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SECOND DIVISION

G.R. No. 207633, December 09, 2015

PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee, v. JOHNLIE LAGANGGA Y DUMPA, Accused-Appellant.

DECISION

DEL CASTILLO, J.:

This is an appeal from the Decision1 dated April 16, 2013 of the Court of Appeals (CA) in CA-G.R. CR-HC No. 00940 which
affirmed the January 7, 2011 Decision2 of the Regional Trial Court (RTC), Branch 34, Cabadbaran City, in Criminal Case No,
2004-45 finding appellant Johnlie Lagangga y Dumpa (appellant) guilty beyond reasonable doubt of the crime of rape.

On March 9, 2004, an Information for rape under paragraph 1(a), Article 266-A of the Revised Penal Code was filed against
appellant. The accusatory portion of said Information reads:

That on or about the 9th day of February, 2004, at dawn, at x x x Agusan del Norte, Philippines, and within the jurisdiction of
this Honorable Court, the above-named accused, by means of force, threat and intimidation, did then and there willfully,
unlawfully and feloniously have carnal knowledge of one "AAA,"3 against her will.

Contrary to law.4ChanRoblesVirtualawl ibra ry

During his arraignment on July 12, 2004, appellant entered a plea of not guilty. Soon after the pre-trial conference, trial on
the merits ensued.

Version of the Prosecution

The prosecution's version of the incident as summarized by the Office of the Solicitor General (OSG) and adopted by the
appellate court is as follows:
On February 9, 2004 at 2:00 A.M., private complainant (AAA), and her three (3) children were sleeping inside the room of
their house xxx when she was awakened by the presence of a man wearing black clothes and a mask. Mistaking him for a
dog, she simply shooed him away until she suddenly felt a knife being poked at her neck. The man took off his makeshift
mask that was made from a t-shirt and because of the light from the kerosene lamp, private complainant recognized him as
her neighbor and appellant Johnlie Lagangga, which prompted her to shout "Oy! Johnlie ikaw man diay na! (So, Johnlie it
was you)." After covering her mouth, appellant boxed her on the stomach near the epigastric region or "kuto-kuto,"
rendering her unconscious.

When the private complainant regained consciousness at around 3:00 A.M., she saw appellant standing outside the room. He
threatened her, saying: "Basig ipablater ko nimo ugma, hasig mosumbong ka, patyon ta na long ka karon. Rung mosumbong
ka, patyong tamong tanan. (What if you will have me blottered tomorrow? What if you will report? I might as well kill you
now, if you will report, then I will kill all of you.)"

Private complainant then noticed that her panty was gone, her private part smelled differently and that "there was the
presence of mucous and probably a secretion of the male organ," concluding that she was used that night.

Private complainant's eldest son (BBB), who slept to the far right of his mother, was awakened along with his other siblings
[by] the commotion and started crying. He saw appellant on top of his unconscious mother, undressing her and doing "a sort
of push and pull movement or "kijo-kijo."

Despite appellant's threat, private complainant went to the house of their Purok president[,] Victoria "Baby" Mordin, to report
the incident. The two then sought the help of Mordin's friend, Senior Police Officer 3 (SPO3) Paterno Magdula. SP03 Magdula
later accompanied them to the Santiago Police Station where the police interviewed and took the affidavits of both Mordin
and the private complainant. Private complainant's son was later fetched by [the] police from their home [and] brought to
the police station, where he gave his sworn statement on the incident.5 ChanRobles Vi rtua lawlib rary

Version of the Defense

In his defense, appellant admitted having sexual intercourse with "AAA" but claimed it to be a consensual congress. As
summarized by the Public Attorney's Office, his version of the incident is as follows:
In sum, his testimony would prove that on February 8, 2004 at around 6:00 o'clock in the evening, he arrived home from
work in the mountain of Matinggi. Nobody was home, so he left and went to the house of the Purok President, Baby Mordin[,]
at [a]round 7:00 o'clock in the evening, and found out that several people had a drinking session there. He took one shot of
Kulafo, an alcoholic beverage, then returned home to take his supper. Thereafter, he went to the artesian well to wash his
body and saw (AAA) fetching water. (AAA) asked him if he saw her husband in the mountain and after he answered in the
negative, (AAA) invited him to go to her house later. At around 10:00 o'clock that evening, he went to the house of (AAA)
and waited for the latter at the sala. (AAA) came out from her room about two minutes later; they talked briefly and then
had sex. There was no light in the sala, only an illumination from outside, and (AAA) undressed herself. Their sexual
intercourse took only a few minutes, then he went home and slept. To his great surprise, he was arrested the following
day.6ChanRoblesVirt ualawli bra ry

Ruling of the Regional Trial Court

On January 7, 2011, the RTC rendered its Decision rinding appellant guilty beyond reasonable doubt of rape and sentencing
him to suffer the penalty of reclusion perpetua. He was also ordered to pay "AAA" the amount of P50,000.00 as civil
indemnity without subsidiary imprisonment in case of insolvency.

Ruling of the Court of Appeals

On appeal, the CA affirmed with modification the RTC Decision by awarding, in addition to the civil indemnity, the amount of
P50,000.00 as moral damages and P30,000.00 as exemplary damages, with interest at 6% per annum on all the amounts
awarded from the date of finality of the judgment until fully paid.

Undeterred, appellant is now before this Court via the preset appeal to gain a reversal of his conviction. He adopts the same
argument he raised in his brief submitted before the CA, viz.:
THE COURT A QUO GRAVELY ERRED IN CONVICTING ACCUSED-APPELLANT DESPITE THE FAILURE OF THE PROSECUTION TO
PROVE HIS GUILT BEYOND REASOABLE DOUBT.7 ChanRoblesVi rtualaw lib rary

Our Ruling

The appeal is barren of merit.

"Since the crime of rape is essentially one committed in relative isolation or even secrecy, it is usually only the victim who
can testify with regard to the fact of the forced coitus. In its prosecution, therefore, the credibility of the victim is almost
always the single and most important issue to deal with."8 "If the testimony of the victim is credible, convincing and
consistent with human nature and the normal course of things, the accused may be convicted solely on the basis thereof."9

Essentially, the argument of appellant as premised, boils down to the issue of credibility. Often, when the credibility of the
witness is in issue, the trial court's assessment is accorded great weight unless it is shown that it overlooked, misunderstood
or misappreciated a certain fact or circumstance of weight which, if properly considered, would alter the result of the case.10

In the present case, the RTC found "AAA's" account of her painful ordeal credible and sincere and gave it full probative
weight. "AAA's" positive identification of appellant as the one who threatened her by poking a knife at her and her testimony
that he boxed her on the abdomen rendering her unconscious and upon regaining consciousness noticed that her
undergarment was removed, are clear and consistent. The CA was convinced of the veracity of "AAA's" testimony. Thus:
Here, private complainant narrated a realistic account of her ordeal in a simple yet clear-cut manner. She expressed her
anger and bitterness towards appellant who, by his dastardly act, ruined her and her family. Nowhere in the course of her
testimony, not even in her cross examination, did it appear that she was impelled by improper motive.

The testimony of a witness who has no motive or reason to falsify or perjure oneself should be given credence. A virtuous
woman will not, as [a] rule, admit in public that she had been raped, as she thereby blemishes her honor and compromises
her future, unless she is telling the truth. It is her natural instinct to protect her honor. The testimony of a married rape
victim is given full weight and credence because no married woman with a husband and children would place herself on x x x
public trial for rape where she would be subjected to suspicion, morbid curiosity, malicious imputations, and close scrutiny of
her personal life, not to speak of a humiliation and scandal she and her family would suffer, if she was merely concocting her
charge and would not be able to prove it in court.11 ChanRoble sVirt ualawli bra ry

The absence of a medical certificate is not fatal to the cause of the prosecution. Case law has it that in view of the intrinsic
nature of rape, the only evidence that can be offered to prove the guilt of the offender is the testimony of the offended party.
"Even absent a medical certificate, her testimony, standing alone, can be made the basis of conviction if such testimony is
credible. Moreover, the absence of external injuries does not negate rape. In fact, even the [presence] of spermatozoa is not
an essential element of rape."12

Appellant contends that he cannot be convicted of a crime entirely different from that alleged in the Information. According
to him, from the tenor of the RTC's January 7, 2011 Decision, it appears that he was convicted of rape while "AAA" was
under the state of unconsciousness. In the Information, however, he was accused of rape committed thru force and
intimidation. He thus claims that his right to due process was violated.

We are not persuaded. An information that fails to allege that the offense was committed while the victim was unconscious is
deemed cured by the failure of the accused to question before the trial court the sufficiency of the information or by his
failure to object to the presentation of evidence tending to establish that the crime was committed through such means.
Apparently, appellant participated in the trial without raising any objection to the prosecution's evidence. Besides, as
correctly observed by the CA, "AAA's" unconsciousness was the direct result of the force employed by appellant when he
boxed the former on her stomach.

More importantly, appellant admitted having sexual intercourse with "AAA" at the latter's house although he claimed that the
sexual intercourse was consensual since they were lovers. The Court cannot subscribe to appellant's "sweetheart" theory and
exculpate him from the charge. For one, such claim is self-serving since it was not substantiated by the evidence on record.
And even if "AAA" and appellant were sweethearts, this fact does not necessarily negate rape. As has been consistently
ruled, "a love affair does not justify rape, for the beloved cannot be sexually violated against her will."13 "[L]ove is not a
license for lust"14 More importantly, what destroyed the veracity of appellant's "sweetheart" defense are "AAA's" credible
declaration that he is not her sweetheart and her vehement denial that he courted her.15

In fine, the Court finds no cogent reason to overturn the RTC's finding, which was affirmed by the CA, that appellant
employed force and intimidation on "AAA," who consequently lost consciousness, to perpetrate the offense charged.

The Penalty

Rape as defined and penalized under paragraph 116 of Article 266-A in relation to Article 266-B17 of the Revised Penal Code,
as amended, is punishable by reclusion perpetua. Consequently, the penalty of reclusion perpetua imposed by the RTC and
affirmed by the CA is proper.

The Civil Liability

With respect to the civil liability of appellant, the Court finds that the CA correctly affirmed the RTC's award of P50,000.00 as
civil indemnity and the CA's additional awards of P50,000.00 as moral damages even without need of further proof and
P30,000.00 as exemplary damages, with interest at 6% per annum on all the damages awarded from the date of finality of
the judgment until fully paid as proper.

WHEREFORE, the appeal is DISMISSED. The assailed Decision of the Court of Appeals dated April 16, 2013 in CA-G.R. CR-
HC No. 00940 is AFFIRMED.

SO ORDERED. chanroblesvi rtua llawli bra ry

G.R. No. 203397, December 09, 2015

AUGUSTO ONG TRINIDAD II, AUGUSTO ONG TRINIDAD III FOR HIMSELF AND REPRESENTING LEVY ONG
TRINIDAD AND ROHMEL ONG TRINIDAD, MARY ANN NEPOMUCENO TRINIDAD FOR HERSELF AND ASSISTING
HER MINOR CHILDREN JOAQUIN GERARD N. TRINIDAD IV, JACOB GABRIEL N. TRINIDAD, AND JERED GYAN N.
TRINIDAD, Petitioners, v. SPOUSES BONIFACIO PALAD AND FELICIDAD KAUSAPIN, Respondent.

DECISION

DEL CASTILLO, J.:

This Petition for Review on Certiorari1 seeks to set aside the March 27, 2012 Decision2 and August 24,2012 Resolution3 of the
Court of Appeals (CA) in CA-G.R. CV No. 92118 which granted respondents' appeal and reversed the July 4, 2008
Decision4 of the Regional Trial Court (RTC) of Lucena City, Branch 53 (RTC) in Civil Case No. 92-71.

Factual Antecedents

On July 23, 1985, respondents - spouses Bonifacio Palad and Felicidad Kausapin (Felicidad) - bought from Renato Ramos
(Ramos) an eight-hectare parcel of land located within Lucena City, which was later registered as Transfer Certificate of Title
No. (TCT) T-47318.5

Respondents later caused the subject property to be surveyed, and it was discovered that a two-hectare portion thereof (the
subject property) was occupied by Augusto Trinidad (Augusto), who converted the same into a fishpond.

On May 29, 1992, respondents filed with the RTC of Lucena City a Complaint6 for recovery of possession with damages
against Augusto, which was docketed as Civil Case No. 92-71 and assigned to RTC Branch 53.

In his Answer,7 Augusto claimed that respondents were not the owners of the subject property; that Felicidad secured her
title through dubious means; that the subject property formed part of a five-hectare piece of property that was given to him
by his father, Atty. Joaquin Trinidad (Atty. Trinidad); that this five-hectare property was acquired by his father from Genaro
Kausapin (Genaro), who was his father's client; that said five-hectare property was declared for taxation purposes by his
father; that since 1980, he (Augusto) has been in possession of the five-hectare property; that he filed criminal cases for
falsification against Felicidad; and that Felicidad was motivated by greed and bad faith in filing the case. Augusto thus prayed
that the complaint be dismissed; that Felicidad's TCT T-47318 be nullified; and that damages and attorney's fees be awarded
to him.

During the proceedings, Augusto passed away and was substituted by his widow - herein petitioner Levy Ong Trinidad - and
children - petitioners Augusto Ong Trinidad II, Augusto Ong Trinidad in, Rohmel Ong Trinidad, and Joaquin Ong Trinidad III.

Ruling of the Regional Trial Court

After trial, or on July 4,2008, the RTC rendered its Decision,8 pronouncing as follows:
This is a complaint for recovery of possession with damages filed by the spouses Bonifacio Palad and Felicidad Kausapin
against Augusto Trinidad as the original defendant. In the course of the trial Augusto C. Trinidad died and his widow, Levy
Ong Trinidad, and their children Rohmel Ong Trinidad, Augusto Ong Trinidad II, Augusto Ong Trinidad III and Joaquin
Trinidad III were substituted as defendants.

xxxx

The land subject of this case is a 2-hectare portion of the eight (8) hectares covered by Transfer Certificate of Title No. T-
47318 now registered in the names of the spouses Bonifacio Palad and Felicidad Kausapin (Exhibit "A").

In their complaint, the plaintiffs merely emphasized the fact that as the registered owners of the parcel of land with an area
of eight (8) hectares including the 2-hectare area in dispute, they are entitled to the possession of the disputed area which,
despite their demands to the defendants to vacate, the defendants have not vacated the area consisting of a well-developed
fishpond.

xxxx

For their part, the defendants posit as follows: During the lifetime of Genaro Kausapin, the father of complainant Felicidad
Kausapin, Genaro Kausapin availed of the legal services of Atty. Joaquin Trinidad in a land dispute involving a 12-hectare
property. For Atty. Trinidad's services, Genaro Kausapin and Atty. Trinidad executed on October 4, 1977 a document
denominated Kasulatan ng Pagbabahagi whereby they partitioned between themselves the 12-hectare property composed of
Lot 13-A, Lot 13-B and Lot 13-C of the Subdivision Plan, (LRC) PSD-254630 confirmed on December 19,1976 by the Land
Registration Commission. As his share in the partition Atty. Trinidad was given Lot 13-A (Exhibit "2").

In 1980 Atty. Trinidad gave to his son August© Trinidad the five (5) hectares given to him by Genaro Kausapin as attorney's
fee. Augusto Trinidad developed a 2-hectare portion of the five hectares into a fishpond spending huge amount of money in
the process.

xxxx

By whichever mode the plaintiffs had come to title the 8-hectare property including the 2-hectare portion in dispute, the
Court, sifting through the evidence presented by the parties, finds:

1. By virtue of the Kasulatan ng Pagbabahagi dated October 4, 1977 Genaro Kausapin and Atty. Joaquin
Trinidad partitioned between themselves the 12-hectare property composed of Lot 13-A, Lot 13-B and Lot
13-C of the Subdivision Plan (LRC) PSD-254630, Atty. Joaquin Trinidad getting Lot 13-A as his attorney's fee
for legal services he rendered to Genaro Kausapin.

2. Atty. Joaquin Trinidad gave to his son Augusto Trinidad his 5- hectare share and Augusto Trinidad,
beginning the year 1980, developed a portion of the area into a fishpond spending a huge amount of money
in the process.

3. On July 23, 1985 the plaintiffs bought an 8-hectare property from Renato Ramos and they had the land
titled in their names on September 11,1985.

4. It was when the plaintiffs had the land they bought from Renato Ramos surveyed that they found out that
the fishpond developed by Augusto Trinidad was embraced in the area of the [land] Renato Ramos sold to
them.

5. Renato Ramos did not know that the area developed by Augusto Trinidad into a fishpond was part of the
land he (Ramos) sold to the plaintiffs. Otherwise, if Renato Ramos knew this, he would not have allowed
Augusto Trinidad to occupy and transform the area into a fishpond and, much more, for him (Renato
Ramos) to have sold the entire property to the plaintiffs for the measly sum of P8,000.00, given the size of
the area and the improvements on the area in dispute. Likewise, it was only after the plaintiffs had caused
the survey of the area they bought that they came to know that the 2-hectare [property] developed by
Augusto Trinidad into a fishpond was within the area they bought.

From the foregoing, it is clear that when Augusto Trinidad entered the property in dispute in 1980 and began to transform it
into a fishpond, this was with the knowledge and consent of Genaro Kausapin, the father of the plaintiff. That what Augusto
Trinidad occupied was Lot 13-C when it should have been Lot 13-A becomes immaterial when it is considered that while the
lots were then designated as Lot 13-A, Lot 13-B and Lot 13-C, obviously Genaro Kausapin and Atty. Joaquin Trinidad and
Augusto Trinidad were not fully aware of the exact metes and bounds of each lot. This was also the case when, before the
area bought by the plaintiffs was surveyed, the vendor Renato Ramos and the plaintiffs as vendees did not know that the
area developed by Augusto Trinidad as a fishpond was within the area sold to the plaintiffs.

Given that the possession by the defendants of the area in question antedates by five years the claim of the plaintiffs to the
disputed property, and given that the parties who should have questioned the entry of the defendants into the property,
namely, Genaro Kausapin or Renato Ramos, did not do so, and considering the valuable improvements made by the
defendants in the area in dispute, the defendants have a better right to possess the disputed area, even as the area had
been included in [the] title issued to the plaintiffs.

WHEREFORE, the complaint is ordered dismissed.

Defendants' counterclaim is likewise ordered dismissed.

SO ORDERED.9 ChanRoblesVi rtualaw lib rary

Riding of the Court of Appeals

Respondents filed an appeal before the CA, docketed as CA-G.R. CV No. 92118, arguing that as registered owners of the
subject two-hectare property, they have a better right thereto; that petitioners' claim that the subject property was part of a
12-hectare piece of property owned by respondent Felicidad's father Genaro, five hectares of which was allegedly awarded by
Genaro to petitioners' father Atty. Trinidad as the latter's attorney's fees in a case, has no basis, as there is no evidence on
record to show that Genaro even owned a parcel of land; that in truth, Genaro was a mere tenant of the original owners of
the 12-hectare property - Juliana Navarro (Navarro), Pedro Loyola, and Ramos; that eventually, Ramos sold an eight-hectare
portion of the property to respondents, which is now the property covered by TCT T-47318 and claimed by petitioners to the
extent of two hectares; that apart from a document denominated as "Kasulatan ng Pagbabahagi" supposedly executed by
Genaro and Atty. Trinidad on October 4,1977, petitioners have not presented any title or any other documentary proof, such
as receipts showing payment of real property taxes, to prove their alleged ownership of the subject property; that
respondents cannot be bound by the supposed agreement between Genaro and Atty. Trinidad because it is void since, being
a mere tenant of the property, Genaro cannot award the same to Atty. Trinidad; that Genaro's status as a mere tenant is
known to Atty. Trinidad, since the latter was Genaro's counsel in a claim involving the subject property docketed as CAR
Case No. 585(62), which was eventually terminated by Genaro's execution in 1963 of a "Kasunduan", wherein he
acknowledged before Ramos and Atty. Trinidad that he was a mere tenant of the Ramos family; that Augusto was a
policeman during his lifetime, and he took over the disputed property by force, and respondents -fearing violence and
bloodshed - opted to resort to court action instead; and that under the Civil Code,10 they are protected as the registered
owners, and petitioners should be considered intruders and builders in bad faith.

During the pendency of the appeal, Joaquin Ong Trinidad HI died and was substituted by his widow and children - herein
petitioners Mary Ann Nepomuceno Trinidad, Joaquin Gerard N. Trinidad IV, Jacob Gabriel N. Trinidad and Jered Gyan N.
Trinidad.

On March 27, 2012, the CA rendered the assailed judgment, declaring as follows:
In this appeal, Spouses Palad assert their Transfer Certificate of Title No. T-47318 which undoubtedly covers appellees' two-
hectare fishpond found within the former's eight-hectare lot. They argue that appellees' predecessors-in-interest, Genaro
Kausapin and Atty. Joaquin Trinidad, were never owners of the eight-hectare lot, including the subject realty, as the property
was owned by Renato Ramos who sold it to them.

On the other hand, appellees reiterate in their brief that their father possessed the fishpond long before Spouses Palad
bought the eight-hectare lot. They also posit that a certificate of title by itself alone does not vest ownership in any person.

We grant the appeal.

Appellants are owners of the eight-hectare lot, including the two-hectare fishpond, by virtue of their Transfer Certificate of
Title No. T-47318. Spouses Esmaquel v. Coprada, explains why:
On the other hand, it is undisputed that the subject property is covered by Transfer Certificate of Title No. T-93542,
registered in the name of the petitioners. As against the respondent's unproven claim that she acquired a portion of the
property from the petitioners by virtue of an oral sale, the Torrens title of petitioners must prevail. Petitioners' title
over the subject property is evidence of their ownership thereof. It is a fundamental principle in land
registration that the certificate of title serves as evidence of an indefeasible and incontrovertible title to the
property in favor of the person whose name appears therein. Moreover, the age-old rule is that the person who
has a Torrens title over a land is entitled to possession thereof.
As a rule, a certificate of title cannot be attacked collaterally. At any rate, in Spouses Sarmiento et al. v. Court of Appeals et
al., a counterclaim assailing a certificate of title is deemed a direct attack. x x x

xxxx

The burden of proof is on appellees to establish by clear and convincing evidence the ground or grounds for annulling a
certificate of title, In Lasquite et al. v. Victory Hills:
The established legal principle in actions for annulment or reconveyance of title is that a party seeking it should
establish not merely by a preponderance of evidence but by clear and convincing evidence that the land sought
to be reconveyed is his. It is rather obvious from the foregoing disquisition that respondent failed to dispense such burden.
Indeed, the records are replete with proof that respondent declared the lots comprising Lot No. 3050 for taxation purposes
only after it had instituted the present case in court. This is not to say of course that tax receipts are evidence of ownership,
since they are not, albeit they are good indicia of possession in the concept of owner, for no one would ordinarily be paying
taxes for a property not in his actual or at least constructive possession. x x x
Here, appellees offered no evidence, much less, clear and convincing evidence, that Spouses Palad's transfer certificate of
title should be annulled. In fact, it is on record that appellees' documents pertain to Lot 13-A, but they occupied Lot 13-C. As
the trial court determined, appellees' only basis for claiming the fishpond was their occupation thereof, though mistakenly
and the absence of the boundaries of Lots 13-A, 13-B and 13-C. But these matters do not and cannot annul Spouses Palad's
transfer certificate of title. They actually imply admission of appellees' intrusion into Lot 13-C under Transfer Certificate of
Title No. T-47318 without any right to own or possess it. Truth to tell, the trial court correctly did not set aside the transfer
certificate of title. Hence, it remains valid and binding with all its legal effects.

ACCORDINGLY, the appeal is GRANTED. The Decision dated July 4, 2008 of the Regional Trial Court, Branch 53, Lucena
City, in Civil Case No. 92-71 is REVERSED AND SET ASIDE. Defendants-appellees Levy Ong Trinidad, Joaquin Trinidad III,
Augusto Trinidad II, Augusto Trinidad III and Rohmel Trinidad, their successors-in-interest, privies and heirs are ordered to
vacate the two-hectare fishpond occupied by them in Lot 13-C under Transfer Certificate of Title No. T-47318. No
costs.

SO ORDERED.11 (Emphasis in the original).


Petitioners filed their Motion for Reconsideration,12 which was denied in the assailed August 24, 2012 Resolution. Hence, the
instant Petition.

In a January 27, 2014 Resolution,13 this Court resolved to give due course to the Petition.

Issues

Petitioners claim that the CA erred:

1. In its ruling that the respondents have a better right of possession over the disputed 2-hectare portion of the 8-
hectare property by the mere fact that said disputed portion is covered by a certificate of title in their names;

2. In its ruling that the petitioners offered no evidence that spouses Palad's transfer certificate of title should be
annulled, and therefore remains valid and binding with all its legal effects, as it failed to consider evidence showing
otherwise;

3. In its ruling that the petitioners should vacate the 2-hectare fishpond, as it failed to consider that the respondents
have no right or cause of action against the petitioners to seek the latter's ejectment from the property in question.14

Petitioners'Arguments

In their Petition and Reply15 seeking reversal of the assailed CA dispositions and reinstatement of the RTC's July 4, 2008
Decision dismissing Civil Case No. 92-71, petitioners essentially argue that respondents may not claim ownership of the
subject property just because it is embraced within their title, TCT T-47318; that TCT T-47318 is null and void since it is the
result of a June 5, 1985 deed of extrajudicial settlement16 and September 9, 1985 segregation agreement17 and not a sale
between respondents and Ramos; that since respondent Felicidad was not an heir of one of the original owners of the
property - Navarro - as erroneously stated in the deeds of extrajudicial settlement and segregation agreement, said
documents are therefore null and void, and could not be the bases for the issuance of TCT T-47318; that the subject
property was not included in the July 23, 1985 sale between respondents and Ramos because its inclusion in TCT T-47318
was discovered only after a survey was conducted after the sale; that since respondents are not the owners of the subject
property, they have no cause of action against petitioners; and that in their answer with counterclaim, they sought to annul
TCT T-47318, claiming that respondents secured same through Felicidad's claim that she is an heir of Navarro - thus, said
allegation made through a valid counterclaim constitutes a direct attack upon the validity of TCT T-47318 which is allowed by
law.

Respondents' Arguments

In their Comment18 seeking denial of the Petition, respondents argue that the CA correctly held that TCT T-47318 serves as
incontrovertible proof of their indefeasible title to the subject property, as well as their right to possession thereof; that
petitioners' claim that their title is void as it arose out of void agreements constitutes a prohibited collateral attack on TCT T-
47318; that the issue of validity or nullity of TCT T-47318 cannot be raised, as said issue was not touched upon by the RTC;
that TCT T-47318 may not be annulled because petitioners' supposed claim of ownership specifically refers to Lot 13-A, while
they wrongly occupied Lot 13-C, which is the subject of TCT T-47318; and that with the finding on record that petitioners
wrongly occupied Lot 13-C, they must be ordered to vacate the same and surrender possession to respondents who are the
registered owners

Our Ruling

The Court denies the Petition.

The fact is undisputed that the subject two-hectare property lies within Lot 13-C which is registered in the name of
respondents as TCT T-47318.

The evidence on record also suggests that contrary to petitioners' claim, the subject property constitutes a portion of an
eight-hectare parcel of land acquired by respondents from Ramos by purchase in 1985, and was not the result of a June 5,
1985 deed of extrajudicial settlement and September 9, 1985 segregation agreement between the original owners and
respondent Felicidad. This is a finding of fact arrived at by both the RTC and the CA - and this is admitted by petitioners in
their Petition, which specifically adopted the findings of fact of the RTC on this score.19

By adopting the findings of fact of the trial court, petitioners are precluded from further arguing that TCT T-47318 is void on
the ground that it was obtained through a simulated extrajudicial settlement agreement; and as far as this Court is
concerned, the fact is settled that respondents acquired the property covered by TCT T-47318 by purchase from Ramos. If
indeed Felicidad was an heir of any of the original owners of the property, then there would have been no need for her to
purchase the same. Besides, the evidence further points to the fact that Felicidad's father Genaro was a mere tenant of the
Ramos family and could not have owned the property in question; and this is precisely why, to own it, she had to purchase
the same from Ramos.

The CA is therefore correct in its pronouncement - citing Spouses Esmaquel and Sordevilla v. Coprada20 - that TCT T-47318
constitutes evidence of respondents' ownership over the subject property, which lies within the area covered by said title;
that TCT T-47318 serves as evidence of indefeasible and incontrovertible title to the property in favor of respondents, whose
names appear therein; and that as registered owners, they are entitled to possession of the subject property. As against
possession claimed by the petitioners, respondents' certificate of title prevails. "[M]ere possession cannot defeat the title of a
holder of a registered [T]orrens title x x x."21

On the other hand, petitioners' claim - their main defense in the suit - is that their predecessor Augusto was the owner of the
subject property. But such claim rests on very shaky ground. First, they claim that the subject property was awarded as
attorney's fees in 1977 to Augusto by Genaro. However, in seeking the annulment of respondents' title, they claim at the
same time that the property was acquired by Felicidad through inheritance from Navarro, who happens to be the
grandmother of Ramos.22 And yet, at the appeal stage before the CA, they adopt without question the RTC's finding that the
subject property was purchased by Felicidad from Ramos. Such a conflicting and flip-flopping stance deserves no serious
consideration. Genaro may not dispose of the property which does not belong to him although he may have executed a
document awarding the same to Augusto. No one can give that which he does not own - nemo dat quod non habet. Finally,
petitioners acknowledge that what Genaro supposedly gave Augusto as the latter's attorney's fees was Lot 13-A, while it
turned out that what Augusto occupied was Lot 13-C, which is registered in respondents' favor as TCT T-47318. Evidently,
Augusto had no right over Lot 13-C which he wrongly occupied; consequently, petitioners, as Augusto's successors-in-
interest, have no viable defense to respondents' claim in Civil Case No. 92-71.

Indeed, the only reason why petitioners won their case in the RTC is that in the court's July 4, 2008 Decision it assumed and
concluded that Genaro was the owner of the subject property which he awarded to Augusto via the supposed October 4,
1977 "Kasulatan ng Pagbabahagi" between Genaro and Augusto - when the evidence points to the fact that the property was
acquired by respondents through purchase from its original owner, Ramos.

Thus, as the CA correctly held, petitioners are mere intruders with respect to the subject property; they have no right to own
or possess the same. On the other hand, as registered owners of the subject property, respondents have the right to
exercise all attributes of ownership including possession which they cannot do while petitioners remain there.

WHEREFORE, the Petition is DENIED. The March 27, 2012 Decision and August 24, 2012 Resolution of the Court of Appeals
in CA-G.R. CV No. 92118 are AFFIRMED IN TOTO. Petitioners and their heirs, successors-in-interest and privies are ordered
to VACATE the two-hectare fishpond as well as any other portion of the property covered by Transfer Certificate of Title No.
T-47318.

SO ORDERED. chanroblesvi rtua llawli bra ry

SECOND DIVISION

G.R. No. 203115, December 07, 2015

ISLAND OVERSEAS TRANSPORT CORPORATION/PINE CREST SHIPPING CORPORATION/CAPT. EMMANUEL L.


REGIO, Petitioners, v. ARMANDO M. BEJA, Respondent.

DECISION

DEL CASTILLO, J.:

This Petition for Review on Certiorari1 assails the March 28, 2012 Decision2 and August 13, 2012 Resolution3 of the Court of
Appeals (CA) in CA-G.R. SP No. 113550 affirming the October 26, 2009 Decision4 and February 15, 2010 Resolution5 of the
National Labor Relations Commission (NLRC), which ordered petitioners Island Overseas Transport Corporation/Pine Crest
Shipping Corporation/Capt. Emmanuel L. Regio (petitioners) to pay respondent Armando M. Beja (Beja) US$110,000.00 as
permanent total disability benefits and 10% thereof as attorney's fees.

Antecedent Facts
On March 6, 2007, Beja entered into a Contract of Employment6 with petitioner Island Overseas Transport Corp. for and on
behalf of its foreign principal, petitioner Pine Crest Shipping Corporation, for a period of nine months as Second Assistant
Engineer for the vessel M/V Atsuta. Beja underwent the pre-employment medical examination, where he was declared fit for
work. He boarded the vessel on March 14, 2007.

In November 2007, Beja experienced pain and swelling of his right knee, which he immediately reported to the Master of the
vessel. On November 10, 2007, he was brought to a hospital in Italy and was diagnosed to have Arthrosynovitis. He
underwent arthrocentesis of the right knee, was referred to an orthopedic surgeon and was advised to take a rest.7 However,
while in Spain, the pain in his right knee recurred and persisted. He was brought to a physician on November 19, 2007 and
was advised to be medically repatriated.

Upon arrival in Manila on November 22, 2007, petitioners referred him to Nicomedes G. Cruz (NGC) Medical Clinic for
evaluation. The Magnetic Resonance Imaging of his right knee showed Chronic Tenosynovitis with Vertical Tear, Postero-
Lateral Meniscus and Probable Tear Anterior Cruciate and Lateral Collateral Ligaments.8 Beja underwent physical therapy and
was advised to undergo operation.9On April 23, 2008, Anterior Cruciate Ligament Reconstruction and Partial Menisectomy of
the Medial Meniscus was done on his right knee at Medical Center Manila.10 After the operation, petitioners sent him for
rehabilitation at St. Luke's Medical Center under the supervision of Dr. Reynaldo R. Rey-Matias (Dr. Matias).

Meantime, while undergoing therapy, or on May 15, 2008, Beja filed a complaint11 against petitioners for permanent total
disability benefits, medical expenses, sickness allowance, moral and exemplary damages and attorney's fees. Beja alleged
that his knee injury resulted from an accident he sustained on board the vessel when a drainage pipe fell on his knee. He
claimed that from the time of his repatriation on November 22, 2007, his knee has not recovered which rendered him
incapable of returning to his customary work as seafarer. This, according to him, clearly entitles him to permanent total
disability benefits pursuant to AMOSUP-JSU Collective Bargaining Agreement (CBA) which provides:

Article 28.1:
chanRob lesvi rtua lLawl ibra ry

A seafarer who surfers permanent disability as a result of an accident whilst in the employment of the Company regardless of
fault, including, accidents occurring while travelling to or from the ship, and whose ability to work as a seafarer is reduced as
a result thereof, but excluding permanent disability due to willful acts, shall in addition to sick pay, be entitled to
compensation, according to the provisions of this Agreement.12 ChanRobles Virtualawl ibra ry

He claimed for compensation in the amount of US$137,500.00 in accordance with the degree of disability and rate of
compensation indicated in the said CBA, to wit:
Disability

In the event a seafarer suffers permanent disability in accordance with the provisions of Article 28 of this Agreement, the
scale of compensation provided for under Article 28.3 shall, unless more favourable benefits are negotiated, be: chanRoble svirtual Lawlib ra ry

xxxx

Effective from 1st January to 31st December, 2007

Degree of Disability Rate of Compensation (US$)

Junior Officers &


% Ratings, AB & Below Senior Officers (4)
Ratings Above AB

100 82,500 110,000 137,500

75 61,900 82,500 103,150

60 49,500 66,000 82,500

50 41,250 55,000 68,750

40 33,000 44,000 55,000

30 24,750 33,000 41,250

20 16,500 22,000 27,500


10 8,250 11,000 13,750

Note: "Senior Officers" for the purpose of this clause means Master, Chief Officer, Chief Engineer and 1st Engineer.13 ChanRoble sVirtualawli bra ry

On May 26, 2008, the company-designated physician, Dr. Nicomedes G. Cruz (Dr. Cruz), issued an assessment of Beja's
disability:
1. Prognosis - guarded.

2. Combined disability grading under the POEA schedule of disabilities:

a. Grade 10 - stretching leg of the ligaments of a knee resulting in instability of the joint.

b. Grade 13 - slight atrophy of calf muscles without apparent shortening or joint lesion or disturbance of weight-bearing
line.14

After more than three months of therapy, Dr. Matias issued on August 28, 2008 a medical report15stating that Beja is still
under pain as verified by the Visual Analog System which measures his pain at 6 out of 10 (10 being the highest measure of
pain) and is having difficulty in his knee movements. Thereafter, on August 30, 2008, Beja consulted an orthopedic surgeon,
Dr. Nicanor F. Escutin (Dr. Escutin), who examined and certified him to be unfit for sea duty in whatever capacity due to pain
and difficulty of the use of his right knee despite the operation and therapy performed on him.16

Proceedings before the Labor Arbiter

During the preliminary conference, petitioners offered to pay Beja the amount of US$13,345.00, corresponding to the
combined disability grading given by Dr. Cruz, which is disability Grade 10 (US$50,000 x 20.15%) and Grade 13 (US$50,000
x 6.72%) under the Schedule of Disability Allowances in the POEA Standard Employment Contract (POEA- SEC). Beja,
however, rejected petitioners' offer and reiterated his claim for total disability benefits as strengthened by the certification of
Dr. Escutin that he suffers from a permanent total disability, which he claimed, confirmed the findings of Dr. Matias.

Petitioners, however, insisted that the combined disability assessment given by Dr. Cruz, who for months continuously
treated and monitored Beja's condition, prevails over that rendered by Dr. Escutin, who examined Beja only once and whose
diagnosis was merely based on the medical reports and findings of the company-designated physicians. Petitioners further
disclaimed Beja's entitlement to disability claim under the CBA as it expressly requires the parties to consult a third doctor
whose opinion shall be binding on them. Since Beja failed to observe this procedure which is also mandated under the POEA-
SEC, the finding of Dr. Cruz deserves utmost respect. Petitioners also asseverated that Beja already received his sickness
allowance by presenting several vouchers.17

In a Decision18 dated February 27, 2009, the Labor Arbiter awarded Beja maximum disability benefits under the CBA. The
Labor Arbiter did not give credence to the assessment given by Dr. Cruz as it was issued after the lapse of 120 days which,
by operation of law, transformed Beja's disability to total and permanent. Moreover, despite continued physical therapy,
Bejars condition did not improve even beyond the 240-day maximum medical treatment period. The Labor Arbiter found
doubtful Dr. Cruz's assessment considering that he was not the one who performed the operation on Beja's knee. The Labor
Arbiter denied Beja's claim for sickness allowance since payment thereof was fully substantiated by evidence presented by
petitioners. The dispositive portion of the Decision reads:
WHEREFORE, premises considered, judgment is hereby rendered against the above-named respondents ISLAND OVERSEAS
TRANSPORT CORP. and/or PINE CREST SHIPPING CORP. and/or CAPT. EMMANUEL L. REGIO, who are hereby ordered to pay,
jointly and severally, complainant's Permanent Total Disability benefits in the amount of US DOLLARS ONE HUNDRED THIRTY
SEVEN THOUSAND FIVE HUNDRED (US$137,500.00), in Philippine currency at the prevailing rate of exchange at the time of
payment, plus ten percent (10%) thereof as attorney's fees.

SO ORDERED.19 ChanRoblesVi rtua lawlib rary

Proceedings before the National Labor Relations Commission

On appeal, petitioners attributed error in the Labor Arbiter in granting Beja the maximum disability benefits under the CBA.
Petitioners argued that since Dr. Cruz made an assessment on May 26, 2008 or before the lapse of the maximum 240-day
treatment period from the date of Beja's repatriation on November 22, 2007, mere was no factual basis in ruling that Beja is
entitled to full disability benefits. They cited Vergara v. Hammonia Maritime Services, Inc.,20 where it was pronounced that
only after the lapse of 240 days of continuous medical treatment without any assessment given by the company doctor that
a medically repatriated seafarer could be adjudged as permanently and totally disabled. They also claimed that the CBA is
inapplicable in Beja's case because Beja failed to comply with the procedure regarding the third doctor referral and more
importantly, no proof was adduced to show that his medical condition resulted from an accident Petitioners presented a
certification21 of the Master of vessel M/V Atsuta, Captain Henry M. Tejado, and a written declaration22 of the vessel's Chief
Engineer, Ramon B. Ortega, both confirming that Beja neither met an accident on board nor was injured during his stay in
the vessel under their command. Finally, petitioners contended that assuming that the CBA applies, the award of
US$137,500.00 is erroneous as Beja is not a Senior Officer. In fine, petitioners insisted that the disability assessment given
by Dr. Cruz based on the POEA-SEC is binding and controlling.

Beja, however, disputed petitioners' belated and self-serving denial that an accident took place and insisted that his failure to
resume his work as Second Engineer for more than 240 days resulted in his entitlement to the maximum disability benefit
under the CBA, as correctly ruled by the Labor Arbiter.

In a Decision23 dated October 26, 2009, the NLRC sustained the Labor Arbiter's finding that Beja is permanently and totally
disabled. It found Dr. Cruz's disability assessment premature and inaccurate considering that it was issued only a month
after Beja's surgery when the latter was still under medical evaluation and treatment. On the other hand, it found Dr.
Escutin's evaluation of Beja's condition more credible as it conforms to Dr. Matias' medical report which was rendered after
four months of therapy following the operation. The NLRC likewise ruled that Beja is entitled to compensation under the CBA
for an accident-sustained disability. It noted that his medical records reveal indications of tear and injury on his right knee
that could have resulted from an accident on board. It, however, reduced the award from US$137,500.00 to US$110,000.00
as Beja was only a Second Engineer and not a Senior Officer, thus:
WHEREFORE, premises considered, the Decision appealed from is hereby declared Modified to the extent only that
complainant's permanent total disability award should be US Dollars 110,000.00 (US$110,000.00). All other dispositions are
hereby Affirmed.

SO ORDERED.24 ChanRoblesVi rtua lawlib rary

Petitioners' motion for reconsideration25 was denied in the NLRC Resolution26 dated February 15, 2010.

Proceedings before the Court of Appeals

Petitioners filed a Petition for Certiorari with Prayer for the Urgent Issuance of a Writ of Preliminary Injunction and/or
Temporary Restraining Order27 to enjoin the enforcement/ execution of the NLRC judgment. In a Resolution28 dated June 23,
2010, the CA denied Petitioners' application for the issuance of a Temporary Restraining Order and/or Writ of Preliminary
Injunction.

On March 28, 2012, the CA rendered a Decision29 denying the Petition for Certiorari and affirming the NLRC ruling. Trie CA
similarly found that Beja's injury resulting from an accident while on board the vessel. It likewise found merit in Dr. Escutin's
disability report declaring Beja unfit to work since his injury has prevented him from performing his customary work as
Second Engineer for more than 240 days and thus entitles him to permanent total disability benefits in accordance with the
CBA.

Petitioners sought reconsideration30 of the CA Decision. In a CA Resolution31 dated August 13, 2012, petitioners' motion was
denied.

Issues

Hence, petitioners filed the present Petition for Review on Certiorari raising the following grounds:

I. In awarding permanent total disability benefits in favor of the Respondent in utter disregard of extant case laws
outlining the instances when and how a temporary total disability can be converted into a permanent total one.

II. In relying on the opinion of Respondent's chosen doctor to justify an award of disability compensation contrary to
the clear edicts of the POEA Contract, the CBA and of the Supreme Court in jurisprudential precedents on the proper
establishment and/or determination of a seafarer's entitlement to disability benefits.

III. In awarding benefits based on the compensation provided in the parties' CBA when the said agreement
unequivocally confines compensation to injuries arising from accident, which is absolutely wanting in this case.

IV. In sustaining the award of attorney's fees albeit [without] legal and factual substantiation.32

Petitioners assert that Beja cannot be automatically declared as permanently and totally disabled by the mere lapse of 120
days without any assessment or certification of fit to work being issued. Citing Vergara, they argue that the 120-day period
may be extended up to the maximum of 240 days if the seafarer requires further medical attention. Since Dr. Cruz's
assessment was issued within the 240-day medical treatment period, albeit beyond 120 days, this could serve as the basis
for determining Beja's disability and the degree thereof. In short, Beja should have been declared as partially disabled with
Grades 10 and 13 disability under the POEA-SEC, as assessed by Dr. Cruz.

Moreover, they posit that Beja's complaint was prematurely filed and lacked cause of action for total and permanent disability
benefits. According to petitioners, the lack of a second opinion from Beja's chosen physician at the time of the filing of the
complaint and a third-doctor opinion is fatal to Beja's cause, for without a binding third opinion, the assessment of the
company-designated physician stands.

Further, they insist that Beja is not entitled to compensation under the parties' CB A which is only confined to injuries arising
from accident.

Our Ruling

The Petition is partially meritorious.


The parties' CBA is inapplicable.

Beja based his claim for full disability benefits under the CBA, claiming that his disability resulted from an accident while in
the employ of petitioners and that petitioners' belated denial cannot negate the applicability of the CBA provisions.

We are not convinced.

While, indeed, petitioners did not dispute, before the Labor Arbiter, the fact that Beja met an accident while performing his
duties, they, however, disputed the same in their appeal with the NLRC by submitting the certifications of the Master of the
vessel and Chief Engineer that no accident happened under their command. We have held that "rules of procedure and
evidence should not be applied in a very rigid and technical sense in labor cases in order that technicalities would not stand
in the way of equitably and completely resolving the rights and obligations of the parties."33 The Court is, thus, not precluded
to examine and admit this evidence, even if presented only on appeal before the NLRC, if only to dispense substantial justice.

We, however, note that Beja has not presented any proof of his allegation that he met an accident on board the vessel.
There was no single evidence to show that Beja was injured due to an accident while doing his duties in the vessel. No
accident report existed nor any medical report issued indicating that he met an accident while on board. Beja's claim was
simply based on pure allegations. Yet, evidence was submitted by petitioners disputing Beja's allegation. The certifications by
the Master of the vessel and Chief Engineer affirmed that Beja never met an accident on board nor was he injured while in
the performance of his duties under their command. Beja did not dispute these certifications nor presented any contrary
evidence. "It is an inflexible rule that a party alleging a critical fact must support his allegation with substantial evidence, for
any decision based on unsubstantiated allegation cannot stand without offending due process."34

The Court also takes notice of the fact that Beja's medical condition cannot be solely attributable to accidents. His injury
could have possibly been caused by other factors such as chronic wear and tear35and aging.36 Thus, the NLRC's conclusion
that the tear and injury on Beja's knee was caused by an accident on board had no factual basis but was anchored merely on
speculation. The Court cannot, however, rest its rulings on mere speculation and presumption.37

Thus, we find the CBA inapplicable; the determination of Beja's entitlement to disability benefits must, consequently, be
governed by the POEA-SEC and relevant labor laws.

Beja is entitled to a total and permanent disability compensation of US$60,000.00 under the POEA-SEC.

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: chanRoblesv irt ual Lawlib rary

(1) Temporary total disability lasting continuously for more than one hundred twenty days, except as otherwise provided for
in the Rules;
The Rule referred to in this Labor Code provision is Section 2, Rule X of the Amended Rules on Employees Compensation
(AREC) implementing Title II, Book IV of the Labor Code, which states:
Sec. 2. Period of Entitlement — (a) The income benefit shall be paid beginning on the first day of such disability. If caused by
an injury or sickness it shall not be paid longer than 120 consecutive days except where such injury or sickness still requires
medical attendance beyond 120 days but not to exceed 240 days from onset of disability in which case benefit for temporary
total disability shall be paid. However, the System may declare the total and permanent status at any time after 120 days of
continuous temporary total disability as may be warranted by the degree of actual loss or impairment of physical or mental
functions as determined by the System.
Section 20 B (3) of the POEA-SEC, meanwhile provides that:
3. Upon sign-off from the vessel for medical treatment, the seafarer is entitled to sickness allowance equivalent to his basic
wage until he is declared fit to work or the degree of permanent disability has been assessed by the company-designated
physician but in no case shall this period exceed one hundred twenty (120) days.

For this purpose, the seafarer shall submit himself to a post-employment medical examination by a company-designated
physician within three working days upon his return except when he is physically incapacitated to do so, in which case, a
written notice to the agency within the same period is deemed as compliance. Failure of the seafarer to comply with the
mandatory reporting requirement shall result in his forfeiture of the right to claim the above benefits.

If a doctor appointed by the seafarer disagrees with the assessment, a third doctor may be agreed jointly between the
employer and the seafarer. The third doctor's decision shall be final and binding on both parties.
In Vergara,38 this Court has ruled that the aforequoted provisions should be read in harmony with each other, thus: (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
disability assessment and the seafarer is still unable to resume his regular seafaring duties.
Thus, although Section 3239 of the POEA-SEC states that only those injuries or disabilities classified as Grade 1 are
considered total and permanent, a partial and permanent disability could, by legal contemplation, become total and
permanent.40 The Court ruled in Kestrel Shipping Co., Inc. v. Munar,41viz.:
Indeed, under Section 32 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 seafarer's fitness to work
or permanent disability within the period of 120 or 240 days. That should he fail to do so and the seafarer's medical condition
remains unresolved, the seafarer shall be deemed totally and permanently disabled.42 ChanRobles Vi rtua lawlib rary

Beja was repatriated on November 21, 2007. Roughly a month after his right knee operation or on May 26, 2008, Dr. Cruz
rendered a Grade 10 and 13 partial disability grading of his medical condition. Thereafter, Beja's medical treatment,
supervised by another company-referred doctor, Dr. Matias, continued. On August 28, 2008, Dr. Matias issued a medical
report declaring that Beja has not yet fully recovered despite continued therapy. Hence, although he was given Grades 10
and 13 combined disability rating by Dr. Cruz, this assessment may only be considered as tentative because he still
continued his physical therapy sessions, which even went beyond 240 days.

In Sealanes Marine Services, Inc. v. Dela Torre,43 the seafarer was repatriated on August 4, 2010 and underwent
rehabilitation until July 20, 2011, exceeding the 240 days allowed to declare him either fit to work or permanently disabled. A
partial disability rating of Grade 11 was issued by the company-designated physician on March 10, 2011 but the Court
deemed this assessment only an interim one because of De La Torre's continued physical therapy sessions. The Court then
granted De La Torre the maximum disability compensation because despite his long treatment and rehabilitation, he was
unable to go back to work as a seafarer. In applying the Kestrel ruling, the Court held that if the seafarer's illness or injury
prevents him from engaging in gainful employment for more than 240 days, then he shall be deemed totally and
permanently disabled. The Court ratiocinated that while the seafarer is partially injured or disabled, he must not be precluded
from earning or doing the same work he had before his injury or disability or that which he is accustomed or trained to do.

In Belchem Philippines, Inc. v. Zafra, Jr.,44 the Court stressed that partial disability exists only if a seafarer is found capable
of resuming sea duties within the 120/240-day period. The premise is such that partial injuries did not disable a seafarer to
earn wages in the same kind of work or similar nature for which he was trained.
In this case, there was no assessment that Beja was found fit to resume sea duties before the end of the 240-day period.
Also Beja's allegation that he has not been able to perform his usual activities has not been contradicted by petitioners or by
contrary documentary evidence. In fact, in his medical report dated August 28, 2008, Dr. Matias opined that there was still
difficulty in Beja's knee movements. Beja should, therefore, be deemed to be suffering permanent total disability.

It must also be stressed that Dr. Cruz did not even explain how he arrived at the partial permanent disability assessment of
Beja. Dr. Cruz merely stated that Beja was suffering from impediment Grades 10 and 13 disability but without any
justification for such conclusion. Petitioners' claim that Beja only suffered a partial disability has undoubtedly no basis on
record.

Petitioners still argue that Beja's complaint is premature and as of its filing, no cause of action for total and permanent
disability benefits had set in. They contend that despite the lapse of the 120-day period, Beja was still considered under a
state of temporary total disability at the time he filed his complaint. In this regard, we quote the following pronouncements
in Kestrel, which involved the same circumstances as in the case at bar: chanRoblesv irt ual Lawlib rary

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 company-designated physicians and their familiarity with his medical condition.

It may be argued that these provide sufficient grounds for the dismissal of Munar's complaint. Considering that the 240-day
period had not yet lapsed when the NLRC was asked to intervene, Munar's complaint is premature and no cause of action for
total and permanent disability benefits had set in. While beyond the 120-day period, Dr. Chua's medical report dated May 3,
2007 was issued within the 240-day period. Moreover, Munar did not contest Dr. Chua's findings using the procedure
outlined under Section 20-B(3) of the POEA-SEC. For being Munar's 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.
Chua's disability grading. As Munar did not allege, much less, prove the contrary, there exists no reason why Dr. Chiu's
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
Munar's disability. Also, Munar was still undergoing physical therapy and his spine injury had not 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 y rule then was that enunciated by this Court in Crystal Shipping, Inc. v. Natividad that total and permanent
disability refers to the seafarer's 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 or 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 one's 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 when he is unable to work. x x x
Consequently, that after the expiration of the 120-day period, Dr. Chua had not yet made any declaration as to Munar's
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 seafarer's 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 Court's 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 seafarer's
inability to work and the failure of the company-designated physician to determine fitness or unfitaess to work despite the
lapse of 120 days will not automatically bring about a shift in the seafarer's 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 company-designated physician to issue a final assessment.45 (Emphasis in the original)
More importantly, in Montierro v. Rickmers Marine Agency Phils., Inc.46 and Eyana v. Philippine Transmarine Carriers,
Inc.,47 the Court applied the ruling in Kestrel, that if the maritime compensation complaint was filed prior to October 6, 2008,
the rule on the 120-day period, during which the disability assessment should have been made in accordance with Crystal
Shipping, Inc. v. Natividad,48 that is, the doctrine then prevailing before the promulgation of Vergara on October 6, 2008,
stands; if, on the other hand, the complaint was filed from October 6, 2008 onwards, the 240-day rule applies.

In the case at bar, Beja filed the complaint on May 15, 2008. Dr. Cruz issued his assessment only on May 26, 2008 or 187
days from Beja's repatriation on November 21, 2007. Therefore, due to Dr. Cruz's failure to issue a disability rating within
the 120-day period, a conclusive presumption that Beja is totally and permanently disabled arose. Consequently, there was
no need for Beja to secure an opinion from his own doctor or resort to a third doctor as prescribed under Section 20 B (3) of
the POEA-SEC.

In sum, the CA is correct in affirming the NLRC's award of permanent total disability benefit to Beja. It, however, erred in
pertaining to the parties' CBA in granting the award relative to the amount due. The Schedule of Disability Allowances under
Section 32 of the POEA-SEC should instead apply. Under this section, Beja is entitled to US$60,000.00 (US$50,000.00 x
120%) corresponding to Grade 1 Disability assessment.

The award of attorney's fees is likewise justified in accordance with Article 2208 (2)49 and (8)50 of the Civil Code since Beja
was compelled to litigate to satisfy his claims for disability benefits.

WHEREFORE, the Petition is PARTIALLY GRANTED. The March 28, 2012 Decision and August 13, 2012 Resolution of the
Court of Appeals in CA-G.R. SP No. 113550 are MODIFIED in that petitioners, Island Overseas Transport Corp./Pine Crest
Shipping Corp./Capt. Emmanuel L. Regio, are ordered to jointly and solidarily pay respondent Armando M. Beja total and
permanent disability benefits in the amount of US$60,000.00 or its equivalent amount in Philippine currency at the time of
payment, plus 10% thereof as attorney's fees.
SO ORDERED.

SECOND DIVISION

G.R. No. 201652, December 02, 2015

HEIRS OF SIMEON LATAYAN, NAMELY: LEONIDES Q. LATAYAN, ARIEL Q. LATAYAN, AND ETHEL Q. LATAYAN-
AMPIL, REPRESENTED BY THEIR ATTORNEY-IN-FACT, LEONIDES Q. LATAYAN, Petitioners, v. PEING TAN, JOHNNY
TAN, HERMTNIGILDO CASALAN, WEBINO VILLAREAL, DIOSCOROMOLO, DAMACINO BAYAWA, EDGAR NARITA,
YOLANDA NARITA, POLICRONIA CAPIONES, ANDRES LOZANO, GREGORIO YAGAO, EMILIANO GUMATAY, JESUS
ALCONTIN, ADAM DULAUON, MARIO PEREZ, LARRY CEMAFRANCA, FELIXBERTO BULADACO, CIPRIANOAHIT,
BUENAVENTURA B ACALSO AND SALDE ESPIA,**** Respondents.

DECISION

DEL CASTILLO, J.:

This Petition for Review on Certiorari1 assails the April 29, 2011 Decision2 and the April 18, 2012 Resolution3 of the Court of
Appeals (CA) in CA-G.R. SP No. 02756-MIN. The CA affirmed the May 9, 2005 Decision4 and the January 6, 2009
Resolution5 of the Department of Agrarian Reform and Adjudication Board (DARAB) in DARAB Case No. 10403, which
reversed the July 10, 2000 Decision6 and the September 13, 2000 Resolution7 of the Office of the Provincial Adjudicator
(PARAD) in DARAB Case No. XI-1589-DC-99 which nullified respondents' Certificates of Land Ownership Award (CLOAs).

Factual Antecedents

On January 31, 2000, Simeon Latayan (Simeon), represented by his son and attorney-in-fact, Leonides Latayan, filed an
Amended Complaint8 before the PARAD Davao City, for cancellation of the CLOAs issued to respondents, docketed as DARAB
Case No. XI-1589-DC-99. Simeon alleged that he is the registered owner of two adjoining lots covered by Transfer
Certificates of Title Nos. T-14201 and T-14202 comprising 23.1488 hectares. He contended that the titles to the subject lots
were unilaterally and arbitrarily cancelled without his consent or knowledge, and without notice and placed under the
coverage of the Comprehensive Agrarian Reform Program (CARP) sans payment of just compensation. After the compulsory
acquisition, the subject lots were divided and distributed to respondents. Simeon claimed that the subject properties are
exempt from the CARP because they had been fully developed into an agro-industrial estate, are within the 1,000-meter strip
of the highway, and are currently leased as a commercial farm to the Southern Tropical Fruits, Incorporated (STFI).
Moreover, Simeon argued that respondents could not be properly considered as farmers-beneficiaries as they never occupied
the subject lots nor introduced improvements therein; that if anything, respondents merely wanted to use the law to
unlawfully divest him of his proprietary rights to the subject lots, and enjoy the improvements he had introduced and replace
him as STFI's lessor. Simeon thus prayed that respondents' CLOAs be cancelled and that a preliminary mandatory injunction
be issued in his favor to maintain him in his peaceful and lawful possession of the subject lots, over which he in due course of
law had indeed been lawfully issued certificates of title.

In their Amended Answer,9 respondents denied that Simeon's titles were unilaterally or arbitrarily cancelled. They insisted
that, on the contrary, Simeon's titles were duly and properly cancelled in accordance with law. They claimed that Simeon was
properly furnished a copy of Notice of Coverage; was invited to a conference to discuss the inclusion of the subject properties
under the CARP; and was sent a copy of a Notice to Acquire and Notice of Land Valuation. They also asserted that Simeon's
landholdings is extensive, about 93 hectares of which is agricultural land. They also averred that only a portion of the subject
lots is within the highway's 1,000-meter strip. Finally, they claimed that they were identified by the proper authorities as
qualified beneficiaries. In sum, they opined that Simeon's titles to the subject lots were properly cancelled and their CLOAs
duly issued.

Ruling of the PARAD

On July 10, 2000, the PARAD rendered a Decision10 in favor of Simeon. The PARAD noted that Simeon was never notified of
the coverage by CARP of his properties and that he learned of the same only when he, filed with the Department of Agrarian
Reform (DAR) a petition for exemption of his landholdings from the operation of the CARP. According to the PARAD, that was
the first time Simeon learned that his properties would be taken over by the so-called farmers-beneficiaries. The PARAD
concluded that Simeon was denied due process since there was no observance of the procedural steps for the proper
implementation of the CARP Law. Thus, the cancellation of Simeon's titles was unwarranted.

The dispositive portion of the Decision reads as follows:

WHEREFORE, premises considered, judgment is hereby rendered:


1. Declaring the compulsory coverage on the land of the complainant [Simeon] a complete nullity and further
declaring the CLOAs issued thereon null and void;

2. Ordering the MARO of Baguio District, Davao City, to re-document and cover the area anew under
compulsory coverage, properly observing the administrative guidelines on the matter.

SO ORDERED.11 ChanRoblesVi rtua lawlib rary

Respondents moved for reconsideration12 which was denied in the Resolution13 of September 13, 2000.

Proceedings before the DARAB

Respondents filed an appeal with the DARAB.14 While the appeal was pending, Simeon died and was substituted by his sons,
Leonides and Ariel, and his daughter, Ethel, herein petitioners.

In its May 9, 2005 Decision,15 the DARAB set aside the PARAD Decision and dismissed the case for lack of jurisdiction. The
DARAB held -
The issues however in this case partakes the nature [of] agrarian law, which are purely administrative in nature. Hence,
falling within the exclusive jurisdiction of the Honorable DAR Secretary. As correctly noted [by] the [PARAD] there was no
proper observance of administrative processes in terms of coverage as well [as] the identification of farmer[s] -beneficiaries.
These issues [fall] squarely under the jurisdiction of the Honorable DAR Secretary as mandated by DAR Administrative Order
No. 6, Series of 2000, which include the following:
1) classification and identification of landholdings under the CARP, including protests [or] oppositions thereto and petitions
for lifting of coverage;

2) identification, qualification or disqualification of potential farmer[s]-beneficiaries.


Having ruled that the issues are administrative in nature, this Board for that matter has no recourse but to respect the
primary jurisdiction of the administrative agency. x x x

Jurisdiction is conferred by law. x x x

xxxx

WHEREFORE, premises considered[,] the decision of the [PARAD] is SET ASIDE and the case is DISMISSED for lack of
jurisdiction.

SO ORDERED.16 ChanRoblesVi rtua lawlib rary

Petitioners filed a Motion for Reconsideration17 which was denied in the January 6, 2009 Resolution.18

Proceedings before the CA

Aggrieved, petitioners elevated the DARAB's judgment to the CA via a Petition for Review.19 But in the assailed Decision
dated April 29, 2011,20 the CA upheld the DARAB with modification. The CA ruled:
Verily, the case at bar does not concern an agrarian dispute as there is no established tenancy relationship between
petitioners' father and [respondents]. Neither is the case one for just compensation, contrary to petitioners' assertion. It
originated as an action for cancellation of CLOAs registered with the Register of Deeds, thus seemingly cognizable at the
initial stage by the PARAD and thereafter by the DARAB. However, for the DARAB to have jurisdiction in such cases, they
must relate to an agrarian dispute between [the] landowner and [the] tenants to whom [the] CLOAs have been issued by the
DAR Secretary. The cases involving the issuance, correction and cancellation of the CLOAs by the PAR in the administrative
implementation of agrarian reform laws, rules and regulations to parties who are not agricultural tenants or lessees are
within the jurisdiction of the PAR and not of the DARAB. Moreover, it involves issues with respect to the classification and
identification of landholdings for coverage under the agrarian reform program, and the identification, qualification or
disqualification of private respondents as farmer[s]-beneficiaries. These issues are not cognizable by the PARAD and the
DARAB, but by the DAR Secretary because these are Agrarian Law Implementation (ALI) Cases.

In the present case, the DAR Secretary a[p]proved CLOAs Nos. CL-3731 and CL-3729 in favor of [respondents] in the
exercise of his adrninsitrative powers and in the implementation of the agrarian reform laws. The approval was based on the
investigation of the MARO, over whom the DAR Secretary has supervision and control. The DAR Secretary also had the
authority to withdraw the CLOA[s] upon a finding that the same is contrary to law and DAR orders, circulars and memoranda.
The resolution of such issues by the DAR S[e]cretary will entail the application and implementation of agrarian reform laws, x
x x as well as the implementing orders, circulars and rules and regulations issued by the DAR. xxx

Without doubt, the PARAB committed no reversible error when it set aside the decision of the PARAD and dismissed the case
recognizing that jurisdiction over the matters involved is rightly vested with the DAR Secretary.

Indeed, the jurisdiction of the court or tribunal is not affected by the defenses or theories set up by the defendant or
respondent in his answer or motion to dismiss. x x x Jurisdiction should be determined by considering not only the status or
the relationship of the parties but also the nature of the issues or questions that is the subject of the controversy. The
proceedings before a court or tribunal without jurisdiction, including its decision, are null and void, hence, susceptible to
direct and collateral attacks. x x x

xxxx

It is axiomatic that void judgments never become final and executory and cannot be the source of any right whatsoever. x x
x

xxxx

Thus, since the FARAD had no subject-matter jurisdiction over the complaint for annulment of CLOAs brought before it the
PARAD's decision dated 10 July 2000 invalidating the compulsory coverage on the land of [Simeon] and annulling the CLOAs
issued to private respondents has not vet attained finality.

It should be made clear that this Court is constrained to limit the resolution of this petition [to] the key issue of which, as
between the DARAB and the DAR Secretary, has jurisdiction to resolve the merits of DARAB Case No. 10403. Having
recognized the DAR Secretary's exclusive jurisdicition over that case, the Court believes that the merits of the case are best
left for the DAR Secretary to determine. The DAR Secretary is in a better position to resolve the issues on the validity of the
coverage, and the qualification of private respondents as the identified farmer[s]-beneficiaries for the subject properties,
being the agency lodged with such authority inasmuch as it possesses the necessary expertise on the matter. The Court
adopts such attitude of restraint in deference to a co-equal branch, the Executive Branch of Government, [to] which the DAR
Secretary belongs.

ACCORDINGLY, the petition is DENIED. The Court AFFIRMS the decision of the DARAB in Case No. 10403 WITH
MODIFICATION. The dismissal of DARAB Reg. Case No. XI-1589-DC-99 for lack of jurisdiction is without prejudice to its re-
filing in accordance with DAR Administrative Order No. 6, Series of 2000, within thirty (30) days from the finality of this
Decision.

SO ORDERED.21 ChanRoblesVi rtua lawlib rary

Petitioners' motion for reconsideration was denied by the CA in its Resolution22 of April 18, 2012.

Proceedings before this Court

Hence, the present recourse, with petitioners now contending that:


THE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR WHEN IT RULED THAT IT IS THE DAR SECRETARY AND NOT
THE [DARAB] WHICH HAS JURISDICTION OVER CASES INVOLVING CANCELLATION OF CLOAS[J JUST COMPENSATION, ETC.
SAID RULING IS DIAMETRICALLY OPPOSITE [THE] EXPRESS PROVISIONS OF SECTION 50 OF REPUBLIC ACT 6657 AND THE
JURISPRUDENCE PROMULGATED BY [THE] HONORABLE SUPREME COURT, WHICH EXPRESSLY CONFERRED EXCLUSIVE
ORIGINAL JURISDICTION UPON THE DARAB TO HEAR CASES OF THIS NATURE.23 ChanRoblesVi rt ualawlib ra ry

Petitioners'Arguments

In their Petition24 and Memorandum,25 petitioners contend that the CA erred in ruling that the DAR Secretary has jurisdiction
over the instant controversy given that Section 50 of the Comprehensive Agrarian Reform Law, Sections 1 and 2, Rule II of
the 1994 DARAB Rules of Procedure, and jurisprudence all clearly confer such jurisdiction upon the DARAB; that the instant
case is already beyond the coverage of DAR Administrative Order (AO) 06-00, cited by the CA and the DARAB, since the
subject CLOAs had already been registered; that a statute must prevail over an administrative regulation; that since the
DARAB had already validly acquired jurisdiction over the case at the time of the filing of the complaint, then the jurisdiction
so acquired is not affected by any subsequent law or rule that grants another body or tribunal jurisdiction; that the resolution
of the issue of just compensation in agrarian reform land cases is a judicial function hence, the CA erred in concluding that
the issues at hand "[partake] the nature of agrarian law, which [is] purely administrative in nature." Petitioners thus pray for
the reversal of the assailed dispositions. They also pray that the DARAB be ordered to assume jurisdiction over the instant
case and resolve the same.

Respondents 'Arguments

In their Comment26 and Appeal Memorandum,27 respondents maintain that the instant case does not pertain to the fixing of
just compensation; that the cancellation by the PARAD of Simeon's certificates of title to the subject lots and the issuance of
CLOAs in favor of the aforenamed farmers-beneficiaries involved questions regarding the validity of the coverage of the
subject lots under the CARP, vis-a-vis the qualifications of the identified farmers-beneficiaries, hence, within the DAR
Secretary's exclusive and primary jurisdiction; that the issue of jurisdiction may be raised at any stage of the proceedings,
even for the first time on appeal; that the DAR Secretary has jurisdiction over the instant case pursuant to Section 2, Rule I
and Section 6, Rule II of DAR AO 06-00 in relation to Sections 49 and 50 of the CARP; that indeed as held in Heirs of Julian
Dela Cruz v. Heirs of Alberto Cruz,28 cases involving cancellation of CLOAs issued to non-agricultural tenants or lessees are
within the jurisdiction of the DAR Secretary; that the case law rulings cited by petitioners are inapplicable to this case, as
Simeon's original case did not pertain to tenancy relations, nor to any intra-corporate controversy, much less to a joint
venture agreement; and finally, that Magno v. Francisco29 cited by petitioners actually declared that it is the DAR Secretary
that has jurisdiction over issues relating to landowners' retention rights and land exemptions from agrarian reform coverage.

This Court's Ruling


This Petition will not prosper.
The jurisdiction of a court or tribunal over the nature and subject matter of an action is conferred by law. The court or
tribunal must look at the material allegations in the complaint, the issues or questions that are the subject of the
controversy, and the character of the relief prayed for in order to determine whether the nature and subject matter of the
complaint is within its jurisdiction. If the issues between the parties are intertwined with the resolution of an issue within the
exclusive jurisdiction of a court or tribunal, the dispute must be addressed and resolved by the said court or tribunal.30 ChanRoblesVirtualawli bra ry

The Amended Complaint filed with the PARAD on January 31, 2000, contained the following averments:
5. That [Simeon's] titles were unilaterally and arbitrarily cancelled by the [PARO, MARO, DAR Regional Director, and [the]
Register of Deeds] in favor of [respondents] by granting them two (2) Certificate of Land Ownership Award (CLOA) Nos. CL-
3731 and CL-3729 under the [CARP], but without the actual consent, notice, fixing of just compensation, and payment to the
landowner, to the latter's prejudice.

xxxx

a. That the fixing of just compensation by the DAR was not expressly consented to by [Simeon] who, as the landowner,
was without actual and personal notice that the entire area of TCT Nos. T-14201 and T-14202 were placed under the CARP.
Hence, the x x x summary actions in cancelling the two (2) titles of [Simeon] should not be sanctioned by this Board.

6. That the [respondents] were never in occupation of any part or portion of the area covered by TCT Nos. T-14201 and T-
14202 as the alleged farmer[s]-beneficiaries of the land or as farmworkers who have farmed or developed the area in any
manner and by reason of which they have to be regarded by the DAR as qualified beneficiaries under the CARP.

a. Admittedly, the entire area of the land has been fully developed and leased as a commercial farm such that there
was never an occasion that [respondents] had, by themselves, made any agricultural improvements inside the entire area
which would qualify them as farmers-beneficiaries.

[b]. The most of what may be said of the [respondents' claims] as farmers-beneficiaries is that they are illegal
occupants of the area who are not the qualified farmers-beneficiaries x x x [contemplated] under the agrarian laws.

[c]. The truth is that the entire area of the said two (2) titles comprising 23.1488 hectares is already fully and
comprehensively developed by [Simeon] and his family into an agro-industrial estate by way of tilling, cultivating and
preparing the land and planting and devoting [the] same, on rotation basis, to papaya, banana and pineapple, and putting up
or allowing the putting up of a packing plant inside the said area, and with the entire area leased by [Simeon] and his family
to [STFI], long before [respondents'] incredible and preposterous claim of being farmers-beneficiaries inside the area
[covered by] TCT Nos.T-14201 and T-14202.

xxxx

[c]. That [respondents] who, all along, merely intended to succeed to [Simeon's] improvements have, in fact, just wanted to
continue the existing lease of the STFI over the entire area covered by the said two (2) titles, to the actual detriment and
prejudice of [Simeon] and his family.

xxxx

7. That the [PARO, MARO, DAR Regional Director, and Register of Deeds], in applying the CARP to the entire area of the
subject titles under TCT Nos. T-14201 and T-14202, have exceeded or otherwise abused their authority.

a. The entire area covered by said titles is beside the road and/or within the 1,000 meter strip from the highway, already
existing and fully developed as an agro-industrial estate or land which is virtually EXCLUDED from the application of the
CARP by virtue of [PD 399], the pertinent provision of which provides, to quote: chanRo blesvi rtua lLaw lib rary

xxx

LIMITING THE USE OF A STRIP OF ONE THOUSAND METERS OF LAND ALONG ANY EXISTING, PROPOSED OR ON-GOING
PUBLIC HIGHWAY OR ROAD UNTIL THE GOVERNMENT SHALL HAVE [MADE] A COMPETENT STUDY AND HAVE FORMULATED
A COMPREHENSIVE AND INTEGRATED LAND USE AND DEVELOPMENT PLAN.

xxx

Section 3. Likewise, all lands owned by private persons within the strip of one thousand meters along existing, proposed or
on-going public highways or road shall first be available for human settlement sites, land reform, relocation of squatters from
congested urban areas, tourism development, agro-industrial estates, environmental protection and improvement,
infrastructure and other vital projects in support of the socio-economic development program of the government. The owners
of these lands shall not develop or otherwise introduce improvements thereon without previous approval from the proper
government agency, who shall in this case be the Chairman of the Human Settlements and Planning Commission.

xxx
b. That the above-cited law clearly provides [for] the applicable instances under which private lands located within the strip
of one thousand meters along existing, proposed or on-going public highways or road shall first be devoted or made available
for.

c. Admittedly, the entire adjoining and contiguous area covered by TCT Nos. T-14201 and T-14202 which comprises x x x
about 23.1488 is already [a] fully developed agro-industrial estate, complete with packing plant, and as evidenced by the
continuing [lease] of the entire area to [STFI] in consonance [with] such purpose[s] and no other.

d. That the entire area of TCT Nos. T-14201 and T-14202 which is beside the road and/or within the 1,000 meter strip from
the highway and, at the same time, a fully developed agro-industrial estate cannot, therefore, be subjected to CARP
anymore, by sheer force of provision of law under [PD 399], and should be deemed to be EXCLUDED from the coverage of
the CARP.31 ChanRoblesVirtualawl ibra ry

In essence, Simeon's Amended Complaint sets forth the following: (1) that he was not notified that the subject lots had been
placed under the CARP; (2) that he did not expressly consent to the fixing of just compensation; (3) that the DAR had no
justifiable basis for considering the respondents as farmers-beneficiaries since the latter were neither in occupation of the
subject lots nor farmworkers who farmed or developed the pertinent area; (4) that with his family (the present petitioners),
he (Simeon) had fully developed the subject lots into a commercial farm and agro-industrial estate and had leased the same
to STFI; (5) that respondents are illegal occupants or squatters thereon, and are not qualified farmers-beneficiaries; that
respondents merely intended to enjoy the improvements he (Simeon) introduced thereon, and to continue his lease with
STFI; (6) that the Provincial Agrarian Reform Officer (PARO), the Municipal Agrarian Reform Officer (MARO), the DAR
Regional Director, and the Register of Deeds abused their authority by applying the CARP to the entirety of the subject lots;
(7) that the subject lots are excluded from CARP coverage pursuant to Presidential Decree (PD) No. 399 because these lots
are located beside the road and/or within the 1,000-meter strip from the highway, apart from being an already existing and
fully developed agro-industrial estate. What is more, Simeon's Amended Complaint did not raise the issue of tenurial
relationship between him and the aforenamed respondents. Significantly, the Amended Complaint concluded with this prayer
-
WHEREFORE, premises considered and in view of the foregoing, it is respectfully prayed that a writ of preliminary mandatory
injunction be ordered issued by the Honorable Board after the posting of the necessary bond sufficient in amount by the
complainant as determined by the Honorable Adjudicator, during the pendency of the above-entitled case, in order to
preserve the status quo or the last peaceful circumstance prior to the controversial issuance of the questionable two (2)
[CLOAs] by [the PARO, MARO, PAR Regional Director, and Register of Deeds] in favor of [respondents], and also in order not
to render moot and academic the final judgment of the Honorable Board in the instant case; and that after trial on the merits
and/or due evaluation of the facts and laws involved in this case, that -

1. The pertinent CLOA Nos. CL-3731 and CL-3729 be CANCELLED, RECALLED, NULLIFIED, VOIDED or otherwise SET
ASIDE and with the previous two (2) titles which are TCT Nos. T-14201 and T-14202, covering the entire area of
23.1488 hectares involved in this instant case, be ordered declared REINSTATED, REVIVED or otherwise RESTORED
in full legal force and effect.

Complainant prays for reliefs as may be deem[ed] just and equitable under the premises.32 ChanRobles Vi rt ualawlib ra ry

Considering that herein petitioners' predecessor-in-interest (i.e. Simeon) sought to cancel respondents' registered CLOAs on
the grounds: (1) that no agrarian dispute was involved in this case; (2) that the subject lots are exempt from CARP
coverage, and (3) that due process of law was not observed when the original petitioner (Simeon) was divested of the
ownership of the subject lots: it thus stands to reason that it is the DAR Secretary that has jurisdiction to resolve the
controversy pursuant to applicable law, rules, and jurisprudence.

Both illuminating and instructive are these pronouncements by this Court that bear with particular relevance on the petition
at bench -
Section 1, Rule II of the 1994 DARAB Rules of Procedure, the rule in force at the time of the filing of the petition, provides:
Section 1. Primary and Exclusive Original and Appellate Jurisdiction. — The Board shall have primary and exclusive
jurisdiction, both original and appellate, to determine and adjudicate all agrarian disputes involving the implementation of
the [CARP] under [RA 6657], Executive Order Nos. 228, 229 and 129-A, [RA 3844] as amended by [RA 6389], [PD 27] and
other agrarian laws and their implementing rules and regulations. Specifically, such jurisdiction shall include but not be
limited to cases involving following: c hanRoble svirtual Lawlib rary

xxx

f) Those involving the issuance, correction and cancellation of [CLOAs] and Emancipation Patents (EPs) which are registered
with the Land Registration Authority;

xxx
While the DARAB may entertain petitions for cancellation of CLOAs, as in this case, its jurisdiction is, however, confined only
to agrarian disputes. As explained in the case of Heirs of Dela Cruz v. Heirs of Cruz and reiterated in the recent case
of Bagongahasa v. Spouses Cesar Caguin, for the DARAB to acquire jurisdiction, the controversy must relate to an agrarian
dispute between the landowners and tenants in whose favor CLOAs have been issued by the DAR Secretary. x x x

xxxx
As defined in Section 3 (d) of [RA 6657], an agrarian dispute relates to "any controversy relating to tenurial arrangements,
whether leasehold, tenancy, stewardship, or otherwise, over lands devoted to agriculture, including disputes concerning
farmworkers' associations or representation of persons in negotiating, fixing, maintaining, changing, or seeking to arrange
terms or conditions of such tenurial arrangements. It includes any controversy relating to compensation of lands acquired
under the said Act and other terms and conditions of transfer of ownership from landowners to farmworkers, tenants and
other agrarian reform beneficiaries, whether the disputants stand in the proximate relation of farm operator and beneficiary,
landowner and tenant, or lessor and lessee."

xxxx

To be sure, the tenurial, leasehold, or agrarian relations referred to may be established with the concurrence of the
following: 1) the parties are the landowner and the tenant or agricultural lessee; 2) the subject matter of the relationship is
an agricultural land; 3) there is consent between the parties to the relationship; 4) the purpose of the agricultural
relationship is to bring about agricultural production; 5) there is personal cultivation on the part of the tenant or agricultural
lessee; and 6) the harvest is shared between the landowner and the tenant or agricultural lessee. x x x

In this case, a punctilious examination reveals that petitioner's allegations are solely hinged on the erroneous grant by the
DAR Secretary of CLOA No. 00122354 to private respondents on the grounds that she is the lawful owner and possessor of
the subject lot and that it is exempt from the CARP coverage, hi this regard, petitioner has not alleged any tenurial
arrangement between the parties, negating the existence of any agrarian dispute and consequently, the jurisdiction of the
DARAB. Indisputably, the controversy between the parties is not agrarian in nature and merely involves the administrative
implementation of the agrarian reform program which is cognizable by the DAR Secretary. Section 1, Rule II of the 1994
DARAB Rules of Procedure clearly provides that "matters involving strictly the administrative implementation of [RA 6657],
and other agrarian refonn laws and pertinent rules, shall be the exclusive prerogative of and cognizable by the DAR
Secretary."

Furthermore, it bears to emphasize that under the new law, [RA 9700], x x x which took effect on July 1, 2009,
all cases involving the cancellation of CLOAs and other titles issued under any agrarian reform program are now
within the exclusive and original jurisdiction of the DAR Secretary. Section 9 of the said law provides:
Section 9. Section 24 of [RA 6657], as amended, is further amended to read as follows:

xxx

All cases involving the cancellation of registered emancipation patents, certificates of land ownership award,
and other titles issued under any agrarian reform program are within the exclusive and original jurisdiction of
the Secretary of the DAR.
Consequently, the DARAB is bereft of jurisdiction to entertain the herein controversy, rendering its decision null and void.
Jurisdiction lies with the Office of the DAR Secretary to resolve the issues of classification of landholdings for coverage
(whether the subject property is a private or government[-]owned land), and identification of qualified beneficiaries. Hence,
no error can be attributed to the CA in dismissing the case without prejudice to its re-filing x x x.33ChanRobles Vi rtualaw lib rary

And while this Court does indeed seek to expeditiously resolve the case at bench in compliance with its constitutionally-
mandated duty, the well-settled principle of primary jurisdiction, as stressed in Bagongahasa v. Romualdez,34 must likewise
be observed thus:
While it is true that the PARAD and the DARAB lack jurisdiction in this case due to the absence of any tenancy relations
between the parties, lingering essential issues are yet to be resolved as to the alleged lack of notice of coverage to
respondents as landowners and their deprivation of just compensation. Let it be stressed that while these issues were
discussed by the PARAD in his decision, the latter was precisely bereft of any jurisdiction to rule particularly in the absence of
any notice of coverage for being an ALI case. Let it also be stressed that these issues were not met head-on by petitioners.
At this juncture, the issues should not be left hanging at the expense and to the prejudice of respondents.

However, this Court refuses to rule on the validity of the CARP coverage of the subject properties and the issuance of the
assailed CLOAs. The doctrine of primary jurisdiction precludes the courts from resolving a controversy over which jurisdiction
was initially lodged with an administrative body of special competence. The doctrine of primary jurisdiction does not allow a
court to arrogate unto itself authority to resolve a controversy, the jurisdiction over which is initially lodged with an
administrative body of special competence. The Office of the DAR Secretary is in a better position to resolve the particular
issue of non-issuance of a notice of coverage — an ALI case — being primarily the agency possessing the necessary expertise
on the matter. The power to determine such issue lies with the DAR, not with this Court.
Hence, even as this Court affirms the CA's dismissal of the instant case without prejudice, this Court also sees fit to delete
the qualification that petitioners' re-filing of this case be made "in accordance with [DAR AO 06-00], within 30 days from the
finality of [the] decision.35" In the event that petitioners shall indeed opt to re-file this case, the DAR Secretary shall resolve
the matter pursuant to the laws, rules, and jurisprudence applicable at the time of the commencement of the action.

IN VIEW OF ALL OF THE FOREGOING, the Petition is DENIED. The Decision dated April 29, 2011 and Resolution dated
April 18, 2012, of the Court of Appeals in CA-G.R. SP No. 02756-MIN dismissing without prejudice DARAB Case No. XI-1589-
DC-99 due to lack of jurisdiction of the Department of Agrarian Reform Adjudication Board is AFFIRMED with
MODIFICATION that the condition that its re-filing be made in accordance with Department of Agrarian Reform
Administrative Order No. 6, Series of 2000, be DELETED.
SO ORDERED.

SECOND DIVISION

G.R. No. 195654, November 25, 2015

REYNALDO INUTAN, HELEN CARTE, NOEL AYSON, IVY CABARLE, NOELJAMILI, MARITES HULAR,
ROLITOAZUCENA, RAYMUNDO TUNOG, ROGER BERNAL, AGUSTEV ESTRE, MARILOU SAGUN, AND ENRIQUE
LEDESMA, JR., Petitioners, v. NAPAR CONTRACTING & ALLIED SERVICES, NORMAN LACSAMANA,*** JONAS
INTERNATIONAL, INC., AND PHILIP YOUNG, Respondent.

DECISION

DEL CASTILLO, J.:

A judicially approved compromise agreement has the effect and authority of res judicata.2 It is final, binding on the parties,
and enforceable through a writ of execution. Article 2041 of the Civil Code, however, allows the aggrieved party to rescind
the compromise agreement and insist upon his original demand upon failure and refusal of the other party to abide by the
compromise agreement.

This Petition for Review on Certiorari2 assails the August 27, 2010 Decision3 of the Court of Appeals (CA) in CA-G.R. SP No.
106724, which dismissed the Petition for Certiorari filed by Reynaldo Inutan (Inutan), Helen Carte (Carte), Noel Ayson
(Ayson), Ivy Cabarle (Cabarle), Noel Jamili (Jamili), Maritess Hular (Hular), Rolito Azucena (Azucena), Raymundo Tunog
(Tunog), Jenelyn Sancho, Wilmar Bolonias, Roger Bernal (Bernal), Agustin Estre (Estre), Marilou Sagun (Sagun), and Enrique
Ledesma, Jr. (Ledesma), against respondents Napar Contracting & Allied Services (Napar), Norman Lacsamana (Lacsamana),
Jonas International, Inc. (Jonas), and Philip Young (Young), and affirmed the June 26, 2008 Decision4and October 14, 2008
Resolution5 of the National Labor Relations Commission (NLRC) in NLRC CA No. 041474-04 dismissing the consolidated
complaints against respondents for illegal dismissal with money claims on the ground of res judicata. Likewise assailed is the
CA's February 10, 2011 Resolution6 which denied the Motion for Reconsideration.

Factual Antecedents

Petitioners Inutan, Carte, Ayson, Cabarle, Jamili, Hular, Azucena, Tunog, Bernal, Estre, Sagun, and Ledesma were employees
of respondent Napar, a recruitment agency owned and managed by respondent Lacsamana. Napar assigned petitioners at
respondent Jonas, a corporation engaged in the manufacture of various food products with respondent Young as its
President, to work as factory workers, machine operator, quality control inspector, selector, mixer, and warehouseman.

Sometime in September of 2002, petitioners and other co-workers (complainants) filed before the Arbitration Branch of the
NLRC three separate complaints for wage differentials, 13th month pay, overtime pay, holiday pay, premium pay for holiday
and rest day, service incentive leave pay, and unpaid emergency cost of living allowance (ECOLA) against respondents,
docketed as NLRC NCR Case Nos. 09-76698-2002, 09-08152-2002, and 09-08046-2002, which complaints were consolidated
before Labor Arbiter Jaime M. Reyno (LA Reyno).

On January 13, 2003, complainants and respondents entered into a Joint Compromise Agreement7 which reads: chanRoble sv irtua lLawl ibra ry

JOINT COMPROMISE AGREEMENT

COMPLAINANTS and the RESPONDENTS, through their' respective counsel, respectfully submit the following Compromise
Agreement.

WHEREAS, the parties (except Susana Larga) deciding to finally write "finis" to the instant case, have agreed to settle the
instant case and to enter into a Compromise Agreement.

NOW THEREFORE, for and in consideration of the terms and conditions herein below stipulated, the parties do hereby agree:

1. That the complainants should be considered regular employees of Napar Contracting and Allied Services
reckoned from their date of hire and are entitled to all the benefits under the law due to regular employees;

2. That the complainants shall be re-assigned by Napar Contracting and Allied Services and shall ensure that
they will be given work within forty five days (45) or until February 26,2002;

3. That in case Napar Contracting and Allied Services failed to re assign or provide them work, complainants
shall be reinstated in their payroll or be given their salary equivalent to the existing minimum wage x x x;
4. That the complainants shall each receive the amount of SEVEN THOUSAND PESOS as payment for their
monetary claims and which amount shall be considered in any future litigation;

5. That upon signing of this agreement and compliance with the stipulations herein provided, the cases shall be
deemed and considered fully and completely satisfied and the complainants hereby release, remiss and
forever discharge the herein respondents, from any and all claims arising from the above cases;

6. The parties herein respectfully pray unto this Honorable Commission to approve this Compromise Agreement
and thereafter an Order be issued declaring the judgment in the above-entitled cases fully and completely
satisfied.

IN WITNESS WHEREFORE, the parties have hereunto set their hands this 13th day of January 2003.8
cralawlawl ibra ry
ChanRoblesVi rtualawl ib rary

In an Order9 dated January 16, 2003, LA Reyno approved the Joint Compromise Agreement, enjoined the parties to fully
comply with its terms and dismissed the case without prejudice.

In accordance with the Joint Compromise Agreement, complainants, on several instances, reported to Napar. They were paid
P7,000.00 each as part of the agreement but were required by Napar; (1) to submit their respective bio-data/resume and
several documents such as Police Clearance, NBI Clearance, Barangay Clearance, Mayor's Permit, Health Certificate, drug
test results, community tax certificate, eye test results and medical/physical examination results; (2) to attend orientation
seminars; (3) to undergo series of interviews; and (4) to take and pass qualifying examinations, before they could be posted
to their new assignments. These requirements, according to Napar, are needed to properly assess complainants' skills for
new placement with the agency's other clients.

Complainants failed to fully comply, hence they were not given new assignments.

Proceedings before the Labor Arbiter

Sensing Napar's insincerity in discharging its obligation in reassigning them, complainants filed anew before the Arbitration
Branch of the NLRC four separate Complaints10 for illegal dismissal, non-payment of 13th month pay, wage differentials,
overtime pay, service incentive leave pay, holiday pay, premium pay for holiday and rest day, and moral and exemplary
damages against respondents, docketed as NLRC NCR Case Nos. 00-0505557-2003, 00-05-06187-2003, 00-05-06605-
2003,11 and 00-07-07792-2003. These complaints were consolidated.

In their Position Paper,12 complainants averred that Napar's failure to reinstate or provide them work without any condition,
in consonance with the terms of the Joint Compromise Agreement, constitutes illegal constructive dismissal. They prayed for
backwages plus separation pay in lieu of reinstatement.

Respondents, in their Position Paper,13 claimed that they have fulfilled their obligation under the agreement when Napar
required complainants to report for work, to submit documentary requirements, to undergo seminars and training, and to
pass qualifying exams. They contended that complainants were the ones who violated the agreement when they refused to
comply with the foregoing requirements in order to assess their working capabilities and skills for their next posting. As such,
they were deemed to have waived their right to be reassigned. They argued that complainants should not have filed new
complaints but should have instead moved for the execution of the Joint Compromise Agreement. They then argued that the
Labor Arbiter who approved the said Joint Compromise Agreement or LA Reyno has exclusive jurisdiction to act on the
complaints.

In a Decision14 dated July 29, 2004, Labor Arbiter Pablo C. Espiritu, Jr. (LA Espiritu) held that the conditions of the Joint
Compromise Agreement particularly regarding reinstatement/reassignment of complainants were violated thereby justifying
rescission of the Joint Compromise Agreement. LA Espiritu noted that complainants were correct in re-filing the complaints as
this was an available remedy under the NLRC Rules of Procedure when their previous complaints were dismissed without
prejudice. He struck down respondents' contention that a motion for execution of the compromise agreement was the proper
remedy, ratiocinating that the dismissal of the cases was approved without prejudice and therefore cannot be the subject of
an execution.

LA Espiritu then ruled that complainants were constructively dismissed as they were placed on temporary off-detail without
any work for more than six months despite being regular employees of Napar. Doubting respondents' intention of reinstating
complainants, LA Espiritu observed that the submission of requirements and compliance with the procedures for rehiring
should not be imposed on complainants who are not newly-hired employees. Thus, Napar and Lacsamana were held jointly
and severally liable to pay complainants their separation pay in lieu of reinstatement due to the already strainedrelations of
the parties.

Respondents Jonas/Young, as indirect employers of complainants, were held jointly and severally liable with
Napar/Lacsamana for wage differentials, 13 month pay differentials, service incentive leave pay, unpaid ECOLA, and holiday
pay to some complainants, less the P7,000.00 already received from respondents. The claims for premium pay for holiday,
rest day, overtime pay, and moral and exemplary damages were denied for lack of merit.

Proceedings before the National Labor Relations Commission


All parties appealed to the NLRC.

Complainants filed a partial appeal, arguing that LA Espiritu erred in not awarding backwages as well as wage and 13th month
pay differentials to nine of them.

Respondents, for their part, argued that LA Espiritu erred in failing to recognize the final and binding effect of the Joint
Compromise Agreement, contending that complainants are barred from rescinding the agreement for having received
P7,000.00 each as partial compliance and refusing to comply with the requirements for their reassignment. Respondents
Napar and Lacsamana, in their Memorandum on Appeal,15 vehemently denied having illegally dismissed complainants and
averred that they have the prerogative to impose certain requirements in order to determine their working skills vis-a-
vis their new postings. And since they refused to comply, they have waived their right to be reassigned. Respondents
Jonas/Young, meanwhile, in its Notice of Appeal Memorandum of Appeal,16 asserted that they cannot be held solidarity liable
with respondents Napar and Lacsamana since only Napar is obligated to reassign complainants under the Joint Compromise
Agreement.

In a Decision17 dated June 26, 2008, the NLRC granted respondents' appeal. It ruled that the approval of the Joint
Compromise Agreement by LA Reyno operates as res judicata between the parties and renders it unappealable and
immediately executory. It held that complainants had no cause of action when they re-filed their complaints for being barred
by res judicata. The NLRC, in disposing of the case, ordered the issuance of a writ of execution to enforce the Joint
Compromise Agreement, thus: chanRoblesv irt ual Lawlib rary

WHEREFORE, premises considered, the appeal of respondents is GRANTED, while that of the complainants is DISMISSED for
lack of merit. The Decision of Labor Arbiter Pablo C. Espiritu, Jr. dated July 29, 2004 is REVERSED and SET ASIDE, and a new
one is rendered DISMISSING the above-entitled complaints for having been barred by res judicata. The Order of Labor
Arbiter Jaime Reyno dated January 16, 2003 finding the Compromise Agreement entered into by the parties on January 13,
2003 to be in order and not contrary to law and approving the same, stands valid, effective and should be enforced. Let the
records of this case be forwarded to the Labor Arbiter for the issuance of a writ of execution to enforce the said Compromise
Agreement.

SO ORDERED.18
cralawlawl ibra ry
ChanRoblesVi rtua lawlib rary

Complainants filed a Motion for Reconsideration,19 averring that the NLRC gravely erred in ordering the issuance of a writ of
execution despite the absence of a final judgment or a judgment on the merits. They stand on their right to rescind the Joint
Compromise Agreement and to insist on their original demands when respondents violated the compromise agreement and
on their right to re-file their cases as sanctioned by the rules in cases of provisional dismissal of cases,

Napar and Lacsamana, on the other hand, filed a Motion for Partial Reconsideration20 praying for the modification of the
NLRC Decision in that complainants be declared to have waived their right to their claims under the Joint Compromise
Agreement for likewise violating the agreement.

Both motions were denied in the NLRC Resolution21 dated October 14, 2008.

Proceedings before the Court of Appeals

In their Petition for Certiorari22 filed before the CA, complainants insisted on their right to rescind the Joint Compromise
Agreement under Article 204123 of the Civil Code and on their right to re-file their complaints under Section 16, Rule V of the
NLRC Rules of Procedure.24

Napar and Lacsamana filed a Comment25 on the Petition. Jonas and Young, however, failed to file a comment. As the CA did
not acquire jurisdiction over Jonas and Young and on the basis of complainants' manifestation that Jonas and Young had
already ceased operation, Jonas and Young were dropped as party respondents by the CA in its Resolution26 of December 16,
2009.

On August 27, 2010, the CA rendered a Decision27 affirming the NLRC. The CA considered the January 16, 2003 Order of LA
Reyno, which approved the Joint Compromise Agreement, as a judgment on the merits, and held that the second set of
complaints was barred by res judicata. According to the C A, the complainants, in re-filing their complaints due to
respondents' unwarranted refusal to provide them work, were essentially seeking to enforce the compromise agreement and
were not insisting on their original demands that do not even include a claim for illegal dismissal. Thus, the CA ruled that
complainants should have moved for the execution of the Joint Compromise Agreement instead of filing a separate and
independent action for illegal dismissal. The CA dismissed the Petition, viz.: chanRob lesvi rtua lLawl ibra ry

WHEREFORE, premises considered, the instant petition for certiorari is DISMISSED for lack of merit. Accordingly, the June
26, 2008 Decision and October 14, 2008 Resolution of public respondent National Labor Relations Commission are
AFFIRMED.

SO ORDERED.28 cralawlawlib rary

Complainants filed a Motion for Reconsideration29 but it was likewise denied by the CA in its Resolution30dated February 10,
2011.

Twelve of the complainants, herein petitioners, instituted the present Petition for Review on Certiorari.

Issues

Petitioners presented the following issues: c hanRoble svirtual Lawlib ra ry

WHETHER THE COURT OF APPEALS GRAVELY ERRED IN RULING THAT PETITIONERS' COMPLAINT IS ALREADY BARRED
BY RES JUDICATA.

II

WHETHER THE COURT OF APPEALS GRAVELY ERRED IN RULING THAT, IN FILING THE SECOND COMPLAINT, THE
PETITIONERS ARE ENFORCING THE JOINT COMPROMISE AGREEMENT AND NOT RESCINDING IT. THUS, THE PETITIONERS
SHOULD HAVE MOVED FOR THE ISSUANCE OF A WRIT OF EXECUTION BEFORE THE LABOR ARBITER INSTEAD OF FILING A
SECOND COMPLAINT.

III

WHETHER THE PETITIONERS ARE ENTITLED TO SEPARATION PAY IN LIEU OF REINSTATEMENT AND FULL BACKWAGES. 31 cralawlawli bra ry

Petitioners argue that the CA, in ordering the execution of the Joint Compromise Agreement, has deprived them of their right
of rescission under Article 2041 of the Civil Code. They posit that due to the blatant violation by the respondents of the
provisions of the Joint Compromise Agreement, they only exercised the option accorded to them by law of rescinding the
agreement and of insisting upon their original demands by filing anew their Complaints. The inclusion of illegal dismissal in
their causes of action is, for petitioners, a necessary consequence of their subsequent dismissal and the blatant omission of
respondents' commitment to reinstate them. Petitioners thus pray for the payment of separation pay in lieu of reinstatement
and full backwages as a consequence of their illegal dismissal.

Napar and Lacsamana on the other hand, aver that petitioners' sole remedy was to move for the execution of the Joint
Compromise Agreement. They aver that petitioners cannot be allowed to rescind the agreement after having violated the
same and having already enjoyed its benefits. After all, the Joint Compromise Agreement is final, binding and constitutes
as res judicata between them.

Our Ruling

The Petition has merit. Petitioners' right to rescind the Joint Compromise Agreement and right to re-file their complaints must
prevail.

Petitioners validly exercised the


option of rescinding the Joint
CompromiseAgreement under
Article 2041 of the Civil Code

Article 2028 of the Civil Code defines a compromise agreement as a contract whereby the parties make reciprocal
concessions in order to avoid litigation or put an end to one already commenced. If judicially approved, it becomes more
than a binding contract; it is a determination of a controversy and has the force and effect of a judgment.32 Article 227 of the
Labor Code provides that any compromise settlement voluntarily agreed upon by the parties with the assistance of the
Bureau of Labor Relations or the regional office of the Department of Labor and Employment shall be final and binding upon
the parties. Compromise agreements between employers and workers have often been upheld as valid and accepted as a
desirable means of settling disputes.33

Thus, a compromise agreement, once approved, has the effect of res judicata between the parties and should not be
disturbed except for vices of consent, forgery, fraud, misrepresentation, and coercion.34 A judgment upon compromise is
therefore not appealable, immediately executory, and can be enforced by a writ of execution.35 However, this broad precept
enunciated under Article 203736 of the Civil Code has been qualified by Article 2041 of the same Code which recognizes the
right of an aggrieved party to either (1) enforce the compromise by a writ of execution, or (2) regard it as rescinded and
insist upon his original demand, upon the other party's failure or refusal to abide by the compromise. In a plethora of
cases,37 the Court has recognized the option of rescinding a compromise agreement due to non-compliance with its terms.
We explained in Chavez v. Court of Appeals:38 cha nro blesvi rtua llawli bra ry

A compromise has upon the parties the effect and authority of res judicata;but there shall be no execution except in
compliance with a judicial compromise. cra lawlawlib rary
Thus, we have held that a compromise agreement which is not contrary to law, public order, public policy, morals or good
customs is a valid contract which is the law between the parties themselves. It has upon them the effect and authority of res
judicata even if not judicially approved, and cannot be lightly set aside or disturbed except for vices of consent and forgery.
However, in Heirs of Zari, et al v. Santos, we clarified that the broad precept enunciated in Art, 2037 is qualified by Art. 2041
of the same Code, which provides:
If one of the parties fails or refuses to abide by the compromise, the other party may either enforce the compromise or
regard it as rescinded and insist upon his original demand.
We explained, viz.:
[B]efore the onset of the new Civil Code, there was no right to rescind compromise agreements. Where a party violated the
terms of a compromise agreement, the only recourse open to the other party was to enforce the terms thereof.

When the new Civil Code came into being, its Article 2041 xxx created for the first time the right of rescission. That provision
gives to the aggrieved party the right to "either enforce the compromise or regard it as rescinded and insist upon his original
demand." Article 2041 should obviously be deemed to qualify the broad precept enunciated in Article 2037 that "[a]
compromise has upon the parties the effect and authority of res judicata.
In exercising the second option under Art. 2041, the aggrieved party may, if he chooses, bring the suit contemplated or
involved in his original demand, as if there had never been any compromise agreement, without bringing an action for
rescission. This is because he may regard the compromise as already rescinded by the breach thereof of the other party. cralawlawl ibra ry

To reiterate, Article 2041 confers upon the party concerned the authority, not only to regard the compromise agreement as
rescinded but also, to insist upon his original demand. We find that petitioners validly exercised this option as there was
breach and non-compliance of the Joint Compromise Agreement by respondents.

It is undisputed that Napar failed to reassign and provide work to petitioners. Napar, however, puts the blame on petitioners
for their alleged deliberate refusal to comply with the requirements for reassignment to other clients. Napar claims that the
imposition of these so-called "reassessment procedures" will efficiently guide them on where to assign petitioners; it likewise
posits that it is a valid exercise of its management prerogative to assign workers to their principal employer.

At the outset, it must be emphasized that there was no indication that petitioners deliberately refused to comply with the
procedures prior to their purported reassignment. Petitioners alleged that they reported to Napar several times waiting for
tlieir assignment and that Napar was giving them a run-around even as they tried to comply with the requirements. These
matters were not disputed by respondents. Thus, we cannot agree with respondents were the ones who violated the
compromise agreement. Moreover, we are not persuaded by Napar's assertion that petitioners' reassignment cannot be
effected without compliance with the requirements set by it. Petitioners are regular employees of Napar; thus, their
reassignment should not involve any reduction in rank, status or salary.39 As aptly noted by LA Espiritu, petitioners are not
newly-hired employees. Considering further that they are ordinary factory workers, they do not need special training or any
skills assessment procedures for proper placement. While we consider Napar's decision to require petitioners to submit
documents and employment clearances, to attend seminars and interviews and take examinations, which according to Napar
is imperative in order for it to effectively carry out its business objective, as falling within the ambit of management
prerogative, this undertaking should not, however, deny petitioners their constitutional right of tenure. Besides, there is no
evidence nor any allegation proffered that Napar has no available clients where petitioners can be assigned to work in the
same position they previously occupied. Plainly, Napar's scheme of requiring petitioners to comply with reassessment
procedures only seeks to prevent petitioners' immediate reassignment.

"We have held that management is free to regulate, according to its own discretion and judgment, all aspects of
employment, including hiring, work assignments, working methods, time, place and manner of work, processes to be
followed, supervision of workers, working regulations, transfer of employees, work supervision, lay off of workers and
discipline, dismissal and recall of workers. The exercise of management prerogative, however, is not absolute as it must be
exercised in good faith and with due regard to the rights of labor."40 Such "cannot be used as a subterfuge by the employer
to rid himself of an undesirable worker."41

Respondents' non-compliance with the strict terms of the Joint Compromise Agreement of reassigning petitioners and
ensuring that they will be given work within the required time constitutes repudiation of the agreement. As such, the
agreement is considered rescinded in accordance with Article 2041 of the Civil Code. Petitioners properly chose to rescind the
compromise agreement and exercised the option of filing anew their complaints, pursuant to Art. 2041. It was error on the
part of the CA to deny petitioners the right of rescission.

Still, respondents insist that petitioners cannot seek rescission for they have already enjoyed the benefits of the Joint
Compromise Agreement. According to respondents, petitioners' acceptance of the amount of P7,000.00 each bars them from
repudiating and rescinding the agreement.

The contention lacks merit for the following reasons. First, petitioners never accepted the meager amount of P7,000.00 as
full satisfaction of their claims as they also expected to be reassigned and reinstated in their jobs. In other words, their
acceptance of the amount of P7,000.00 each should not be interpreted as full satisfaction of all their claims, which included
reinstatement in their jobs. The amount of P7,000.00 is measly compared to the amount of monetary award granted by LA
Espiritu and therefore makes the agreement unconscionable and against public policy,42 At this point, it is worth noting that
even quitclaims are ineffective in barring recovery for the full measure of the worker's rights and that acceptance of benefits
therefrom does not amount to estoppel.43 Lastly, it must be emphasized that the Joint Compromise Agreement expressly
provided that each of the complainants shall receive P7,000.00 as payment for their monetary claims and "which amount
shall be considered in any future litigation."44By virtue of this stipulation, the parties in entering into the agreement did not
rule out the possibility of any future claims in the event of non-compliance. As correctly ruled by LA Espiritu, this proviso
showed that petitioners were not barred from raising their money claims in the future.

Section 16 of Rule V of the NLRC Rules


of Procedure allows petitioners to re-file their
complaints which were previously dismissed
without prejudice

The Court also takes into account the circumstance that petitioners' previous complaints were dismissed without prejudice.
"A dismissal without prejudice does not operate as a judgment on the merits."45 As contrasted from a dismissal with
prejudice which disallows and bars the filing of. a complaint, a dismissal without prejudice "does not bar another action
involving the same parties, on the same subject matter and theory."46 The NLRC Rules of Procedure, specifically Section 16
of Rule V thereof, provides the remedy of filing for a revival or re-opening of a case which was dismissed without prejudice
within 10 days from receipt of notice of the order of dismissal and of re-filing the case after the lapse of the 10-day period.
Petitioners are thus not barred from re-filing their Complaints.

In choosing to rescind the Joint Compromise Agreement and re-file their complaints, petitioners can rightfully include their
claim of illegal dismissal. The CA took off from the wrong premise that petitioners, in re-filing their case, cannot be said to
have opted to rescind the compromise agreement since they were not insisting on their original claim. It must be noted that
when petitioners initially filed their first set of complaints for wage differentials, 13th month pay, overtime pay, holiday pay,
premium pay for holiday and rest day, service incentive leave pay, and unpaid ECOLA (that does not include the claim of
illegal dismissal), subsequent events transpired which brought about their unceremonious suspension and dismissal from
work. This then led to the parties entering into the Joint Compromise Agreement whereby respondents undertook to reinstate
petitioners and pay them the sum of P7,000.00 in partial satisfaction of their claims. The compromise agreement evinces and
shows that petitioners' reinstatement was part of their original demands. Besides, respondents acknowledged that the first
and second sets of Complaints filed by petitioners are similar in nature. Respondents even admitted that the issues raised in
the first set of Complaints were similar to the issues raised by petitioners when they filed anew their Complaints.
Nevertheless, the filing of a separate action for illegal dismissal shall only go against the rule on multiplicity of suits. It is
settled that a plaintiff may join several distinct demands, controversies or rights of action in one declaration, complaint or
petition.47 This is to avert duplicity and multiplicity of suits that would farther delay the disposition of the case.

In view of the foregoing, we find that both the NLRC and CA gravely erred in dismissing petitioners' Complaints on the
ground of res judicata. LA Espiritu correctly assumed jurisdiction and properly took cognizance of petitioners' consolidated
complaints for illegal dismissal and other monetary claims.

Petitioners are entitled to separation pay


and full backwages as well as to the other
monetary awards granted by the
Labor Arbiter

We, likewise, subscribe to LA Espiritu's ruling that petitioners, as regular employees, are deemed to have been constructively
and illegally dismissed by respondents. Being on floating status and off-detailed for more than six months, not having been
reinstated and reassigned by respondents, petitioners are considered to have been constructively dismissed.48 Settled is the
rule that an employee who is unjustly dismissed from work shall be entitled to reinstatement, or separation pay if
reinstatement is no longer viable, and to his full backwages.49

LA Espiritu awarded petitioners separation pay in lieu of reinstatement. The Court agrees that the award of separation pay is
warranted due to the already strained relations between the parties.50 However, aside from separation pay, petitioners, for
having been illegally dismissed, should also be awarded full backwages, inclusive of allowances and their other benefits or
their monetary equivalent computed from November 9, 2002 (the date of their last work assignment or from the time
compensation was withheld from them) up to the date of finality of this Decision.

While petitioners failed to raise the matter of entitlement to backwages before the CA, this does not prevent the Court from
considering their entitlement to the same. The Court has discretionary authority to take up new issues on appeal if it finds
that their consideration is necessary in arriving at a just decision.

Anent the other monetary claims in petitioners' complaints, the awards granted to them by LA Espiritu stand undisturbed for
petitioners' failure to question the same on appeal before the CA and even before this Court. Hence, we sustain the award of
wage differentials, 13th month pay differentials, service incentive leave pay, unpaid ECOLA, and holiday pay less the
P7;000.00 already received by them.

WHEREFORE, the Petition is GRANTED. The August 27, 2010 Decision and February 10, 2011 Resolution of the Court of
Appeals in CA-G.R. SP No. 106724 are REVERSED and SET ASIDE. The July 29, 2004 Decision of the Labor Arbiter Pablo C.
Espiritu, Jr. in NLRC NCR Case Nos. 00-05-05557-2003, 00-05-06187-2003, 00-05-06605-2003 and 00-07-07792-2003
is REINSTATED. In addition, respondents Napar Contracting & Allied Services and Norman Lacsamana are held jointly and
severally liable to pay petitioners Reynaldo Inutan, Helen Carte, Noel Ayson, Ivy Cabarle, Noel Jamili, Maritess Hular, Rolito
Azucena, Raymundo Tunog, Roger Bernal, Agustin Estre, Marilou Sagun, and Enrique Ledesma, Jr. full backwages, inclusive
of allowances and their other benefits or their monetary equivalent computed from November 9, 2002 up to the date of
finality of this Decision.

SO ORDERED. chanroblesvi rtua llawli bra ry

SECOND DIVISION

G.R. No. 202611, November 23, 2015

ABNER MANGUBAT, Petitioner, v. BELEN MORGA-SEVA, Respondent.

DECISION

DEL CASTILLO, J.:

This Petition for Review on Certiorari assails the Resolutions of the Court of Appeals (CA) dated (i) July 13, 20111 which
dismissed for lack of merit petitioner Abner Mangubat's (Abner) Petition for Annulment of Judgment and, (ii) June 13,
20122 which denied his motion for reconsideration.

Factual Antecedents

On March 5, 1974, Gaudencio Mangubat (Gaudencio) and his wife Aurelia Rellora-Mangubat (Aurelia) filed with the Regional
Trial Court (RTC) of Pili, Camarines Sur a Complaint for Specific Performance with Damages against respondent Belen Morga-
Seva (Belen) and two other defendants. The case was docketed as Civil Case No. P-279 and raffled to the RTC Branch 31. On
August 27, 1985, the RT.C issued a Decision,3 the dispositive portion of which reads in part, viz.: chanRoble svirtual Lawlib ra ry

Based on the facts x x x established x x x and the cited applicable law and jurisprudence, this Court hereby renders
judgment and orders: chanRob lesvi rtua lLawl ibra ry

xxxx

3. The defendants to reimburse the plaintiffs the total amount the latter have paid the (Development Bank of the Philippines
[DBP]) after 1971, the year the defendants defaulted in their amortization payments to DBP, and in the event of the failure
of the defendants to make such reimbursement, for plaintiffs to assume the rights of the old creditor (DBP) and take such
remedial action as the situation may warrant, x x x

xxxx

5. The defendants [are] entitled to claim and recover title or ownership over the following properties held as collaterals by
DBP, subject, however, to the encumbrance in favor of the plaintiffs, who have substituted for DBP as creditors: chanRoble svirtual Lawli bra ry

1. The parcel of land covered by TCT No. 6337 with all the improvements thereon; x x x

xxxx

SO ORDERED.4
cralawlawl ibra ry
ChanRoblesVi rtualaw lib rary

Since Belen and her co-defendants' appeal to the CA and later to this Court were both unsuccessful, the RTC Decision
became final and executory.

On September 3, 1998, Gaudencio and his children as heirs (the heirs) of the deceased Aurelia filed with the same court a
Complaint for Revival of the Decision in Civil Case No. P-279.5 They averred that the writ of execution could not be
implemented because Belen and her co-defendants evaded service thereof. And since five years had already lapsed from the
date of its entry, Gaudencio and the heirs prayed for the revival of the RTC Decision.

Gaudencio, assisted by Atty. Reynaldo L. Herrera (Atty. Herrera) and Belen by Atty. Junnel M. Relativo, entered into a
Compromise Agreement6 which states as follows: chanRoblesvi rtua lLawl ibra ry

xxxx

The defendants admit that they shall pay the amount of P33.OOO.OO that was previously paid by the plaintiffs to [the DBP1
prior to the issuance of the decision in Civil Case No. 279, plus its legal interest of 12% per annum since August [1990 until]
the year 2000 or a total sum of P72,600.00 plus P5,000.00 for attorney's fee, payable on or before June 30, 2001;

That upon payment of said amount, the plaintiffs will transfer the title, TCT No. 6337 to defendant Belen Morga Seva;
All other claims and counterclaims that the parties may have [against each other] are hereby waived.

x x x x7
cralawlawlib ra ry

The RTC approved8 the agreement and on February 23, 2001 rendered a Decision9 in accordance therewith. Upon its finality,
the Writ of Execution was ordered issued by the said court.10

On June 24, 2002, Abner, on his own behalf, moved to substitute his father Gaudencio who died on January 31, 2002.11 A
few months thereafter and now allegedly in behalf of his co-heirs, Abner, through Atty. Haide B. Vista-Gumba (Atty. Vista-
Gumba) filed another motion to substitute Gaudencio exclusively for the purpose of executing the final judgment in the case
on the claim that it was necessary for the settlement of the intestate estate of his father.12 In an Order13 dated September
13, 2002, the RTC granted Abner's motion for substitution but for purposes of execution only.

On December 18, 2003, Belen handed to Atty. Herrera her payment of P91,280.0014 in accordance with the Compromise
Agreement.15 Alleging, however, that the heirs refused to convey to Belen the lot covered by TCT No. 6337, the RTC, upon
motion of Atty. Herrera,16 directed (1) Abner, who was allegedly in possession of the owner's copy of the title, to surrender
the same to the Clerk of Court; and (2) the Clerk of Court to execute in behalf of the heirs a deed of sale or conveyance of
the lot in favor of Belen pursuant to Sec. 10, Rule 39 of the Rules of the Court.17 Abner, however, manifested that as far as
he is concerned, Belen has not yet made any payment to the heirs as he was not notified by Atty. Herrera of the
same.18 Thus, Atty. Herrera reported to the court that out of the P91,280.00 handed to him by Belen, he had turned-over the
amount of P84,480.00 to the Clerk of Court and retained £6,800.00 as his attorney's fee.19 This was duly noted by the RTC.20

On January 20, 2005, Abner terminated the services of Atty. Herrera.21 Subsequently and purportedly in behalf of all the
heirs, Abner, through Atty. Vista-Gumba, filed a Motion to Declare the Amicable Settlement Null and Void.22 It was alleged
therein that Gaudencio acted only on his own behalf when he entered into the compromise agreement with Belen, hence, the
same is null and void for want of consent and participation of the heirs who were indispensable parties.

Interestingly, however, two of the heirs namely, Ruth Mangubat Parcia and Job Mangubat filed a Manifestation with Motion to
Withdraw the Heirs['] Respective Shares.23 According to them, they were seven siblings all in all and each is entitled to
P12,068.00 from Belen's payment. They do not agree with the course of action taken by Abner relative to the case and
prayed that the case be considered closed and terminated and their respective shares from Belen's payment released to
them. Belen, on the other hand, questioned Abner's capacity to assail the compromise agreement. She averred that in the
decision of the probate court regarding the intestate estate of Gaudencio, Abner was disinherited by his father.24

In an Order25 dated September 8, 2005, the RTC ruled on the Motion to Declare the Amicable Settlement Null and Void as
follows: cha nRoblesv irt ual Lawlib rary

The present action for Declaration of Nullity of the Compromise Agreement was filed by Abner Mangubat, son and one. of the
heirs of Gaudencio and Aurelia Mangubat, who has been disinherited by final judgment in Spec. Procs. No. P-984 before
RTC[,] Branch 33 of this Court x x x thus, Abner Mangubat is not a real party in interest to bring this present action ([to]
declare [the] amicable settlement null and void] under Rule 3, Section 2 of the Rules of Court. His allegations that the
present motion was brought in behalf of the other heirs of Gaudencio and Aurelia Mangubat is gratuitous and without basis,
there is no evidence to show that he is authorized to represent them. As a matter of fact, two of the heirs, Ruth Mangubat
Parcia and Job Mangubat manifested that they do not want to be involved and dragged in this proceeding nor in any other
action that Abner may institute; that accordingly, they are satisfied with the decision of the Court, and they want to get their
share of the deposit x x x.

Be it noted that the decision has been partially satisfied when defendant Belen Morga Seva, thru Atty. Reynaldo Herrera,
deposited the amount of P84,480.00 to the Clerk of Court as per [R]eceipt No. 1201439 dated April 6, 2005. Moreover, by
his own act, Abner Mangubat is bound by the compromise agreement when he substituted for his father. Record shows that
Abner Mangubat continued to retain the legal services of Atty. Reynaldo Herrera as counsel for the plaintiffs contrary to his
allegations. The services of Atty. Herrera was terminated only sometime in January 2005. x x x

It is well settled that a judgment on a compromise is not appealable and is immediately executory, unless a motion is filed to
set aside the compromise on the ground of fraud, mistake or duress in which case an appeal may be taken from the order
denying the motion.

The inaction of Abner Mangubat or [the] other heirs of Gaudencio Mangubat and Aurelia Mangubat for a period of almost four
(4) years after becoming aware of the compromise agreement and of the judgment thereon, amounts to a ratification on
their part of said agreement. For laches operates to validate an agreement otherwise invalid, granting that the herein
compromise agreement was invalid, when the party on becoming aware of the compromise fails to repudiate it promptly.
Such ratification is presumed from his or their inaction.

The validity of a judgment or order of a Court cannot be assailed collaterally unless the ground of attack is lack of
jurisdiction. If the purported nullity of the judgment lies on the party's lack of consent to the compromise agreement, as
claimed by Abner Mangubat being the heir of Aurelia Rellora-Mangubat who died before the filing of this case for revival of
judgment, the remedy of the aggrieved party is to have it reconsidered, and if denied to appeal from such judgment or if
final to apply for relief under Rule 38 of the Rules of Court or to file an annulment of judgment under Sec. 9 of B.P. 129
before the Honorable Court of Appeals.

It is unfortunate that Abner Mangubat failed to avail of the remedies provided for under the Rules of Court and opted to file
this instant motion to declare the compromise agreement null and void which has no leg to stand on.

WHEREFORE, in view of all the foregoing, for lack of sufficient merit, the motion to declare [the] amicable settlement null and
void is hereby DENIED.

SO ORDERED.26 cralawlawlib rary

Again purportedly on behalf of all the heirs, Abner moved for the reconsideration of the above-quoted Order27 but was denied
by the RTC in its Order28 of February 27, 2006. When the same became final, Belen filed a Motion for Execution of Specific
Acts29 wherein she once more prayed that Abner be ordered to surrender to the RTC the owner's copy of TCT No. 6337 and
the Clerk of Court to execute in her favor and on behalf of the heirs a deed of sale involving the lot covered by the said title.
This was granted by the RTC in an Order30 dated July 14, 2006. Still, Abner refused to comply. Hence, the said court upon
motion of Belen31 issued its Order32 of September 25, 2006, the dispositive portion of which reads: chanRoblesv irt ual Lawlib rary

WHEREFORE, in view of the foregoing, plaintiffs through Abner Mangubat [are] hereby divested of the ownership of the
property covered by Transfer Certificate of Title No. 6337 pursuant to the decision of this Court dated February 23, 2001 and
the same is vested to herein defendant Belen Morga-Seva. This order shall now have the force and effect of a conveyance
executed in due form oflaw pursuant to the last sentence of Sec. 10(a) of Rule 39 of the [R]ules of Court.

SO ORDERED.33
cralawlawl ibra ry
ChanRoblesVi rtua lawlib rary

Trie afore-mentioned order became final on November 19, 2006.34 Pursuant thereto, the RTC directed the Registrar of Deeds
of Camarines Sur to transfer title to the property under TCT No. 6337 to Belen.35

Riding of the Court of Appeals

On September 21, 2010, Abner filed a Petition for Annulment of Final Order36 with the CA. He contended that under the
Compromise Agreement, Belen was supposed to make her payment on or before June 30, 2001. However, the same was
made only on December 18, 2003 or way beyond the period agreed upon. Thus to Abner, it was unjust for the RTC to have
issued its September 25, 2006 Order divesting the heirs of ownership of the subject property. Moreover, Abner argued that
since the February 23, 2001 RTC Decision approving the Compromise Agreement had long become final and executory, the
RTC had already lost its jurisdiction over the case when it issued the September 25, 2006 Order.

In a Resolution37 dated July 13, 2011, the CA dismissed the Petition for lack of merit. The Motion for
Reconsideration38 thereto was also denied in Resolution39 dated June 13, 2012.

Hence, this Petition for Review on Certiorari.

The Parties' Arguments

Abner basically reiterates the arguments he advanced before the CA.

For her part, Belen argues that the RTC has jurisdiction over the Complaint for revival of judgment. In fact, the RTC's
issuance of the September 25, 2006 Order is nothing but an exercise of jurisdiction pursuant to its authority to handle the
case until the full satisfaction of its Decision. At any rate, Abner is guilty of laches as it was only after almost four years from
the finality of the said Order that he questioned the same.

Our Ruling

The Petition fails.

It must be stressed that the remedy of annulment of judgment is only available under certain exceptional circumstances as
this is adverse to the concept of immutability of final judgments.40 Hence, it is allowed only on two grounds, i.e., extrinsic
fraud and lack of jurisdiction.41

Abner anchors his Petition for Annulment of Final Order on lack of jurisdiction. He posits that the RTC had lost jurisdiction
over the case when its February 23, 2001 Decision became final, hence, any issuance subsequent thereto is made without
any jurisdiction.

The argument is, however, specious. "Lack of jurisdiction on the part of the trial court in rendering the judgment or final
order is either lack of jurisdiction over the subject matter or nature of the action, or lack of jurisdiction over the person of the
petitioner."42 Here, it is undisputed that the RTC acquired jurisdiction over the person of Abner, he having asked for
affirmative relief therefrom several times.43 As mentioned, what Abner questions is the RTC's jurisdiction over the case.

"In a petition for annulment of judgment based on lack of jurisdiction, petitioner must show not merely an abuse of
jurisdictional discretion but an absolute lack of jurisdiction. Lack of jurisdiction means absence of or no jurisdiction, that is,
the court should not have taken cognizance of the petition because the law does not vest it with jurisdiction over the subject
matter. Jurisdiction over the nature of the action or subject matter is conferred by law."44 The RTC's jurisdiction over
petitions for revival of judgment had already been upheld by the Court.45 It was held that "[a]n action for revival of judgment
may be filed either 'in the same court where said judgment was rendered or in the place where the plaintiff or defendant
resides, or in any other place designated by the statutes which treat of the venue of actions in general.'"46 Here, the
Complaint for revival of judgment was filed in the same court (RTC-Pili Camarines Sur, Branch 31) which rendered the
August 27, 1985 Decision in Civil Case No. P-279. Undoubtedly, the RTC has jurisdiction over the action. There is therefore
no valid ground for the Petition for Annulment of Final Order that Abner filed with the CA.

To the mind of the Court, Abner's flawed arguments emanate from his misconception of lack of jurisdiction over the subject
matter or nature of the action as a ground for annulment. As aptly observed by the CA, he has confused lack of jurisdiction
with error in the exercise of jurisdiction, viz.: chanRo blesvi rtua lLawl ib rary

It is settled that once jurisdiction has been acquired, it is not lost until the court shall have disposed of the case in its
entirety. [Abner's] predecessor having elected to enforce the compromise agreement, the RTC is still vested with jurisdiction
until compliance therewith has been fully enforced.

[Abner] clearly confused lack of jurisdiction with error in the exercise of jurisdiction. Jurisdiction is not the same as the
exercise of jurisdiction. As distinguished from the exercise of jurisdiction, jurisdiction is the authority to decide a case, and
not the decision rendered therein. Where there is jurisdiction over the person and the subject matter, the decision on all
other questions arising in the case is but an exercise of such jurisdiction. And the errors which the court may commit in the
exercise of jurisdiction are merely errors of judgment which are the proper subject of an appeal. The error raised by [Abner]
pertains to the trial court's exercise of its jurisdiction, not its lack of authority to decide the case. In a petition for annulment
of judgment based on lack of jurisdiction, [a] petitioner must show not merely an abuse of jurisdictional discretion but an
absolute lack of authority to hear and decide the case. On this basis, there would be no valid ground to grant the petition for
annulment of judgment.47
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ChanRoblesVi rt ualawlib rary

Even assuming that the claim of lack of jurisdiction is well-grounded, Abner's Petition for Annulment of Final Order is barred
by laches. An action for annulment of judgment or final order if based on lack of jurisdiction, must brought before it is barred
by laches.48 "The principle of laches or 'stale demands' ordains that the failure or neglect, for an unreasonable and
unexplained length of time, to do that which by exercising due diligence could or should have been done earlier ~ negligence
or omission to assert a right within a reasonable time, warrants a presumption that the party entitled to assert it has
abandoned it or declined to assert it."49 In this case, it was only after almost four years from the finality of the September
25, 2006 Order that Abner brought an action to annul the same. He did not even care to provide in his petition any
justification for his inaction for such a long period of time. Such unreasonable delay warrants the presumption that Abner has
declined to assert his right to the property covered by TCT No. 6337. Verily, to permit him now to assert the same would be
unfair and inequitable.

In any event, Abner's Petition for Annulment of Final Order was not the proper remedy to nullify the September 25, 2006
Order which is an interlocutory order. "An interlocutory order refers to a ruling respecting some point or matter between the
commencement and end of the suit, but is not a final adjudication of the claims and liabilities of the parties that are in
dispute in that suit.50 The September 25, 2006 Order merely dealt with the incidental matter of causing the transfer of the
title to the property covered by TCT No. 6337 under the name of Belen in accordance with the final and executory February
23, 2001 RTC Decision after Abner refused to comply with the directive to deliver the owner's copy thereof. No further
settlement of any claim or imposition of any further liability was made in the said order.

WHEREFORE, the Petition for Review on Certiorari is DENIED. The assailed Resolutions of the Court of Appeals dated July
13, 2011 and June 13, 2012 are AFFIRMED.

SO ORDERED.

SECOND DIVISION

G.R. No. 179257, November 23, 2015

UNITED ALLOY PHILIPPINES CORPORATION, Petitioner, v. UNITED COCONUT PLANTERS BANK [UCPB] AND/OR
PHILIPPINE DEPOSIT INSURANCE CORPORATION [PDIC], JAKOB VAN DER SLUIS AND ROBERT
T.CHUA, Respondent.

DECISION

DEL CASTILLO, J.:

"[T]he dismissal of the principal action x x x [carries] with it the denial, disallowance or revocation of all reliefs ancillary to
the main remedy sought in that action."1
Challenged in this Petition for Review on Certiorari2 is the August 17, 2007 Decision3 of the Court of Appeals, Cagayan de Oro
City Station (CA CDO) in CA-G.R. SP No. 67079 dismissing petitioner United Alloy Philippines Corporation's (UniAlloy) Petition
for Certiorari and Mandamus filed therewith. In said Petition, UniAlloy sought to nullify the Orders dated September 134 and
14,5 2001 of the Regional Trial Court (RTC), Branch 40, Cagayan de Oro City in Civil Case No. 2001-219 that dismissed its
Complaint for Annulment and/or Reformation of Contract and Damages with Prayer for A Writ of Preliminary Injunction or
Temporary Restraining Order (TRO)6 and ordered it to surrender the possession of the disputed premises to respondent
United Coconut Planters Bank (UCPB).

Factual Antecedents

UniAlloy is a domestic corporation engaged in the business of manufacturing and trading on wholesale basis of alloy
products, such as ferrochrome, ferrosilicon and ferromanganese. It has its principal office and business address at Phividec
Industrial Area, Tagaloan, Misamis Oriental. Respondent UCPB, on the other hand, is a banking corporation while respondent
Robert T. Chua (Chua) is one of its Vice-Presidents. Respondent Jakob Van Der Sluis is a Dutch citizen and was the Chairman
of UniAlloy. Respondent Philippine Deposit Insurance Corporation is the assignee-in-interest of UCPB as regards the loan
account of UniAlloy.

On September 10, 1999, UniAlloy and UCPB entered into a Lease Purchase Agreement7 (LPA) wherein UniAlloy leased from
UCPB several parcels of land with a total area of 156,372 square meters located in Barangay Gracia, Tagoloan, Misamis
Oriental,8 The three-year lease commenced on August 1, 1999 to run until July 31, 2002 for a monthly rent: of P756/700.00.
The parties stipulated that upon the expiration of the lease, UniAlloy shall purchase the leased properties for P300 million to
be paid on staggered basis. UniAlloy also obtained loans from UCPB.

On August 27, 2001, however, UniAlloy filed the aforesaid Complaint9 against respondents. It claimed that, thru
misrepresentation and manipulation, respondent Jakob Van Der Sluis took foil control of the management and operation of
UniAlloy; that respondents connived with one another to obtain fictitious loans purportedly for UniAlloy as evidenced by
Promissory Note Nos. 8111-00-00110-6, 8111-00-20031-1, and 8111-01-20005-6 for P6 million, US$10,000.00, and
US$320,000.00, respectively; that UCPB demanded payment of said loans; and, that UCPB unilaterally rescinded the LPA.
UniAlloy prayed that judgment be issued: (i) ordering the annulment and/or reformation of the three Promissory Notes; (ii)
nullifying UCPB's unilateral rescission of the LPA; (iii) enjoining UCPB from taking possession of the leased premises; and (iv)
ordering respondents to jointly and severally pay nominal and exemplary damages, as well as attorney's fees of P500,000.00
each. As ancillary relief, UniAlloy prayed for the issuance of a temporary restraining order and/or writ of preliminary
injunction.

On the same day, the Executive Judge of the RTC, Cagayan de Oro City issued a 72-hour TRO directing UCPB to cease and
desist from taking possession of the disputed premises.10 The following day, respondent Jakob Van Der Sluis filed a Motion to
Dismiss and Opposition to the Application for Injunction or TRO11 on the grounds of improper venue, forum-shopping,12 litis
pendentia, and for being a harassment suit under the Interim Rules of Procedure for Intra-Corporate Cases. He argued that
the LPA specifically provides that any legal action aiising therefrom should be brought exclusively in the proper courts of
Makati City. The Complaint did not disclose the pendency of Civil Case No. 2001-156 entitled "Ernesto Paraiso and United
Alloy Philippines Corporation v. Jakob Van Der Sluis" before Branch 40, as well as CA-G.R. SP No, 66240 entitled "Jakob Van
Der Sluis v. Honorable Epifanio T. Nacaya, et al." He further averred that what UniAlloy sought to enjoin is already fait
accompli.

Respondents UCPB and Chua, on the other hand, filed a Motion to Dismiss & Motion to Recall Temporary Restraining
Order.13 In addition to the ground of improper venue, they raised the issue of lack of authority of the person who verified the
Complaint as no secretary's certificate or a board resolution was attached thereto.

During the hearing on the writ of preliminary injunction on August 30, 2001, the RTC directed the parties to maintain
the status quo by not disturbing the possession of the present occupants of the properties in question pending resolution of
respondents' motions,

On September 13, 2001, the RTC, acting as Special Commercial Court, issued an Order14 granting the motions to dismiss and
ordering the dismissal of the case on the grounds of improper venue, forum-shopping and for being a harassment suit. The
RTC held that venue was improperly laid considering that the Promissory Notes sought to be annulled were issued pursuant
to a Credit Agreement which, in turn, stipulates that any legal action relating thereto shall be initiated exclusively in the
proper courts of Makati City. It also opined that UniAlloy committed forum-shopping for failing to disclose in its certificate of
non-forum-shopping the pendency of Civil Case No, 2001-156 which involves the same parties, the same transactions and
the same essential facts and circumstances. The cases, as ruled by the RTC, have also identical causes of action, subject
matter and issues. The dispositive portion of the September 13, 2001 Order reads: ch anRoblesvi rtua lLawl ibra ry

ACCORDINGLY, finding meritorious that the venue is improperly laid and the complain[an]t engaged in forum-shopping and
harassment of defendant Jakob Van der Sluis, this case is hereby DISMISSED rendering the prayer issuance of a writ of
preliminary injunction moot and academic, and ordering plaintiff to turn over possession of the subject premises of the
properties in question at Barangay Gracia, Tagoloan, Misamis Oriental to defendant United Coconut Planters Bank.

SO ORDERED.15
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ChanRoblesVi rtua lawlib rary
Upon UCPB's motion, the RTC issued another Order16 dated September 14, 2001 directing the issuance of a writ of execution
to enforce its September 13, 2001 Order. Accordingly, a Writ of Execution17 was issued directing the Sheriff to put UCPB in
possession of the disputed premises. It was satisfied on September 17, 2001.18 The employees of UniAlloy were evicted from
the leased premises and UCPB's representatives were placed in possession thereof.

On September 25, 2001, UniAlloy received copies of the RTC Orders.19 And on October 9, 2001, it filed with the Court of
Appeals, Manila Station (CA Manila) its petition in CA-G.R. SP No. 67079 attributing grave abuse of discretion on the part of
the court a quo in (i) dismissing its petition on the grounds of improper venue, forum-shopping and harassment, (ii) ordering
the turnover of the property in question to UCPB after the dismissal of the Complaint, and (iii) applying the Interim Rules of
Procedure for Intra-corporate Controversies.

On October 18,2001, the CA Manila issued a TRO. After hearing, the CA Manila issued a Resolution20dated February 18, 2002
granting UniAlloy's ancillary prayer for the issuance of a writ of preliminary injunction upon posting of a bond in the amount
of P300,000.00.

UniAlloy posted the requisite bond.

However, no writ of preliminary injunction was actually issued by the CA Manila because of this Court's March 18, 2002
Resolution21 in G.R. No. 152238 restraining it from enforcing its February 18, 2002 Resolution. G.RNo. 152238 is a Petition
for Certiorari initiated by UCPB assailing said Resolution of CA Manila. And, in deference to this Court, the CA Manila refrained
from taking further action in CA-G.R. SP No. 67079 until G.R. No. 152238 was resolved.22

On January 28, 2005, this Court rendered its Decision23 in G.R. No. 152238 finding no grave abuse of discretion on the part
of the CA in issuing its February 18, 2002 Resolution and, consequently, denying UCPB's petition.

Thereafter, and since this Court's Decision in G.R. No. 152238 attained finality, UniAUoy filed with the CA Manila a Motion to
Issue and Implement Writ of Preliminary Mandatory Injunction.24 In the meantime, the records of CA-G.R. SP No. 67079
were forwarded to CA CDO pursuant to Republic Act No. 8246.25 cralaw red

On May 31, 2006, the CA CDO issued a Resolution26 denying UniAlloy's motion. It found that UniAUoy had lost its right to
remain in possession of the disputed premises because it defaulted in the payment of lease rentals and it was duly served
with a notice of extrajudicial termination of the LPA. Said court also found that UniAUoy vacated the leased premises and
UCPB was already in actual physical possession thereof as of August 24, 2001, or three days before UniAUoy filed its
complaint with the RTC. Hence, it could no longer avail of the remedy of preliminary injunction to regain possession of the
disputed premises.

UniAUoy filed a Motion for Reconsideration,27 which was denied in the CA CDO's November 29,2006 Resolution.28

On August 17, 2007, the CA CDO issued the assailed Decision denying UniAlloy's petition and affirming the RTC's questioned
Orders. It opined inter alia that UniAUoy erred in resorting to a Rule 65 petition because its proper recourse should have
been to appeal the questioned Orders of the RTC, viz.: chanRoblesvi rt ualLawl ibra ry

It is plain from the record, though, that Unialloy had lost its right to appeal. The time to make use of that remedy is gone. It
is glaringly obvious that Unialloy resorted to this extraordinary remedy of certiorari and mandamus as a substitute vehicle for
securing a review and reversal of the questioned order of dismissal which it had, by its own fault, allowed to lapse into
finality. Unfortunately, none of the arguments and issues raised by Unialloy in its petition can adequately brand the 13
September 2001 Order as void on its face for being jurisdietionaily flawed, nor mask the fact that it became final and
executory by Unialloy's failure to file an appeal on time. And so, even if the assailed order of dismissal might arguably not
have been entirely free from some errors in substance, or lapses in procedure or in findings of fact or of law, and which that
account could have been reversed or modified on appeal, the indelible fact, however is that it was never appealed. It had
become final and executory. It is now beyond the power of this Court to modify it.29
cralawlawl ibra ry
ChanRoblesVirtualawl ibra ry

Hence, this Petition raising the following issues for Our resolution:

1. Whether the Court of Appeals (Cagayan de Oro City) erred, or acted without, or in excess of jurisdiction, or
committed grave abuse of discretion arnounting to lack, or excess of jurisdiction in DENYING United Alloy's Motion to
Issue and Implement Writ of Preliminary Mandatory Injunction in this case, DESPITE the earlier resolution dated
February 18, 2002 issued by the same Court of Appeals (Manila) of coordinate and co-equal jurisdiction which
granted United Alloy's Motion for Issuance of Preliminary Injunction upon bond of P300,000.00, and DESPITE this
Honorable Court's decision dated January 28, 2005 in the certiorari case G.R. No. 152238 filed by UCPB to assail the
Court of Appeals's Resolution of February 18, 2002, which decision sustained the said resolution of February 18,
2002, and DENIED UCPB's petition in said G.R. No. 152238.

As sub-issue - Whether the Court of Appeals (Cagayan de Oro City) disregarded the rule that every court must take
cognizance of decisions the Supreme Court has rendered, because they are proper subjects of mandatory judicial
notice. The said decisions more importantly, form part of the legal system, and failure of any court to apply them
shall constitute an abdication of its duty to resolve a dispute in accordance with law and shall be a ground for
administrative action against an inferior court magistrate x x x
2. Whether x x x the Court of Appeals (Cagayan de Qro City) decided this case in accord with law and the evidence,
and so far departed from the accepted and usual course of judicial proceedings as to call for an exercise of the
supervisory power of this Honorable Court, and to entitle this petition to allowance and the review sought in this
case.30
cralawlawl ibra ry

Issue

The basic issue to be resolved in this case is whether the CA CDO erred in dismissing UniAlloy's Petition for Certiorari and
Mandamus. For if the said court did not commit an error then it would be pointless to determine whether UniAlloy is entitled
to a writ of preliminary injunction pursuant to CA Manila's February 18, 2002 Resolution which was issued as a mere
ancillary' remedy in said petition.

Our Ruling

The Petition is devoid of merit.

Before delving on the focal issue, the Court shall first pass upon some procedural matters.

UniAlloy availed of the proper remedy


in assailing the RTC's September 13, 2001
Order dismissing its Complaint

In its Comment,31 UCPB defends the CA CDO in denying due course to UniAlloy's Petition for Certiorariand Mandamus. It
posits that UniAlloy should have filed with the RTC a Notice of Appeal from the Order dated September 13, 2001 instead of a
Rule 65 petition before the CA, Respondents Jakob Van der Sluis and Chua echo UCPB's contention that UniAlloy resorted to
a wrong mode of remedy and that the dismissal of its complaint had become final and executory which, in turn, rendered
UniAlloy's Rule 65 petition before the CA moot and academic.32

In its Consolidated Reply,33 UniAlloy counter-argues that it filed a Rule 65 petition with the CA because the remedy of appeal
is inadequate as the RTC had already directed the issuance of a writ of execution and that the RTC Orders are patently
illegal.

UniAlloy availed of the correct remedy. Under Section 1 Rule 16 of the Rules of Court, the following may be raised as grounds
in a motion to dismiss: chanRoble svi rtual Lawli bra ry

SECTION 1. Grounds. — Within the time for but before filing the answer to the complaint or pleading asserting a claim, a
motion to dismiss may be made on any of the following grounds: chanRoble svi rtual Lawli bra ry

(a) That the court has no jurisdiction over the person of the defending party;

(b) That the court has no jurisdiction over the subject matter of the claim;

(c) That venue is improperly laid;

(d) That the plaintiff has no legal capacity to sue;

(e) That there is another action pending between the same parties for the same cause;
(f) That the cause of action is barred by a prior judgment or by the statute of limitations;

(g) That the pleading asserting the claim states no cause of action;

(h) That the claim or demand set forth in the plaintiffs pleading has been paid, waived, abandoned, or otherwise
extinguished;

(i) That the claim on which the action is founded is unenforceable under the provisions of the statute of frauds; and

(j) That a condition precedent for filing the claim has not been complied with. cralawlawl ib rary

Except for cases falling under paragraphs (f), (h), or (i), the dismissal of an action based on the above-enumerated grounds
is without prejudice and does not preclude the refiling of the same action. And, under Section l(g) of Rule 41,34 an order
dismissing an action without prejudice is not appealable. The proper remedy therefrom is a special civil action
for certiorari under Rule 65,35 But, if the reason for the dismissal is based on paragraphs (f), (h), or (i) (i.e., res
judicata, prescription, extinguishment of the claim or demand, and unenforceability under the Statute of Frauds) the
dismissal, under Section 5,36 of Rule 16, is with prejudice and the remedy of the aggrieved party is to appeal the order
granting the motion to dismiss.
Here, the dismissal of UniAlloy's Complaint was without prejudice. The September 13, 2001 Order of the RTC dismissing
UniAlloy's Complaint was based on the grounds of improper venue, forum-shopping and for being a harassment suit, which
do not fall under paragraphs (f), (h), or (i) of Section 1, Rule 16. Stated differently, none of the grounds for the dismissal of
UniAlloy's Complaint is included in Section 5 of Rule 16 of the Rules of Court. Hence, since the dismissal of its Complaint was
without prejudice, the remedy then available to UniAlloy was a Rule 65 petition.

CA CDO did not err in affirming the


dismissal of UniAlloy's Complaint on the
grounds of improper venue, forum-shopping
and for being a harassment suit

The RTC was correct in dismissing UniAlloy's Complaint on the ground of improper venue. In general, personal actions must
be commenced and tried (i) where the plaintiff or any of the principal plaintiffs resides, (ii) where the defendant or any of the
principal defendants resides, or (III) in the case of a resident defendant where he may be found, at the election of the
plaintiff.37 Nevertheless, the parties may agree in writing to limit the venue of future actions between them to a specified
place.38

In the case at bench, paragraph 18 of the LPA expressly provides that "[a]ny legal action arising out of or in connection with
this Agreement shall be brought exclusively in the proper courts of Makati City, Metro Manila."39 Hence, UniAlloy should have
filed its complaint before the RTC of Makati City, and not with the RTC of Cagayan de Oro City.

But to justify its choice of venue, UniAlloy insists that the subject matter of its Complaint in Civil Case No. 2001-219 is not
the LPA, but the fictitious loans that purportedly matured on April 17, 2001.40

UniAlloy's insistence lacks merit. Its Complaint unequivocally sought to declare "as null and void the unilateral rescission
made by defendant UCPB of its subsisting Lease Purchase Agreement with [UniAlloy]."41 What UCPB unilaterally rescinded is
the LPA and without it there can be no unilateral rescission to speak of. Hence, the LPA is the subject matter or at least one
of the subject matters of the Complaint. Moreover, and to paraphrase the aforecited paragraph 18 of the LPA, as long as the
controversy arises out of or is connected therewith, any legal action should be filed exclusively before the proper courts of
Makati City. Thus, even assuming that the LPA is not the main subject matter, considering that what is being sought to be
annulled is an act connected and inseparably related thereto, the Complaint should have been filed before the proper courts
in Makati City.

With regard forum-shopping, our review of the records of this case revealed that UniAlloy did not disclose in the
Verification/Certification of the Complaint the pendency of Civil Case No. 2001-156 entitled "Ernesto Paraiso and United Alloy
Philippines Corporation v. Jakob Van Der Sluis." The trial court took judicial notice of its pendency as said case is also
assigned and pending before it. Thus, we adopt the following unrebutted finding of the RTC: chanRoblesvi rtua lLawl ibra ry

These two civil cases have identical causes of action or issues against defendant Jakob Van Der Sluis for having
misrepresented to plaintiff and its stockholders that he can extend financial assistance in running the operation of the
corporation, such that on April 6, 2001 plaintiff adopted a Stockholders Resolution making defendant Jakob chairman of the
corporation for having the financial capability to provide the financial needs of plaintiff and willing to finance the operational
needs thereof; that a Memorandum of Agreement was subsequently entered between the parties whereby defendant Jakob
obligated to provide sufficient financial loan to plaintiff to make it profitable; that Jakob maliciously and willfiilly reneged [on]
his financial commitments to plaintiff prompting the stockholders to call his attention and warned him of avoiding the said
agreement; that defendant who had then complete control of plaintiffs bank account with defendant UCPB, through
fraudulent machinations and manipulations, was able to maliciously convince David C. Chua to pre-sign several checks; that
defendant Jakob facilitated several huge loans purportedly obtained by plaintiff which defendant himself could not even
account and did not even pay the debts of the corporation but instead abused and maliciously manipulated plaintiffs account.

Forum-shopping indeed exists in this case, for both actions involve the same transactions and same essential facts and
circumstances as well as identical causes of action, subject matter and issues, x x x42 cralaw lawlib rary

The dismissal of UniAlloy's main


action carries with it the dissolution of
any ancillary relief previously granted
therein.

UniAlloy argues that the CA CDO erred in denying its petition considering that this Court has already sustained with finality
the CA Manila's February 18, 2002 Resolution granting its prayer for the issuance of a writ of preliminary mandatory
injunction.

The contention is non sequitur.

"Provisional remedies [also known as ancillary or auxiliary remedies], are writs and processes available during the pendency
of the action which may be resorted to by a litigant to preserve and protect certain rights and interests pending rendition,
and for purposes of the ultimate effects, of a final judgment in the case. They are provisional because they constitute
temporary measures availed of during the pendency of the action, and they are ancillary because they are mere incidents in
and are dependent upon the result of the main action."43 One of the provisional remedies provided in the Rules of Court is
preliminary injunction, which may be resorted to by a litigant at any stage of an action or proceeding prior to the judgment
or final order to compel a party or a court, agency or a person to refrain from doing a particular act or acts.44 In Bacolod City
Water District v. Hon. Labayen,45 this Court elucidated that the auxiliary remedy of preliminary injunction persists only until it
is dissolved or until the tepnination of the main action without the court issuing a final injunction, viz.: chanRob lesvi rtua lLawl ibra ry

x x x Injunction is a judicial writ, process or proceeding whereby a party is ordered to do or refrain from doing a certain act,
It may be the main action or merely a provisional remedy for and as an incident in the main action.

The main action for injunction is distinct from the provisional or ancillary remedy of preliminary injunction which cannot exist
except only as part or an incident of an independent action or proceeding. As a matter of course, in an action for injunction,
the auxiliary remedy of preliminary injunction, whether prohibitory or mandatory, may issue. Under the law, the main action
for injunction seeks a judgment embodying a final injunction which is distinct from, and should not be confused with, the
provisional remedy of preliminary injunction, the sole object of which is to preserve the status quo until the merits can be
heard. A preliminary injunction is granted at any stage of an action or proceeding prior to the judgment or final order. It
persists until it is dissolved or until the termination of the action without the court issuing a final injunction.46 cralawlawl ibra ry

Based on the foregoing, it is indubitably clear that the August 17, 2007 Decision of CA CDO dismissing UniAlloy's Petition
for Certiorari and Mandamus effectively superseded the February 18, 2002 Resolution of the CA Manila granting UniAUoy's
ancillary prayer for the issuance of a writ of preliminary injunction. It wrote finis not only to the main case but also to the
ancillary relief of preliminary injunction issued in the main case.

For the same reason, there is no merit in UniAUoy's contention that the RTC grievously erred in ordering it to turn over the
possession of the subject premises to UCPB considering that the latter never prayed for it. As borne out by the records of the
case, UCPB was already in actual possession of the litigated premises prior to the filing of the Complaint on August 27, 2001.
This conforms with the finding of the CA CDO which pronounced that "an actual turnover of the premises x x x was really
effected on August 24, 2001, prior to the institution of the complaint a quo."47 UniAlloy was able to regain possession of the
disputed premises only by virtue of the RTC's 72-hour TRO. With the issuance of the RTC's September 13, 2001 Order
dismissing the Complaint of UniAlloy, however, the RTC's 72-hour TRO and August 30, 2001 order to maintain status quo,
which are mere incidents of the main action, lost their efficacy. As discussed above, one of the inevitable consequences of
the dismissal of the main action is the dissolution of the ancillary relief granted therein. Besides, the RTC issued the status
quo order with the express caveat that the same shall remain in force until it has resolved respondents' motions to dismiss,
which it subsequently granted. Consequently, UniAlloy has no more bases to remain in possession of the disputed premises.
It must, therefore, restitute whatever it may have possessed by virtue of the dissolved provisional remedy, even if the
opposing party did not pray for it.

The August 17, 2007 Decision neither


violated this Court's January 28, 2005
Decision in G.R. No. 152238 nor contradicted
the CA Manila's February 18, 2002 Resolution.

UniAlloy further argues that in denying its petition, CA CDO contradicted the earlier Resolution of a coordinate court, the CA
Manila, and the January 28, 2005 Decision of this Court in G.R. No. 152238. It insists that no court can interfere with the
judgment, orders or decrees of another court of concurrent or coordinate jurisdiction.

We are not persuaded.

True, under the doctrine of judicial stability or non-interference, "no court can interfere by injunction with the judgments or
orders of another court of concurrent jurisdiction having the power to grant the relief sought by injunction. The rationale for
the rule is founded on the concept of jurisdiction: a court that acquires jurisdiction over the case and renders judgment
therein has jurisdiction over its judgment, to the exclusion of all other coordinate courts, for its execution and over all its
incidents, and to control, in furtherance of justice,, the conduct of ministerial officers acting in connection with this
judgment."48 But said doctrine is not applicable to this case. Here, the proceeding in CA CDO is a continuation of the
proceeding conducted in CA Manila. There is only one case as what was resolved by CA CDO is the same case, CA-G.R. SP
No. 67079 earlier filed with and handled by CA Manila. It was referred to CA CDO pursuant to Republic Act No. 8246 creating
three divisions of the CA each in Cebu and Cagayan de Qro. Section 5 thereof provides: chanRob lesvi rtual Lawli bra ry

SECTION 5. Upon the effectivity of this Act, all pending cases, except those which have been submitted for resolution, shall
be referred to the proper division of the Court of Appeals.cralawlawli bra ry

In fine, CA CDO did not intrude into an order issued by another co-equal court in a different case. Rather, it continued to
hear the petition until its termination after the CA Manila referred the same to it by virtue of a law.

The fact that said February 18, 2002 Resolution of CA Manila was affirmed by this Court in its January 28, 2005 Decision in
G.R. No. 152238 is likewise of no moment. Said Resolution of CA Manila only granted UniAlloy's ancillary prayer for injunctive
relief. It did not touch on the issues of improper venue, forum-shopping, and harassment. Thus, neither did this Court tackle
said issues in its January 28, 2005 Decision. In fact, this Court cautiously limited its discussions on the propriety of the CA's
directive temporarily restraining the RTC from placing UCPB in possession of the disputed premises and deliberately reserved
to the CA the determination of whether the RTC erred in dismissing the main case. Thus: chanRoblesvi rt ual Lawlib rary
The dismissal of Civil Case No. 2001-219 on the grounds of forum-shopping, improper venue and harassment - although
raised, too, by Unialloy in its Petition before the Court of Appeals - was not passed upon in the assailed interlocutory CA
Resolution. As a consequence, it would be premature and improper for us to pass upon the RTC's dismissal of the case.
Hence, we shall limit our discussion to the assailed Resolutions temporarily stopping the trial court's turnover of the litigated
property to petitioner.49
cralawlawl ibra ry
ChanRob les Virtualawl ibra ry

WHEREFORE, the instant petition is hereby DENIED.

SO ORDERED. chanroblesvi rtua llawli bra ry

SECOND DIVISION

G.R. No. 202859, November 11, 2015

NEW FILIPINO MARITIME AGENCIES, INC., TAIYO NIPPON KISEN CO., LTD., AND ANGELINA T,
RIVERA, Petitioners, v. VINCENT H. D ATAYAN -HEIR OF SIMON VINCENT H. DATAYAN III,1Respondent.

DECISION

DEL CASTILLO, J.:

As a rule, the death of a seafarer during the term of his employment makes his employer liable for death benefits. The
employer, may, however, be exempt from liability if it can successfully establish that the seafarer's death was due to a cause
attributable to his own willful act.2

This Petition for Review on Certiorari assails title February 22, 2012 Decision3 of the Court of Appeals (CA) in CA-G.R. SP No.
119775. The CA granted the Petition for Certiorari filed therewith and reversed and set aside the October 28, 2010
Decision4 and March 15, 2011 Resolution5 of the National Labor Relations Commission (NLRC) in NLRC LAC No. 07-000536-
10, which, in turn, affirmed the May 31, 2010 Decision6 of Labor Arbiter Arden S. Anni (LA) dismissing the complaint in
NLRC-NCR OFW Case No. (M)05-07052-09.

Likewise challenged is the July 24, 2012 CA Resolution7 denying the motion for reconsideration for lack of merit.

Factual Antecedents

On August 8, 2007, New Filipino Maritime Agencies, Inc. (NFMA), for and on behalf of St. Paul Maritime Corp. (SPMC),
employed Simon Vincent Datayan II (Simon) as deck cadet on board the vessel Corona Infinity. His employment was for nine
months with basic monthly salary of US$23 5.00.8 Prior to his deployment, Simon underwent pre-employment medical
examination (PEME) and was declared fit for sea duties. On August 17, 2007, he boarded the vessel and assumed his duties
as deck cadet.9

On December 30,2007, at 12:40 a.m., the Master authorized the conduct of an emergency fire drill in which the crew
participated. At about 1:25 a.m., he declared that Simon jumped overboard. A futile search-and-rescue operation ensued.
After a few weeks, Simon was declared missing and was presumed dead.10

Simon's father, Vincent H. Datayan (respondent), alleged that he went to NFMA to claim death benefits but his claim was
unheeded.11 On May 11, 2009, he filed a complaint12 for death benefits and attorney's fees against NFMA, Taiyo Nippon Kisen
Co., Ltd.,13 and Angelina T. Rivera (petitioners).

Respondent averred that because Simon died during the term of his employment, the provisions of the collective bargaining
agreement (CBA) among All Japan Seamen's Union, Associated Marine Officers' and Seamen's Union of the Philippines
(AMOSUP), and the International Mariners Management Association of Japan, must be applied in the grant of death benefits
and burial assistance in his favor, being the heir of Simon.14

Respondent also stated that the fire drill was conducted at 12:40 a.m. where there was heavy concentration of fishing boats
in the area; and during which the water temperature was expected to cause hypothermia. He asserted that petitioners were
presumed to be at fault or had acted negligently, unless they could prove that Simon's death was due to causes not legally
compensable.15 He declared that there was no evidence that Simon committed suicide and maintained that his death was a
result of negligence and reckless instruction of the Master.16

On the other hand, petitioners alleged that on December 29/2007, the crew, except those on duty, were in the mess hall for
a birthday celebration. They stated that Simon was invited by the Master to join the party but he refused.17 At about 12:40
a.m. of December 30, 2007, the Master ordered the conduct of a fire and emergency drill. After the drill, a crew meeting was
held where the Master reprimanded Simon for his poor performance. They stated that Simon left even before the meeting
was concluded. Thus, the Master ordered the crew to search for him. At about 1:25 a.m. to 1:30 a.m. of December 30, 2007,
Raymond Ocleasa (Ocleasa) saw Simon jump overboard.18

Additionally, petitioners declared that they exerted efforts to search, locate and rescue Simon.19 They alleged that the vessel
retraced its course to where he fell. The Master also informed the Japan Coast Guard about the incident. In response, the
Yokohama Coastguard Patrol conducted a search-and-rescue operation to no avail.20

Petitioners also averred that during a search made on the vessel, a note from Simon was found.21

Petitioners argued that respondent had no cause of action against them because Simon's death was a result of his (Simon's)
deliberate act. They insisted that based on the Philippine Overseas Employment Administration (POEA) Standard Employment
Contract (SEC) and CBA, a complainant is not entitled to death benefits when the cause of the seaman's death was the
latter's willful act.22 Petitioners added that the Master's Report, Statement of Facts, Marine Note of Protest and Investigation
Report conclusively proved that Simon committed suicide. They stated that this conclusion was bolstered by the suicide note
found on the vessel, signed by Simon himself.23

Ruling of the Labor Arbiter

On May 31, 2010, the LA dismissed the complaint.24 The LA held that Simon's suicide was established by the evidence on
record. Specifically, the Master's Report, as corroborated by Simon's suicide note, showed that he voluntarily jumped
overboard. The LA stated that ''the signature of the deceased seafarer in said note and in his POEA Contract would show
similarity, if not identity. To say that it was fabricated or concocted will not lessen the credibility of the suicide note, absent
any concrete evidence to the contrary."25 cralawred

Ruling of the National Labor Relations Commission

On appeal, the NLRC affirmed the LA Decision.26 Like the LA, the NLRC gave probative weight to the suicide note, the
Master's Report, along with other pieces of documentary evidence adduced, to establish that Simon committed suicide. It
held that considering that the death of the seafarer was due to his willful act, then his heir is not entitled to his death
benefits.

On March 15, 2011, the NLRC denied respondent's motion for reconsideration.27

Ruling of the Court of Appeals

Respondent then filed a Petition for Certiorari with the CA maintaining that there was no evidence that Simon committed
suicide hence his death is compensable.

On February 22, 2012, the CA rendered the assailed Decision,28 finding for respondent, the decretal portion of which
reads: chanRoble svirtual Lawli bra ry

WHEREFORE, the petition for certiorari is GRANTED. The assailed October 28, 2010 Decision and March 15,2011 Resolution
of public respondent are REVERSED and SET ASIDE. A new judgment is rendered ordering private respondents New Filipino
Maritime Agencies, Inc. and/or Taiyo Nippon Kisen Co., Ltd. and Angelina T. Rivera to pay petitioner Vincent H. Datayan as
heir of Simon Vincent H. Datayan II, the following:

1. US$50,000.00 or its Philippine currency equivalent as death benefits in accordance with the 2000 POEA
Amended Standard Terms and Conditions Governing the Employment of Filipino Seafarers on Board Ocean[-
]Going Vessels;

2. US$1,000.00 or is [sic] Philippine currency equivalent as burial assistance;

3. P50,000.00 as moral damages and P25,000.00 as exemplary damages;

4. Attorney's fees equivalent to 10% of the total monetary awards; and

5. Legal interest on the foregoing amounts from the date of filing of the complaint until fully paid.

SO ORDERED.29
cralawlawl ibra ry
ChanRoblesVi rtua lawlib rary

The CA explained that it was beyond question that Simon died aboard the vessel and during the effectivity of his contract,
thus, respondent is entitled to receive death benefits arising therefrom. It found that petitioners' evidence failed to prove
that Simon committed suicide; and ruled that the Master who executed and signed the Master's Report, Marine Note of
Protest and Statement of Facts failed to give positive testimony ascertaining Simon's actual suicide. It further pointed out
that the crew members who signed the Investigation. Report had no personal knowledge of Simon's suicide. It added that
Ocleasa, the alleged witness of the incident, did not sign the report or issue a sworn statement on the matter.

In addition, the CA stated that Simon underwent PEME and was not declared emotionally unfit. As such, it gave no probative
weight to the alleged suicide note of Simon.

Finally, the CA reasoned that in computing the death benefits in favor of respondent, the applicable provisions are those
under the POEA SEC not the CBA which covers disability benefits only; moreover, there was no evidence that Simon was an
AMOSUP member.

On July 24,2012, the CA denied petitioners' motion for reconsideration.30 Hence, petitioners filed the instant Petition arguing
that: chanRoblesvi rtua lLawl ibra ry

I. x x x the Court of Appeals committed serious, reversible error of law in awarding death benefits in favor of
respondent Mr. Vincent H. Datayan II despite the ruling of this Honorable Court in the case of Reyes vs. Maxim's Tea
House, that findings of fact of quasi-judicial bodies like the NLRC, particularly when they coincide with those of the
Labor Arbiter and if supported by substantial evidence, are accorded respect and even finality by appellate courts.

II. x x x the Court of Appeals committed serious, reversible error of law in holding that the death of the deceased
seafarer was compensable as the defense of suicide was not established with substantial evidence despite the suicide
note made by the deceased seafarer whose authenticity was affirmed by the Labor Arbiter and the First Division of
the NLRC.32

III. x x x the Court of Appeals committed serious, reversible error of law in awarding damages, attorney's fees and legal
interest in favor of respondent. The award of damages and attorney's fees has no basis as the denial of respondent's
claim for death benefits was done in good faith. Further, the award of legal interests has no basis in fact and in
law.33
cralawlawl ibra ry

Petitioners submit that the documentary evidence established that Simon killed himself, which makes respondent not entitled
to death benefits. They contend the LA and the NLRC found said documents to be authentic and are sufficient proof that the
cause of Simon's death was his willful act of committing suicide.

Petitioners posit that the CA erred in holding that the best evidence to prove Simon's alleged suicide was his body, which was
never found. They added that it would be unjust to hold that the fact of death was established but its cause was not shown
from the evidence on record. They further aver that to follow this line of reasoning the fact of death must be established by
clear and convincing evidence. As such, according to petitioners, respondent's cause of action would have accrued only after
four years from the time Simon was presumed dead on December 30, 2007.

Likewise, petitioners state that the Marine Note of Protest, Master's Report, Statement of Facts and Investigation Report
were not hearsay evidence because they were official documents issued by the Master. Also, they point out that these
documents were notarized and were authenticated by an affidavit signed by the Master.

Petitioners also explain that the absence of signature of Ocleasa was addressed in the Investigation Report. The report
indicated that Ocleasa had already disembarked when the investigation was conducted; he, nonetheless, reported to the local
agents and narrated what he witnessed on the vessel.

Petitioners emphasize the finding of the LA that the signatures in the alleged suicide note and in the POEA contract were the
same, if not identical.

Lastly, petitioners allege that damages were improperly awarded in favor of respondent considering that necessary
procedures were undertaken to locate Simon. They also state that investigation was conducted to gather information from
the crew regarding the circumstances surrounding his death.

For his part, respondent reiterates that there was no evidence that Simon committed suicide and that his death was a result
of the Master's negligence. He insists that the alleged suicide note could not have been written by Simon considering the
proximity of events, that is, at 12:40 a.m., the fire drill was conducted and at 1:25 a.m., Simon was said to have jumped
overboard. He asserts that he is entitled to compensation for the death of his son because he had established that he died
during the term of his employment contract with petitioners.

Issue

Is the CA correct in finding that the NLRC committed grave abuse of discretion in denying respondent's claim for death
benefits?

Our Ruling

In labor cases, the review of the Court under Rule 45 of the Rules of Court involves the determination of the legal
correctness of the CA Decision. This means that the Court must ascertain whether the CA properly determined the presence
or absence of grave abuse of discretion in the NLRC Decision. Simply put, "in testing for legal correctness, the Court views
the CA Decision in the same context that the petition for certiorari it ruled upon was presented to it."34 It entails a limited
review of the acts of the NLRC, of whether it committed errors of jurisdiction. It does not cover the issue of whether the
NLRC committed any error of judgment, unless there is a showing that its findings and conclusion were arbitrarily arrived at
or were not based on substantial evidence.35

In this case, both the LA and the NLRC ruled that respondent's claim for death benefits was without basis. They agreed that
Simon committed suicide, as principally established by the Master's Report and Simon's suicide note. The CA ruled otherwise.
It gave no weight to the suicide note because Simon underwent the PEME and was declared fit to work. The CA also refused
to accord probative value to the Master's Report, among others, because the Master gave no positive testimony on Simon's
actual suicide.

To determine whether the CA correctly found that the NLRC gravely abused its discretion in finding that there is substantial
evidence - or such relevant evidence a reasonable mind might accept as adequate to support a conclusion36 - that Simon
committed suicide, it becomes imperative to resolve whether the parties discharged their respective burdens of proof and the
corresponding shift in the burden of evidence in this case.37

As claimant for death benefits, respondent has the burden to prove by substantial evidence that his son's death is work-
related and that it transpired during the term of his employment contract. In this respect, respondent has discharged his
burden. It is beyond question that Simon died during the term of his contract. The next question is whether Simon's death
was due to his deliberate act. If such is the case, then respondent is not entitled to death benefits. That Simon's death was a
result of his willful act is a matter of defense.38 Thus, petitioners have the burden to prove this circumstance by substantial
evidence.

The Court finds that petitioners discharged their burden to prove that Simon committed suicide. The Master's Report39 clearly
described the situation on the vessel prior to, during and after the time that Simon went overboard, to wit:chanRoble svi rtual Lawli bra ry

x x x WE CONDUCTED EMERGENCY FIRE DRILL AT NIGHT TIME 0040LT 30th DECEMBER 2007/ 1540TC 29th DECEMBER 2007.
AFTER THE DRILL AT ABOUT 0055LT WE CONDUCTED MEETING AT CREW MESSHALL FOR MASTER'S EVALUATION AND AT
THE SAME TIME SAFETY MEETING DURING EVALUATION, I STRONGLY MENTIONED ABOUT HIS (SIMON'S) BEHAVIOUR ON
BOARD THE SHIP TO MOTIVATE HIM AND TO IMPROVE HIS PERFORMANCE SINCE HE IS A DECK CADET AND ABOUT TO BE
PROMOTED AS ORDINARY SEAMAN x x x

x x x AFTER THE MEETING [I] OBSERVED THAT HE WAS NOT AROUND IN THE MESSHALL. KNOWING THAT HE WAS
SLIGHTED I ORDER TO LOOK FOR HIM IN WHICH THE CREW COMPLIED. ONE OF THE CREW WIPER RAYMOND C. OCLEASA
xxx SAW DECK CADET SIMON VINCENT H. DATAYAN II WAS STANDING [SIC] ON THE FAIRLEAD PORT QUARTER AND AT
THAT POINT HE (WIPER) SAW TORCH LIGHT PASS HIS (DECK CADET) FACE AND CAUGHT HIS (DECK CADET) ATTENTION
THEN WHEN HE ATTEMPTED TO JUMP, HE (WIPER) CALLED HIS NAME BUT HE (DECK CADET) JUMPED OVERBOARD. THEN
WIPER WENT TO SHIP'S OFFICE AND DIAL 0 FOR PUBLIC ADDRESS AND SHOUT MANOVERBOARD PORTSIDE. BUT THAT
ANNOUNCEMENT WAS NOT CLEAR ENOUGH. SO WHEN I REACH THE BRIDGE I ASKED SECOND OFFICER WHICH SIDE HE
FELL OVERBOARD BUT SECOND OFFICER ALSO NOT SURE [SIC] WHICH SIDE HE FELL. IN ORDER TO RETURN I ORDERED
HARD STARBOARD TO MANEUVER WILLIAMSON TURN AND RETURN TO RECIPROCAL COURSE AND DROP LIFEBOUY WITH
BOUYANT SMOKE SIGNAL AND SELF IGNITING LIGHT. TURN ON ALL DECK LIGHTS AND POSTED LOOKOUTS x x x40
cralawlawl ibra ry
ChanRobles Vi rtualaw lib rary

At the same time, the Statement of Facts41 submitted by petitioners indicated that after the vessel retraced its course to
where Simon fell, the incident was reported to the Japan Coast Guard and to petitioners' local agents in the Philippines. The
Yokohama Coastguard Patrol also conducted search-and-rescue but to no avail.

Moreover, in their Investigation Report,42 the crew described Simon as a "very silent person, bright student, [f]ast learner
but very sensitive person and will not talk unless you x x x question him. No problems with anybody since he embarked the
vessel [sic]."

The Master Report and Statement of Facts were executed by the Ship Master Arthur Evangelista, who also subscribed and
swore to his statements before a Notary Public.43

In Unicol Management Services, Inc. v. Malipot,44 the Court considered the Master's Report and the Investigation Report,
among others, in ruling that the seaman's beneficiaries were not entitled to death benefits. It noted that these documents
completely detailed the events that transpired prior to and the circumstances leading to the discovery of his death by suicide.

Similarly, in the instant case, the Master's Report as well as the Statement of Facts described the events that occurred prior
to, during and after the incident when Simon went overboard. In particular, Simon declined the Master's invitation for him to
join the party; thereafter, the Master reprimanded him because he performed poorly in the drill; Simon left the meeting and
was later seen to jump overboard by Ocleasa. Added to this narration is the statement of the crew in the Investigation
Report that Simon was a "very sensitive" person.

Also, the Investigation Report addressed the question on why Ocleasa did not sign said report. As stated therein, he already
disembarked from the vessel when the report was executed and was investigated at the (local) office, where he stated that
he saw Simon jump overboard.45

More importantly, the fact that Simon committed suicide is bolstered by the suicide note that he executed. His
note46 reads: chanRob lesvi rtual Lawl ibra ry
0100LT Dec. 30, 2007

Dear loved ones & shipmates,

I cannot take it anymore. Sorry for letting you pay for my shortcomings. I ask you to let me end my life. I cannot bear the
shame of letting you all endure all what is due me. But I happily end my life because I know it is the only [way] I can repay
you [sic]. You suffered for not letting myself obey my Master for a drink [sic], of which, he commenced a drill w/out anyones
[sic] idea[.]

Sayonara & God bless.

w/ you always.
cralawlawl ibra ry
Simon

The suicide note is informative as to why Simon committed suicide. He declined to join the party held prior to the drill and
was reprimanded for his poor performance in said drill. It can, thus, be inferred from the note that he blamed himself for the
difficulties he assumed to have caused his colleagues.

As such, to refute petitioners' position that Simon committed suicide, the burden of evidence shifts to respondent.
Nonetheless, respondent failed to discharge his burden. Respondent relies on the alleged negligence of the Master in ordering
the conduct of the drill and argues that Simon could not have written a suicide note because of the proximity of the time
when the drill was conducted and the time when Simon jumped overboard. Respondent presented no proof that said suicide
note was fabricated, as no specimen of Simon's handwriting was submitted to prove that it was not written by him.

On the contrary, the Court shares the observation of the LA that the signature47 in the suicide note and the signature48 of
Simon in his employment contract appear to be the same.

Hence, by substantial evidence, there are adequate reasons and proof that Simon committed suicide.

Under Section 20(D) of the POEA SEC,49 no compensation or benefits shall arise in case of death of a seafarer resulting from
his willful act, provided that the employer could prove that such death is attributable to the seafarer.

Although Simon died during the term of his contract with petitioners, still, respondent is not entitled to receive benefits
arising from his death. As clearly established, Simon died by his willful act of committing suicide and death under that
circumstance is not compensable under the POEA SEC.

In consideration of the foregoing, the Court finds that the CA erred in setting aside the NLRC Decision which affirmed the LA
Decision dismissing the complaint for lack of merit.

WHEREFORE, the Petition is GRANTED. The February 22, 2012 Decision and July 24, 2012 Resolution of the Court of
Appeals in CA-G.R. SP No. 119775 are REVERSED and SET ASIDE. The October 28, 2010 Decision of the National Labor
Relations Commission in NLRC LAC No. 07-000536-10 is REINSTATED and AFFIRMED. Accordingly, the complaint in NLRC-
NCR OFW Case No. (M)05-07052-09 is DISMISSED.

SO ORDERED.

SECOND DIVISION

G.R. No. 197458, November 11, 2015

NICANOR PINLAC Y RESOLME, Petitioner, v. PEOPLE OF THE PHILIPPINES, Respondent.

DECISION

DEL CASTILLO, J.:

This Petition filed under Rule 45 of the Rules of Court assails the March 29, 2011 Decision1 of the Court of Appeals (CA)
which affirmed with modification the ruling2 of the Regional Trial Court (RTC) of Olongapo City, Branch 72, finding petitioner
Nicanor Pinlac (petitioner) guilty of violation of Section 5(b), Article III of Republic Act (RA) No. 7610 (otherwise known as
the Special Protection of Children Against Child Abuse, Exploitation, and Discrimination Act), which provides: chanRoblesv irt ual Lawlib rary

SEC. 5. Child Prostitution and Other Sexual Abuse. - Children, whether male or female, who for money, profit or any other
consideration or due to the coercion or influence of any adult syndicate or group, indulge in sexual intercourse or lascivious
conduct are deemed to be children exploited in prostitution and other sexual abuse.
The penalty of reclusion temporal in its medium period to reclusion perpetua shall be imposed upon the following:

xxxx

(b) Those who commit the act of sexual intercourse or lascivious conduct with a child exploited in prostitution or subjected to
other sexual abuse: x x x ChanRoblesVi rtualaw lib rary

The prosecution established that on the evening of March 9, 1997, "AAA,"3 a 14-year old boy, went with petitioner to the
Kale Beach Resort in Subic, Olongapo City for initiation rites in a fraternity founded by the latter. After succumbing to
petitioner's "persuasion" to drink alcohol and smoke marijuana, "AAA" lost control of himself ("nawala ako sa sarili"). While in
a daze, stupor, or near total unconsciousness, petitioner isolated "AAA" from his companions and other fraternity recruits,
forcibly disrobed "AAA", and performed oral sex on him by sucking his penis until he ejaculated. The following day or on
March 10, 1997, petitioner again performed oral sex on "AAA" after convincing him anew to ingest alcohol and to smoke
marijuana.

Petitioner denied the charges against him. He disclaimed that he was at the Kale Beach Resort in Subic, Olongapo City on
March 9, 1997; that "AAA" underwent initiation to join a fraternity; that he isolated "AAA" from his companions and other
fraternity recruits; that he forcibly disrobed "AAA" and performed oral sex on him; that he sucked "AAA's" penis until "AAA"
ejaculated; and that on March 10, 1997, he again performed oral sex on "AAA" after convincing the latter anew to ingest
alcohol and to smoke marijuana. He claimed that he was a candidate for barangay kagawad at the time and that he was too
pre-occupied then campaigning for that post, so that he could find no time at all for some other activities, including the
commission of the alleged acts of lasciviousness imputed to him. He insisted that this case was instigated by "BBB," "AAA's"
mother, who was also running for the position of barangay kagawad.

Ruling of the Regional Trial Court

The RTC did not lend credence to the version of petitioner. In a Decision dated January 6, 2010, it found petitioner guilty
beyond reasonable doubt of having violated Section 5(b), Article III of RA 7610, thus: chanRoble svirtual Lawli bra ry

On the basis of the foregoing evidence presented, the Court finds and so holds that the prosecution has presented the
required evidence to prove the guilt of the accused beyond reasonable doubt [of] [violation of Section 05 (b) of Article III of
Republic Act 7610.

Prosecution evidence would show that on March 9, 1997 accused brought the victim [AAA,] a minor, together with other
persons to Kale Beach Resort located in Subic at around 7:00 o'clock in the evening as part of their initiation as x x x recruits
of the fraternity founded by the accused. At the said place, the accused let [AAA] take alcohol, marijuana, and drugs as part
of their initiation. After taking drugs and marijuana the victim lost control of himself (nawala sa sarili) because he was
"high["] at that time. Seeing the situation of the victim, the accused asked their companions to leave the place leaving him
(accused) and the victim in the said place. While the victim was [in that] condition, and taking advantage of such condition of
the victim, the accused sucked his penis. The following day, particularly on March 10, 1997, the accused did the same thing
to the victim, that is, sucking again the minor victim's penis while lying on the sand. Before the accused sucked his penis, the
accused [first] took off x x x his shirt and pants. The victim was [then still] drunk and "high" on drugs.

It was very clear that the prosecution was able to present a complete picture detailing how the accused sexually abused the
minor victim by sucking his penis [on] the night of March 9, 1997 and also on the following day while the victim was under
the influence of liquor and dangerous drugs.

On the other hand, accused['s] defense is merely denial. He denied having in [his] company x x x the victim on said dates.
His denial was also corroborated by a witness who happened to be his friend. The court is not persuaded by the version of
the accused insinuating that the filing of the instant case was concocted and instigated by the mother of the minor victim and
that the victim had asked forgiveness for the same. For one, it is very apparent that the accused was just concocting [a]
story to exculpate himself. Accused stated that there was no occasion on said dates and prior thereto that he was with the
victim because he was always with Leslie Enciro who always accompanied him in his campaign sorties as a candidate for
barangay kagawad. This is, however, hard to believe. The testimony of Leslie Enciro that there was no time that she was not
[in] the company of the accused on said dates due to their campaign activities even made the defense more unreliable.
Denial and alibi are the weakest defense in criminal cases. (People vs. Bulan 459 SCRA 550). Settled is the rule that denial is
essentially the weakest defense and it can never overcome an affirmative testimony particularly when it comes from the
mouth of a credible witness (People vs. Mendoza 450 SCRA 328).

xxxx

Section 5(b) of Republic Act 7610 provides:

Section 5. Child Prostitution and Other Sexual Abuse. - Children, whether male or female, who, for money, profit, or any
other consideration or due to the coercion or influence of any adult, syndicate or group, indulge in sexual intercourse or
lascivious conduct, are deemed to be children exploited in prostitution and other sexual abuse.

The penalty of in its medium period, to reclusion perpetua shall be imposed upon the following: chanRoble svi rtual Lawli bra ry

xxxx
(b) Those who commit the act of sexual intercourse or lascivious conduct with a child exploited in prostitution or subjected to
other sexual abuse: x x x ChanRoblesVi rtualaw lib rary

Undoubtedly, the accused's act of sucking the penis of the minor victim amounts to lascivious conduct. Hence, there is no
doubt that the accused is guilty of the crime charged against him.4 ChanRoblesVirt ualawli bra ry

Thereafter, the RTC disposed decretally as follows -


WHEREFORE, in view of the foregoing considerations, the Court finds the accused NICANOR PINLAC Y RESOLME GUILTY
beyond reasonable doubt for Violation of Section 5 (b) of Republic Act 7610 (Special Protection of Children Against Child
Abuse, Exploitation and Discrimination Act) and hereby sentences him to suffer the indeterminate imprisonment of TWELVE
YEARS (12) YEARS and ONE (1) DAY of Reclusion Temporal as the minimum to FIFTEEN (15) YEARS SIX MONTHS and
TWENTY DAYS of Reclusion Temporal as the maximum, and for the accused to pay the sum of THIRTY THOUSAND PESOS
(P30,000.00) as moral damages.

SO ORDERED.5 ChanRoblesVi rtualaw lib rary

Proceedings before the Court of Appeals

On appeal, petitioner challenged "AAA's" credibility by citing alleged inconsistencies in his testimony vis-a-vis the testimony
of his mother, "BBB." He likewise questioned why it took "AAA" 10 months to report the crime to the authorities. He also
asserted that the judge who penned the Decision was not the judge6who tried and heard the case, hence, did not allegedly
have the opportunity to personally observe the deportment and demeanor of the prosecution witnesses who gave the
testimonies that led to his conviction.

Dismissing petitioner's arguments, the CA held that the government's case was erected upon actual, incontrovertible facts
which proved beyond reasonable doubt that petitioner did in fact commit the crime set forth under Section 5(b), Article III of
RA 7610 i.e., performing lascivious acts upon a child exploited in prostitution or subjected to sexual abuse, and that the
child-victim, in this case "AAA" as clearly and specifically spelled out in the trial court's discussion, was below 18 years of
age.

The CA stressed that -


In the instant case, the act of accused-appellant in disrobing the minor AAA, who was then under the influence of illegal
drugs and liquor after he was made to take them by accused-appellant, and thereafter, sucking AAA's penis, is clearly a
lascivious conduct performed by accused-appellant on AAA.

A child is deemed exploited in prostitution or subjected to other sexual abuse, when the child indulges in sexual intercourse
or lascivious conduct (a) for money, profit, or any other consideration; or (b) under the coercion or influence of any adult,
syndicate or group. The law covers not only a situation in which a child, through coercion or intimidation, engages in any
lascivious conduct. The very title of Section 5, Article III (Child prostitution and Other Sexual Abuse) of RA 7610 shows that
it applies not only to a child subjected to prostitution but also to a child subjected to other sexual abuse. A child is deemed
subjected to "other sexual abuse" when he or she indulges in lascivious conduct under the coercion or influence of any adult.
In the instant case, accused-appellant influenced minor AAA to go to Sta. Cruz, Zambales; made him to take' drugs and
drink liquor; and when he was already high and out of control, accused-appellant performed lascivious conduct on AAA.

When the said lascivious conduct was performed on 09 and 10 March 1997 by accused-appellant on AAA, the latter was
fourteen years old. As indicated in his Certificate of Live Birth (Exhibit "A"), AAA was born on 21 August 1982. During the
pre-trial, the defense stipulated on AAA's birth certificate (Exhibit "A"). BBB, the mother of AAA, also testified that AAA was
born on 21 August 1982. AAA further testified that he was born on 21 August 1982.7 ChanRobles Vi rtua lawlib rary

The CA gave short shrift to petitioner's pale and stale alibi and denial of the sexual abuse charges, appropriately
characterizing these as "weak and self-serving." The CA held such a characterization both telling and compelling in light of
"AAA's" positive and categorical assertions graphically detailing the lewd and lascivious acts perpetrated by the petitioner.

Regarding "AAA's" alleged delay of 10 months in reporting the incident to the authorities, the CA held that there is no
behavioral norm that victims of sexual abuse follow in respect to the time-frame for making such report, each case being
determined by its peculiar milieu and setting; and that assuming for argument's sake that there was indeed some delay in
this case, such delay should not be construed as implying that the accusation might not have been true at all especially in
light of the fact that the victim was a minor.8

Anent petitioner's contention that the judge who wrote the Decision was not the judge who presided over the trial and did
not have the opportunity to personally observe the deportment and demeanor of the witnesses and hence was not in a
position to calibrate the credibility of these witnesses, the CA ruled that -
x x x The fact that the judge who heard the evidence was not himself the one who prepared, signed and promulgated the
decision constitutes no compelling reason to jettison his findings and conclusions, and does not per se render his decision
void. The validity of a decision is not necessarily impaired by the fact that its ponente only took over from a colleague who
had earlier presided at the trial. x x x9 ChanRobles Vi rtualaw lib rary

On March 29, 2011, the CA rendered judgment as follows: chanRoble svirtual Lawlib ra ry

WHEREFORE, premises considered, the appeal is DENIED. The Decision dated 06 January 2010 of the Regional Trial Court of
Olongapo City, Branch 72, in Criminal Case No. 79-1999 finding accused-appellant Nicanor Pinlac y Resolme guilty beyond
reasonable [doubt] for violation of Section 5 (b), Article III of Republic Act No. 7610, is AFFIRMED with MODIFICATION in
that, accused-appellant is hereby sentenced to suffer the indeterminate penalty of imprisonment of 8 years and 1 day
of prision mayor, as minimum, to 17 years, 4 months and 1 day of reclusion temporal, as maximum, and to pay a fine of
P15,000.00; and for him to pay the victim AAA the amounts of P20,000.00 as civil indemnity, and P15,000.00 as moral
damages. Costs against accused-appellant.
cralawlawl ibra ry

SO ORDERED.10 ChanRoblesVi rtua lawlib rary

Hence, this Petition raising the sole issue of: cha nRoblesvi rtua lLaw lib rary

Whether x x x the Court of Appeals erred in giving credence to the testimony of "AAA."11
ChanRobles Vi rtualaw lib rary
ChanRoblesVi rt ualawlib ra ry

Our Ruling

Petitioner claims that the CA erred in its "findings of facts."12 He avers that the factual finding of the CA that the crime was
committed at Kale Beach Resort, Sta. Cruz, Zambales was erroneous; he posits that Kale Beach Resort is in Olongapo City
and not Sta. Cruz which is another local government unit.13Petitioner next insists that the appellate court erred in its
assessment of "AAA's" credibility.14

The Petition lacks merit.

It must be stressed that only questions of law may be raised in a petition for review filed under Rule 45 of the Rules of Court.
The issue raised by petitioner as well as his arguments pertains to factual findings which are not within the ambit of a
petition for review. Our ruling in Ortega v. People15 is pertinent: "The petition being a petition for review, the jurisdiction of
this Court is confined to reviewing questions of law."16

In any event, we find no cogent reason to set aside the findings of the trial court which were affirmed by the CA. After a
thorough review of the records of this case, we find that the CA Decision squares with the evidence and with the law as well
as with the jurisprudential doctrines laid down by this Court. Both the RTC of Olongapo City, Branch 72 and the CA reached
the correct conclusion that petitioner was indeed guilty beyond reasonable doubt of having violated Section 5(b), Article in of
RA 7610. We find, as did the RTC and the CA, that the State had satisfactorily established the following elements constitutive
of the offense charged: "(1) the accused commits the act of sexual intercourse or lascivious conduct; (2) the said act is
performed with a child exploited in prostitution or subjected to sexual abuse; and (3) the child, whether male or female, is
below 18 years of age."17 In this case "AAA" was 14 years and eight months old when he was subjected to sexual abuse by
the herein petitioner on March 9 and 10, 1997. This Court thus finds no reversible error in the assailed Decision.

Penalties and Awards of Damages

Under Section 5, Article III of RA 7610, the penalty of reclusion temporal in its medium period to reclusion perpetua shall be
imposed on those who commit acts of lasciviousness with a child exploited in prostitution or subjected to other sexual abuse.
Notwithstanding the fact that RA 7610 is a special law, the petitioner in this case may enjoy the benefits of the
Indeterminate Sentence Law.18 In applying the Indeterminate Sentence Law, the penalty next lower in degree is prision
mayor in its medium period to reclusion temporal in its minimum period. Thus, the CA correctly imposed the indeterminate
sentence of eight (8) years and one (1) day of prision mayor as minimum, to seventeen (17) years, four (4) months and one
(1) day of reclusion temporal as maximum.

The CA likewise correctly ordered petitioner to pay "AAA" the following amounts: P20,000.00 in the concept of civil
indemnity, P15,000.00 as moral damages, and a fine of P15,000.00 pursuant to Section 31(f), Article XII of RA 7610.19 In
addition, this Court also orders petitioner to pay "AAA" P15,000.00 by way of exemplary damages.20

Finally, we note that the RTC, in an Order21 dated January 21, 2010, allowed petitioner to enjoy his provisional liberty by
posting an appeal bond thru Monarch Insurance Company, Inc. in the amount of P80,000.00 under Bond No. JCR(2)
1004159.22 In conformity with this Decision, the bondsman, Monarch Insurance Company, Inc. is directed to surrender
petitioner to the court of origin. In turn, the RTC of Olongapo City, Branch 72 is directed to order the transmittal of petitioner
to the Bureau of Corrections.

WHEREFORE, the Petition is DENIED. The Decision dated March 29, 2011 of the Court of Appeals in CA-GR. CR. No. 33169
finding petitioner Nicanor Pinlac y Resolme guilty beyond reasonable doubt of having violated Section 5(b), Article III of
Republic Act No. 7610, and sentencing him to suffer the indeterminate penalty of imprisonment ranging from eight (8) years
and one (1) day oiprision mayor, as minimum, to seventeen (17) years, four (4) months and one (1) day of reclusion
temporal, as maximum, and to pay the victim "AAA" the amounts of P20,000.00 as civil indemnity, P15,000.00 as moral
damages, and P15,000.00 by way of fine is AFFIRMED, subject to the MODIFICATIONS that petitioner is also ordered to
pay "AAA" P15,000.00 in the concept of exemplary damages. All damages awarded shall earn interest at the rate of 6% per
annum from finality of this Decision until fully paid.

The bondsman, Monarch Insurance Company, Inc. is DIRECTED to surrender the person of petitioner to the Regional Trial
Court of Olongapo City, Branch 72 within 10 days from notice and to make a REPORTof the fact of surrender to this Court,
also within 10 days. The Regional Trial Court of Olongapo City, Branch 72 is DIRECTED to order or cause the transfer of
petitioner to the Bureau of Corrections within 10 days from the time petitioner was turned over, and to make a report to this
Court of such transfer, also within 10 days. Finally, the Bureau of Corrections is DIRECTED to make a report within 10 days
of petitioner's confinement thereat.
cralawlawl ibra ry

SO ORDERED.
SECOND DIVISION

G.R. No. 192955, November 09, 2015

EDILBERTO P. ETOM, JR., Petitioner, v. AROMA LODGING HOUSE THROUGH EDUARDO G. LEM, PROPRIETOR AND
GENERAL MANAGER, Respondent.

DECISION

DEL CASTILLO, J.:

Assailed in this Petition for Review on Certiorari1 is the January 21, 2010 Decision2 of the Court of Appeals (CA) in CA-G.R.
SP No. 110901. The CA granted the Petition for Certiorari3 filed therewith and set aside the April 30, 2009 Decision4 and June
30, 2009 Resolution5 of the National Labor Relations Commission (NLRC) in NLRC LAC No. 09-003303-08 which affirmed with
modification the August 20, 2008 Decision6 of Labor Arbiter (LA) Eduardo G. Magno in NLRC NCR No. 04-05453-08 and found
Edilberto Etom (petitioner) entitled to unpaid wages, 13th month pay and holiday pay. Also assailed is the July 2, 2010 CA
Resolution7 which denied petitioner's motion for reconsideration.

Factual Antecedents

This case stemmed from a complaint8 dated April 15, 2008 filed by petitioner against Aroma Lodging House (respondent) for
illegal dismissal and money claims. Petitioner alleged that respondent, a business engaged in providing affordable
lodging,9 employed him as roomboy in 1997 with a monthly salary of P2,500.00. He averred that his working hours were
from 5:00 a.m. to 11:00 p.m. from Monday to Saturday, including holidays. His tasks included cleaning the lodging house
and washing towels and bedsheets.10

Petitioner claimed that on February 4, 2008, respondent refused to allow him to report for work. Petitioner argued that
respondent did not inform him of any violation that would warrant his dismissal. He also claimed that he was not given an
opportunity to explain and answer any imputation against him by his employer.11

On the other hand, respondent asserted that it employed petitioner as roomboy in 2000.12 He was paid salary above the
required minimum wage, holiday pay, 13th month pay and overtime pay. Respondent also stated that it provided petitioner
with free meals, allowed him to receive "tips" from customers, and sell bottles left by customers in the lodge. It also gave
him commission on certain occasions.13

Respondent averred that despite its beneficence, petitioner still showed an adverse attitude in work. In particular, he created
trouble within the workplace, stole items from customers and was even charged with rape in 2003.14 Petitioner also figured in
a fistfight with another roomboy, Reynaldo Baccus, whom he tried to stab with a knife on September 2, 2006. He likewise
had an altercation with Arnold Sansona (Sansona), a checker in the lodge, who reprimanded him for watching television
during working hours. He also had a quarrel with another co-worker, Jess Abuca (Abuca). On separate occasions, while
purportedly armed with a knife, petitioner chased Sansona and Abuca.15

Respondent averred that it served upon petitioner a memorandum16 requiring him to explain why he chased a co-employee
with a knife. However, respondent refused to receive said memorandum. Taking into consideration the safety of its
employees and customers, it terminated petitioner for serious misconduct.17

Ruling of the Labor Arbiter

On August 20, 2008, the LA rendered a Decision18 finding petitioner to have been legally dismissed. The LA, however,
ordered respondent to pay petitioner punitive damages amounting to P10,000.00 for non-compliance with the termination
notice requirement, salary differential computed at P199,482.80, holiday pay amounting to P3,107.50 and 13th month pay of
P7,150.00.

Respondent appealed to the NLRC arguing that petitioner was not underpaid.19 It stated that in a "Sama-Samang
Sinumpaang Salaysay"20 - which was submitted in another labor case, - petitioner and another employee averred that they
were regular employees of respondent since 2000 and that they were receiving wages beyond the minimum required by
law.21 Respondent also claimed that it furnished petitioner with a copy of notice to explain and notice of termination but the
latter refused to receive them.22

Ruling of the National Labor Relations Commission

In its April 30, 2009 Decision,23 the NLRC affirmed the ruling of the LA but deleted the award of punitive damages.

The NLRC concurred with the LA ruling that petitioner was underpaid considering that he was receiving only P2,500.00 as
monthly salary. It decreed that petitioner was entitled to receive salary differential amounting to P166,080.38 for three years
computed from February 20, 2005 to February 20, 2008 less 10% thereof for the facilities provided by respondent.
On June 30, 2009, the NLRC denied respondent's motion for reconsideration.24

Undaunted, respondent filed with the CA a Petition for Certiorari insisting that petitioner was not entitled to salary
differential, 13th month pay and holiday pay because he admitted in an affidavit that he had been receiving wages and other
benefits in accordance with law.25 It also asseverated that it was exempt from Minimum Wage Law since it had no more than
10 employees.26

For his part, petitioner argued that the Petition for Certiorari should not be entertained for late filing of the motion for
reconsideration of the NLRC Decision. He contended that respondent received the NLRC Decision on May 13, 2009 but filed a
motion for reconsideration only on May 26, 2009. Thus, he maintained that such filing was three days late.27

Ruling of the Court of Appeals

On January 21, 2010, the CA rendered the assailed Decision28 granting the Petition for Certiorari, the decretal portion of
which reads: chanRoble svirtual Lawlib ra ry

FOR THE STATED REASONS, the petition is GRANTED and the assailed decisions, dated April 30, 2009 and June 30, 2009 of
the National Labor Relations Commission (Second Division), awarding private respondent Edilberto Etom of unpaid wages,
13th month pay and holiday pay are hereby REVERSED and SETASIDE.xxx

SO ORDERED.29 ChanRoblesVi rtua lawlib rary

The CA held that respondent timely filed a motion for reconsideration of the NLRC Decision. It added that "if the motion for
reconsideration was filed out of time, the NLRC would have dismissed it outright, instead of resolving it on its merit."30

Moreover, the CA explained that for having executed an earlier notarized affidavit stating that he received wages above the
required minimum salary, petitioner could not subsequently claim that he was underpaid by respondent.31 It also declared
that there is no factual basis to support the grant of 13thmonth pay and holiday pay in favor of petitioner.32

On July 2, 2010, the CA denied petitioner's motion for reconsideration.33

Hence, petitioner filed the instant Petition raising the following assignment of errors: cha nRoblesvi rtua lLawl ibra ry

1. THE HONORABLE COURT OF APPEALS COMMITTED A VERY GRAVE ERROR WHEN IT BASED ITS CONCLUSION THAT
HEREIN RESPONDENT'S] MOTION FOR RECONSIDERATION OF THE DECISION OF THE NLRC WAS NOT FILED OUT
OF TIME, ON CONJECTURES [sic] DESPITE THE CATEGORICAL ADMISSION OF HEREIN RESPONDENTS [sic] AND THE
MACHINE RECEIVED COPY OF SAID MOTION.

2. THE HONORABLE COURT OF APPEALS COMMITTED A VERY GRAVE ERROR WHEN IT UPHELD THE JOINT-AFFIDAVIT
OF HEREIN PETITIONER AND HIS CO-EMPLOYEE AS ADMISSION AGAINST INTEREST DESPITE THE DOCUMENTARY
EVIDENCE THAT PETITIONER WAS NOT PAID HIS MINIMUM WAGE AND DESPITE DECISIONS OF THE HONORABLE
SUPREME COURT ON QUITCLAIMS AND WAIVERS.

3. THE COURT OF APPEALS COMMITTED A VERY GRAVE ERROR WHEN HEREIN PETITIONER WAS NOT GIVEN THE
OPPORTUNITY TO FILE A REPLY AND SUCH OTHER RESPONSIVE PLEADING TO THE PETITION FOR CERTIORARI,
PURSUANT TO SECTION 6 OF RULE 65, AND/OR MEMORANDUM PURSUANT TO SECTION 8 THEREOF.34

Petitioner reiterates that respondent's motion for reconsideration of the NLRC Decision was filed beyond the reglementary
period.35 He also maintains that he was underpaid, and was not given 13th month pay and holiday pay by respondent.36

In addition, petitioner alleges that his affidavit dated March 19, 2004 was executed during the pendency of a criminal case
against him. He contends that respondent pressured him to sign it.37 He likewise avers that he is illiterate and does not
understand the implication of said affidavit.38 He further explains that he was unable to disclaim the voluntary execution and
authenticity of the affidavit because he was not given the chance to file a memorandum where he could have discussed all
the issues in the Petition for Certiorari.39

For its part, respondent reiterates the timely filing of its motion for reconsideration before the NLRC. It also agrees with the
CA ruling giving evidentiary value to petitioner's affidavit.40

Our Ruling

As a rule, the perfection of appeal within the period required by law is mandatory and jurisdictional. Failure to appeal within
such period results in the assailed decision becoming final and executory. As regards a motion for reconsideration of a
decision of the NLRC, the same must be filed within 10 days from the receipt of the assailed decision. It must, nevertheless,
be emphasized that the NLRC is not bound by the technical rules of procedure. Thus, in deciding labor cases, the NLRC is
allowed to liberally apply its rules.41
In this case, petitioner alleges that the subject motion for reconsideration was filed beyond the 10-day reglementary period.
However, we note the explanation made by respondent for the seeming late filing of its motion to wit: chanRob lesvi rtua lLawl ibra ry

x x x [I]t is public knowledge that May 23, 2009 happens to be a Saturday, hence, under established rules and relevant
jurisprudence, the filing of petitioners' (herein respondent) Motion for Reconsideration should be on May 25, 2009, the next
working day after May 23, 2009. On May 25, 2009, Petitioners filed their Motion for Reconsideration before the public
respondent, however, through a glitch in the docket machine date and time puncher of the NLRC at that date and hour, the
petitioners' Motion for Reconsideration date of filing was erroneously marked and stamped as May 26, 2009 1:47 A.M.
Petitioners only managed to take notice of the mistake in the date and time of the docket of their Motion for Reconsideration
on the following day, May 26, 2009, the real May 26, 2009. Petitioners thence quickly went to the NLRC Docket Section to
report the mistake and x x x was [sic] told by the Docket Section Personnel that they have already corrected the erroneous
date and time of petitioners' docketed Motion for Reconsideration to the x x x correct May 25, 2009, 1:47 P.M. and have
forwarded the Motion for Reconsideration of the [petitioners to the NLRC x x x Indeed, it would be plainly absurd for a
government office docket section like that of the public respondent NLRC to be open for business at such unholy hour of 1:47
A.M. x x x42 ChanRoblesVi rt ualawlib ra ry

Based on the foregoing explanation, we are convinced that respondent timely filed its motion for reconsideration of the NLRC
Decision. In fact, the NLRC took cognizance of it and decided the motion on the merit.

In any event, we held in Opinaldo v. Ravina43 that the NLRC may liberally apply its rules and decide a motion for
reconsideration on the merits. We upheld the liberal application by the NLRC of its technical rules to resolve the issues on the
merits because "a full resolution of the case on the merits is the more palpable explanation for the liberal application of its
rules."44

Petitioner also argues that he failed to disclaim the voluntary execution of the affidavit - where he admitted to have been
paid wages beyond the minimum required by law - because he was not given the opportunity to file a memorandum.

His contention is unmeritorious.

Section 6,45 Rule 65 of the Rules of Court provides that before the court gives due course to a petition for certiorari, it may
require the respondent to file a comment to the petition. Afterwards, the court may require the filing of a reply and such
pleadings as it may deem necessary. In turn, Section 846 of Rule 65 states that after the comment or other pleadings are
filed or the period for their filing has expired, the court may require the parties to file memoranda.

It is thus clear that the filing of a reply and other subsequent pleading, as well as memoranda, is subject to the sound
judgment of the court. "The word 'may' when used in a statute is permissive only and operates to confer discretion x x
x."47 In this case, the CA, in the exercise of its judgment, may or may not require the filing of any pleading and submit the
case for resolution, after the petition and the comment thereto had been filed.

Anent the substantive issue raised by petitioner, the power of the Court to review a CA Decision in labor cases is limited.
Specifically, in a petition for review under Rule 45 of the Rules of Court, the Court has to resolve whether the CA properly
determined the presence of grave abuse of discretion on the part of the NLRC in rendering its Decision, and not whether the
NLRC Decision on the merits was correct. However, while the strict inquiry on the correctness of evaluation of evidence is not
required in a certiorariproceeding, it is still necessary to determine that the conclusions of labor tribunals were supported by
substantial evidence. This is because a decision unsupported by substantial evidence is a judgment rendered with grave
abuse of discretion.48

In addition, as a rule, once the employee has asserted with particularity in his position paper that his employer failed to pay
his benefits, it becomes incumbent upon the employer to prove payment of the employee's money claims. In fine, the burden
is on the employer to prove payment, rather than on the employee to establish non-payment.49

Both the LA and the NLRC held that respondent did not pay petitioner the required minimum wage, holiday pay and
13th month pay. The CA, however, overturned the factual findings of these labor tribunals. Thus, we deem it necessary to
review the facts on record.

While a notarized document is presumed to be regular such presumption is not absolute and may be overcome by clear and
convincing evidence to the contrary. The fact that a document is notarized is not a guarantee of the validity of its contents.50

Here, petitioner is an unlettered employee who may not have understood the full import of his statements in the affidavit.
Notably, petitioner, along with a co-worker did not state the specific amount of what they referred as salary above the
minimum required by law. Their statement only reads as follows: cha nRoblesvi rt ual Lawlib rary

Na kami ay namamasukan bilang mga 'roomboy' sa naturang Aroma Lodge magmula pa noong taong 2000 at bilang mga
regular na mga empleyado nito, kami ay nakakatangap ng pasueldo na lagpas sa 'minimum wage' na takda ng batas, bukod
pa sa libreng tirahan (stay-in), pagkain, [paggamit] ng ilaw at tubig, at mga 'tips' at komisyon sa mga parokyano ng Aroma
Lodge.51ChanRobles Virtualawl ibrary

As found by the LA, respondent did not present substantial evidence that it paid the required minimum wage, 13th month pay
and holiday pay in favor of petitioner.52 Respondent's mere reliance on the foregoing affidavit is misplaced because the
requirement of established jurisprudence is for the employer to prove payment, and not merely deny the employee's
accusation of non-payment on the basis of the latter's own declaration.

In conclusion, we find that the CA erred in ascribing grave abuse of discretion on the part of the NLRC in awarding salary
differential, 13th month pay and holiday pay in favor of petitioner.

WHEREFORE, the Petition is GRANTED. The January 21, 2010 Decision and July 2, 2010 Resolution of the Court of Appeals
in CA-G.R. SP No. 110901 are REVERSED and SET ASIDE. Accordingly, the April 30, 2009 Decision and June 30, 2009
Resolution of the National Labor Relations Commission in NLRC LAC No. 09-003303-08 are REINSTATED and AFFIRMED.

SO ORDERED. cha

SECOND DIVISION

G.R. No. 211638, October 07, 2015

MARK ANTHONY SASO, Petitioner, v. 88 ACES MARITIME SERVICE, INC. AND/OR CARMENCITA A. SARREAL AND
LIN WEN YU, Respondents.

RESOLUTION

DEL CASTILLO, J.:

This Petition for Review on Certiorari1 assails the September 18, 2013 Decision2 and March 5, 2014 Resolution3 of the Court
of Appeals (CA) in CA-G.R.SP No. 124369.

Factual Antecedents

Petitioner Mark Anthony Saso (Saso) was engaged by respondent 88 Aces Maritime Services, Inc. (88 Aces) on behalf of its
principal, respondent Lin Wen Yu (Lin Wen Yu), as a fisherman on board the latter's fishing vessel in Taiwan.

The employment was for a period of 24 months and with an agreed monthly salary of NT$ 17,280.00. After completing the
requirements for his deployment including the mandatory Pre-Employment Medical Examination (PEME) where he was
declared "fit to work/fit for sea service", Saso left the Philippines on February 3,2010.

Not long thereafter or on March 12, 2010, Saso figured in an accident on board the vessel. While in the process of hauling
their catch, a hanging fishnet loaded with fish accidentally knocked him down. While still lying on the ground, the loaded
fishnet and the huge rope holding it crashed into his right thigh thereby fracturing it. As a result, Saso had to be operated on
twice in two different hospitals in Taiwan. He was thereafter repatriated and arrived in the country on April 20,2010 in
crutches.

On August 3, 2010, Saso filed before the Labor Arbiter (LA) a Complaint4 for Disability Benefits, Reimbursement of Medical
Expenses, Sickness Allowance, Damages and Attorney's Fees against 88 Aces, its Managing Director, respondent Carmencita
A. Sarreal, and Lin Wen Yu.

Ruling of the Labor Arbiter

In his pleadings,5 Saso claimed that upon his arrival in the Philippines, respondents already left him on his own. In fact,
respondents did not even care to send somebody to fetch and assist him at the airport despite them being fully aware of his
condition. Worse, when by his own initiative he presented himself to the office of 88 Aces on April 23, 2010, he was merely
told that he should first shoulder the expenses for his continued medical treatment subject to reimbursement only upon
proper documentation. Thus, he was constrained to spend for all his medical needs.

It was only on June 21, 2010 that respondents summoned him to report to their office for medical examination.6 In
compliance, Saso presented himself to them on July 1, 2010 and was referred to by respondents to the company-designated
physician, Dr. Rafael S. Recto (Dr. Recto) of the Manila Doctor's Hospital who examined him on even date.

Subsequent, or on August 3, 2010, Saso filed the said Complaint against On September 3, 2010, Saso was again seen by Dr.
Recto who then issued a medical bulletin stating as follows: cralawlawl ibrary

Mr. Mark Anthony Saso was first seen last July 1, 2010 [f]or evaluation of an injury sustained while on board a ship. He had
a communuted fracture of his right femoral shaft when a heavy tackle fell on his right thigh. Treatments were done in Taiwan
[wherein] two surgeries were done two weeks apart.

A dynamic intramedullary nail was placed with multiple [circlage] wires.

When seen, he was walking with a pair of crutches. His x-ray then showed callous formation. He has a shortening of one inch
on the right leg. He was [advised] to undergo physical therapy to strengthen his thigh muscles.

He was seen again last September 3 x x x with new x-rays revealing further callous formation. He was also walking with full
weight on his right lower extremity. He also complained of right sided back pain.
Examination showed a shortening of one inch on the right [leg] with weak quadriceps muscle.

He was [advised] to continue strengthening his quadriceps muscles and to put a shoe lift on the right. He was also told to
strengthen back muscle with exercises.

He is presently walking without walking aides with a short leg limp on the right.7 chan rob leslaw

However, due to the fact that his right leg has not been restored to its normal condition and also that Dr. Recto failed to
issue an assessment of his disability, Saso consulted Dr. Manuel Fidel M. Magtira (Dr. Magtira) of Casa Medica Inc. who, after
examining him, issued a Medical Report8 dated September 8, 2010 which states in part, viz.: cralawlawl ibra ry

This is the case of Mr. Mark Anthony M. Saso, a 24[-]year old male, resident of Phase I, Blk. 13, Lot 2, Eastwood Subd., San
Isidro, Rodriquez, Rizal. He [complained of] pain on the right thigh. His present condition apparently started on March 12,
2010 when the [patient's right leg] was crushed by a load of fish in a net [causing] injury to his right lower extremity while
on board the ship. He was given emergency splinting and bandaging initially and was brought to a [h]ospital in Taiwan
wherein X-ray was done. He was subjected to surgery wherein ORIF with M nailing was done. He was confined for ten days
and was discharged [in an improved condition] but still in pain. On March 29, 2010, he was brought to another hospital in
Taiwan wherein he [was] again x x x subjected to surgery [where] ORIF with circlage wiring and screw fixation [were done].
On April 20,2010, he was repatriated. On April 29,2010, he [consulte the] Philippine [Orthopedic] Center and was subjected
to physiotherapy.

On physical examination the patient is fairly nourished, well[-]developed, on crutched ambulation. There is a presence of 12
inches incision scar on the lateral aspect of his right thigh. Atrophy of the thigh and calf muscle was noted. There [is a 1-cm]
leg length discrepancy noted. There is limitation of motion of the right hip and knee. Numbness of the right lower extremities
was noted.

Result of X-ray done in Marikina Valley Medical Center dated: 05/18/10

RIGHT FEMUR:
FINDINGS: chanRoblesvi rtua lLawl ibra ry

Orthopedic rod, screws and surgical wires are seen transfixing a comminuted fracture involving the proximal and middle
3rd of the right femur.

Moderate callus formation is documented.


Mr. Saso remains incapacitated. Despite his previous surgeries, he [continues to experience] pain on his right
lower extremities. He walks with limitation. He [cannot] walk [without] the aid of x x x crutches. He has lost his
pre[-]injury capacity and is UNFIT to work back at his previous occupation due to the said impairment. As he
has lost his pre[-]injury capacity [,] he is partially and permanently disable with Grade 10 impediment based on
[the] POEA contract.9
chanrobles law

For their part, respondents averred that after the accident they properly attended to all of Saso's medical needs while he was
still in Taiwan; Saso came home to the Philippines with a companion, a certain Sonia Lianko, who upon arrival at the airport
told him that they should proceed directly to 88 Aces for post-employment medical examination but the latter refused; Saso
was summoned several times by respondents to present himself for post-employment medical examination but he failed to
heed the same; and, despite such failure, respondents still accommodated Saso's request for reimbursement of medical
expenses. In view of these, respondents argued that Saso is not entitled to his claims. Besides, per respondents' narration in
their Position Paper,10 the company-designated physician already issued on September 23, 2010 an assessment of his
disability as Impediment Grade 13.

In a Decision11 dated April 15, 2011, the LA ruled as follows:cralawlawl ibra ry

When [Saso] was repatriated on April 20, 2010, it was expected as required by Section 20[B], paragraph 3 x x x that the
company-designated physician must [assess] [his] disability or fitness to work but in no case shall the period exceed 120
days. [Saso] was repatriated on April 20, 2010 but until September 3, 2010, the company[-]designated physician failed to
declare his assessment of [Saso's] disability or fitness to work, hi the premises, as ruled in

the case of Crystal Shipping, Inc. v. Deo Natividad, G.R. No. 154798, October 20, 2005, 473 SCRA 567, 568, [Saso] is
already entitled to permanent total disability benefits, or the equivalent of US$60,000.00. The Supreme Court, in particular
held that:

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
attainment 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 one's earning capacity.
In the instant case, [Saso] was unable to perform his job as Fisherman since his repatriation on April 20, 2010 until the
filing of the complaint on September 17, 2010, or for more than 120 days. In the case of Leopoldo Abante vs. KJGS
Fleet Management Manila, et al., G.R. No. 182430, December 4, 2009, it has been held that 'given a seafarer's entitlement to
permanent disability benefits when he is unable to work for more than 120 days, the failure of the company-designated
physician to pronounce petitioner fit to work within the 120-day period entitled him to permanent total disability in the
amount of US$60,000.00.'

Regarding [Saso's] claim for sickness allowance, it appears from [his] reply that he was already paid an amount equivalent
to his three (3) months['] salary, or for a period of only ninety (90) days. Thus, he is entitled to one (1) month salary, or the
amount of NT$ 17,280.00 to complete his sickness allowance equivalent to 120 days.

The claims for reimbursement of medical expenses and for moral and exemplary damages, for lack of evidence must be
denied.

Finally, [Saso] being represented by counsel in the instant suit, it is but just and [fair] that he is entitled to an award
equivalent to ten percent (10%) of the total judgment award as and for attorney's fees.

WHEREFORE, all the foregoing premises being considered, judgment is hereby rendered ordering the respondents] to pay
jointly and solidarily [Saso] the sum of US$60,000.00 as permanent total disability benefits, and NT$7,280.00 as balance of
his sickness allowance, plus ten percent (10%) of the foregoing judgment awards as and for attorney's fees.

All other claims of [Saso] are dismissed for lack of merit.

SO ORDERED.12
chanrobles law

Ruling of the National Labor Relations Commission (NLRC)

In their appeal, respondents pointed out, among others, that the Complaint was filed on August 3, 2010 and not on
September 17, 2010 as stated by the LA in his Decision. Hence, from Saso's repatriation on April 20, 2010 up to the filing of
the Complaint on August 3, 2010, the period of 120 days within which the company-designated physician must declare him
fit to work or assess his disability had not yet lapsed. Respondents thus argued that the Complaint against them was
prematurely filed. In any case, they asserted that Saso's failure to present himself for post-employment examination within
three days from his repatriation negated his entitlement to the claimed benefits.

On December 20, 2011, the NLRC issued a Decision13 finding the appeal meritorious. It found that Saso failed to submit
himself to post-employment examination within three days from his repatriation and this precluded him from claiming any
compensation benefit. The NLRC also subscribed to respondents' observation that the Complaint was prematurely filed
considering that the 120-day presumptive disability period, reckoned from Saso's arrival in the country on April 20, 2010,
was yet to lapse on August 19, 2010 or after the Complaint was filed on August 3, 2010.

The dispositive portion of the NLRC Decision reads: cralawlawlib ra ry

WHEREFORE, premises considered, the assailed Decision is hereby reversed and set aside and a new one entered dismissing
the complaint for lack of merit.

SO ORDERED.14 chanrobles law

Saso's Motion for Reconsideration15 thereto was denied by the NLRC in a Resolution16 dated February 17, 2012.

Ruling of the Court of Appeals

In his Petition for Certiorari,17 Saso insisted that he reported to 88 Aces on April 23, 2010, or within three days from his
repatriation, for post-employment medical examination. However, respondents merely advised him to shoulder his own
medical expenses subject to reimbursement. Hence, on the same day, Saso went to the Philippine Orthopedic Center and
had himself medically examined as evidenced by a Medical Certificate18 issued by the said hospital. Also, to prove the
arrangement that respondent would just reimburse him of his medical expenses, Saso referred to an acknowledgement
receipt dated June 3, 2010 showing his receipt of the amount of P3,849.5019 as reimbursement of his medical expenses. He
further averred that although respondents indeed advised him to report for a medical check-up, the same was belatedly
made on June 21, 2010. Saso thus argued that the absence of a timely post-employment medical examination should not
prejudice his rightful claims for compensation since respondents were the ones who refused to provide him with the same.
Anent the 120-day presumptive disability period, Saso averred that the said period is not for the purpose of computing the
timeliness of the filing of the Complaint. Rather, it serves as a time-frame for the company-designated physician to either
declare a seafarer fit to work or to issue an assessment of disability. Thus, to Saso, even if the Complaint was filed ahead of
any disability assessment, this procedural infirmity was cured by the subsequent issuance of the respective disability
assessments of his independent physician and of the company-designated physician. Besides, technicalities should not
override the merits of the case especially in labor cases.
In a Decision20 dated September 18, 2013, the CA declared Saso as not entitled to total and permanent disability benefits
since he failed to comply with the mandatory 3-day reporting requirement. It also ruled that since his Complaint was filed
before the lapse of the 120-day period, he had no cause of action against respondents at the time of its filing. Ultimately, the
CA held thus: cralawlawlibra ry

IN VIEW OF ALL THESE, the Petition is DENIED.

SO ORDERED.21
chanrobles law

Saso's Motion for Reconsideration22 thereto was denied by the CA in a Resolution23 dated March 05, 2014.

Hence, this Petition.

Our Ruling

There is partial merit in the Petition.

A review of the facts is warranted in this


case; the absence of post-employment
examination does not defeat Saso's right to
claim for compensation
and benefits.

"Generally, the Court does not review factual questions, primarily because the Court is not a trier of facts."24 "However, in
instances where the judgment was premised on a misapprehension of facts or when certain material facts and circumstances
were overlooked and which, if taken into account, would alter the result of the case, a review of the facts by this Court is
warranted."25 cralawred

Relevant portions of Section 20(B) of the 2000 Philippine Overseas Employment Administration-Standard Employment
Contract (POEA-SEC) read: cralawlawli brary

Section 20. COMPENSATION AND BENEFITS

xxxx

B. COMPENSATION AND BENEFITS FOR INJURY OR ILLNESS

The liabilities of the employer when the seafarer suffers work-related injury or illness during the term of his contract are as
follows: cha nRoblesv irt ual Lawlib rary

xxxx

2. x x x

[I]f after repatriation, the seafarer still requires medical attention arising from said injury or illness, he shall be so provided
at cost to the employer until such time he is declared fit or the degree of his disability has been established by the company-
designated physician.

3. Upon sign-off from the vessel for medical treatment, the seafarer is entitled to sickness allowance equivalent to his basic
wage until he is declared fit to work or the degree of permanent disability has been assessed by the company-designated
physician x x x

For this purpose, the seafarer shall submit himself to a post-employment medical examination by a company-
designated physician within three working days upon his return except when he is physically incapacitated to do
so, in which case, a written notice to the agency within the same period is deemed as compliance. Failure of the
seafarer to comply within the mandatory reporting requirement shall result in Ms forfeiture of the right to claim
the above benefits. (Emphasis supplied) cha nro bleslaw

The NLRC and CA both held that Saso failed to submit himself for post-employment medical examination within three days
from his repatriation thereby forfeiting his right to file a claim. However, the Court notes that in so ruling, the NLRC and the
CA simply side-swept Saso's allegation that he reported to 88 Aces on April 23, 2010 but was merely told by the latter to
shoulder his medical expenses subject to reimbursement upon proper documentation. This is despite the fact that (1) Saso
has been raising this all along, i.e., in his Reply26 with the LA, in his Comment/Opposition27 and Motion for
Reconsideration28with the NLRC, in his certiorari petition with the CA,29 and in the present Petition, contrary to respondents'
averment that he only did so before the CA,30 and, (2) respondents never categorically denied such claim. Moreover, Saso's
willingness to undergo a post-medical examination despite being told by respondents to just shoulder his medical expenses is
shown by the fact that on the same day, he had himself medically examined in the Philippine Orthopedic center. Also, none
other than respondents' own evidence bolsters his allegation. In their Reply31 before the LA, respondents attached thereto as
Annex "12" an acknowledgment receipt, viz:. c ralawlawl ibra ry

Date: 6/3/10

Received the Payment for Medication Reimbursement dated April 23, 2010 with the total amount of P3,849.50.

Received and signed this 6/3/10 day of May 2010 at Quezon City. Signed by: chanRoblesv irt ual Lawlib rary

Sgd.
MARK ANTHONY M. SASO
Fisherman
Arrival Date: April 20, 2010 (Taipei-Manila)32cha nrob leslaw

Significantly, per the above acknowledgement receipt, respondents reimbursed Saso for the medical expenses he incurred on
April 23, 2010, the same date that he claims to have reported to the office of 88 Aces for post-medical examination.

On the other hand, respondents' averment that they summoned Saso several times for post-medical examination but was
ignored by the latter cannot just be accepted hook, line and sinker. In their Appeal Memorandum33 with the NLRC,
respondents averred that as early as April 27, [2010], Saso went to the office of 88 Aces to ask for reimbursement of his
medical expenses. During the same, an employee of 88 Aces, Cherry Nazareth (Nazareth) allegedly asked Saso to undergo
post-medical examination but the latter refused. This allegation, however, is unsupported by competent proof. While
respondents submitted Nazareth's affidavit to supposedly attest to the same, the said sworn statement, standing alone, is
self-serving and therefore cannot be accorded considerable weight.34 What the Court observes is that respondents could have
easily proved their claimed willingness to comply with their part of the bargain by showing that they issued Saso a referral
for post-employment examination. However, on the said date (April 27, 2010) and on another occasion that Saso went to 88
Aces to claim the reimbursement for his medical expenses as shown by the above-quoted acknowledgement receipt (June 3,
2010), no such referral was issued him.

Anent respondents' written advice of June 21, 2010 wherein they requested Saso to report to their office for medical check-
up, the same cannot also be given any credence for the obvious reason that it was made way beyond the 3-day mandatory
reporting period. As averred by Saso, such issuance by respondents of the written advice is a mere afterthought to make it
appear that they complied with the requirements of the POEA-SEC. Had respondents been truly keen in having him undergo
a post-employment examination, they should have furnished him such advice when he earlier went to their office but did not
do so. It bears to stress that in the same way that a seafarer has the duty to faithfully comply with and observe the terms
and conditions of the POEA-SEC, the employer also has the duty to provide proof that the procedures laid therein were
followed.35 And in case of doubt in the evidence presented by the employer, the scales of justice should be tilted in favor of
the seafarer pursuant to the principle that the employer's case succeeds or fails on the strength of its evidence and not the
weakness of that adduced by the employee.36

In view of the foregoing, the Court lends more credence to Saso's allegation that he reported to 88 Aces on April 23, 2010 or
within three days from his repatriation in compliance with the mandatory reporting requirement and, that it is actually
respondents who failed to fulfill their part of the obligation when they did not provide him with a timely post-employment
medical examination. As held, the absence of a post-employment medical examination cannot be used to defeat a seafarer's
claim when the failure to subject him to such requirement was not due to his fault but to the inadvertence or deliberate
refusal of the employer.37 Hence, contrary to the rulings of the NLRC and the CA, Saso cannot be considered to have forfeited
his right to claim compensation and benefits.

Nevertheless, Saso is not entitled to toted


and permanent disability benefits.

The Court held in Vergara v. Hammonia Maritime Services, Inc.38 that: cralawlawlib ra ry

As [the relevant provisions of the Labor Code and the POEA SEC] operate, the seafarer, upon sign-off from his vessel, must
report to the company-designated physician within three (3) days from arrival for diagnosis and treatment. For the duration
of the treatment but in no case to exceed 120 days, the seaman is on temporary total disability as he is totally unable to
work. He receives his basic wage during this period until he is declared fit to work or his temporary disability is acknowledged
by the company to be permanent, either partially or totally, as his condition is defined under the POEA Standard Employment
Contract and by applicable Philippine laws. If the 120 days initial period is exceeded and no such declaration is made because
the seafarer requires further medical attention, then the temporary total disability period may be extended up to a maximum
of 240 days, subject to the right of the employer to declare within this period that a permanent partial or total disability
already exists. The seaman may of course also be declared fit to work at any time such declaration is justified by his medical
condition.39
chan rob leslaw

Pursuant to the above pronouncement, the Court declared in C.F. Sharp Crew Management, Inc. v. Taok40 that the 120-day
or 240-day period and the obligation of the law imposed on the employer are determinative of when a seafarer's cause of
action for total and permanent disability may be considered to have arisen. The instances when a seafarer may pursue an
action for total and permanent disability benefits were then enumerated therein as follows: "(a) when the company-
designated physician failed to issue a declaration as to his fitness to engage in sea duty or disability x x x after the lapse of
the 120-day period and there is no indication that further medical treatment would address his temporary total disability
[even if the period is extended] to 240 days; (b) 240 days had lapsed without any certification being issued by the company-
designated physician; (c) the company-designated physician declared that he is fit for sea duty within the 120-day or 240-
day period, as the case may be, but his physician of choice and the doctor chosen under Section 20-B(3) of the POEA-SEC
are of a contrary opinion; (d) the company-designated physician acknowledged that he is partially permanently disabled but
other doctors x x x he consulted, on his own and jointly with his employer, believed that his disability is not only permanent
but total as well; (e) the company-designated physician recognized that he is totally and permanently disabled but there is a
dispute on the disability grading; (f) the company-designated physician determined that his medical condition is not
compensable or work-related under the POEA-SEC but his doctor-of-choice and the third doctor selected under Section 20-
B(3) of the POEA-SEC found otherwise and declared him unfit to work; (g) the company-designated physician declared him
totally and permanently disabled but the employer refuses to pay him the corresponding benefits; and (h) the company-
designated physician declared him partially and permanently disabled within the 120-day or 240-day period he remains
incapacitated to perform his usual sea duties after the lapse of the said periods."41

Unfortunately for Saso, none of the above instances justifies his claim for total and permanent disability benefits. As may be
recalled, he filed his Complaint on August 3, 2010 or after a mere 105 days from his repatriation on April 20, 2010. Clearly,
the 120-day period had not yet lapsed at that time. Moreover, the company-designated physician had not yet issued any
declaration as to his fitness or disability. This is considering that at the time of such filing, Saso was still under the care of Dr.
Recto as shown by the fact that he was subsequently seen by the said doctor on September 3, 2010. While Saso was able to
secure a medical report from Dr. Magtira who assessed him to be suffering from permanent disability of grade 10 and
declared him unfit to resume work in his previous occupation, the same is useless and did not provide him the cause of
action for total and permanent disability benefits.42 "Indeed, a seafarer has the right to seek the opinion of other doctors
under Sec. 20-B(3) of the POEA-SEC but this is on the presumption that the company-designated physician had already
issued a certification as to his fitness or disability and he finds this disagreeable. Under the same provision, it is the
company-designated physician who is entrusted with the task of assessing a seafarer's disability and there is a procedure to
contest his findings."43 Without a doubt, Saso has not yet acquired a cause of action for total and permanent disability
benefits when he filed his Complaint. At that time, he was, in legal contemplation, considered to be temporarily disabled and
thus not entitled to total and permanent disability benefits.44

Saso's non-entitlement to total and


permanent disability benefit does not rule
out his right to the other benefits provided
for by the POEA-SEC.

In Javier v. Philippine Transmarine Carriers, Inc.45 the Court clarified that in cases where a seafarer suffers work-related
injury or illness during the term of his contract, the employer under the POEA-SEC has three separate and
distinct liabilities to the former, to wit: (1) provide, at its cost, for the medical treatment of the repatriated seafarer for the
illness or injury that he suffered on board the vessel until the seafarer is declared fit to work or the degree of his disability is
finally determined by the company-designated physician, conditioned upon the 3-day mandatory reporting requirement; (2)
provide the seafarer with sickness allowance that is equivalent to his basic wage until the seafarer is declared fit to work or
the degree of his permanent disability is determined by the designated physician within the period of 120 days or 240 days
as the case may be; and, (3) once a finding of permanent total or partial disability is made within the aforementioned period,
to pay the seafarer disability benefits for his permanent total or partial disability caused by the work-related illness or
injury.46

It is clear from the above that while Saso is not entitled to total and permanent disability benefits, this does not rule out his
right to the other benefits provided for under the POEA-SEC such as reimbursement for medical expenses, sickness
allowance and benefit for partial disability caused by a work-related injury. However, before the Court dwells on Saso's
entitlement to the said benefits, it must first be emphasized that the company-designated physician already issued an
assessment of Saso's injury as Impediment Grade 13 on September 23, 2010 or 156 days from Saso's arrival in the country
on April 20, 2010.47 The certification of the company-designated physician reads as follows: c ralawlawl ibra ry

September 23, 2010

88 Aces Maritime Services Incorporated


Ms. Lilian J. Villarica
President

Re: Mark Anthony Saso


Request for Impediment Grade

Dear Madam: chanRoblesvi rtua lLawl ibra ry

We want to inform your good office that based on the assessment of our affiliated orthopedic surgeon, Dr. Rafael Recto, Mr.
Mark Anthony Saso can be categorized with Impediment Grade 13 (Shortening of a lower extremity from one to three
centimeters with either joint lesion or disturbance of weight bearing joint).

This letter is made for your reference. Thank you very much. Sincerely,
(Sgd.)
Magdalena R. Cruz, M.D.
ATTENDING PHYSICIAN48 chanroble slaw

Notably, the said issuance which was made beyond the 120-day period but within the 240-day period is justified by the
September 3, 2010 medical bulletin released by Dr. Recto prior to the disability assessment which shows that at that time (or
16 days after the lapse of the 120-day period), Saso's condition still requires further therapy, i.e., he was advised to continue
strengthening his quadriceps muscles, put a shoe lift on the right leg, and strengthen back muscles with exercises.

Going now to Saso's entitlement to the above-mentioned benefits, the Court earlier declared that the absence of post-
employment medical examination does not bar Saso from claiming the benefits that are rightfully due him. Nevertheless, his
claim for reimbursement of medical expenses in the amount of P25,857.00 must be disallowed for being not supported by
receipts. At any rate, the records show that respondents already reimbursed him the amount of P3,849.50 for his medical
expenses. With respect to sickness allowance, Saso admitted in his Reply49 with the LA that he already received the amount
of NT$51,200.00 which is equivalent to his salary for three months. Reckoned from his arrival in the Philippines on April 23,
2010, the said amount covers his compensation for only until July 23, 2010. Therefore, Saso is'still entitled to receive from
respondents sickness allowance covering the period July 24, 2010 to September 23, 2010 when the company-designated
physician issued an assessment of his disability, or equivalent to his two months' salary50 amounting to NT$34,560.00.
Finally, while it is true that Saso's claim for total and permanent disability benefit is premature, the fact remains that he
sustained a work-connected injury that did not only impair his physical appearance but also his earning capacity which, thus,
needs to be compensated. Even respondents acknowledged this in their Position Paper with the LA when they asserted that
Saso is entitled to disability compensation commensurate to Impediment Grade 13 under Section 32 of the POEA-SEC. On
this score, the Court deems it proper to award Saso partial disability benefit in accordance with the findings of the company-
designated physician. Under Section 32 of the POEA-SEC, the disability allowance for Impediment Grade 13 is US$50,000.00
multiplied by the degree of impediment which is 6.72%. Saso is thus entitled to US$3,360.00, to be paid in Philippine
Currency equivalent to the exchange rate prevailing at the time of payment. Attorney's fees cannot, however, be granted
since in the light of the factual milieu of this case, respondents were well within their rights to deny Saso's claim for total and
permanent disability benefit.

WHEREFORE, the Petition is PARTLY GRANTED. Respondents are ordered to pay jointly and solidarity petitioner Mark
Anthony Saso sickness allowance in the amount of NT$34,560.00 and partial disability benefit in,the amount of US$3,360.00
or their peso equivalent at the time of payment.

SO ORDERED. chanroblesvi rtua llawli bra ry

SECOND DIVISION

G.R. No. 201535, October 05, 2015

NEC SYSTEM INTEGRATED CONSTRUCTION (NESIC) PHILS., INC., Petitioner, v. RALPH T. CRISOLOGO, Respondent.

DECISION

DEL CASTILLO, J.:

This Petition for Review on Certiorari1 seeks to nullify the November 18, 2011 Decision2 of the Court of Appeals (CA) in CA-
G.R. SP No. 108873 which annulled the November 11, 2008 Decision3 of the National Labor Relations Commission (NLRC) in
NLRC NCR CA No. 043319-05, as well as the CA's April 12, 2012 Resolution4 denying petitioner's Motion for
Reconsideration5 thereon.

Factual Antecedents

On May 3, 1993, respondent Ralph T. Crisologo was employed by petitioner NEC System Integrated Construction Phils., Inc.
(NESIC), a Philippine corporation wholly owned by NEC System Integration & Construction, Ltd., of Japan (NESIC Japan), a
business engaged in providing specialty and technical telecommunications services. He was assigned as Manager of
petitioner's Communication Facilities Engineering Department.

Due to his exemplary work performance, respondent was promoted several times: as Deputy Manager of the Corporate
Planning Office directly under the office of the President; as Department Manager for Transmission Systems; as Head of Data
Communications Department; as Assistant Vice-President, and eventually as Vice-President, of the Information Network
Group; and as Vice-President of the Production Engineering Group6 - which is composed of the Telecommunications Group
and the Information Network Group.7

Sometime in July 2001, respondent was appointed as Executive Senior Manager - Quality Control and Training,8 with a gross
monthly salary of P93,596.84 including allowances.9 Although respondent was reluctant to accept the new position as this
was a demotion from his position at that time as Vice-President, he nevertheless accepted the new position at the special
request of then NESIC President Noriyuki Yamashita (Yamashita) in order to specifically train a certain Nakahata of
Engineering and Operations Group for possible appointment as General Manager of NESIC Japan. In a July 3, 2001
Memorandum10 to Yamashita, respondent voiced his reservations about being effectively demoted yet expressed his
willingness to train Nakahata on condition that his salary "remain the same," and that he would still be Head of the line
functions for the ISED, or the Integrated Systems Engineering Department (Production Engineering Group). Respondent also
expressed the "hope" that the appointment is only temporary. Respondent's memorandum is phrased as follows:

Sir,

As per our initial verbal conversation concerning the above subject, I would like to state my concern[s] as follows:

a.) Although I feel bad about my position as long as my salary scale would remain the same this might be acceptable.

b.) I am willing to train and assist Mr. Nakahata as General Manager so he would improve his skills and perform better when
he would be ultimately be [sic] sent back to NESIC Japan.

c.) I would still be a line function as HEAD for ISED.11

d.) I just hope that this would be on a temporary basis.


Thanks for your continued support and trust in me.12 (Emphasis supplied)

In his July 18, 2001 reply to respondent's July 3, 2001 memorandum, Yamashita thanked respondent for accepting his new
position, acknowledged that respondent was "already a very good General [sic] Manager as Vice-President" and reiterated his
special request to "train and assist Nakahata san [to] become [a] very good x x x GM."13

Although respondent assumed his position as Executive Senior Manager -Quality Control and Training as early as July 2001 -
his formal appointment as such came out only on April 16, 2003, as shown in a Memorandum of even date issued by
Yamashita.14

On July 7, 2003, NESIC Japan appointed Hideaki Amakawa (Amakawa) as petitioner's new President, thus replacing
Yamashita, who retired.

On November 13, 2003, petitioner hired an outsider - Chester Genobaten (Genobaten) - as new Assistant General Manager
for its Engineering and Operations Group. In the meantime, respondent ostensibly remained Executive Senior Manager -
Quality Control and Training.

In an August 12, 2003 "Executive Order,"15 Amakawa announced the implementation of cost-cutting measures, specifically
terminating all project and contractual employees effective September 2003; reducing the number of vehicles rented by
50%; putting on hold purchases of office supplies, except those that were extremely necessary for the continued operations
of the business; and reducing communications expenses by 30%. According to Amakawa, these measures "are the
company's initial response to the need of a long-term cost reduction and increased profitability program to ensure future
progress."16

In line with the above directive, the NESIC General Manager drafted a cost reduction plan,17 which petitioner implemented.
Thus, the employees' health care plan was downgraded two steps; office space was reduced; all company-issued mobile
phones were retrieved; landline phones and telefaxes were reduced from seven to four; air and sea carrier preference was
downgraded to those that offered cheaper fares; parking slots were reduced from nine to only four; the company Christmas
party was cancelled; and the giving of year-end bonus was withheld. Other cost-cutting measures were deferred.18

Notwithstanding its cost-cutting measures, petitioner's financial statements19 revealed a P25,814,677.0020 net loss for the
year ending December 31, 2003.

In a March 4, 2004 Memorandum,21 the NESIC President announced its retrenchment program. On even date, petitioner
notified the Department of Labor and Employment (DOLE) in writing of its retrenchment program and submitted an
Establishment Termination Report, which included respondent as among the 17 employees it was terminating from
employment.22

On March 5, 2004 petitioner sent respondent a termination letter via registered mail,23 which could not be served personally
as respondent was then absent. But on March 8, 2004, respondent personally received a copy of the letter when he reported
for work. The letter reads in part:

x x x [W]e regret to inform you that the Company will undergo an organizational change that will involve the company-wide
restructuring of work assignments and the abolition of certain positions from various departments. In this regard, it is also
very unfortunate that you are among the employees that we have to let go and this shall take effect on April 5, 2004.

We would like you to understand that this move is brought about by the financial losses that we had in the previous year and
the continued decrease in major projects. Although we have implemented cost reduction measures, these have not been
substantial to keep the Company financially stable. Based on the latest sales forecasts and the trend in the currency
fluctuations, the current Company situation is likely to continue in 2004. Thus, it is imperative that the,Company implement
drastic cost reduction measures to make its business viable in the coming year. It is for this reason that the Company has to
reduce its existing headcount in order to significantly reduce operating costs.

The Company offers you the Separation Pay (non-taxable): 100% of the latest monthly basic salary for every year of service
wherein any fraction of over six (6) months shall be considered as one (1) year. This is to be released on or before March 12,
2004.

You will be receiving the following as part of your Last Pay (net of accountabilities to the Company), on or before April 30,
2004:

 Salary (including overtime if applicable) and allowances for March 1 - April 5, 2004
 Conversion of Earned Leave Balances for CY2004 (Vacation Leave and Sick Leave)
 13th month pay (computed at 3 months/12 months) and Tax Refund for CY200424

In petitioner's own words, respondent was retrenched because -


upon evaluation of the company's organizational structure, [petitioner] found that the position of Executive Senior Manager -
Quality Control and Training - was superfluous and in excess of the needs of the company. Since the position of Executive
Senior Manager - Quality Control and Training is not a line position -[petitioner] determined that the line managers of
[petitioner's] Engineering and Operations Group could review their own quality systems and processes, while [petitioner's]
Support Group could handle the training of employees. As [respondent's] position was superfluous based on the foregoing
findings, [petitioner found it necessary to abolish] the position of Executive Senior Manager - Quality Control and Training -
as part of the company reorganization. At the same time, such abolition was in line with the Retrenchment Program's goal to
prevent or reduce substantial business losses.25cra lawredChanRob les Vi rtualaw lib rary

On March 12, 2004, respondent received P1,002,065.24 representing his separation pay and other benefits up to March 5,
2004. He executed a Waiver and Quitclaim and a receipt for said amount.26However, on realizing that respondent received
the termination letter only on March 8, 2004 but that his termination became effective on April 5, 2004, or less than the
required one month from receipt of notice of termination, petitioner adjusted his effective date of termination to April 10,
2004.

Respondent sought reconsideration of petitioner's decision to retrench him, to no avail.27

On April 5, 2004, petitioner announced, among other things, that it hired Suzette Mendoza, Fredes Marie Lucas and Larry
Balonsay as additional personnel to fill positions within the company.

On June 9, 2004, Genobaten was appointed General Manager of the Engineering and Operations Group.

Ruling of the Labor Arbiter

On April 12, 2004, respondent filed a Complaint28 against petitioner and Amakawa for illegal dismissal and recovery of
backwages, allowances, benefits, moral and exemplary damages, and attorney's fees. This was docketed as NLRC Case No.
00-04-04652-04.

In his Position Paper29 and Comment/Rejoinder,30 respondent claimed that there was no basis for the petitioner's
retrenchment program as the latter's claimed loss was not substantial and constituted merely 3.17% of its forecast revenue.
He also asserted that the retrenchment program was an unjustified drastic measure adopted by Amakawa who was then not
familiar with the peculiarities of the business, as he was only eight months into his tenure as President; besides, salary
increases were implemented in April 2003, and a mid-year bonus was given in July of the same year - proof that petitioner
was not in dire financial straits.31 He contended that based on the company's 2004 annual budget32 - prepared in February
2004 - petitioner was not suffering substantial losses. Respondent also alleged that despite his credentials, performance,
loyalty, and years of service with petitioner, he was terminated, even as additional personnel were hired; that despite his
qualifications and performance, petitioner bypassed him when it hired an outsider (Genobaten) to fill the position that he
previously held, and to add insult to injury Genobaten was almost at once also appointed as General Manager. Moreover,
respondent argued that petitioner's retrenchment program was not premised on fair and reasonable criteria, considering that
he (respondent) was an exemplary senior management employee who had served the petitioner for more than 10 years; and
that in dismissing him, petitioner and Amakawa acted in bad faith and in wanton disregard of the law.

In their joint Position Paper,33 Reply,34 and Rejoinder,35 petitioner and Amakawa countered that they acted in accordance
with law in effecting the retrenchment program. They maintained that petitioner's 2003 net loss of P25,814,677.00 was
substantial; that the projected loss for 2004 would be even greater, amounting to P28,455,106.00, necessitating farther
cost-cutting measures such as the retrenchment of personnel; that with retrenchment, projected 2004 losses would be
reduced by at least P5,443,101.00; and that when it became apparent in August 200336 that petitioner was in a precarious
financial situation, cost-cutting measures were immediately instituted, but proved to be insufficient a petitioner continued to
suffer business reverses. They also averred that respondent's position - Executive Senior Manager - Quality Control and
Training, which is responsible for the review of quality systems and processes within the Engineering and Operations Group -
is superfluous because the line managers of the Engineering and Operations Group could conduct their own review of their
quality systems and processes, while the Support Group could handle the training of employees. They maintained that no
criteria were required in determining whether to retain or dismiss respondent since his position was unique and unlike any
other within the company, given that there are no other employees occupying similar positions; that Genobaten's hiring was
a valid exercise of petitioner's management prerogative, and petitioner was under no legal compulsion to appoint respondent
to the position given to Genobaten; that additional personnel (in Suzette Mendoza and Fredes Marie Lucas) were hired
precisely to augment petitioner's Marketing Department and neutralize decreasing sales, and thus reduce losses. They also
pointed out that before termination, the required notices and documents were submitted to the DOLE, and respondent was
given a termination letter. They stressed that respondent voluntarily accepted his separation pay and other benefits and
executed a quitclaim and waiver for valuable consideration; that respondent was even given additional compensation for his
extended employment up to April 10, 2004; that since respondent's retrenchment was legal, respondent is no longer entitled
to his claims; and that Amakawa may not be held personally liable for respondent's claims, since Amakawa acted in good
faith and within his authority as Company President. Thus, petitioner and Amakawa prayed that respondent's Complaint be
dismissed.

On November 30, 2004, the Labor Arbiter rendered his Decision37 dismissing respondent's Complaint for lack of merit, thus:

The sole issue for resolution in the instant case is: WHETHER XXX THE RETRENCHMENT MEASURE ADOPTED BY THE
RESPONDENTS WHICH RESULTED TO [sic] THE TERMINATION OF THE COMPLAINANT WAS JUST AND VALID.

There are formidable obstacles to a finding against the validity of the retrenchment program implemented by the respondent
company. The evidence on record amply supports this conclusion.

The duly audited Financial Statements for December 31, 2003 and 2002 and the Report of Independent Auditors of the Sycip
Gorres Velayo and Co., clearly [indicate] that the respondent company suffered a net loss of Php25,814,677.00 in calendar
year 2003 despite implementing cost reduction program for the second half of said year. Pursuant to the Memorandum
issued by the President on August 12, 2003 x x x, the following measures composed the company's cost reduction plans, to
wit:

"1. All Project/Contractual Employees shall be terminated effective September 2003. x x x

"2. Existing number [of] rented vehicles must be reduced by 50%. x x x

"3. Office supplies purchases will be put on hold except those that are extremely necessary in the operations of the company
x x x.

"4. Communication expenses such as mobile phones must be reduced by 30%. x x x

Thus, in line with the cost reduction plan of the respondent company, various measures calculated to reduce operating
expenses were undertaken x x x.

Despite the implementation of all the cost reduction measures, the respondent company still incurred business losses by the
end of 2003. Respondents might not be faulted for taking the ultimate measure of retrenchment of workers.

The respondents justified the retrenchment of the complainant, as follows: chanRoblesv irtual Lawlib rary

"15. Upon evaluation of the company's organization[al] structure, NPI's management found that the position of Executive
Senior Manager - Quality Control and Training was superfluous and in excess of the needs of the company, xxx NPI
determined that the line managers of NPI's Engineering and Operations Group could review their own quality systems and
processes, while NPI's Support Group could handle the training of employees. As complainant's position was superfluous
based on the foregoing findings, NPI's management [abolished it. S]uch abolition was in line with the Retrenchment
Program's goal to prevent or reduce substantial business losses."
This Arbitration Branch finds merit in the respondents' arguments. The characterization of an employee's services as no
longer necessary or sustainable, and therefore properly terminable, is an exercise of business judgment x x x. The wisdom or
soundness of such characterization or decision is not subject to discretionary review on the part of Labor Arbiters [of] the
NLRC provided of course, that violation of law on arbitrary or malicious action is not shown (Golden Thread Knitting vs.
NLRC, G.R. No. 119157, March 11, 1999, citing Wiltshire File Co., Inc. vs. NLRC, G.R. No. 83349, 7 February 1991,193 SCRA
655).

What militates strongly against the complainant's argument of illegal dismissal is that he executed a "Waiver and Quitclaim,"
which states:chanRoblesvi rtua lLawl ibra ry

"2. That in connection with my former employment with NPI, for valuable consideration in the amount of [PESOS:] ONE
MILLION TWO THOUSAND SIXTY FIVE & 24/100 ONLY (Php1,002,065.24), by these presents, I hereby release, waive and
forever discharge NPI, its officers, directors, representatives or employees from any action for sums of money or other
obligations arising from my previous employment with NPI. I acknowledge that I have received all amounts that are now or
in the future may be due from NPI. I therefore undertake not to do any act prejudicial to the interest of NPI, its branches, or
its projects here in the Philippines, or abroad arising from my previous employment."
Complainant as a senior managerial employee very well knew the implications and significance of said waiver and quitclaim.
As a matter of fact, he did not dispute the validity and due execution of the said waiver and quitclaim. Moreover, this
Arbitration Branch finds that complainant in the execution of the said waiver and quitclaim received a valuable consideration
which is not considered unconscionable under the circumstances.
Finally, complainant's claim for service incentive leave pay may not be granted considering that complainant was a
managerial employee and pursuant to Art. 82 of the Labor Code, he is excepted from the enjoyment of said benefit.
Likewise, his claim for 13th month [pay] for 2004 has already been included in his final terminal pay.

WHEREFORE, all the foregoing premises being considered, judgment is hereby rendered dismissing the complaint for lack of
merit.

SO ORDERED.38 ChanRoblesVi rtua lawlib rary

Ruling of the National Labor Relations Commission

Respondent appealed to the NLRC,39 thereat docketed as NLRC NCR CA No. 043319-05. On November 11, 2008, the NLRC
handed down a Decision40 containing the following pronouncement:

The main thrust of complainant's appeal is whether x x x he was validly dismissed on the ground of retrenchment to prevent
losses.

It must be stressed that retrenchment is a management prerogative, a means to protect and preserve the employer's
viability and ensure [its] survival. This Court [sic] has always respected this prerogative during trying times but there must
be faithful compliance by management with the substantive and procedural requirements laid down by law and jurisprudence
(Central Azucarera delaCarlotavs. NLRC, G.R. No. 100092, December 19, 1995).

The Labor Code, as amended, recognizes retrenchment as a mode of terminating an employment relationship. The Code
provides as follows: c hanRoble svirtual Lawlib ra ry

Art. 283. Closure of establishment and reduction of personnel. - The employer may also terminate the employment of any
employee due to the installation of labor saving devices, redundancy, retrenchment to prevent losses or the closing or
cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the
provisions of this Title, by serving a written notice on the workers and the Ministry of Labor and Employment at least one (1)
month before the intended date thereof. In case of retrenchment to prevent losses and in cases of closures or cessation of
operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall
be equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. A
fraction of at least six (6) months shall be considered one (1) whole year.
Under this provision, there are three basic requisites for a valid retrenchment. These are: (a) the retrenchment is necessary
to prevent losses and such losses are proven; (b) written notice to the employees and to the Department of Labor and
Employment at least one month prior to the intended date of retrenchment; and (c) payment of separation pay equivalent to
one month pay or at least one-half (1/2) month's pay for every year of service, whichever is higher.

It is undisputed in the instant case that the second requirement of written notice to the DOLE and the employees concerned
at least a month before the retrenchment has been satisfactorily fulfilled by respondents x x x. What needs close
examination is the first requirement, i.e. that the retrenchment is necessary to prevent losses and that such losses are
proven.

There are four standards of retrenchment that must be observed to comply with the law. First, the losses expected should be
substantial and not merely de minimis. Second, the substantial loss apprehended must be reasonably imminent, as perceived
objectively and in good faith by the employer. Third, because of the consequential nature of retrenchment, it must be
reasonably necessary and likely to prevent the expected losses. Fourth, the alleged losses, if already incurred, must be
proved by sufficient and convincing evidence x x x.

In his appeal, complainant avers that NPI's actual losses amounting to P25,814,677 cannot be considered substantial
because NPI is such a big Japanese Multinational Company with an average yearly sales of over P300,000,000 and the
incurred loss for CY 2003 of P25,814,677 is x x x a mere 9% of its revenue; that NPI's projected losses for 2004 were not
reasonably imminent because NPI's Income Statement as of February of 2004 showed an expected loss for CY 2004 of
P8,081,190; and that retrenchment was not valid because NPI even hired and regularized three personnels [sic] namely, Ms.
Suzette Mendoza, Ms. Fredes Marie Lucas and Mr. Chester Genobaten.

We agree with the Labor Arbiter in his findings that respondents should not be faulted for taking the ultimate measure of
retrenchment of workers. Records show that in line with the cost production [sic] plan of the respondents [sic] company,
various measures calculated to reduce operating expenses were already undertaken xxx.

Moreover, it cannot be disputed that prior to complainant's dismissal, NPI actually suffered substantial losses in calendar year
2003 amounting to P25,814,677 as shown in the Financial Statements (December 31, 2003 and 2002) and Report of
Independent Auditors prepared by Sycip Gorres Velayo and Co. x x x. We agree with the respondents that the said actual
loss is substantial by any account and cannot be considered de minimis. It should also be noted that NPFs actual loss in 2003
constituted more than half of its P50,000,000.00 authorized capital stock x x x.

Further, the assertion by the complainant that NPFs projected losses for the year 2004 were not reasonably imminent
deserves scant consideration. In fact, x x x the Financial Statements x x x and Report of Independent Auditors x x x reveals
[sic] that NPI actually suffered P30,745,801 x x x.
If the Labor Code allows retrenchment in cases where the employer foresees imminent losses, then retrenchment is all the
more justified when the employer has actually incurred substantial losses. In the case at bar, NPI did not only suffer losses of
P25,814,677 in 2003. NPI also projected and, in fact, actually suffered losses of P30,745,801 in 2004.

Anent the allegation of complainant regarding the hiring of new employees by the respondents, the same is substantially
justified by the respondents. Ms. Suzette Mendoza and Ms. Fredes Marie Lucas were respectively hired in September and
October of 2003 in order to augment NPFs Marketing and Sales Department. On the other hand, Mr. Chester Genobaten who
was allegedly hired as complainant's replacement was hired in November of 2003 as the successor of an Assistant General
Manager who was scheduled to retire in December of 2003. When NPI re-hired Mr. Genobaten in November of 2003,
complainant's Quality Control and Training position was not yet being considered for abolition x x x. NPI validly exercised
management prerogative.

Be that as it may, We cannot ignore the fact that complainant signed a Waiver and Quitclaim. The Labor Arbiter is correct in
stating that the complainant is bound by the Quitclaim he executed. Considering that he received a valuable consideration in
the amount of P1,002,065.24; that he executed the said Quitclaim three days after he received a copy of his termination
[notice], or after he had sufficient time to reflect on the validity of his dismissal; that complainant is not an ordinary rank and
file employee but occupying a managerial position, We cannot believe complainant's claim that he was made to sign the
Waiver and Quitclaim under pressure. Undisputably [sic], it was voluntarily executed by the complainant. In Periquet vs.
NLRC, 186 SCRA 724, the Supreme Court held that not all waivers and quitclaims are invalid as against public policy. If the
agreement was voluntarily entered into and represents reasonable settlement, it is binding on the parties and may not later
be discarded simply because of a change of mind.

WHEREFORE, premises considered, the appeal of complainant is DISMISSED. Accordingly, the Decision of Labor Arbiter Jose
G. De Vera dated November 30,2004 is hereby AFFIRMED.

SO ORDERED.41 ChanRoblesVi rtua lawlib rary

Respondent moved for reconsideration, but the NLRC stood its ground.422

Proceedings before the Court of Appeals

Via a Petition for Certiorari43 before the CA, thereat docketed as CA-G.R. SP No. 108873, respondent assailed the above
dispositions of the NLRC and prayed that the CA declare his dismissal by petitioner illegal and that petitioner be moreover
ordered to pay him full backwages, and other benefits from the time of his dismissal up to his actual reinstatement, plus
reasonable moral and exemplary damages as well as attorney's fees. Respondent insisted that petitioner did not suffer
substantial losses that justified the implementation of a retrenchment program; that it was illegal and improper for petitioner
to hire Genobaten and thereafter fire him (respondent), when he could have been the one appointed to the position filled by
Genobaten since he was a senior employee who possessed the qualifications and experience required for the position; that
worse, Genobaten was promoted just after he (respondent) was dismissed; that his dismissal had no basis other than
petitioner's excuse of management prerogative; and that his quitclaim and waiver are ineffective and did not constitute
estoppel.

In their Comment,44 petitioner and Amakawa asked that the Petition be dismissed. They argued that the identical findings of
the Labor Arbiter and the NLRC are binding and conclusive upon the appellate court; that the NLRC's Decision was not
tainted with grave abuse of discretion; that the retrenchment program was valid; that when Genobaten was hired,
respondent's position was not yet considered for abolition; that since respondent's position was "unique" and not a line
position, no criteria for dismissing his services were required; that the quitclaim and waiver executed by respondent are valid
and binding on him; and that respondent is not entitled to his money claims. They likewise asserted that respondent's
Petition was defective as it did not contain adequate evidence of respondent's identity other than his community tax
certificate.

In his Reply,45 respondent attached photocopies of his driver's license46 and his Social Security System (SSS) identification
card.

On November 18, 2011, the CA rendered the assailed Decision granting the Petition, decreeing thus:

WHEREFORE, in view of the foregoing, the petition is GRANTED. The assailed Decision of the public respondent NLRC is
hereby ANNULLED and SET ASIDE. In lieu thereof, a new one is rendered ordering private respondents as follows -

1. To pay petitioner full backwages x x x; cralawlawlib rary

2. To pay petitioner separation pay in lieu of reinstatement, x x x with the corresponding deduction of whatever amount he
had already received from private respondents as separation pay; cralawlawlib rary

3. To pay petitioner his Salary (including overtime if applicable) and allowances for 01 March - 10 April 2004, the Conversion
of Earned Leave Balances for CY2004 (Vacation Leave and Sick Leave), and 13th month pay (for the covered period of
CY2004) and Tax Refund for CY2004; and
4. To pay petitioner attorney's fees equivalent to ten percent (10%) of the total monetary award.

The other reliefs prayed for are denied for lack of merit.

xxxx

SO ORDERED.47 ChanRoblesVi rtua lawlib rary

In reversing the Labor Arbiter and the NLRC, the CA essentially declared that while petitioner complied with four of the five
requirements for a valid retrenchment — substantial losses, actual and imminent, were being suffered; written notices were
duly sent to the employees and to the DOLE and for the required period; good faith attended the retrenchment; and
respondent had been paid the corresponding separation pay and other benefits for retrenched employees - the last
requirement, viz., that fair and reasonable criteria were used in ascertaining who would be dismissed and who would be
retained, had not been observed. Thus, it held:

As for the fifth requirement listed above, private respondents48 were not able to show x x x reasonable criteria as to why
petitioner49 was one of the seventeen (17) employees laid off. They merely stated that there was no need for them to adopt
a set of criteria, as these [are applicable] only if the employer has to choose whom to terminate among several employees
occupying similar positions.

We hold that private respondents failed to use fair and reasonable criteria in determining which employees shall be
retrenched or retained. Private respondents have not explained why petitioner had to be laid off without considering his
many years of service with private respondents - eleven (11) years. The fact that petitioner had been in private respondents'
employ for so long a time indicates that he had been retained because of his loyal and efficient service. Moreover, there is no
showing also that petitioner's job performance is below par. The absence of criteria in the selection of an employee to be
dismissed renders the dismissal arbitrary.

Private respondents' allegation that petitioner's position was superfluous and in excess of the needs of the company should
not be given any credit. There was no substantial evidence presented by private respondents to justify petitioner's dismissal
due to redundancy. In private respondents' letter addressed to the DOLE, they mentioned "the company-wide restructuring
which has, x x x, resulted in a reorganization of work assignments and the abolition of certain positions that are no longer
needed in the new organizational set up" "in the face of losses in millions and continued decrease in major projects." In the
letter addressed to petitioner, private respondents also alleged that "the Company will undergo an organizational change that
will involve the company-wide restructuring of work assignments and the abolition of certain positions from various
departments." These letters do not satisfy the requirement of substantial evidence, that is, the amount of relevant evidence
which a reasonable mind might accept as adequate to justify a conclusion.

Redundancy exists where the services of an employee are in excess of what is reasonably demanded by the actual
requirement of the enterprise. It is the burden of private respondents, as employer, to prove the factual and legal basis for
the dismissal of their employee, i.e., petitioner, on the ground of redundancy.

It is however not enough for a company to merely declare that positions have become redundant. It must produce adequate
proof of such redundancy to justify the dismissal of the affected employees. In Panlilio v. NLRC, the Supreme Court said that
the following evidence may be proffered to substantiate redundancy: "the new staffing pattern, feasibility studies/proposal,
on the viability of the newly created positions, job description and the approval by the management of the restructuring." In
another case, it was held that the company sufficiently established the fact of redundancy through "affidavits executed by the
officers of the respondent [company], explaining the reasons and necessities for the implementation of the redundancy
program."

The employer must comply with the following requisites to ensure the validity of the implementation of a redundancy
program: (1) a written notice served on both the employees and the Department of Labor and Employment at least one
month prior to the intended date of retrenchment; (2) payment of separation pay equivalent to at least one month pay or at
least one month (sic) pay for every year of service, whichever is higher; (3) good faith in abolishing the redundant positions;
and (4) fair and reasonable criteria in ascertaining what positions are to be declared redundant and accordingly abolished. In
several instances, the Court has held that it is important for a company to have fair and reasonable criteria in implementing
its redundancy program, such as but not limited to, (a) preferred status, (b) efficiency and (c) seniority. This[,] private
respondents failed to do.

We find that private respondents failed to establish either redundancy or retrenchment. Hence, petitioner's termination from
employment was illegal.

Finally, the Supreme Court, in the case of Ariola vs. Philex Mining Corporation, invalidated a retrenchment program for its
improper implementation despite proof of financial losses, x x x

xxxx

Thus, from the foregoing, the NLRC committed grave abuse of discretion amounting to lack of or in excess of jurisdiction in
finding that the retrenchment of petitioner was valid.
Article 279 of the Labor Code pertinently provides:

Art. 279. Security of tenure. In cases of regular employment, the employer shall not terminate the services of an employee
except for a just cause or when authorized by this Title. An employee who is unjustly dismissed from work shall be entitled to
reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to
his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the
time of his actual reinstatement.50

The CA held, nonetheless, that reinstatement could not be done, as respondent's position no longer existed after the
restructuring; hence, the CA ordered that respondent be paid backwages and separation pay. The CA also ruled that
respondent was also entitled to attorney's fees pursuant to Article 111 of the Labor Code51 and Article 2208 of the Civil
Code.52

Petitioner filed a motion for reconsideration, but the CA denied the same in its April 12, 2012 Resolution. Hence, the instant
Petition.

In an April 3, 2013 Resolution,53 this Court resolved to give due course to the Petition. ^^

Issues

Before this Court, petitioner now raises the following issues for resolution:

I.

THE COURT OF APPEALS ERRED IN GIVING DUE COURSE TO, [AND] MORE SO IN GRANTING, THE PETITION FOR
CERTIORARI NOTWITHSTANDING RESPONDENT'S DEFECTIVE VERIFICATION/ CERTIFICATION.

II.

THE COURT OF APPEALS ERRED IN GRANTING THE PETITION FOR CERTIORARI [AND IN REJECTING] THE FINDINGS OF
FACT OF THE LABOR ARBITER AND THE NLRC.

III.

THE COURT OF APPEALS ERRED IN GRANTING THE PETITION FOR CERTIORARI DESPITE THE ABSENCE OF GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION ON THE PART OF THE NLRC.

IV.

THE COURT OF APPEALS ERRED IN GRANTING THE PETITION FOR CERTIORARI [AND IN HOLDING] THAT PETITIONER
FAILED TO COMPLY WITH THE REQUISITES OF A VALID TERMINATION ON THE GROUNDS OF RETRENCHMENT AND/OR
REDUNDANCY.

a. All the requisites of a valid termination on the grounds of retrenchment and/or redundancy are present.

b. Petitioner complied with the 30-day notice rule.

c. Respondent was terminated based on fair and reasonable criteria.

d. Petitioner presented substantial evidence to prove redundancy.

V.

THE COURT OF APPEALS ERRED IN GRANTING THE PETITION FOR CERTIORARI NOTWITHSTANDING RESPONDENT'S
EXECUTION OF A VALID QUITCLAIM AND WAIVER.

VI.

THE COURT OF APPEALS ERRED IN AWARDING RESPONDENT FULL BACKWAGES AND SEPARATION PAY.

VII.

THE COURT OF APPEALS ERRED IN AWARDING RESPONDENT ATTORNEY'S FEE'S.54

Petitioner's Arguments

In its Petition and Consolidated Reply and Comment,55 petitioner argues that it was error for the CA to have entertained
respondent's defective Petition for Certiorari as it did not show adequate evidence of his identity apart from his community
tax certificate, in violation of the 2004 Rules on Notarial Practice;56that respondent's belated submission to the CA of copies
of his driver's license and SSS card did not cure the defective Petition; that the CA may not ignore the identical findings of
the Labor Arbiter and the NLRC, which are final and binding upon it; that there was no grave abuse of discretion on the part
of the NLRC; that its (petitioner's) retrenchment program was valid; that Genobaten was lawfully hired when respondent's
position was still subsisting, and that Genobaten did not supplant respondent at all; that fair and reasonable criteria were
observed in deciding to retrench respondent after it became apparent that his "unique" position and functions had become
superfluous, unnecessary, and redundant, and could be absorbed by other departments within the company; that
respondent's quitclaim/waiver was valid and binding, and bars respondent from recovering additional monetary benefits; and
that since petitioner's retrenchment program was valid, and since respondent had freely and voluntarily executed a
quitclaim/waiver and had already received the proper separation pay, respondent is therefore no longer entitled to
backwages, damages and attorney's fees.

Respondent's Arguments

In a Motion to Dismiss Petition57 which this Court treated as his comment to the Petition,58 respondent counters that
petitioner raised factual issues which are not proper in a petition for review under Rule 45 of the 1997 Rules of Civil
Procedure; and that the CA did not err in arriving at its conclusions. Aside from praying for the dismissal of the Petition,
respondent asks that petitioner be required to post a bond to guarantee payment of his monetary claims. chanroble slaw

Our Ruling

The Petition is meritorious.

We take the view that basic to and at the core of a just resolution of the instant controversy is the respondent's subscribing
to the document/deed captioned "WAIVER AND QUITCLAIM SEPARATION PAY"59 and his acceptance of the benefits
thereunder. Dated March 12, 2004, this deed/document is now marked as Annex "J" and it reads:

That I, RALPH T. CRISOLOGO, of legal age, Filipino and with address at 100 AMR. U.P.C. VILL. T. SORA QC, on my own free
will, and for valuable consideration, hereby declare and manifest:

1. That I have ceased to be employed at NESIC Philippines, Inc. (NPI) due to retrenchment resulting from reorganization at
the close of business hours of April 5, 2004.

2. That in connection with my former employment with NPI, for valuable consideration in the amount of [PESOS:] ONE
MILLION TWO THOUSAND SIXTY FIVE & 24/100 ONLY (Php 1,002,065.24), by these presents, I hereby release, waive and
forever discharge NPI, its officers, directors, representatives or employees from any action for sums of money or other
obligations arising from my previous employment with NPI. I acknowledge that I have received all amounts that are now or
in the future may be due me from NPI. I therefore undertake not to do any act prejudicial to the interest of NPI, its branches,
or its projects here in the Philippines or abroad arising from my previous employment.

3. That I acknowledge that I have no cause of action whatsoever, criminal, civil or otherwise against NPI, its officers, agents
or representatives or project employees with respect to any matter arising from or cessation of my employment with NPI. I
further warrant that I will institute no action and will

not continue to prosecute, pending actions, if any against NPI, its officers, agents or representatives or project employees.

IN WINTESS WHEREOF, I have hereunto set my hand this 12 day of March, 2004 at Makati City.

(Signed)
RALPH T. CRISOLOGO
Employee's Signature over Printed Name60
(Emphases supplied) ChanRoble sVirtualawli bra ry

Read as worded, respondent thereunder declared and manifested of his own free will and for valuable consideration"61 -

(1) That he ceased to be employed by the petitioner because of retrenchment resulting from reorganization, effective at the
close of office hours of April 5,2004; cralawlaw lib rary

(2) That in connection with his former employment with petitioner, for valuable consideration to the tune of PESOS: ONE
MILLION TWO THOUSAND SIXTY FIVE & 24/100 (P1,002,065.24) and because of his execution of this document he
has released, waived and forever discharged petitioner, its officers, directors, representatives or employees from any action
for sums of money or other obligations arising from his previous employment with petitioner; and that he indeed has
acknowledged that he had received all amounts that are now or in the future may be due him from petitioner; hence, he
promised "not to do any act prejudicial to the interest of [petitioner], its branches or its projects here in the Philippines or
abroad arising from [his] my previous employment."62

(3) What is more, respondent acknowledged that he has "no cause of action whatsoever, criminal, civil or otherwise against
[petitioner], its officers, agents or representatives or project employees with respect to any matter arising from or cessation
of [his] employment with [petitioner]."63 Finally, he vowed that he "will institute no action and will not continue to prosecute
pending actions, if any, against [petitioner], its officers, agents or representatives or project employees."64

And, the consideration for all the foregoing: as shown in Annex "K,"65 respondent acknowledged "receipt of RCBC MC No.
0000070301" representing payment of PI,002,065.24, on March 10, 2004.

After this, it appeared that additional blessings still came respondents' way. For on March 31, 2004 respondent received this
letter66 from Amakawa:

March 31, 2004

Mr. RALPH T. CRISOLOGO


100 Ambuklao Rd., NPC Village
Tandang Sora, Quezon City

Dear Mr. Crisologo,

We would like to inform you that we are adjusting the effectivity of your retrenchment to April 10, 2004 instead of April 5,
2004 in consideration of the actual receipt of the Original Copy of the Retrenchment Letter dated March 5, 2004 sent to your
[residence] through registered mail on the same date and basing on the certification issued by the QC Central Post Office. In
addition to the Separation Pay you have received on March 12, 2004, you shall be receiving the following as part of your Last
Pay (net of accountabilities to the Company), on or before April 30, 2004:

 Salary (including overtime if applicable) and allowances for March 1 - April 10, 2004
 Conversion of Earned Leave Balances for CY2004 (Vacation Leave and Sick Leave)
 13th month pay (for the covered period of CY2004) and Tax Refund for CY 2004

Your Certificate of Employment shall be reflecting your service to the Company from your hiring date up to April 10, 2004.

Again, THANK YOU and we wish you luck in all your future endeavors.

Very sincerely,

(Signed)
HIDEAKI AMAKAWA
President67

Thus, it can hardly be doubted that from its end petitioner had dealt at arms length with respondent in the matter of duly
compensating the latter for the services he had rendered the petitioner during the 11 years or so that he had been under its
employ.

Turning now to the deed of waiver/quitclaim cum separation pay; prefatorily, what must not escape our notice and attention
is the fact that what Annex "J" mentions is both a Waiver and a Quitclaim rolled into one. In other words, it is not only the
one but also the other. More than that this waiver and quitclaim is supported by a valuable consideration; this valuable
consideration being the separation pay itself in the amount of P1,002,065.24; and of course, it is no inconsequential matter
that to this amount of P1,002,065.24 should be added the still-to-be computed "Last Pay" (net of accountabilities to the
Company) spoken of in Annex "L," the March 31, 2004 letter of Amakawa to respondent.

The records of the case yield no evidence that respondent had ever been tricked or hoodwinked into affixing his signature
upon the said deed of waiver-quitclaim cum separation pay; indeed, respondent has not put forward any such claim. And if
he did, it should suffice to point to Annex "6"68 authored and accomplished by the respondent himself, wherein he attested to
these facts -

(1) He graduated from the University of the Philippines, Diliman, Quezon City with the college degree B.S. Electrical
Engineering.

(2) He pursued post-graduate studies at the same university and earned 30 units in his M.S. Industrial Engineering course,
without, however submitting his thesis.

(3) He did further post-graduate work at the Asian Institute of Management, graduating at the top of his class in the
70th Basic Management Program in February 1995.

(4) He placed seventh highest (with a rating of 91.4%) in the Government Assistant Electrical Engineering Licensure
Examination in May 1982.

These impressive credentials are of course ample proof of authentic high level academic achievement, indicative of a by-no-
means middling or common place intellectual power. For this reason, this Court cannot accept respondent's claim that he did
not thoroughly apprehend the full scope, thrust and import of the waiver-quitclaim cum separation pay that he freely,
voluntarily and intelligently forged and fashioned with petitioner. The combination of all these circumstances thus repels the
suggestion that respondent might not have fully or thoroughly grasped or understood the plain meaning, intendment and
significance of the deed/document to which he affixed his signature, and from the obvious and inevitable effects of which he
now seeks to rid or extricate himself. That by his free and voluntary act and deed he chose or opted to deed away his
patrimonial rights he has only himself to blame.

In Periquet v. National Labor Relations Commission,69 this Court set the guidelines and doctrinal policy relative to waiver and
quitclaim, thus -

Not all waivers and quitclaims are invalid as against public policy. If the agreement was voluntarily entered into and
represents a reasonable settlement, it is binding on the parties and may not later be disowned simply because of a change of
mind. It is only where there is clear proof that the waiver was wangled from an unsuspecting or gullible person, or the terms
of settlement are unconscionable on its face, that the law will step in to annul the questionable transaction. But where it is
shown that the person making the waiver did so voluntarily, with full understanding of what he was doing, and the
consideration for the quitclaim is credible and reasonable, the transaction must be recognized as a valid and binding
undertaking. As in this case.

And in Samaniego v. National Labor Relations Commission,70 this Court noted that therein petitioners were "not ordinary
laborers or rank-and-file personnel who may not be able to completely comprehend and realize the consequences of their
acts, x x x [that in fact, therein] petitioners are managerial employees holding responsible positions[; and that moreover]
they are educated individuals:"71 basic considerations which impelled this Court into concluding that: "it can hardly be said
that they were coerced into resigning from the company."72

Herein respondent's situation is not much different from therein petitioners' situation in the Periquet73and Samaniego74 cases.
To the same effect: Mendoza, Jr. v. San Miguel Foods, Inc.75Sicangco v. National Labor Relations Commission76Casimiro v.
Stern Real Estate, Inc.77 and Sarocam Interorient Maritime Ent., Inc.78

Under the same parity of reasoning, the case law rulings announced in the above-mentioned cases apply to the present case.

WHEREFORE, the Petition is hereby GRANTED. The November 18, 2011 Decision of the Court of Appeals in CA-G.R. SP No.
108873 and its April 12, 2012 Resolution are hereby ANNULLED and SET ASIDE. The November 11, 2008 Decision of the
National Labor Relations Commission in NLRC NCR CA No. 043319-05 is hereby REINSTATED.

SO ORDERED. chanroblesvi rtua llawli bra ry

SECOND DIVISION

G.R. No. 201359, September 23, 2015

MAGSAYSAY MARITIME CORPORATION, PRINCESS CRUISE LINES, LTD. AND/OR MR. EDUARDO U.
MANESE, Petitioners, v. VIRGILIO L. MAZAREDO, Respondent.

DECISION

DEL CASTILLO, J.:

Assailed in this Petition for Review on Certiorari1 are: 1) the October 28, 2011 Decision2 of the Court of Appeals (CA) in CA-
G.R. SP No. 117748, which affirmed with modification the September 14, 2010 Decision3 and October 29, 2010
Resolution4 of the National Labor Relations Commission (NLRC) in NLRC LAC No. (OFW-M) 06-000439-10; and 2) the CA's
March 28, 2012 Resolution5 denying reconsideration of its assailed Decision.

Factual Antecedents

Respondent Virgilio L. Mazaredo has been working for petitioner manning agency Magsaysay Maritime Corporation
(Magsaysay) since 1996. For his last employment contract, he was hired for Magsaysay's foreign principal and co-petitioner
herein, Princess Cruise Lines, Limited (Princess Cruise). He was assigned as Upholsterer onboard the vessel MY "Tahitian
Princess." His 10-month POEA6 Standard Employment Contract7 dated June 25,2008 stated among others that he was to
receive a monthly salary of US$455.00.

Respondent was deployed on July 5, 2008.8

On February 4, 2009, while aboard M/V "Tahitian Princess," respondent experienced back pain. Upon examination by the
ship's doctor Lana Strydom on March 12, 2009, the following diagnosis was issued: "a) uncontrolled hypertension on
medication; b) probable previous silent inferior myocardial infarct; c) left ventricular hypertrophy; d) tachycardia (95-107);
xxx f) needs CXR, Echo, Stress Test and Angiogram; g) needs cardiologist specialist consultation; h) needs another
seafarer's fitness to work at sea medical before next contract x x x."9

On March 22,2009, respondent was medically repatriated and immediately referred to the company-designated physician.
Respondent underwent a series of examinations10 such as electrocardiogram (ECG), 2D Echo, and coronary
arteriography.11 On May 30, 2009, he was found to be suffering from "coronary artery disease, three-vessel involvement;"
the recommendation was for him to undergo coronary artery bypass graft surgery (CABG12).13

On July 6, 2009, respondent underwent percutaneous coronary intervention14 or angioplasty instead of the recommended
bypass surgery. The angioplasty was a mere outpatient procedure.15 Respondent underwent angioplasty instead of bypass
surgery because he could not afford the latter procedure, as it was he who was paying for his treatment.16 Petitioners did not
provide medical and financial assistance after respondent's initial diagnosis.17 It was respondent alone who chose the hospital
and procedure for the treatment of his condition, with full consideration of the cost and expenses of treatment.18

In a July 6, 2009 Cardiac Catheterization Laboratory Report19 issued after respondent's angioplasty, the attending physician
recommended the administration of dual antiplatelets20 and that medical care or management of respondent's condition
should be "maximized."

On September 25, 2009, respondent sought the opinion of an independent physician, Dr. Efren R. Vicaldo (Dr. Vicaldo), who
issued a Medical Certificate21 declaring that respondent is unfit to resume work as seaman in any capacity; that he requires
maintenance medication to control his hypertension to prevent cardiovascular complications such as worsening coronary
artery disease, stroke and renal insufficiency; and that respondent is not expected to land gainful employment given his
medical background.

Ruling of the Labor Arbiter

Prior to Dr. Vicaldo's assessment, or on July 27, 2009, respondent filed a Complaint22 against Magsaysay, Princess Cruise,
and their co-petitioner Eduardo U. Manese (Manese) - Magsaysay Owner/President/General Manager - for recovery of
permanent total disability and sickness benefits, reimbursement of medical and other expenses, moral and exemplary
damages, and attorney's fees, which was docketed in the NLRC, National Capital Region, Quezon City as NLRC NCR Case No.
OFW (M)-07-10662-09.

In his Position Paper,23 Reply,24 and Rejoinder,25 respondent claimed that petitioners acted in bad faith in refusing to provide
medical and financial assistance to address his heart condition, which he claimed was contracted during his employment with
the latter; that he has been rendered and declared permanently and totally disabled, which thus entitled him to the
maximum corresponding benefits; that petitioners unjustly refused to indemnity him, which further entitled him to actual,
moral and exemplary damages, and attorney's fees for being compelled to litigate; and that in addition, he was entitled to
indemnity under an International Transport Federation Collective Bargaining Agreement (ITF-CBA). Thus, respondent prayed
that he be paid US$80,000.00 as permanent disability compensation; US$2,275.00 sickness compensation; P463,240.31 as
reimbursement for medical expenses incurred; P16,700.00 as reimbursement for transportation expenses; P600,000.00
combined moral and exemplary damages; and 10% attorney's fees.

In their joint Position Paper,26 Reply,27 and Rejoinder,28 petitioners argued that respondent boarded M/V "Tahitian Princess"
on June 17, 2007 and disembarked upon completion of his contract on March 9, 2008, which meant that he completed his
contract prior to contracting of his illness; that respondent's illness is not work-related as declared by the company-
designated physician in a Medical Report29 dated March 27, 2009, which thus justified their denial of respondent's disability
claim; that despite such finding, they continued with respondent's treatment and shouldered all the medical expenses he
incurred; that the company-designated physician's March 27, 2009 assessment should prevail in deciding respondent's case;
that the supposed ITF-CBA is inapplicable in this case, since respondent's illness was not title result of an accident - a pre-
condition under said ITF-CBA; and that respondent is not entitled to his other claims since they have fulfilled their contractual
obligations in good faith, which thus leaves respondent without a valid cause of action. They prayed for the dismissal of
respondent's Complaint and recovery, by way of counterclaim, of P500,000.00 as and for attorney's fees and litigation
expenses.

On April 20, 2010, the Labor Arbiter rendered a Decision30 dismissing the respondent's Complaint for lack of merit, stating
thus:cralawlawli bra ry

ISSUES:

1. Is complainant entitled to permanent disability compensation in the amount of US$80,000.00?

2. Is complainant entitled to reimbursement of full medical cost for treatment of illness, sick wages for "130
days"?

3. Is he entitled to moral and exemplary damages plus attorney's fees?

Before these issues are resolved, this Arbitration branch takes note that in Respondents'31Position Paper, Annex "3", which is
alleged as the Medical Report dated 27 March 2009 of the company-designated physician, is not attached thereto.

Be that as it may, it appears on the records that on March 12, 2009, Dr. Lana Strydom, in the Medical Referral Letter,
diagnosed complainant and requested/recommended that complainant needs to be treated with the following: cralaw lawlib rary

"1. CXR, Echo, Stress Test and Angiogram


2. Cardiologist Specialist consultation
3. Repeat Monitoring of U & E
4. Needs another seafarer's fitness to work at sea medical before next contract." chanrobleslaw

Unfortunately, as earlier mentioned, the alleged Medical Report dated March 27, 2009 of the company-designated physician
is not on record. Although this is not attached, the complainant nonetheless admits that upon his arrival in the Philippines on
March 22, 2009, he underwent a series of medical examinations by the company-designated physician. But he himself did
not submit any document on the results of those tests.

The complainant however submitted a document dated May 30, 2009 executed by his own independent doctor, Eduardo T.
Buan, Angiographer of the Invasive Cardiology Division, Philippine Heart Center. He also submitted a Cardiac Catheterization
Laboratory Report dated July 6, 2009 issued by Drs. Dee/Delos Reyes/Albacite/Regamit with these recommendations: "Dual
Antiplatelets, Maxize [sic] Medical management".

A careful scrutiny of complainant's Annexes "E-l" and "E-2" (CPP) bear no date when they were issued by the Philippine
General Hospital. They however state complainant's "Condition on Discharge - Improved, Ambulatory".

It is noted that this complaint was filed on July 27,2009. On September 25, 2009, or about two (2) months thereafter, Dr.
Efren R. Vicaldo, in his Medical Certificate, states that complainant was confined September 25, 2009 with the following
diagnosis:chanRob lesvi rtua lLawl ibra ry

"Hypertensive cardiovascular disease Coronary artery disease S/P percutaneous coronary intervention"

And in Dr. Vicaldo's Medical Evaluation of Patient/Seaman dated September 2009, he did not state any Grading for which
complainant should be compensated/ entitled. Besides, complainant consulted the said doctor just once.

The ruling in the case of Crystal Shipping, Inc. vs. Natividad (Supra) does not apply in this case. In that case, the company-
designated physician and the respondent physician, although they differ in their assessment of the degree of respondent's
disability, bothfound that respondent was unfit for sea-duty. In the present case, the facts differ. Neither is the ruling on the
case of HFS Philippines, Inc. et al. vs. Ronaldo R. Pilar applicable herein for the same reason - the facts differ in these cases.

It is also noted that complainant went to seek the medical opinion of Dr. Vicaldo after he had filed this case and after the
lapse of One Hundred Twenty (120) days.

Much as this Labor tribunal looks tenderly on the laborer, there are legal parameters that limit our resolution on cases of this
nature. There are rulings favoring the seafarer; there are also those not in their favor. The particular facts of the case and
the evidence adduced by the parties had always been the bases for the High Court's decisions. This Arbitration Branch can
only apply those which We deem fall squarely on the base at bar.

One last note: The respondents are hereby admonished to carefully go over the evidence they present or inadvertently fail to
attach.

WHEREFORE, in the light of the foregoing, judgment is hereby rendered DISMISSING this complaint for lack of merit.

All other claims herein sought and prayed for are hereby denied for lack of legal and factual bases.

SO ORDERED.32 chanrobles law

Ruling of the National Labor Relations Commission

Respondent interposed an appeal33 before the NLRC, which was docketed as NLRC LAC No. (OFW-M) 06-000439-10. On
September 14, 2010, the NLRC issued its Decision34 containing the following pronouncement: cralawlaw lib rary

Hence, this appeal anchored on serious errors and grave abuse of discretion committed by the Labor Arbiter in dismissing the
complaint, with the complainant35 asserting that the diagnosed illnesses that caused the death [sic] of the seafarer are listed
as occupational illnesses under the POEA Standard Employment Contract, and therefore compensable.

The appeal is impressed with merit.

It must be clarified at the outset that while respondents36 have argued that complainant was on finished contract, having
embarked in June 2007, this contention is belied by the POEA-approved contract clearly showing that complainant's last
contract on board the vessel "TAHITIAN PRINCESS" was for a period of ten months commencing on July 8, 2008 or the date
of his departure. That complainant was medically repatriated on March 22, 2009 or two months short of the 10-month
contract duration is not disputed, and as such the reasonable presumption is that complainant's contract had not expired or
[was not] completed, as claimed by respondents.

Proceeding to the primary issue in this appeal, we find that complainant's allegation notwithstanding, it is the provisions of
the POEA Standard Employment Contract that would have to be applied. The contention that the claim for disability
compensation should be based on the provisions of the CBA which provides higher benefits is untenable as it is unequivocally
stated in the CBA that disability compensation under said Agreement is conditioned upon a finding that the injury is due to
an accident. In this case, complainant was repatriated due to illness, thereby excluding the coverage of his claim under the
CBA.

Under Section 20.B of the POEA Standard Employment Contract, the employer is liable for payment of disability
compensation arising from work-related illness/injury sustained or contracted during the period of the seafarer's
employment. Section 32-A of the same Contract enumerates what are deemed occupational illnesses, whereas Section 20.D
specifically states that illnesses not listed are disputably presumed to be work-connected.

Complainant in this case was discharged from his assigned vessel when he was found to be suffering from uncontrollable
hypertension, with specific requirement for cardiac consultation and related laboratory examinations. Upon arrival it is not
disputed that complainant underwent angioplasty and was assessed by his physician to be suffering from hypertensive
cardiovascular disease and coronary artery disease and determined to be unfit to resume employment as seafarer in any
capacity whatsoever.

Respondents' defense is predicated on the claim that complainant's illness is not work-related.

This argument is bereft of merit.

Complainant's diagnosed illness is listed under Section 32-A of the POEA Standard Employment Contract and therefore
compensable. It is to be noted that as against the medical certificates submitted by the complainant, respondents' claim of
non-work connection is anchored on a purported certification issued by the company-designated physician which, as found by
the Labor Arbiter, was not attached to the respondents' Position Paper.

Be that as it may, the fact that the illness is listed as an occupational disease is sufficient to overcome the respondents'
unsubstantiated allegation of the illness' absence of work causality.

As to the argument that it is the assessment of the company[-designated] physician that should be upheld, the Supreme
Court in Maunlad Transport Inc., et al. vs. Manigo (G.R. No. 161416, June 13, 2008) x x x reconciled its rulings on the same
issue and declared that the seaman does not automatically bind himself to the medical report of the company-designated
physician and that neither are the labor tribunals and courts bound by the medical report, the inherent merit of which will be
weighed and duly considered. It was further decreed that the seaman may dispute the medical report issued by the
company-designated physician by seasonably consulting another physician, which will be evaluated by the labor tribunal and
the courts based on its inherent merits.

Thus, as between the respondents' unsubstantiated declaration that complainant's illness is not work-related, and the
complainant's medical certificates detailing the extent and nature of his condition, the latter must be upheld as reflective of
the complainant's medical status, and resulting incapacity. Likewise, it must [also be] emphasized that complainant had been
continuously a seafarer for more than twelve (12) years with the respondents and as such his work must have at least
contributed and aggravated his illness which resulted in his incapacity.

The fact that complainant's condition may have improved, or that he is ambulatory, as found by the Labor Arbiter will not
militate against complainant's entitlement to disability compensation. What is important is that the complainant's medical
condition [from] which he suffered during his employment and while in the performance of his duties has rendered him
incapacitated to perform his usual job.

In Seagull Maritime Corp. et al. vs. Jaycee Dee et al., (G.R. No. 165156, April 2, 2001) the Supreme Court decreed that
disability should not be understood solely on its medical significance, but also on the real and actual effects of the injury [on]
the claimant's right and opportunity to perform work and earn a living. The test to determine its gravity is the impairment or
loss of one's capacity to earn and not its mere significance. Permanent total disability means disablement of the employee to
earn wages in the same kind of work or work of similar nature [- that for which] he was trained for or accustomed to
perform, or any kind of work which a person of his mentality and attainment can do.

Complainant is therefore entitled to the maximum disability compensation of US$60,000.00.

In addition, complainant is entitled to sickness wages corresponding to the remaining period of his ten[-]month contract.
While the POEA Standard Employment Contract provides a maximum period of 120 days sickness wage [benefit] (130 days
under the CBA) complainant is not entitled to the entire covered period considering that there was less than three (3)
months left of his contract. Given the nature of sickness wages, which are intended to compensate the seafarer while he is
ailing during the period of his contract, it goes without saying that his entitlement should be limited to one month and
thirteen days or 43 days equivalent to US$652.16.00 [sic].
Likewise, complainant is entitled 'to reimbursement [for] medical expenses as duly proven, considering that it is the
obligation of the respondents to provide medical attendance to the complainant.

The claims for moral and exemplary damages are denied, but complainant is nonetheless entitled to ten percent of the
monetary award as and for attorney's fees, having secured legal representation to pursue his valid claims.

WHEREFORE, premises considered, the decision dated April 20, 2010 is VACATED and SET ASIDE. Respondents are ordered
to pay complainant jointly and severally the Philippine peso equivalent at the time of actual payment
of US$60,000.00 representing permanent disability benefits and US$652.16.00 [sic] representing sickness
wages, [P]463,240.31representing reimbursement of duly proven medical expenses, and ten percent (10%) thereof as and
for attorney's fees.

SO ORDERED.37
chanrobles law

Petitioners filed a Motion for Reconsideration,38 insisting that respondent's illness is not work-related; that the company-
designated physician's assessment prevails; that respondent's illness is not a Grade 1 disability; and that consequently, he is
not entitled to sickness allowance and attorney's fees. However, in a Resolution dated October 29,2010, the NLRC held its
ground.39 chan roblesv irtuallaw lib rary

Ruling of the Court of Appeals

In a Petition for Certiorari40 filed with the CA and docketed therein as CA-G.R. SP No. 117748, petitioners sought to set aside
the NLRC dispositions, reiterating their arguments that respondent's disability was not work-related; that he disembarked
from the vessel due to a finished and completed employment contract, and not his illness; and that the NLRC committed
grave abuse of discretion in granting the awards. Petitioners also sought injunctive relief.

On October 28, 2011, the CA issued the herein assailed Decision containing the following pronouncement: cralaw lawlib rary

Petitioners assert that private respondent is [a] contractual employee, thus, when the contract expired upon private
respondent's return, the term contract has terminated. As such, any claims he may have under such a contract has also
terminated.

We disagree.

Section 18 (B) (1) of the POEA SEC provides:


"xxx xxx xxx

B. The employment of the seafarer is also terminated when the seafarer arrives at the point of hire for any of the following
reasons: chanRoblesv irt ual Lawlib rary

(1) when the seafarer signs-off and is disembarked for medical reasons pursuant to Section 20 (b) (5) of this Contract.

xxx xxx xxx " chanroble slaw

Section 20 (B) (5) of the same contract also states that upon the seafarer's sign-off from the vessel for medical treatment,
the employer shall bear the full cost of repatriations in the even[t] the seafarer is declared fit for repatriation. True, private
respondent signed-off and disembarked for medical reasons but this [is] not tantamount to the denial of the private
respondent's right to claim any disability benefits under the POEA SEC.

It bears stressing that seafarers are contractual employees. Their employment is governed by the contracts they sign and
are fixed for a period of time. Their entitlement to disability benefits is a matter governed, not only by medical findings but
also by contract. By contract means the Employment Contract and POEA Standard Employment Contract (POEA SEC), x x x

xxxx

Petitioners posit that the opinion of the company-designated physician is the best and most reliable source of information as
to the private respondent's state of health. The declaration that private respondent's illness is not work-related should not
only be given great weight in determining disability benefits but also be considered as conclusive.

xxxx

Any dispute as to private respondent's claim and state of health could have been easily resolved had the parties observed the
provisions of the POEA SEC. However, the parties did not jointly choose a third doctor to assess private respondent's
condition. We are therefore constrained to make a ruling based on the evidence already submitted by the parties and made
part of the records of the case, including the medical certification of private respondent secured from this [sic] attending
physicians.

It is undisputed that private respondent submitted himself to the treatment and medical evaluation of company-designated
physician, Dr. Robert Lim. It has also been established that private respondent was found to be suffering from a heart
ailment. The problem arose when he was diagnosed with hypertensive cardiovascular disease and the company-designated
physician opined that his illness is not work-related and found to be generic in origin.

xxxx

On the other hand, private respondent's own physician declares that the illness suffered by him is work-related/work-
aggravated. True, it is the company-designated physician who is entrusted with the task of assessing the seaman's disability
under the POEA SEC. Nonetheless, private respondent also had the right to seek medical treatment other than [from] the
company-designated physician. A claimant may dispute the company-designated physician's report by seasonably consulting
another doctor. In such a case, the medical report issued by the latter shall be evaluated by the labor tribunal and the court,
based on its inherent merit.41 The records indicate that when private respondent was given medical attention at the
Philippine General Hospital, he consistently complained of back pains as shown in the Clinical Abstract and Discharge
Summary. Thereafter, he was finally diagnosed with "ISCHEMIC HEART DISEASE; CORONARY ARTERY DISEASE, 3 VESSEL
CAD." We also note that Dr. Efren Vicaldo is a Cardiologist at the Philippine Heart Center. Therefore, Dr. Vicaldo's diagnosis
and assessment should be given credence.

xxxx

Thus, We see no reason to disturb the NLRC's findings and conclusion on this point xxx

xxxx

The POEA SEC provides a Schedule of Disability or Impediment for Injuries Suffered and Diseases Including Occupational
Diseases or Illness Contracted. Here, private respondent has been diagnosed to be suffering from the "Hypertensive
Cardiovascular Disease, Coronary Artery Disease; S/P percutaneous coronary intervention." Cardiovascular diseases are
classes of diseases that involve the heart and blood vessels (arteries and veins). The term cardiovascular diseases must be
understood not only in its generic form but also in its plural sense, x x x

Corollarily, cardiovascular disease is listed as an occupational disease under the POEA SEC. xxx

xxxx

It is sufficient that the foregoing elements be established by substantial evidence or such relevant evidence as a reasonable
mind to accept [sic] as adequate to justify a conclusion. In this case, private respondent's medical history and condition was
well-documented. When private respondent consulted the ship doctor, [Dr.] Lana Strydom, he had been complaining of back
pain post lifting and bending and was diagnosed of Mechanical Lower Back Pain with Muscle Spasm. He then had a blood
pressure of 177/119. After being repatriated xxx, Dr. Eduardo Buan found that private respondent was suffering [from]
Coronary Artery Disease, Three-Vesel Involvement. Thereafter, private respondent underwent Percutaneous Transcoronary
Angioplasty at the Philippine General Hospital. Obviously, these signs and symptoms did not develop overnight.

The significance of the Medical Referral Letter, Clinical Abstract and Discharge Summary cannot be overemphasized. They
confirmed that private respondent began to experience the signs and symptoms of hypertensive cardiovascular disease such
as back pains and fatigue which persisted when subjected to stress at work until he underwent angioplasty. It is undisputed
that private respondent was deployed with petitioners for more than twelve (12) years. Given the arduous nature of his job,
it must have at least aggravated any pre-existing condition he might have had. Clearly, there is substantial evidence to
support the reasonable connection between private respondent's work and development and exacerbation of his heart
ailment.

xxxx

As to the award of sickness allowance, we find it to be warranted by the undisputed fact on record that private respondent's
basic salary is US$ 455.00 per month. However, we modify that amount. Private respondent has a right to receive the
sickness allowance for 120 days pursuant to Section 20 (B) (3) of the POEA SEC and not 43 days as found by the NLRC.
Multiplying the 120-day sickness allowance due to private respondent on the basis of the correct monthly rate of US$455.00,
he should be awarded US$1,820.00 as sickness allowance.

As to the reimbursement of medical expenses, we will likewise modify this award. The records reveal that only the amount of
P104,955.31 are duly supported by official receipts.

As to the award of attorney's fees, the same is justified, as private respondent actually hired the services of a lawyer to
vindicate his right to claim his disability benefits. Attorney's fees is [sic] recoverable when the defendant's act or omission
has compelled the plaintiff to incur expenses to protect his interest. The attorney's fees awarded by the NLRC shall be
maintained but must reflect the modified amount of the sickness allowance and reimbursement of medical expenses.

With respect to petitioners' application for provisional remedies, there is no need to pass upon it as it has been rendered
moot and fait accompli by this decision.

WHEREFORE, premises considered, this petition is DISMISSED. The assailed Decision dated September 14, 2010 and
Resolution dated October 29, 2010 of the NLRC is [sic] AFFIRMED with MODIFICATION. Petitioners are hereby ORDERED to
jointly and severally pay private respondent Virgilio Mazaredo the following: (1) permanent disability compensation in the
amount of US$60,000.00; (2) sickness allowance in the amount US$1,820.00; (3) reimbursement of medical expenses in the
amount of PI04,955.31; and (4) attorney's fees equivalent to ten percent (10%) of the total monetary award.

SO ORDERED.42
chanrobles law

Petitioners filed a Motion for Reconsideration,43 but the CA denied the same in its March 28, 2012 Resolution. Hence, the
present Petition.

Issues

Petitioners submit the following issues for resolution: cra lawlawlib rary

1. Whether x x x the Court of Appeals' decision in awarding private respondent US$60,000.00 as disability benefits is in
accord with law or the applicable decisions of this Honorable Court despite the fact that private respondent
disembarked from the vessel due to a finished contract and the alleged cause of the seafarer's disability is not work-
related.

2. Whether x x x the Court of Appeals' decision in awarding private respondent sickness allowance, medical
reimbursement and attorney's fees is in accord with law or the applicable decisions of this Honorable Court
considering that private respondent has provided no basis for such claims.

3. Whether x x x the Court of Appeals' decision is in accord with law or the applicable decisions of this Honorable Court
considering that the findings of fact and legal conclusions both [sic] the Labor Arbiter and the NLRC are completely
different from its questioned Decision and Resolution.44
chanrobles law

Petitioners' Arguments

Praying that the assailed CA pronouncements be set aside and that a new judgment be rendered dismissing NLRC NCR Case
No. OFW (M)-07-10662-09, petitioners insist in their Petition and Reply45 that respondent has no right to any disability
benefits since his employment contract expired before he contracted his illness; that his illness is not work-connected; that
hypertensive cardiovascular disease is not compensable as it is not a work-connected illness under the POEA SEC; that the
company-designated physician already made a prior categorical assessment, contained in a March 22, 2009 Medical Report,
that respondent's illness was not work-related and thus not compensable; that the company-designated physician's
assessment - not that of respondent's appointed doctor, Dr. Vicaldo's - should be given credence; and that resultantly, the
CA committed grave abuse of discretion in awarding disability benefits, damages, and attorney's fees to respondent.

Respondent's Arguments

In his Comment,46 respondent counters that the assailed Decision of the appellate court is duly supported by the evidence
adduced; that his condition -hypertensive cardiovascular disease or coronary artery disease - was contracted during his
employment with petitioners; that his work contributed to the development of his condition and deterioration of his health;
that cardiovascular disease is listed as a compensable illness under the POEA SEC; that he is entitled to permanent and total
disability benefits as he has been unable to work even up to the present as a result of his illness which prevents him from
obtaining gainful employment; and that the POEA SEC is a contract of adhesion that should be construed liberally in his
favor, and strictly against petitioners.

Our Ruling

The Court denies the Petition.

Respondent's POEA SEC

Petitioners insist that respondent's employment contract expired before he contracted his illness; however, the evidence
clearly belies such claim. His 10-month POEA SEC was dated June 5, 2008; he was deployed on July 5, 2008, and repatriated
on March 22, 2009 - or sometime during the ninth or tenth month of his POEA SEC. Petitioners seem to base their argument
on respondent's previous contract, and not the current one in issue.

Compensability

On the issue of compensability, there is no question that respondent's condition — "coronary artery disease, three-vessel
involvement" — is a covered illness. It has consistently been held that cardiovascular disease, coronary artery disease, as
well as other heart ailments, are compensable.47 It likewise remains undisputed that given his 12 years of employment with
petitioners and the conditions he was subjected to as a seafarer, respondent's illness can be attributed to his work. As
correctly held by the CA, there is a reasonable connection between respondent's work and the development and exacerbation
of his heart ailment. During his employment as seafarer, respondent was consistently exposed to varying temperatures and
harsh weather conditions as the ship crossed ocean boundaries, and he may have been required to perform overtime work.
Indeed, "any kind of work or labor produces stress and strain normally resulting in wear and tear of the human
body."48 Moreover, as seafarer, respondent was constantly plagued by homesickness and emotional strain as he is separated
from his family, even as he had to contend with the perils of the sea while at work.49 chanroblesv irt uallawl ibra ry

Company-designated physician's Assessment

Under Article 192 (c)(l) of the Labor Code50 and Rule X, Section 2 of the Amended Rules on Employees Compensation,51 the
company-designated physician must arrive at a definite assessment of the seafarer's fitness to work or permanent disability
within the period of 120 or 240 days; if he fails to do so and the seaman's medical condition remains unresolved, the latter
shall be deemed totally and permanently disabled.

Respondent was repatriated on March 22, 2009 and was examined and treated by the company-designated physician. On
May 30, 2009, he was found to be suffering from "coronary artery disease, three-vessel involvement," and recommended to
undergo CABG, or bypass surgery. However, instead of the recommended bypass surgery, respondent underwent
percutaneous coronary intervention or angioplasty - an outpatient procedure - on July 6, 2009, because he did not have the
resources to pay for the more expensive bypass surgery. On July 6, 2009, the company-designated physician issued a
Cardiac Catheterization Laboratory Report recommending the administration of dual antiplatelets; he likewise stated that the
medical management of respondent's condition should be "maximized." Thereafter, it appears mat respondent's treatment
was discontinued, and no assessment of respondent's fitness to work or disability was made. Indeed, up to this stage of the
proceedings, there is no such declaration of fitness or disability issued by the company-designated physician.

Petitioners argue that there is a March 27, 2009 Medical Report issued by the company-designated physician which declared
that respondent's condition was not work-connected and not compensable. However, the record of the case is bereft of such
report. On the contrary, the last medical report issued by the company-designated physician on July 6, 2009 indicates that
respondent's condition has not been resolved; he has not been cured, and instead, the attending physician recommended
that medical management of respondent's condition should be maximized, meaning that his treatment must continue and the
medical care to be given to him must be augmented.

Respondent's condition remains unresolved even up to this day, and petitioners did not renew his contract; nor was
respondent able to work for other employers on account of his condition. Thus, applying the doctrine enunciated
in Magsaysay Mitsui OSK Marine, Inc. v. Bengson52 and Alpha Ship Management Corporation v. Cab53 - that an employee's
disability becomes permanent and total when so declared by the company-designated physician, or, in case of absence of
such a declaration either of fitness or permanent total disability, upon the lapse of the statutory 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 - respondent
is thus deemed totally and permanently disabled and entitled to the corresponding benefit under the POEA SEC in the
amount US$60,000.00.

The assessment of Dr. Vicaldo, an independent physician consulted by respondent, is irrelevant in this case. At most, it
merely corroborates the findings of the company-designated physician; what prevails is the opinion of the latter, particularly
the July 6, 2009 medical report recommending continued treatment and management of respondent's condition.

Pecuniary Awards

On the matter of pecuniary awards, the Court finds no reason to disturb the pronouncement of the CA in this regard. In the
exercise of its power of review, the findings of fact of the CA are conclusive and binding on this Court; it is not the latter's
function to analyze or weigh evidence all over again.

Deceitful Conduct

Finally, this Court has not failed to notice how petitioners' counsels of record, Attorneys Herbert A. Tria and Jerome T.
Pampolina, repeatedly attempted - all throughout the proceedings of this case, or for a period of six years - to deceive and
mislead the Labor Arbiter, the NLRC, the CA, and this Court, into believing that a favorable March 27, 2009 "Medical Report"
of petitioners' company-designated physician exists which supposedly shows that respondent's condition was not work-
connected and not compensable, when in fact there is none. Indeed, the CA was duped, and it fell for Tria and Pampolina's
scheme. This Court has taken pains to review in earnest - again and again - the record, in order to locate and determine
what the March 27, 2009 medical report contained, but it could not be found. Yet in their pleadings filed before this Court,
Atrys. Tria and Pampolina continued to refer to the document.54Instead, it appears that in truth and in fact, there is no such
document: from the start, the Labor Arbiter already noted its absence; in fact, the Labor Arbiter even admonished
respondents to "carefully go over the evidence they present or inadvertently fail to attach."55 But just the same, the CA was
deceived to the point of declaring that respondent "was diagnosed with hypertensive cardiovascular disease and the
company-designated physician opined that his illness is not work-related and found to be generic in origin"56 when no such
medical opinion exists on record. It would appear, therefore, that such "medical report" was contrived in order to satisfy the
legal requirement that the company-designated physician must make a definitive assessment of the employee's fitness to
work in order to justify a denial of disability benefits.

The Code of Professional Responsibility provides that "[a] lawyer shall not engage in unlawful, dishonest, immoral or deceitful
conduct" (Rule 1.01); he "shall not, for any corrupt motive or interest, encourage any suit or proceeding or delay any man's
cause" (Rule 1.03); he "shall not do any falsehood, nor consent to the doing of any in Court, nor shall he mislead, or allow
the Court to be misled by any artifice" (Rule 10.01); and he "shall not knowingly x x x assert as a fact that which has not
been proved" (Rule 10.02).

Let this serve as a warning to Attys. Tria and Pampolina. Another transgression shall warrant the initiation of proceedings for
their disbarment. Suffice it to state that lawyers should not transcend the bounds of propriety and commit a travesty before
this Court by willfully, intentionally and deliberately resorting to falsehood and deception in handling their client's case in
order to misguide, obstruct and impede the proper administration of justice.

WHEREFORE, the Petition is DENIED. The assailed October 28, 2011 Decision and March 28, 2012 Resolution of the Court
of Appeals in CA-G.R. SP No. 117748 are AFFIRMED, with the MODIFICATIONthat in addition to the adjudged amounts of
P104,955.31 as reimbursement for medical expenses and attorney's fees equivalent to 10 per cent (10%) of the total
monetary award, the awarded sums of US$60,000.00 representing permanent total disability compensation and
US$1,820.00 representing sickness allowance shall be paid by the petitioners to the respondent in Philippine pesos,
computed at the exchange rate prevailing at the time of payment.

Attorneys Herbert A. Tria and Jerome T. Pampolina are STERNLY WARNED for their unethical conduct. A repetition of these
acts shall be dealt with more severely.

SO ORDERED. chanroblesvi rtua ll

EN BANC

G.R. No. 204835, September 22, 2015

MOVERTRADE CORPORATION, Petitioner, v. THE COMMISSION ON AUDIT AND THE DEPARTMENT OF PUBLIC
WORKS AND HIGHWAYS, Respondents.

DECISION

DEL CASTILLO, J.:

Obligations arising from contracts have the force of law between the contracting parties and should be complied with in good
faith.1
cralawred nad

This Petition for Certiorari2 under Rule 65, in relation to Rule 64, of the Rules of Court assails the December 29, 2011
Decision3 of respondent Commission on Audit (COA), which denied petitioner Movertrade Corporation's claim for payment for
dredging works with side dumping of spoils in Pampanga Bay and the primary Pasac-Guagua-San Fernando Waterways in
Pampanga amounting to P7,354,897.10. Likewise assailed is the November 5, 2012 Resolution4 of respondent COA denying
petitioner's Motion for Reconsideration.

Factual Antecedents

On February 7, 1996, petitioner and respondent Department of Public Works and Highways (DPWH) entered into a Contract
Agreement5 for dredging and other related works in Pampanga Bay and the primary Pasac-Guagua-San Fernando Waterways
in Pampanga, which were affected by the Mt. Pinatubo eruptions and mudflows, in the total amount of PI 88,698,000.00,
broken down as follows: ChanRoblesvi rt ualLawlib rary

Particulars Volume Amount


Dredging Works 3.35 million cu. m. P148,698,000.00
Distance Pumping provisional sum 20,000,000.00
Spoil Site Developmentprovisional sum 20.000,000.00
Total P188,698,000.006
The Mount Pinatubo Emergency-Project Management Office of respondent DPWH, headed by Director Florante Soriquez
(Director Soriquez), implemented and supervised the project.7 cral awredna d

On August 13, 1997, due to the alleged absence of spoil sites, petitioner requested permission from Director Soriquez to
allow it to undertake side dumping (dumping within the river) chargeable against the dredging works.8 c ralaw rednad

On August 18, 1997, Director Soriquez issued a letter9 denying the request. He reminded petitioner that side dumping was
not allowed and that as per the report of Engr. Marcelino P. Bustos (Engr. Bustos), the Area Engineer of respondent DPWH,
petitioner could still pump the dredge spoils to the following spoil sites: Pascual "A," Pascual "B," and the Regala fishpond.
On September 29, 1997, Engr. Bustos issued a letter10 requiring petitioner to provide additional pipelines for distance
pumping. Engr. Bustos also reiterated in his letter that "Pascual spoil site can still accommodate more materials" and that
'[respondent DPWH] is not allowing or giving any instruction to use side dumping process for whatsoever reason."11 cralawred nad

However, despite the denial and the prohibition issued by Director Soriquez and Engr. Bustos, petitioner continued to side
dump.12 Thus, on October 1, 1997, Director Soriquez issued another letter,13 which reads: ChanRoblesvi rtua lLawl ibra ry

We were informed by our field personnel that in spite of the field memo dated 29 September 1997 x x x issued to your
Engineer at the 28" [diameter] dredger and followed by a letter dated 30 September 1997 by Jose C. Gabriel, Engineer IV of
this office, your 28" [diameter] dredger presently operating near the town proper of Sasmuan, is still dredging through side
dumping.

Please be informed that side dumping activities in the area is not allowed which this office has previously informed your end
thru our letter of 18 August 1997. There is still an available spoil site where spoils could be dumped thru distance pumping
and the other one is the Regala spoil site, which has to be developed as previously instructed based on our previous letters.14

Still, petitioner ignored the prohibition and continued to side dump.15 cra lawred nad

When the project was in its final phase of completion, petitioner, through its President, Mr. Wenceslao Zingapan, wrote a
letter16 dated October 15, 1997 to then DPWH Secretary Gregorio Vigilar (Secretary Vigilar) asking for payment for the
dredging work it rendered. In the letter, petitioner explained that it was forced to side dump the dredge spoils along the
project waterway for the following reasons: ChanRoblesvi rtua lLawl ibra ry

1.0)The strong and heavy siltation if not avoided will ground our 28" Dredge and the
grounding will render the equipment inutile for a considerable time beyond the
contract despite the application of extraneous salvaging measures, and
2.0)Even if the extraordinary effort of the Project Implementing Office shall be factored
in the provision and making available to us the needed spoil site, the Regala
Property which was presented to us for development of a dike thereon, is a mere 2-
hectare size and in our long experience in shallow river dredging, is uneconomical,
unsafe and inoperable for utilization as an effective dumping site. If the
development of the Regala property is pursued, the disproportionate heavy pressure
pumping induced by our huge deep sea 28" Dredge will cause a dangerous spillage
back to the middle of the waterway. The resultant volume equivalent to the
containment capacity of the 2-hectare size Regala property will create a dike-like
[blockade] transversal to the length of the waterway. Navigation and commerce
along the waterway then will be put to standstill.17
On October 24, 1997, Director Soriquez issued a letter18 informing petitioner of the denial of its request for payment. He
said:ChanRoblesvi rt ualLaw lib rary

Please be informed that side dumping of your [dredge] spoils between Sta. 15+000 to Sta. 14+000 was not allowed by this
Office thru our letters of August 18, 1997 and October 1, 1997 to your end. The strong and heavy siltations you are
mentioning at the vicinity of Sta. 14+000 (mouth of San Pedro Creek) was not too alarming, since the flow of the
floodwaters and siltations coming from the confluence of Pasig-Potrero River is x x x going downstream through San
Francisco River at Minalin, as a result of the heavy rains caused by typhoon Ibiang and not at Guagua River and San Pedro
Creek. The siltations at the subject section were already there since the breaching of the transverse dike.

Furthermore, with respect to spoil site availability, you have two (2) alternatives: a] Utilize Pascual "A" spoil site, thru
distance pumping wherein the volume of 50,000 cu. m. of silt materials could still be accommodated, and b] Utilize Regala
fishpond, even with only two (2) hectares in area, can contain at least 60,000 cu. m. of dredge spoils, the same area as the
spoil site at Malusac portion (S3-1) that you have used previously using your 25" dia. Dredger.

In view of the above, we cannot recommend any compensation for the volume of silt materials side dumped based on your
letter of October 15,1997.19

When the project was completed, respondent DPWH paid petitioner the total amount of P180,029,910.15, covered by various
disbursement vouchers.20 The amount of P7,354,897.10, representing the 165,576.27 cubic meters dredging work rendered
by petitioner, however, was not paid.21 cralaw rednad

On June 18, 1998, the Director III of the Legal Service of DPWH, Mr. Cesar D. Mejia, issued a Memorandum22 to Director
Soriquez expressing his position that petitioner should be paid for work accomplished as shown in the As-Built Plans and the
Statement of Work Accomplished without the necessity of issuing a variation order.

On January 4, 2000, then DPWH Secretary Vigilar wrote a letter stating that the agency will no longer entertain any request
for reconsideration on the subject matter.23 Petitioner, however, continued to demand payment for the said dredging works.

On February 24, 2005, former DPWH Acting Secretary Hermogenes E. Ebdane, Jr. (Secretary Ebdane Jr.) issued Department
Order No. 51, creating an Ad Hoc Committee to further evaluate the payment claim of petitioner.24 c ralaw rednad

On October 5, 2005, the Committee rendered a Resolution25 recommending payment of the claim in the amount of
cralaw red

P7,354,897.91 provided petitioner restores to its original grade elevation the section where dredge spoils were dumped. One
of the members of the Committee, Regional Director Ramon P. Aquino (Regional Director Aquino), DPWH-Region III, San
Fernando City, Pampanga, however, did not agree with the recommendation and maintained that petitioner is not entitled to
payment for breach of contract.26 And since Secretary Ebdane Jr. likewise did not agree with the Resolution, he resolved to
return the same to the Committee for re-evaluation.27 c ralawre dnad

On December 8, 2006, the DPWH Ad Hoc Committee rendered an amended Resolution,28 to wit: ChanRoblesvi rtua lLawl ib rary

WHEREFORE, BE IT RESOLVED AS IT IS HEREBY RESOLVED THAT PAYMENT FOR THE CLAIM OF MOVERTRADE
CORPORATION FOR WORK PERFORMED UNDER THE DUTCH-FUNDED MT. PINATUBO AFFECTED WATERWAYS PROJECT
SHALL BE GRANTED PROVIDED THAT THE IMPLEMENTING OFFICE SHALL DETERMINE THE AMOUNT OF PAYMENT DUE TO
THE CONTRACTOR.29

Regional Director Aquino and Secretary Ebdane Jr., however, did not sign amended Resolution as they did not agree with the
recommendation.30 cralaw rednad

On July 14, 2009, petitioner offered a reduction of P300,000.00 on its claim if payment is made within a month.31 cralaw rednad

On January 22,2010, Assistant Secretary Dimas S. Soguilon, the Chairman of the Extraordinary Claims and Review
Committee, DPWH, issued a Memorandum finding petitioner's claim for payment to be a money claim, which is under the
jurisdiction of respondent COA.32 cralawrednad

Accordingly, on February 19,2010, petitioner filed with respondent COA a money claim against respondent DPWH for
payment of dredging works with side dumping of spoils in Pampanga Bay and the primary Pasac-Guagua-San Fernando
Waterways in Pampanga amounting to P7,354,897.10.33 cralawrednad

Ruling of the Commission on Audit

On December 29, 2011, respondent COA rendered Decision No. 2011-106 denying the money claim34 of petitioner for lack of
merit.35 Respondent COA ruled that petitioner is not entitled to payment for the dredging works for breach of
contract.36 Paragraph 11 of the Contract Agreement prohibits side dumping as it specifically requires that dredge spoils
should be dumped at pre-designated areas to prevent them from spilling back into the channel.37 It also noted that
petitioner's claim for payment was never approved by respondent DPWH as the Resolution and amended Resolution issued
by the DPWH Ad Hoc Committee were not signed by Secretary Ebdane Jr.38 cralaw rednad

Aggrieved, petitioner moved for reconsideration39 insisting that there was no breach of contract and that even if there was a
breach, it is still entitled to payment under the principle of quantum meruit.

On November 5, 2012, respondent COA issued a Resolution denying the motion for reconsideration for lack of merit.40 It
stood pat on its finding that there was a breach of contract as the side dumping employed by petitioner was never
authorized, verbally or in writing.41 As to the principle of quantum meruit, respondent COA explained that the principle
applies only when there is no written contract between the parties.42 In this case, since there is a written contract entered
into by the parties, the principle of quantum meruit cannot be applied.43 Thus, petitioner should bear the loss for breaching
the contract.44cralawrednad

Issue

Hence, petitioner filed the instant Petition raising the core issue of whether petitioner is entitled to the payment of
P7,354,897.10 for dredging works.

Petitioner's Arguments

Petitioner ascribes grave abuse of discretion on the part of respondent COA in denying its money claim.45It insists that it did
not violate paragraph 11 of the Contract Agreement and alleges it was respondent DPWH who failed to provide adequate
spoil sites.46 To substantiate its allegation, petitioner cites Director Soriquez's letter47 dated June 6, 1997 addressed to the
Executive Director of the Mt. Pinatubo Commission, where Director Soriquez mentioned that "[petitioner's] equipment can no
longer continue the dredging works due to non-availability of spoil sites [as] the spoil sites being used in the area have
already been utilized to full capacity."48 This statement allegedly proves that respondent DPWH knew that there were no
available spoil sites left, which justifies petitioner's non-compliance with paragraph 11 of the Contract Agreement.49 cralawre dnad
Petitioner likewise denies side dumping the dredge spoil and claims that what it did was actually "free dumping," wherein the
spoils during dredging were exposed to strong current of the water and were carried away by it towards the mouth of Manila
Bay.50 Although it admits that it used the term "side dumping" in its letters, it claims that it was used to refer to a situation
where the spoils are not being dumped at the spoil sites.51 In any case, petitioner claims that despite the method of disposal
used, the waterways remained navigable except for minimal siltation when the DPWH engineers inspected the subject
waterways.52 And since the dredging works benefited the public and the government, petitioner asserts that it is entitled to
its money claim in the highest interest of justice and equity.53 cralaw rednad

Respondents' Arguments

Respondents, through the Office of the Solicitor General (OSG), contend that respondent COA committed no grave abuse of
discretion in denying the money claim because petitioner in disposing the dredge spoils through side dumping violated
paragraph 11 of the Contract Agreement.54 They maintain that respondent DPWH provided adequate spoil sites and that
assuming that these were insufficient, petitioner should have ceased dredging operation in the meantime instead of
breaching the terms and conditions of the Contract Agreement.55 Also, petitioner is not entitled to its money claim as "a
breach of contract cannot be the source of rights or the basis of a cause of action."56 Moreover, the dredging work did not
benefit the government as side dumping, which entails dumping of dredge spoils back into the river, goes against the very
purpose for which the dredging works were done.57 c ralaw rednad

Our Ruling

The Petition must fail.

Paragraph 11 of the Contract Agreement reads: ChanRoblesvi rtua lLawl ibra ry

11. The disposal of dredge spoils shall be made at pre-designated areas to be provided by the OWNER, including land
access as appropriate, to the CONTRACTOR as follows: ChanRobles virtua lLawl ibra ry

In case of cutter suction dredge or other similar type with pipeline discharge, the disposal area shall be within a
maximum distance of 500 meters beyond which the CONTRACTOR shall be entitled to additional payment at [the]
rate of P3.00 per cu. m. per 500 meters increment, but the total discharge distance shall not exceed 2,000 meters.

The CONTRACTOR shall develop and maintain the disposal areas during use and, together with the OWNER'S
representative shall monitor and evaluate their effectiveness, to ensure that discharges thereof, into the primary
waterway, are minimized.58

Under the said provision, petitioner should dispose of the dredge spoils by dumping them at the pre-designated areas
provided by respondent DPWH. Petitioner should also develop and maintain the designated disposal areas during use.
Petitioner, however, failed to comply with the said provision as it opted to side dump 165,576.27 cubic meters of dredge
spoils back to the river. To justify its action, petitioner claims that respondent DPWH failed to provide adequate spoil sites.

We do not agree.

It is evident from the records that respondent DPWH provided spoil sites to petitioner. Director Soriquez, in his letters dated
August 18, 1997 and October 1, 1997, specifically mentioned Pascual "A," Pascual "B," and the Regala fishpond as
designated spoil sites. Engr. Bustos, in his letter dated September 29, 1997, also reminded petitioner of the available spoil
sites. These letters clearly show that contrary to the claim of petitioner, respondent DPWH complied with its obligation to
provide spoil sites.

Petitioner, however, contends that these letters contradict Director Soriquez's earlier letter dated June 6, 1997 addressed to
the Executive Director of the; Mt. Pinatubo Commission. In the said letter, Director Soriquez was requesting the Mt. Pinatubo
Commission to issue a certification to the OSG to confirm the availability of funds for the expropriation of certain properties
as "the spoil sites being used have already been utilized to full capacity."59 cralawrednad

At first glance, the letter dated June 6, 1997 issued by Director Soriquez seems to contradict his subsequent letters. But a
careful review of the records leads us to believe otherwise. First of all, when Director Soriquez informed petitioner that there
were still available spoil sites, he cited the report of Engr. Bustos as basis. Thus, it is possible that at the time Director
Soriquez issued the lelter dated June 6, 1997, he was not aware that there were still available spoil sites in some other areas
and that it was only after he received the report of Engr. Bustos that he became aware of the availability of said spoil sites.
And considering that petitioner's request for side dumping was made on August 13, 1997 or more than two months after
Director Soriquez wrote to Executive Director Fernando, it is also possible that during that span of time, respondent DPWH
was able to look for other possible spoil sites. In fact, in the Memorandum dated December 17, 1999 addressed to then
DPWH Secretary Vigilar, Director Soriquez explained that: ChanRoblesvi rtua lLawl ib rary

A. The spoil sites referred to in the subject communications of the contractor with a total of 30.2 hectares, such as the 10
hectares of Mrs. Olivia Pascual, 7.7. hectares of P. Santos, et al., and the 12.5 hectares of F. Gutierrez, did not materialize
due to funding constraint. However, a written instruction was issued to the contractor to utilize further the existing 5.0
hectares of Mrs. Olivia Pascual adjacent to the 10.0 hectares owned also by Mrs. Pascual, the 2 hectares owned by Mr.
Regala and the Mangalindan/Manansala property with an area of 3 hectares. The combined total area of 10 hectares for the 3
spoil sites could accommodate 168,517 cu. m. The total side dumping volume is 165,000 cu. m. The contractor was given
ample time to develop these spoil sites to contain the [dredge] volume but unfortunately they insisted on side dumping
because they lack sufficient pipelines for distance pumping with an allocation of P20 Million in the Contract Agreement. Such
provision was purposely provided in the contract in the event distance pumping would be required but the contractor never
availed of this provision and undertook side dumping activities without first obtaining the approval of the DPWH.60

In view of the foregoing, we find petitioner's contention untenable as the letter dated June 6, 1997 does not necessarily
contradict the subsequent letters issued by Director Soriquez.

Neither can petitioner justify the breach by merely alleging that the spoil sites provided by respondent DPWH were
inadequate, uneconomical, unsafe, and inoperable.61 To begin with, no evidence was presented to support these allegations.
And even if true, petitioner failed to inform respondent DPWH of these problems. In fact, after receiving Director Soriquez's
letter dated August 18, 1997 denying its request to side dump the dredge spoils, petitioner did not ask for a reconsideration
nor did it issue any letter questioning the capacity of the designated spoil sites. Instead, it was only after the dredge spoils
were side dumped or when petitioner was already following-up its claim for payment that it explained in writing its reasons
for side dumping.62c ralaw rednad

Respondent DPWH, on the other hand, consistently prohibited side dumping as reiterated in the letters dated September 29,
1997 and October 1, 1997 issued by Engr. Bustos and Director Soriquez, respectively. However, notwithstanding the
prohibition, petitioner continued with its side dumping activities without any explanation. Petitioner's blatant defiance of the
prohibition on side dumping is a violation of the contract that should not be ignored just because petitioner was able to
complete the project.

It is a basic principle in law that contracts have the force of law between the parties and should be complied with in good
faith.63 In this case, the contract specifically provides the manner of disposing dredge spoils. Thus, petitioner cannot
unilaterally change the manner of disposal without first amending the contract or obtaining the express consent or approval
of respondent DPWH. Otherwise, petitioner would be guilty of breaching the contract. "[A] breach occurs where
the contractor inexcusably fails to perform substantially in accordance with the terms of the contract."64 Without a doubt,
petitioner's failure to dump the dredge spoils at the designated spoil sites constitutes a breach.

As a last-ditch effort, petitioner for the first time claims that the dredge spoils were not side dumped but were "freely"
dumped. Petitioner's attempt to split hairs between "side dumping" and "free dumping" is unavailing as both are not allowed
under paragraph 11 of the Contract Agreement. It makes no difference whether petitioner performed side dumping or free
dumping activities considering that in both instances, dredge spoils are not dumped at spoil sites. What is crucial is the
admission of petitioner that it did not dump the dredge spoils at the designated spoil sites but dumped them back into the
river.65The act of dumping dredge spoils back into the river clearly violates paragraph 11 of the Contract Agreement. And as
aptly explained by respondent COA: ChanRoblesvirtual Lawlib rary

Furthermore, in the engineering point of view, for purposes of improving the discharge capacity of the channel, dredging
through side dumping is not a sound engineering practice. The purpose of pre-designated spoil sites is to provide
containment of the [dredge] spoils to ensure that the same will not flow back into the channel, otherwise
government funds would be wasted because of faulty dredging procedure. (Memorandum dated October 23, 2001 of
OIC-Project Director Amando R. Ramirez, MPE-PMO, DPWH)(Emphasis supplied)66

Considering that the dredge spoils were dumped back into the river, we cannot be certain, as pointed out by the OSG, that
the government benefited from petitioner's 165,576.27 cubic meters dredging work. And it would be unfair to allow
petitioner to benefit from its breach. Besides, petitioner cannot claim that it was not duly compensated for the services it
rendered as the amount of P7,354,897.10 is only a part of the P188,698,000.00 contract. In fact, petitioner admits that it
was already paid the amount of P180,029,910.15.67 Thus, we agree with respondent COA that petitioner is not entitled to its
money claim for the 165,576.27 cubic meters dredging work as it was done in contravention of paragraph 11 of the Contract
Agreement.

All told, we find no grave abuse of discretion on the part of respondent COA in denying petitioner's money claim as the
evidence on record undoubtedly supports the factual findings of respondent COA. We need not belabor that in the absence of
grave abuse of discretion, the decisions and resolutions of respondent COA are accorded not only with respect but also with
finality, not only on the basis of the doctrine of separation of powers, but also of its presumed expertise in the laws it is
entrusted to enforce.68

WHEREFORE, the Petition is hereby DISMISSED for lack of merit. The assailed December 29, 2011 Decision and the
November 5, 2012 Resolution of respondent Commission on Audit are hereby AFFIRMED.

SO ORDERED.

SECOND DIVISION
G.R. No. 201945, September 21, 2015

MAERSK-FILIPINAS MAERSK-FILIPINAS CREWEVG, INC., INC./A.P. MOLLER A/S, Petitioners, v.ROMMEL RENE O.
JALECO, Respondent.

DECISION

DEL CASTILLO, J.:

Assailed in this Petition for Review on Certiorari1 are: 1) the March 13, 2012 Decision2 of the Court of Appeals (CA) granting
the Amended and/or Supplemental Petition for Certiorari in CA-G.R. SP No. 118688; and 2) the CA's May 21, 2012
Resolution3 denying reconsideration of its assailed Decision.

Factual Antecedents

On December 4, 2006, respondent Rommel Rene O. Jaleco was hired by petitioner Maersk-Filipinas Crewing, Inc. (Maersk),
on behalf of its foreign principal and co-petitioner herein, A.P. Moller A/S (Moller), as Able Bodied Seaman on board the
vessel "M/T Else Maersk."4 Respondent boarded "M/T Else Maersk" on January 16, 2007 and commenced his work.

Sometime in February 2007, respondent complained of intermittent pain on the left buttock radiating to the. lower back and
left groin.5 When examined in Singapore on April 13, 2007, his lumbosacral spine x-ray generated normal results but he was
diagnosed as having "suspected prolapsed intervertebral disc." Nonetheless, he was declared fit to sail.6

On April 29, 2007, respondent was once more examined in Dubai, United Arab Emirates, where the doctor diagnosed him
with "acute lumbago with left-sided sciatica r/o disc prolapsed."7 He was advised to obtain an MRI8 scan of the lumbar spine,
undergo neurosurgical review, and to avoid lifting heavy objects for one week. Moreover, he was declared unfit for duty.9

Respondent was repatriated on May 1, 2007 and was immediately referred to the company-designated physician, Dr. Natalio
Alegre II (Dr. Alegre), who examined him on May 2 and 3, 2007. He found respondent to be suffering from "paralumbar
spasm and limitation of movement due to pain. Straight leg raise is normal and sensation intact."10 He prescribed medication
and physical therapy at three sessions per week.11

On May 17, 2007, respondent was again examined, and found to still have "left buttock pain radiating to his lower back and
lateral side of his left thigh which is most severe at 8/10 on a pain scale x x x (which) is slightly relieved with intake of his
pain medications." MRI scan was recommended12 as well as epidural steroid injection and further physical therapy.

When respondent was examined on June 4, 2007, Dr. Alegre found that he "still has low back pain radiating to his left lower
extremity even with physical therapy. This is associated with numbness on the lateral aspect of his left leg and paralumbar
spasm is still present."13 Thus, further medication, physical therapy and epidural steroid injection were recommended.

Respondent was confined at the St. Luke's Medical Center from June 13 to 19, 2007 and from July 24 to 27, 2007.14 On
June 16, 2007,14 he underwent epidural steroid injection,15 as well as electromyogram and nerve conduction velocity (EMG-
NCV) testing.16

Respondent returned on June 20, 2007, complaining of headache and low back pain. He was diagnosed with stage 1
hypertension and given medication.17

On June 29, 2007, respondent was evaluated by a spine surgeon who recommended provocative discography to find out
whether he will need a disc replacement.18

In his July 9, 2007 Progress Report,19 Dr. Alegre noted the evaluation of respondent by a spine surgeon who declared that
the EMG-NCV tests returned normal20 and "beginning L5S1 disc herniation." Dr. Alegre further stated: cralawlaw lib rary

The low back pain intensity is not commensurate with the alleged symptoms of back pain so that a Provocative Discography
is recommended and the schedule will follow as the operating room right now is fully book [sic].

Likewise an incidental note of a probable small cyst in the left kidney was noted. Since this is only an incidental finding, we
would need your approval to evaluate Ms.21 chanrobles law

On July 26, 2007, respondent underwent Provocative Discography22 at the St. Luke's Medical Center which generated the
following result:
c ralawlawli bra ry

Finding: There is midposterior Grade 1 annular tear with contrast medium leakage more to the left.

CONCLUSION: ELICITED AREAS ARE NOT CONCORDANT WITH USUAL PAIN BASED ON PATIENT'S EXPERIENCE. 23 chan robles law

On July 27, 2007, Dr. Alegre issued another Progress Report24 stating essentially as follows: c ralawlawl ibra ry
Objective Findings:
Tenderness over the loose paralumbar muscles.
Truncal mobility restricted.
Small Cyst in the left kidney.
chanrobles law

Assessment:
Beginning Disk Dessication, L5S1
Small Cyst, Left
Urology evaluated the small kidney cyst and opined that it will be observed as it is small and no impairment of kidney
function is noted.

Provocative Discography was done on 26 July 2007 and showed leakage of contrast material at the midposterior aspect of
the disk more towards the left thru a mild posterior annular tear. It was opined by Interventional Radiology that the pain
complained of is not commensurate with the Discography.

Plans: chanRoblesvi rtua lLaw lib rary

As the pain is not commensurate with the discography, personality reasons should be evaluated to rule out malingering is for
your approval the form of [sic] Minnesota Multiphasic Personality Test. Approximate cost is Phpl0,000.00.25 chanrob leslaw

On August 15, 2007, respondent took the Minnesota Multiphasic Personality Inventory - 2 Test26 (MMPI-2) at the St. Luke's
Medical Center. The results of the test are contained in Dr. Alegre's August 30,2007 Progress Report,27 thus: cra lawlawlib rary

The MMPI-2 Test provides a number of validity indices that are designed to provide an assessment of factors that could
distort the results of testing. Such factors could include failure to complete test items properly, carelessness, reading
difficulties, confusion, exaggeration, malingering or defensiveness.

During the interview phase, he was highly defensive finishing the test in more than 5 hours which is normally completed
within P/2 hours. He expressed doubts as to whether his injury or back pain will be cured doubting about his capacity and
fitness to return to work. He already approached an attorney for disability claims and he is expecting a large sum of money
from his claim. According to him, he was informed and-encouraged by the ship's "Master" on board regarding disability
benefits.
The test showed that he tried to create a favorable impression of himself by not being honest in responding to the items. He
reported a number of vague physical complaints and the development of physical problems occur when he is under stress.
The medical history is characterized by excessive and vague physical complaints, weakness and pain. He tends to rely on
hysterical defenses or exaggeration in the face of conflict. The test also showed Mr. Jaleco converting psychological conflict
into physical complaints.

Based on the test protocol and interview, there are indicators that Mr. Jaleco is malingering and exaggerating hi [sic]
symptoms. The essential feature is the intentional production of exaggerated physical symptoms motivated by external
incentives - obtaining financial compensation and avoiding work.28 chanrobles law

On September 4, 2007, respondent underwent another check-up. The results thereof are contained in Dr. Alegre's Progress
Report29 of even date, thus: crala wlawlibra ry

Subjective Complaints:
Complained of persistence of back pains

Objective Findings:

1. Slightly spastic paraspinal muscles


2. Truncal mobility functional
3. Straight leg raising test normal
4. Personality test (MMPI) indicates malingering and exaggeration of symptoms

Assessment:
Mild Disc Dessication, L5S1

Plans: chanRoblesvi rtua lLaw lib rary

Physical therapy

If a disability is to be assessed now, a disability grade of 11 [would be obtained] based on the POEA Contract, Chest-Trunk-
Spine #6 - Slight Rigidity or 1/3 loss of motion or lifting power of the trunk.30 chanroble slaw

On February 8, 2008, respondent underwent physical examination by an independent physician, Dr. Ramon Santos-Ocampo
(Dr. Santos-Ocampo), at the Department of Radiology of the Makati Medical Center. Dr. Santos-Ocampo's Clinical
Abstract31 of the examination reads as follows: cralawlawl ibra ry

Physical Examination: chanRoblesv irtual Lawlib rary

There is no tenderness elicited when pressing on the left buttock. Slight tenderness and radiating pain was noted when the
L5-S1 facet joints were pressed.

Assessment;
Sacro-iliitis, left and Bilateral facet joint arthropathy, L5-S1

Plan: chanRoblesvi rt ualLawlib rary

Local anesthesia injection into the left sacro-iliac joint to determine significance of the sacro-ilitis. If there is a slight
improvement or complete improvement, then the sacro-iliac joint will be injected with steroids and long-acting local
anesthesia. Then bilateral facet joint injections at L4-5 and L5-S1 will be performed on the same day.32 chanrob leslaw

On April 28, 2008, respondent consulted another independent physician, Dr. Alan Leonardo R. Raymundo (Dr. Raymundo) -
an orthopedic surgeon of the Philippine Orthopedic Institute - who issued a Medical Report33 which states: cra lawlawlib rary

This 37-year-old seaman was repatriated here last May 2007, because of low back pain after carrying a heavy load while on
board a ship. He was first seen at St. Luke's Medical Center when he was repatriated x x x and has undergone an epidural
shot for his low back pain. His MRI plates show no significant disc protrusion that might be impinging on the nerve and his
EMG NCV results were also normal. However he continuous [sic] to have low back pain whenever he would walk for long
distances and whenever he would sit for long periods. He claims that his pain is actually in the area of the sacroiliac joint
radiating down the buttock area and posterior to the thigh when this would occur.

He was referred to Dr. Ramon Santos Ocampo to look for the pain generator and injection of the Facet Joint and the
Sacroiliac Joint of the Lumbar Spine were done. After the procedure the pain was relieved, however after three weeks the
pain recurred.

Because of the recurrence of the pain and considering the nature of his job as a seaman, I told him that it would be
impossible for him to return to his previous work duties. I would therefore declare him not fit for duty.34 chanroble slaw

On October 8, 2009, respondent underwent a second MRI of the lumbar spine at the Makati Medical Center. The results are
as follows: cralawlaw lib rary

Examination of the sagittal imaging demonstrates normal alignment of the vertebral bodies. The lumbar curvature is
maintained. The conus medullaris is seen to be normal and ends at T12-L1 level. No abnormal signal is seen within the
conus.

Focal T1W/T2W hyperintensity is noted in the anterosuperior corner of the L3 vertebral body. There is also a Tl W/T2W
hyperintense focus in the L5 vertebral body. Examination of the intervertebral disc reveals no signal abnormality. No
paraspinal or intraspinal mass noted.

T12-L1: No evidence of disc bulge or herniation.


LI-2: No evidence of disc bulge or herniation.
L2-3: No evidence of disc bulge or herniation.
L3-4: No evidence of disc bulge or herniation.
L4-5: No evidence of disc bulge or herniation.
L5-S1: Focal left of central disc protrusion mildly abutting the ipsilateral traversing nerve root.

A 1.0 cm. cyst is noted in the superior pole of the left kidney.

IMPRESSION: chanRoblesvirt ual Lawlib rary

1. Degenerative osteitis, L3 vertebral body


2. L5 vertebral body hemangioma
3. Focal left of central disc protrusion mildly abutting the ipsilateral traversing nerve root, L5-S1.
4. Above findings are generally unchanged from previous study.
5. Left renal cyst35 chanrobles law

On October 12, 2009, respondent was again examined by Dr. Raymundo, who thereafter issued another Medical
Report36stating as follows: c ralawlawli bra ry

The patient is here today with his new MRI results showing a disk protrusion at the level of L5-S1 with [sic] mildly abutting
the ipsilateral traversing nerve root. I have already given this patient a rating of grade 8 with a moderate rigidity or % loss
of motion or lifting power of the trunk.
If I were to re-evaluate this, the functional capacity of the patient is actually more severe than this grading. However, the
next grading which is grade 6 indicates or points to a fracture of the dorsal or lumbar spine which the patient does not have.
However, the severity of his symptom is almost equal to a grade 6 with severe or total rigidity or total loss of lifting power of
heavy objects.

In my opinion, despite the absence of a fracture of the dorsal lumbar spine, I will still give this patient a rating of grade 6 in
terms of pain and affectation of the spinal cord.37
chanrobles law

No further attempt to secure the opinion of a third physician was made by the parties. Instead, respondent filed a complaint
for illegal dismissal, nonpayment of salaries/wages and other benefits, disability claims, medical expenses, damages, and
attorney's fees against petitioners and Maersk General Manager Jerome P. delos Angeles (delos Angeles) before the National
Labor Relations Commission (NLRC) docketed as NLRC-NCR Case No. (M) 12-17087-08.

In his Position Paper,38 respondent claimed that in February 2007, while performing the difficult task of ship-to-ship mooring
on deck - which involved lifting and pulling heavy wires and ropes thus placing pressure and stress on the back and spine -
something in his spine snapped and he felt terrible lower back pain such mat he could not stand erect or carry anything for
more than a month. He averred that despite his protestations and appeals for medical intervention, petitioners - in bad faith
and acting with inexcusable negligence - failed and refused to give him immediate medical attention. He was forced to
continue working in spite of his injury and the excruciating pain it caused him. For this reason, his injury and pain were
aggravated. It was only after two months from his injury - or in April 2007 - that he was medically attended to. Despite post-
repatriation treatment and medication by the company-designated physician, his injury persisted and incapacitated him from
returning to work. After consulting an independent physician, he was declared unfit for sea duty and was given a Grade 6
disability raiting. For petitioners' acts and refusal to compensate him, he suffered injury for which he should be indemnified.
Thus, he prayed that petitioners be declared liable for malice or inexcusable negligence which caused the aggravation of his
injury, and that they be ordered to pay him a) disability benefits corresponding to a Grade 6 rating, b) reimbursement for his
medical and other expenses, c) compensation for permanent injury based on the Consolidated Workers' Compensation Act of
Denmark, d) P1 million actual damages, e) P1 million moral damages, f) P1 million exemplary damages, g) 20% attorney's
fees, and h) costs of suit.

In their joint Position Paper,39 petitioners and delos Angeles sought dismissal of the complaint, arguing that respondent is not
entitled to a Grade 6 disability rating, but only Grade 11 as determined by the company-designated physician. They argued
that it has been shown that respondent is merely malingering, feigning, and exaggerating his pain; that
assuming arguendo that a different opinion was issued by an independent physician, the opinion of a third doctor should
have been obtained by the parties pursuant to the provisions of the POEA40 Standard Employment Contract.41 Since no third
opinion was obtained, then the company-designated physician's opinion prevails over the respondent's doctor's findings.
They also contended that respondent is not entitled to reimbursement of his medical and other expenses, which were
incurred after the company-designated physician declared his findings on September 4, 2007. Moreover, respondent is not
entitled to his claim for damages, attorney's fees and costs, for being unfounded and in the absence of malice, bad faith, or
negligence on their part.

In his Reply/Comment,42 respondent insisted that he is entitled to disability benefits based on his physician's
recommendation; that the company-designated physician's treatment was inadequate, and his findings inaccurate and based
on fraud and malice, which thus prompted him to secure the opinion of an independent doctor; and that for these reasons,
he should be paid all his claims as prayed for in his Position Paper.

In their Reply43 to respondent's Position Paper, petitioners argued that there is no basis for the accusation of refusal or failure
to give respondent immediate and proper medical attention after his injury, as he failed to show convincingly that indeed he
suffered his injuries sometime in February 2007. His only basis for such claim - a supposed "Notification of Accident at Work"
marked Annex "D" of his Position Paper44 — is self-serving and hearsay, since it was not signed by him. Moreover, there is no
truth to his allegation that he protested and appealed for medical intervention or that he was forced to work and endure
excruciating pain for two months before proper medical intervention was done. On the contrary, he was able to work until his
repatriation in May 2007. In addition, they gave him timely and extensive medical attention and treatment, with the
company-designated physician closely monitoring his condition all throughout. Also, based on the medical findings of the
company-designated physician, respondent was feigning his illness. Moreover, respondent's doctor's opinion cannot prevail
over the company-designated physician's findings, as it was merely based on a single MRI report, and not on an extensive
treatment and monitoring of respondent's condition over an extended period of time; and that for lack of legal basis,
respondent cannot claim indemnity based on a supposed collective bargaining agreement or foreign law.

Ruling of the Labor Arbiter

On March 23, 2010, a Decision45 was rendered by Labor Arbiter Catalino R. Laderas granting disability benefits and attorney's
fees in favor of respondent. The Decision decrees as follows: cralawlawl ibra ry

Upon his repatriation on 01 May 2007, complainant was assessed and medically treated by respondents' company-designated
physician and the latter's team of specialists and was never declared fit to work.

Finding that complainant's illness is compensable, we now determine whether the same is permanent or total in order that he
may claim full disability benefits.
xxxx

In the case at bar, x x x while respondents' company-designated doctor/s provided a disability rating for complainant's
sustained injury, the former, nonetheless failed to make any declaration and/or assessment as to the latter's fitness for work
and/or capability to render sea duty.

Indubitably, the failure of respondents' company-designated doctor/s to declare complainant's fitness for work reasonably
infers a scheme to evade full payment of disability benefits to the complainant, by merely declaring complainant partially
disabled with a Grade 6 Impediment assessment.

Verily, it was undisputed that despite continuous medical treatment, complainant continue[s] to suffer his ailment and the
same remained uncured, until [the] present, which rendered him unable to work and earn income for his family.

As a result therefore of the injury he sustained while on board the vessel "ELSE MAERSK DENMARK", complainant was unable
to work for more than 120 days that resulted in the impairment of his earning capacity.

xxxx

Hence, this Office rules that notwithstanding the medical assessment of respondents' company-designated doctors,
jurisprudence dictates that complainant be entitled to permanent total disability benefits by reason of his continued medical
condition that rendered him incapacitated for work for more than 120 days from the date he was medically repatriated x x x
to the Philippines.

On the other hand, for lack of particulars, complainant's claim for medical expenses and for non-payment of wages, overtime
pay, vacation leave and sick leave pay, the same could not be reasonably granted under the circumstances for lack of factual
basis with which to make an appropriate award.

xxxx

Similarly, for lack of particulars as to complainant's claim for damages, the same could not be reasonably granted under the
circumstances for lack of factual basis with which to make an appropriate award.

xxxx

WHEREFORE, premises considered, judgment is hereby rendered ordering the respondents, jointly and severally, to pay the
complainant total disability benefits corresponding the [sic] schedule of rates provided for under the CBA between the
AMOSUP and respondent manning agency.

Respondents are likewise ordered to pay respondents [sic] attorney's fees equivalent to ten (10%) percent of the total
judgment award.

The computation unit of this Office is hereby directed to compute the monetary award of the complainant which forms part of
this decision.46

Other claims are DISMISSED.

SO ORDERED.47
chanrobles law

Ruling of the National Labor Relations Commission

Petitioners appealed before the NLRC which docketed the case as NLRC LAC No. OFW(M) 07-000539-10.

On November 30> 2010, the NLRC issued a Decision,48 declaring as follows: c ralawlawl ibra ry

The instant appeal is impressed with merit.

At the outset, it should be pointed out that had the parties in the instant case complied strictly with the provisions of the
POEA Standard Employment Contract, particularly on the appointment of a third physician in case of disagreement, a lot of
controversy would have been averted, x x x

xxxx

We are thus compelled to evaluate the divergent opinions of the company-designated physicians and complainant's private
physician.

xxxx

As can therefore be seen from the last MRI of complainant, the findings of the latter are basically unchanged. However,
complainant's physician issued a disability grading of Grade 6 "in terms of pain and affectation of the spinal cord," observing
that the severity of complainant's symptom is equivalent to said grading.

A close perusal of the above finding of Dr. Raymundo shows that there is "severe or total rigidity or total loss of lifting power
of heavy objects" based on complainant's symptom, that is, his pain. This however has been put in issue by the company-
designated physician, who earlier observed that: cralawlawl ibra ry

"Provocative Discography was done on 26 July 2007 and showed leakage of contrast material in the midposterior aspect of
the disk more towards the left thru a mild posterior annular tear. It was opined by Interventional Radiology that the pain
complained of is not commensurate with the Discography." chanroble slaw

This resulted in the following recommendation: cralaw lawlib rary

As the pain is not commensurate with the discography, personality reasons should be evaluated to rule out malingering is for
your approval the form of Minnesota Multiphasic Personality Test [sic]. Approximate cost is Php 10,000.00." chanrobleslaw

And the findings of said Minnesota Multiphasic Personality Test shows that: cralawlawlib rary

Based on the test protocol and interview, there are indicators that Mr. Jaleco is malingering and exaggerating hi [sic]
symptoms. The essential feature is the intentional production of exaggerated physical symptoms motivated by external
tendencies - obtaining financial compensation and avoiding work."
chanrobles law

As the company-designated physician has opined that complainant is malingering and exaggerating his pain, the same pain
made the basis for the disability grading of Dr. Raymundo, it was incumbent upon complainant to refute the same. He has
failed to do so.

xxxx

We therefore uphold the disability grading of Grade 11 as opined by the company-designated physician, which amounts to
US$7,465.00 corresponding to 14.93% disability as provided for in the POEA Standard Employment Contract.

Likewise, the mere fact that complainant was no longer able to return to work as a seaman, by itself, is no ground to
automatically entitle him to Grade 1 permanent total disability benefits, x x x.

xxxx

As the instant complaint is clearly unfounded, complainant is not entitled to any attorney's fees.

WHEREFORE, premises considered, the appealed Decision is hereby MODIFIED, in that complainant Rommel Rene O. Jaleco
is entitled only to disability benefits of US$7,465.00, corresponding to 14.93% disability (Grade 11) as provided for in the
POEA Standard Employment Contract. The award of 10% attorney's fees is DELETED for lack of legal basis.

SO ORDERED.49 chanrobles law

Respondent moved for reconsideration, but in a February 28, 2011 Resolution,50 the NLRC held its ground.

Ruling of the Court of Appeals

In an Amended and/or Supplemental Petition for Certiorari 51 filed with the CA and docketed therein as CA-G.R. SP No.
118688, respondent sought to set aside the dispositions of the NLRC, arguing that since he was incapacitated to work since
his repatriation up to the filing of his Petition, or for a period of more than three years, he should be entitled to permanent
total disability benefits as adjudged by the Labor Arbiter. He also argued that he is entitled to reimbursement of medical and
other expenses incurred for his continued treatment, rehabilitation and aid even after treatment by the company-designated
physician because a) the company-designated physician's services proved to be inadequate and incomplete, and b) the
collective bargaining agreement (CBA) between AMOSUP52 and the Danish Shipowners Association, as well as the
Consolidated Workers' Compensation Act of Denmark, mandates reimbursement of these expenses. Moreover, as a
consequence of petitioners' bad faith and inexcusable negligence, he should also be entitled to moral and exemplary
damages; and that as there is ground to award his pecuniary claims, he should likewise be awarded attorney's fees, since he
was compelled to litigate and incur expenses as a result of petitioners' refusal to indemnify him.

On March 13, 2012, the CA issued the assailed Decision which contains the following pronouncement: cralawlawl ibra ry

The petition is meritorious.

In this case, Dr. Alegre based his assessment of petitioner Jaleco's disability at Grade 11 on the spine surgeon's evaluation
conducted on July 9, 2007 finding that the low back pain intensity was not commensurate to the alleged symptoms of back
pain, the opinion of the Interventional Radiology that the pain complained of was not commensurate with the Provocative
Discography performed on July 26, 2007 which showed "leakage of contrast material in the midposterior aspect of the disk
more towards the left thru a mild posterior annular tear", and the Minnesota Multiphasic Personality Inventory - 2 Test
(MMPI-2) which found petitioner Jaleco to be malingering and intentionally exaggerating his physical symptoms to obtain
financial compensation and avoid work.

On the other hand, Dr. Raymundo not only assessed petitioner Jaleco's disability at Grade 6 or Moderate Rigidity or two
thirds (%) loss of motion or lifting power of the trunk, but also declared him to be unfit for duty because of the recurrence of
pain and the nature of his job as a seaman.

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.53

Dr. Alegre may have referred petitioner Jaleco's case to the proper medical specialist, monitored the latter's case during its
progress and issued a certification based on the medical records available and the results obtained. However, there is no
showing that he made a categorical declaration as regards petitioner Jaleco's fitness to resume sea-duty.

The POEA Standard Employment Contract for Seamen is designed primarily for the protection and benefit of Filipino seaman
[sic] in the pursuit of their employment on board ocean-going vessels. Its provisions must, therefore, be construed and
applied fairly, reasonably and liberally in their favor. Only then can its beneficent provisions be fully carried into effect.

Hence, petitioner Jaleco is entitled to the US$60,000.00 for Impediment Grade 1 award.

As regards the award of attorney's fees, this Court finds that petitioner Jaleco is entitled to attorney's fees equivalent to ten
percent (10%) of the monetary award.

xxxx

Petitioner Jaleco averred that as a registered member of AMOSUP, he is necessarily covered by the CBA (Ratings) between
the AMOSUP-FIGWO-ITF and the Danish Shipowners Association. But there is no showing that he was able to prove by
substantial evidence his positive assertions that he is a registered member of the said union and the said CBA is applicable to
him in this case.

xxxx

Petitioner Jaleco invokes protection under the Consolidated Workers' Compensation Act of Denmark by merely quoting its
pertinent provisions in his position paper, x x x

Foreign laws do not prove themselves in our courts. Foreign laws are not a matter of judicial notice. Like any other fact, they
must be alleged and proven.

Besides, the snap on petitioner Jaleco's back was an injury sustained from carrying and pulling the heavy wires that allegedly
got stuck and messed up everything during a mooring operation, which injury resulted in his disability. The injury cannot be
said to be the result of an accident, that is, an unlooked for mishap, occurrence, or fortuitous event, because the injury
resulted from the performance of a duty. Although petitioner Jaleco may not have expected the injury, yet, it is common
knowledge that carrying heavy objects can cause back injury, as what happened in this case.

xxx

Hence, the injury cannot be viewed as unusual under the circumstances, and is not synonymous with the term "accident" as
defined above.

With respect to the award for moral and exemplary damages, there is no showing of bad faith or malice on the part of
private respondents when they relied on Dr. Alegre's assessment of petitioner Jaleco's disability in denying the latter's claim.

Petitioner Jaleco's claim for actual damages was premised on his bare allegation that he was deprived of his sole source of
livelihood as a consequence of his dismissal without due process, by private respondents in violation of the Labor Code and
their failure and refusal to grant him the correct disability benefits. A party is entitled to adequate compensation only for
such pecuniary loss actually suffered and duly proved. It is a basic rule that to recover actual damages, the amount of loss
must not only be capable of proof but must actually be proven with a reasonable degree of certainty, premised upon
competent proof or best evidence obtainable of the actual amount thereof.

WHEREFORE, premises considered, the petition is GRANTED. The Decision dated November 30, 2010 and Resolution dated
February 28, 2011 of public respondent NLRC, First Division in NLRC NCR Case No. OFW(M) 12-17087-08 NLRC LAC No.
OFW(M) 07-000539-10 are hereby REVERSED and SET ASIDE. Judgment is hereby rendered ordering private respondents,
jointly and severally, to pay petitioner Jaleco US$60,000.00 as total permanent disability benefit and to pay him attorney's
fees equivalent to ten percent (10%) of the total judgment award.

SO ORDERED.54
chanrobles law
Petitioners filed a Motion for Reconsideration,55 but the CA denied the same in its May 21,2012 Resolution. Hence, the
present Petition.

Issues

Petitioners submit that -cralawlawl ibra ry

THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS, REVERSIBLE AND GROSS ERROR IN LAW BASED ON THE
FOLLOWING GROUNDS: chanRoblesvirt ual Lawlib rary

In granting disability benefits based on the erroneous application of the case of Crystal Shipping v. Natividad (G.R. No.
154798, October 20, 2005) and equally erroneous interpretation of the case of Jesus Vergara v. Hammonia Maritime
Services, Inc. (G.R. No. 172933, October 6, 2008)

In awarding attorney 's fees without legal and factual basis.56 chan roble slaw

Petitioners' Arguments

Praying that the assailed CA pronouncements be set aside and that the NLRC's November 30, 2010 Decision be reinstated,
petitioners maintain in their Petition and Reply57 that the company-designated physician's findings and recommendation
relative to disability grading and compensation should be upheld, the same being accurate, reliable, and reflective of
respondent's true state of health. They also insist that there should be no reason to doubt the results of the tests indicating
that respondent deliberately exaggerated the physical symptoms of his illness to obtain financial compensation and avoid
work as these tests are scientific and accurate. They posit that the CA erroneously applied the doctrine in the Crystal
Shipping case and that since the opinion of a third physician was not obtained, the company-designated physician's
assessment should prevail. Moreover, what happened to respondent was not an accident. Since there is no ground to grant
respondent's claims, and absent bad faith on their part, no attorney's fees may be awarded to him.

Respondent's Arguments

In his Comment,58 respondent counters that his permanent total disability benefits should be increased to US$105,761.00 in
accordance with the Consolidated Workers' Compensation Act of Denmark; that the opinion of Dr. Raymundo should prevail,
as it correctly reflects his true state of health, while the findings of the company-designated physician are inadequate and
inaccurate; that he is likewise entitled to additional reimbursement of medical expenses; and that he should be paid moral
and exemplary damages. Thus, he prays that petitioners be ordered to pay disability benefits in the amount of
US$105,761.00; reimbursement of his medical expenses; combined actual, moral and exemplary damages in the amount of
P3 million; and 10% of said amounts as attorney's fees.

Our Ruling

The Court grants the Petition.

The evidence indicates that contrary to the findings of the CA, the company-designated physician made a categorical
declaration relative to respondent's fitness to resume duty - approximately one hundred and twenty-seven (127) days from
his repatriation. Thus, in his September 4, 2007 Progress Report, Dr. Alegre declared: cral awlawlib rary

If a disability is to be assessed now, a disability grade x x x 11 [would be obtained] based on the POEA Contract, Chest-
Trunk-Spine #6 - Slight Rigidity or 1/3 loss of motion or lifting power of the trunk.59
chan robleslaw

In addition, Dr. Alegre concluded - after conducting extensive tests - that respondent was malingering or feigning his illness.
For these reasons, respondent sought the opinion of an independent physician, who came up with a Grade 6 disability rating.

"An employee's disability becomes permanent and total [only 1)] when so declared by the company-designated physician, or,
[2)] 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 periods, 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."60 The "mere lapse of the 120-day period itself does not automatically warrant the payment of permanent total
disability benefits."61 "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."62

Since the company-designated physician, Dr. Alegre, arrived at an assessment that respondent's disability rating was only a
Grade 11 prior to the expiration of the maximum 240-day period prescribed, then there is no permanent total disability to
speak of. The appellate court erred in not considering that the mere lapse of the 120-day period itself does not automatically
warrant the payment of permanent total disability benefits, as said period may be extended up to 240 days.
Moreover, pursuant to Section 20(B)(3) of the POEA Standard Employment Contract, the parties should have secured the
opinion of a third doctor jointly appointed by them, whose decision shall be final and binding. However, this procedure was
not observed, and instead, respondent went on to file his labor complaint. Such misstep should prove costly for him.
In Philippine Hammonia Ship Agency, Inc. v. Dumadag,63 it was held that - cralawlawlib ra ry

We are confronted, once again, with the question of whose disability assessment should prevail in a maritime disability claim
- the fit-to-work assessment of the company-designated physician or the contrary opinion of the seafarer's chosen physicians
that he is no longer fit to work. A related question immediately follows - how are the conflicting assessments to be resolved?

xxxx

The POEA-SEC and the CBA govern the employment relationship between Dumadag and the petitioners. The two instruments
are the law between them. They are bound by their terms and conditions, particularly in relation to this case, the mechanism
prescribed to determine liability for a disability benefits claim. In Magsaysay Maritime Corp. v. Velasquez, the Court said:
"The POEA Contract, of which the parties are both signatories, is the law between them and as such, its provisions bind both
of them." Dumadag, however, pursued his claim without observing the laid-out procedure. He consulted physicians of his
choice regarding his disability after Dr. Dacanay, the company-designated physician, issued her fit-to-work certification for
him. There is nothing inherently wrong with the consultations as the POEA-SEC and the CBA allow him to seek a
second opinion. The problem only arose when he pre-empted the mandated procedure by filing a complaint for
permanent disability compensation on the strength of his chosen physicians' opinions, without referring the
conflicting opinions to a third doctor for final determination.

xxxx

The filing of the complaint constituted a breach of Dumadag's contractual obligation to have the conflicting
assessments of his disability referred to a third doctor for a binding opinion. The petitioners could not have possibly
caused the non-referral to a third doctor because they were not aware that Dumadag secured separate independent opinions
regarding his disability. Thus, the complaint should have been dismissed, for without a binding third opinion, the fit-to-work
certification of the company-designated physician stands, pursuant to the POEA-SEC and the CBA. x x x

xxxx

Whatever his reasons might have been, Dumadag's disregard of the conflict-resolution procedure under the POEA-SEC and
the CBA cannot and should not be tolerated and allowed to stand, lest it encourage a similar defiance. We stress in this
respect that we have yet to come across a case where the parties referred conflicting assessments of a seafarer's disability to
a third doctor since the procedure was introduced by the POEA-SEC in 2000 - whether the Court's ruling in a particular case
upheld the assessment of the company-designated physician, as in Magsaysay Maritime Corporation v. National Labor
Relations Commission (Second Division) and similar other cases, or sustained the opinion of the seafarer's chosen physician
as in HFS Philippines, Inc. v. Filar, cited by the CA, and other cases similarly resolved. The third-doctor-referral provision
of the POEA-SEC, it appears to us, has been honored more in the breach than in the compliance. This is
unfortunate considering that the provision is intended to settle disability claims voluntarily at the parties' level
where the claims can be resolved more speedily than if they were brought to court.

Given the circumstances under which Dumadag pursued his claim, especially the fact that he caused the non-referral to a
third doctor, Dr. Dacanay's fit-to-work certification must be upheld. In Santiago v. Pacbasin Ship Management, Inc., the
Court declared: "[t]here was no agreement on a third doctor who shall examine him anew and whose finding shall be final
and binding, x x x [T]his Court is left without choice but to uphold the certification made by Dr. Lim with respect to
Santiago's disability." (Emphasis and underscoring supplied) chan roble slaw

The above pronouncement was reiterated in subsequent cases, particularly Veritas Maritime Corporation v. Gepanaga,
Jr.;64 Daraug v. KGJS Fleet Management Manila, Inc.;65Bahia Shipping Services, Inc. v. Hipe;66Magsaysay Maritime
Corporation v. Simbajon;67 and Ayungo v. Beamko Shipmanagement Corporation.68

Thus, following the ruling in Dumadag, this Court rules that for respondent's disregard of the conflict-resolution procedure
under the parties' POEA Standard Employment Contract, his claims against petitioners should have been denied, since the
company-designated physician Dr. Alegre's assessment necessarily stands. Indeed, since respondent was the one pursuing a
claim, as he did by filing a labor complaint before the NLRC, then it was he - and not petitioners - who should have taken the
initiative to secure the opinion of a third physician prior to seeking intervention by the labor tribunals.

Besides, there is no reason to doubt Dr. Alegre's medical opinion regarding respondent's condition. Prior to his final
declaration, he took pains to address respondent's condition and did his best to reconcile the conflicting medical evidence
with respondent's declared symptoms. His objective resolve led him so far as to require respondent to undergo a
comprehensive battery of tests - EMG-NCV test, provocative discography, and even MMPI-2 - just to make sure that
respondent's complaints are addressed, while at the same time insure that an objective diagnosis of his illness is obtained.
There is thus merit in Dr. Alegre's finding that respondent is malingering; medical evidence obtained after the battery of
tests is to the effect that respondent's supposed excruciating back pain is not supported by or commensurate to the results
of the provocative discography and MMPI-2 tests. Being scientific medical procedures, the accuracy and reliability of these
tests cannot be doubted; besides, they have not been questioned in these proceedings.
As for respondent's claim that petitioners should answer for greater amounts than that adjudged by the appellate court - that
is, disability benefits in the amount of US$105,761.00; reimbursement of his medical expenses; and combined actual, moral
and exemplary damages in the amount of P3 million -this Court may not allow it. In order for such claims to be considered,
respondent should have filed the corresponding petition for review questioning the judgment of the CA. Settled is the rule
that a party is barred from assailing the correctness of a judgment not appealed from by him. In an appeal, an appellee may
argue only to sustain the appealed judgment, but not introduce arguments that would modify the same; in order to do that,
he likewise should have seasonably filed an appeal. The rule is rooted in the presumption that a party who did not interpose
an appeal is satisfied with the judgment rendered by the lower court.

WHEREFORE, the Petition is GRANTED. The assailed March 13,2012 Decision and May 21, 2012 Resolution of the Court of
Appeals in CA-G.R. SP No. 118688 are REVERSED and SET ASIDE. The November 30, 2010 Decision of the National Labor
Relations Commission in NLRC LAC No. 0FW(M) 07-000539-10 is REINSTATED.

SO ORDERED. chanroblesvi rtua llawli bra ry

SECOND DIVISION

G.R. No. 201793, September 16, 2015

PHILIPPINE TRANSMARINE CARRIERS, INC/NORWEGIAN CREW MANAGEMENT, Petitioners, v.JULIA T. ALIGWAY


(AS SUBSTITUTE FOR HER DECEASED HUSBAND, DEMETRIO ALIGWAY, JR., Respondent.

DECISION

DEL CASTILLO, J.:

This Petition for Review on Certiorari1 assails the February 20, 2012 Decision2 of the Court of Appeals (CA) in CA-G.R. SP No.
120589. The CA granted the Petition for Certiorari filed therewith and accordingly, nullified the February 24, 2011
Decision3 and May 11, 2011 Resolution4 of the National Labor Relations Commission (NLRC) in NLRC LAC No. OFW(M) 12-
001028-10 which, in turn, affirmed the August 31, 2010 Decision5 of Labor Arbiter Geobel A. Bartolabac (LA) in NLRC NCR
Case No. OFW(M) 01-01214-10 dismissing the Complaint for lack of merit. Also assailed is the May 11,2012 CA
Resolution6which denied the Motion for Reconsideration filed by Demetrio Aligway, Jr. (Demetrio).

Factual Antecedents

On November 25, 2008, the Philippine Transmarine Carriers, Inc. (PTC), for and in behalf of its foreign principal, the
Norwegian Crew Management (NCM), employed Demetrio as chief cook on board the vessel Amasis. Demetrio's employment
contract was for nine months with a monthly salary of US$758.00.7

Demetrio alleged that prior to his deployment, he underwent pre-employment medical examination (PEME) and was declared
fit to work.8 Thereafter, while aboard the vessel, he suffered from "vomiting, anorexia, weight loss, and palpitations followed
by dizziness and a feeling of lightheadedness."9 As a result, on April 22, 2009,10 he was medically repatriated.

Demetrio claimed that despite medical examinations by the company-designated physician, his illness persisted beyond 120
days.11 This condition allegedly rendered him incapacitated to work again as a seafarer but the PTC and the NCM refused to
pay him disability benefits.12

Consequently, Demetrio filed a Complaint13 dated January 22, 2010 for disability benefits, moral and exemplary damages,
and attorney's fees against the PTC, the NCM, and their officers. He alleged that his work as chief cook, which involved food
intake, contributed to or aggravated his gastric cancer. He claimed that although the cause of gastric cancer was unknown,
there was speculation that smoked food may be promoting factors.14

Demetrio invoked the presumption laid down in the provision of the POEA15 Standard Employment Contract (SEC) mat his
illness was work-related.16 He also averred that he passed the PEME;17 and that as such, the PTC, the NCM, and their officers
were estopped from claiming that he was unfit to work prior to his deployment or that he did not contract his illness aboard
the vessel.18 He likewise argued that because the vessel Amasis was covered by a collective bargaining agreement (CBA), it
stands to reason that he was entitled to the benefits stipulated in that agreement.19

The PTC, the NCM and their officers did confirm that on December 25, 2008, Demetrio boarded the vessel; that on April 20,
2009, he was brought to the Entabeni Hospital in Durban due to gastritis; and that eventually, he was repatriated for further
treatment.20

The PTC, the NCM, and their officers however contended that Demetrio was a heavy smoker, and that he was smoking 12 to
15 cigarette sticks a day;21 that the company-designated physician Dr. Susannah Ong-Salvador (Dr. Salvador), declared that
Demetrio's condition was not work-related; and that the risk factors in Demetrio's condition included age, diet rich in
saturated fat, fatty acid, linoleic acid, and genetic predisposition.22
The PTC, the NCM, and their officers also argued that stomach cancer is asymptomatic - or an illness that has nonspecific
symptoms in its early stage and only becomes apparent when in the advanced stage already; that since Demetrio was only
about four months aboard the vessel when the symptoms of his cancer manifested, then it could not be inferred that he
acquired it during his employment with them;23and, that while Demetrio's contract was covered by an AMOSUP24 CBA, this
CBA did not include non-occupational illnessess, such as gastric cancer.25 cralawred

In sum, the PTC, the NCM, and their officers maintained that Demetrio's work involved food preparation and not food
intake;26 that the company-designated doctor found that the cause of his illness was not work-related;27 that there was no
evidence to indicate that his working conditions increased the risk of contracting it; that there was no evidence that his
illness was caused by the food being served on the vessel;28 and, that no causal connection was established between
Demetrio's work as chief cook and his gastric or stomach cancer.29

Ruling of the Labor Arbiter

On August 31, 2010, the LA rendered a Decision30 dismissing the Complaint for lack of merit. The LA held that the company-
designated physician declared that Demetrio's illness was not work-related; and that because of this, the burden fell on the
latter to disprove the finding of the company-designated doctor. The LA ruled that Demetrio failed to discharge this burden
because he adduced no evidence proving that his work increased the risk of contracting stomach cancer.

Ruling of the National Labor Relations Commission

On appeal, the NLRC affirmed the Decision of the LA.31 It gave credence to the medical opinion of the company-designated
physician. It opined that aside from bare allegations, Demetrio adduced no competent evidence to prove that his stomach
cancer was caused or aggravated by the working conditions on the vessel.

On May 11, 2011, the NLRC denied32 Demetrio's Motion for Reconsideration.

Ruling of the Court of Appeals

Demetrio thereafter filed a Petition for Certiorari with the CA imputing grave abuse of discretion against the NLRC in not
granting him full disability benefits despite his alleged work-related illness that manifested during his last contract with the
PTC and the NCM.

On February 20,2012, the CA rendered the assailed Decision,33 the decretal portion of which reads:

ACCORDINGLY, the petition is GRANTED. The Decision dated February 24, 2011 and Resolution dated May 11, 2011 are
nullified and [a] new one rendered, directing private respondents to pay petitioner full disability benefits and attorney's fees
equivalent to 10% thereof.

The Motion for Substitution of Parties dated January 25, 2012, praying that Mrs. Julia T. Aligway be substituted as petitioner,
in lieu of her husband Demetrio Aligway Jr., who died on December 26, 2011, is granted. The caption of the case is amended
to reflect the name of Mrs. Julia T. Aligway, as substitute petitioner.

SO ORDERED.34
The CA decreed that the LA and the NLRC improperly relied on the findings of the company-designated physician. It held that
said doctor merely referred to medical literature to explain Demetrio's condition without personally examining him; that Dr.
Salvador did not discuss how Demetrio's work and working environment could have caused or aggravated his illness; that the
opinion of Dr. Salvador lacked accuracy and was hypothetical, if not purely academic; and that Dr. Salvador was not
Demetrio's original attending physician.

In conclusion, the CA held that the presumption of compensability prevails and that Demetrio is entitled to full disability
benefits pursuant to the CBA.

On May 11, 2012, the CA denied35 the Motion for Reconsideration. Hence, the PTC and the NCM filed this Petition contending
that:
THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS, REVERSIBLE AND GROSS ERROR IN LAW BASED ON THE
FOLLOWING GROUNDS:

A. In ignoring the legal precept that findings of facts of the NLRC are accorded respect and finality when supported by
substantial evidence[.]

B. In ignoring the declaration of the company[-]designated physician finding the illness to be not work[-]related
thereby violating the terms of the POEA contract giving authority to the company[-designated] doctor to assess the
illness involved.

C. In profoundly relying on inapplicable jurisprudence which finds no parallelism to the instant case.
D. In upholding the applicability of the alleged CBA in awarding USD$ 110,000.00 even if its provisions limit the liability
of the Employer to work[-]related accidents only.

E. In awarding attorney's fees without legal and factual basis.36

The PTC and the NCM insist that the medical opinion of the company-designated physician stood unchallenged since
Demetrio did not consult his own physician for a contrary opinion; that the opinion of the company-designated doctor cannot
be superseded or rescinded by mere speculation that the seafarer's illness was work-connected; and, that prior to the
aforesaid declaration of the company-designated doctor, Demetrio underwent a series of examinations and treatments, which
tended to show that the declaration of the company-designated physician was not arrived at capriciously.

The PTC and the NCM moreover fault the CA for holding that Dr. Salvador was not the original doctor who examined
Demetrio; that the medical opinion of the company-designated doctor should not be taken singly but as the collective opinion
of a team of doctors who worked together in arriving at a declaration regarding the seafarer's condition; and, that Dr.
Salvador merely reported the conclusion reached collectively by the medical experts in the team.

The PTC and the NCM insist that stomach cancer is often asymptomatic; that since Demetrio was only about four months
aboard the vessel when the symptoms of his stomach cancer manifested, then it is an open question whether he acquired his
illness on board the vessel; that the burden of proof to establish work-relation is upon the seafarer; and, that in this case,
there is no showing that the nature of Demetrio's work as well as the working conditions in the vessel increased the risk of
his acquiring stomach cancer.

Finally, the PTC and the NCM take the position that the CBA does not apply here because its provisions limit the employer's
liability to occupational injury as a result of an accident or to occupational disease suffered by the employee; and, that given
that stomach cancer is not listed as an occupational disease, it would be erroneous to award disability benefits pursuant to
the CBA; hence, the CA improperly awarded attorney's fees considering that the CA gave no explanation for that award.

For her part, Julia Aligway (Julia), as substitute for her deceased husband Demetrio, contends that Dr. Salvador did not
explain why Demetrio's illness was not work-related; that there is in fact substantial evidence that Demetrio's illness was
work-related; that environmental factors, which include conditions in oceangoing vessels, contributed to Demetrio's illness;
that Demetrio had passed his PEME and was aboard the vessel when he suffered from his illness; and, that his work as chief
cook was all about food intake and this circumstance did contribute to and aggravate his stomach cancer.

Issue

In fine, the core issue before us is whether the CA erred in holding that the NLRC committed grave abuse of discretion in
denying Demetrio's appeal and in affirming the dismissal of the complaint for lack of merit.

Our Ruling

As a rule, in a petition for review under Rule 45 of the Rules of Court, only questions of law can be raised and be reviewed by
this Court. However, this rule admits of exceptions and one such exception is where the Court may make its own evaluation
of the evidence adduced by the parties because the factual findings of the tribunals or courts a quo are in conflict with each
other.37 In this case, the LA, as affirmed by the NLRC, found that Demetrio was not entitled to disability benefits, among
other claims, and dismissed his complaint for lack of merit. The CA ruled otherwise. Thus, because of the conflicting findings
of fact of the LA and NLRC, on one hand, and of the CA, on the other, this Court has to exercise its mandated authority to
examine the evidence on record.

We stress that entitlement of seafarers to disability benefits is governed by medical findings, law and contract. Articles 191
to 193 under Chapter VI (Disability Benefits) of Book IV of the Labor Code set forth the applicable provisions concerning
disability benefits. Also, the POEA-SEC and the CBA bind the seafarer and his employer to each other.38

In this case, considering that Demetrio did not surfer from an occupational disease - or such diseases listed under Section
32-A of the 2000 POEA-SEC - it stands to reason that to be entitled to disability benefits, he must establish that he suffered
from a work-related injury or illness.

Under Section 20(B) of the 2000 POEA SEC, for disability to be compensable, (1) the seafarer's injury or illness must be
work-related; and (2) the work-related injury or illness must have existed during the term of his employment contract.
Hence, the seafarer must not only show that he suffers from an illness or injury that rendered him permanently or partially
disabled, but he must also prove that there is a causal relation between his illness or injury and the work for which he had
been engaged.39

This Court has held that a person who claims entitlement to the benefits provided by law must establish his right thereto by
substantial evidence or "such relevant evidence as a reasonable mind might accept as adequate to support a
conclusion."40 This Court cannot grant a claim for disability benefits without such substantial evidence because to do so would
be offensive to due process. Hence, the burden is on the seafarer to prove that he suffered from a work-related injury or
illness during the term of his contract.41
In this case, Demetrio failed to discharge this burden. He failed to prove the required causal connection between his stomach
cancer and his work as chief cook aboard the vessel.

In his Position Paper,42 Demetrio admitted that the cause of stomach cancer was unknown, but stressed that there is
speculation that smoked food may be promoting its development; that his illness is presumed to be work-related; and that
since he had passed the PEME, this estopped the PTC and the NCM from claiming that he was unfit to work prior to his
deployment or that he did not contract his illness on board the vessel.

Additionally, in the Comment43 to the Petition filed before this Court, Demetrio's widow, Julia, averred that the company-
designated doctor, Dr. Salvador, failed to explain how or why Demetrio's illness was not work-related; and that the latter's
work as chief cook was all about food intake and that this contributed to his becoming afflicted with stomach cancer.

Against this backdrop, the basic issue that clamors for resolution is how Demetrio's work, as chief cook, contributed to or
aggravated his illness; and definitely this was an issue that was not addressed or explained by both Demetrio and Julia. All
we have on record is the fact that Demetrio died of stomach cancer plus the claim that his work involved food intake which
according to him caused or aggravated his stomach cancer.

Demetrio and later, Julia, issued general statements that we deem self-serving because they are unproved or uncorroborated
allegations that simply raised the possibility that Demetrio's stomach cancer could have been or might have been work-
related. At any rate, even if the seafarer erects his claim on the probability of work-connectedness, such claim would still fail.
"Probability of work-connection must at least be anchored on credible information and not on self-serving allegations."44

Thus, this Court agrees with the finding of the NLRC that there is no substantial evidence to support the allegation that
Demetrio's stomach cancer was caused by work-connected factors.

In addition, Julia cannot point to Demetrio's having successfully passed the PEME as basis for the conclusion that he acquired
his illness on board the vessel. This is a non-sequitur. The PEME conducted upon a seafarer would not or could not
necessarily reveal or disclose his illness because such examination is not at all fool-proof or thoroughly exploratory.45

Here, stock can be taken of the fact that the company-designated doctor treated Demetrio from his repatriation until the
time that he was undergoing chemotherapy. Even then, the company-designated physician categorically stated that
Demetrio's medical condition was not work-related or work-aggravated.

Indeed, in her October 9, 2009 Medical Report,46 Dr. Salvador enumerated the causes of stomach cancer to wit:

1. Diet (nitrates, nitrites, cured or picked foods)

2. Environmental factors (smoke, dust, cigarettes and alcohol)

3. Chronic gastritis (atrophic, hypertrophic gastritis, gastric ulcers, achlorhydia, pernicious anemia, and prior gastric
resection)

4. Genetic factors (blood group A)

5. H. pylori infection

6. Previous gastric surgery

7. Obesity

8. Radiation exposure47

The company-employed physician opined that stomach cancer "[may be] more often multifactoral in origin involving both
inherited predisposition and environmental factors."48 She concluded that in the case at bench, Demetrio's stomach cancer
was not work-related.

In the absence of a second opinion from Demetrio's own physician of choice, this Court may not arbitrarily disregard the
finding of the company-designated doctor, Dr. Salvador. If anything, we hew close to the jurisprudential teaching that the
seafarer is not entitled to disability benefits if he does not adduce substantial evidence of a medically-established connection
between his work and his illness.49This is as it should be. For, unopposed and uncontradicted by equally credible and
trustworthy countervailing substantial evidence from herein respondents-spouses who, as the original suitors-at-law in this
indemnity-recovery suit, had the onus to establish their suit by the presentation of such specie of substantial evidence called
for by this case: this Court is not at liberty to reject, with no show of reason, the unopposed and uncontradicted testimony of
the company-designated physician.

All told, this Court finds that the CA erred in setting aside the NLRC Decision which affirmed the Decision of the LA dismissing
the Complaint for lack of merit.
WHEREFORE, the Petition is GRANTED. The Decision dated February 20, 2012 and Resolution dated May 11,2012 of the
Court of Appeals in CA-G.R. SP No. 120589 are REVERSED and SET ASIDE. Accordingly, the Complaint in NLRC NCR Case
No. OFW(M) 01-01214-10 is DISMISSED. Without costs.

SO ORDERED. cha

SECOND DIVISION

G.R. No. 197484, September 16, 2015

GERARDO A. CARIQUE, Petitioner, v. PHILIPPINE SCOUT VETERANS SECURITY AND INVESTIGATION AGENCY,
INC., AND/OR RICARDO BONA AND SEVERO** SANTIAGO, Respondents.

DECISION

DEL CASTILLO, J.:

This Petition for Review on Certiorari1 assails the November 30, 2010 Decision2 of the Court of Appeals (CA) in CA-G.R. SP
No. 99967, which denied the Petition for Certiorari filed therewith and affirmed the October 30, 2006 Decision3 of the
National Labor Relations Commission (NLRC) dismissing petitioner Gerardo A. Carique's (petitioner) Complaint for illegal
dismissal against respondents Philippine Scout Veterans Security and Investigation Agency, Inc. (respondent agency) and/or
Ricardo Bona (Bona) and Severo Santiago (Santiago). Also assailed is the June 22, 2011 Resolution4 of the CA denying
petitioner's Motion for Reconsideration.5
chan roble svirtual lawlib rary

Antecedent Facts

On November 8,1990, petitioner was hired as security guard by respondent agency owned by respondent Santiago and
managed by respondent Bona. He was thereafter assigned/posted to respondent agency's several clients, the last of which
was at National Bookstore - Rosario, Pasig Branch.6 On October 28, 2002, petitioner was relieved from his post at the
National Bookstore - Rosario, Pasig Branch and was replaced by Security Guard Roel Juan pursuant to a rotation policy being
implemented by respondent agency.

On May 6, 2003, petitioner filed an illegal dismissal case against respondents before the Labor Arbiter, docketed as NLRC
NCR Case No. 00-05-05393-2003. The complaint was subsequently amended to include his claims for illegal deduction,
damages and refund of cash bond.7

Petitioner alleged that on October 30, 2002, shortly after his relief, he reported to respondent agency's office and inquired
about his next assignment. He was, however, informed of the lack of available assignment. He then reported continuously
but was repeatedly advised to wait for a new posting. He was thus surprised when on March 9, 2003, he received a
memorandum8 from respondent agency requiring him to explain his Absence Without Leave (AWOL) since November 30,
2002. He submitted an explanation9 on the charge, but no assignment at all was given to him. On May 5, 2003, he again
returned, but was compelled to acknowledge receipt of a memorandum10 dated April 30, 2003 requiring him to explain his
unjustified refusal to accept the posts offered to him and his AWOL. Attached to the memorandum were three Special
Security Detail (SSD)11 which required him to report for assignment at the National Bookstore, SM Bicutan, Taguig on March
11, 2003 and at East Asia Diesel Power Corporation and Country Space Condominium on March 17, 2003. Contending that
the SSDs attached to the memorandum were fabricated by respondent agency in order to evade liability, petitioner refused
to acknowledge receipt of the said memorandum. These events led him to file an illegal dismissal case against respondents.

Respondents denied having dismissed petitioner, let alone illegally, and alleged that petitioner was relieved from his post
because of a rotation policy being implemented as required by respondent agency's clients; that this lawful practice of
relieving security personnel from their posts did not amount to terminating the security personnel from employment but was
simply meant to place them on floating status while awaiting a new assignment; that petitioner was offered an assignment
for posting at the National Bookstore - SM Bicutan Branch as evidenced by SSD12 dated March 11, 2003 some five months
after his relief; that this offer was, however, refused by petitioner for no known reason; and, that after five days, petitioner
was again offered another assignment at the Country Space Condominium at Buendia, Makati as shown in the SSD13 dated
March 17, 2003 but petitioner rejected this second offer anew for no reason at all. Hence, respondents issued a
memorandum dated April 30, 2003 requiring petitioner to explain his actions. Two officers of respondent agency, Ermelo
Basal (Duty Officer Basal) and Fernando Amor (Investigator General Amor), submitted sworn statements14 attesting to the
fact that the offers for posting were refused by petitioner.

In his reply, petitioner averred that he did not consider the SSDs as valid offers for his posting; that there were apparent
discrepancies between the three SSDs submitted by him and the two SSDs presented by respondents; and, that the
conflicting entries between the SSDs submitted by him vis-a-visthose submitted by respondents were suggestive of
irregularities in their issuances.
Ruling of the Labor Arbiter

In a Decision15 dated April 30, 2004, the Labor Arbiter declared petitioner to have been illegally dismissed on the ground that
respondents repeatedly denied petitioner's demands/requests for assignment/posting. The Labor Arbiter thus ordered
respondents to pay petitioner separation pay of P45,000.00, partial backwages of P90,000.00, and to refund petitioner's cash
bond in the amount of P17,840.00.

Ruling of the National Labor Relations Commission

In their appeal before the NLRC, respondents averred that the Labor Arbiter gravely erred in relying on petitioner's baseless
allegations and disregarding their convincing countervailing evidence consisting of the SSDs and the sworn statements of
respondent agency's officers attesting to the fact that petitioner refused to accept his new assignment. Respondents thus
sought the invalidation of the Labor Arbiter's award for separation pay, backwages, and the refund of cash bond.

In a Decision16 dated October 30, 2006, the NLRC granted respondents' appeal and annulled the Labor Arbiter's judgment.
The NLRC was convinced that petitioner had refused new assignments. The NLRC found that petitioner never denied having
received copies of the SSDs as well as the memorandum asking him to explain his refusal to accept the offered assignments.
The NLRC noted that petitioner, far from complying with the memorandum directing him to explain his alleged refusal, chose
to ignore the memorandum and instead filed a case against respondents. The NLRC stressed that all that petitioner did was
to point out alleged discrepancies and conflicting entries in the SSDs but did not categorically deny that he received these
detail orders. The NLRC also noted that petitioner even adopted these documents as part of the evidence he submitted
before the Labor Arbiter. The NLRC, thus, concluded that petitioner was not at all dismissed; instead, he rejected the
assignments given to him.

In any event, the NLRC ordered the refund of petitioner's cash bond in view of respondents' admission that the cash bond
should be remitted upon severance of employment and upon petitioner's manifestation that he was no longer interested to
work for respondent agency. The dispositive portion of the NLRC Decision reads:

WHEREFORE, respondents' appeal is hereby GRANTED, the appealed Decision is hereby SET ASIDE and a new one entered
dismissing the complaint for lack of merit. Respondents are, however, ordered to refund to complainant his cash bond in the
amount of P17,840.00.

SO ORDERED.17
Petitioner moved for reconsideration which was denied by the NLRC in its Resolution18 of June 12, 2007.

Ruling of the Court of Appeals

Via a Petition for Certiorari,19 petitioner appealed the NLRC Decision to the CA. Petitioner reiterated that he was illegally
dismissed and that he continuously pleaded for new assignments but was not given any by respondent agency; that the
SSDs issued to him by respondent agency were fabricated and were merely prepared by respondent agency in order to
evade liability. Petitioner prayed for the reinstatement of the Labor Arbiter's Decision.

In a Decision20 dated November 30, 2010, the CA denied the Petition for Certiorari and affirmed the NLRC Decision. The CA
ruled that when petitioner was relieved from his post at the National Bookstore Rosario, Pasig Branch on October 28, 2002,
he was merely placed on floating status or temporary off-detail and was not dismissed. His floating status did not exceed six
months as he was in fact given new assignments within five months from his alleged relief but he refused these new
assignments.

Petitioner moved for reconsideration which was denied by the CA in its Resolution21 of June 22, 2011.

Issue

Hence, this Petition raising the issue of whether petitioner was illegally dismissed.

Petitioner's Arguments

Petitioner maintains that the evidence he adduced before the Labor Arbiter compels the conclusion that he was illegally
dismissed, respondents' evidence notwithstanding. Petitioner avers that his 12 years of service with respondent agency as
well as the filing the instant complaint, belied any intention on his part to forego or abandon his employment. Petitioner
insists that, in any event, he was constructively dismissed because respondent agency's alleged offerings of new assignments
did not effectively toll the six-months floating period, because first, his relief did not arise from a bonafide suspension of the
company's operation as contemplated in Article 286 of the Labor Code22 effectively placing him on temporary off-detail for a
period not exceeding six months. The reason for his relief, i.e. rotation policy, was for regulatory purpose only and
presupposed available assignments under other existing service contracts. Secondly, the new assignments offered to him
were temporary reliever positions, and did not reinstate him to his former position with a regular status.

Our Ruling
The Petition is without merit.

We find no cogent reason to depart from the factual finding of both the NLRC and the CA that petitioner was not illegally
dismissed. The evidence on record clearly shows that respondents did offer petitioner new assignments. The SSDs and the
affidavits executed by Duty Officer Basal and by Investigator General Amor attest to this incontrovertible fact.

This Court is not unmindful of the rule that the employer has the burden of proving that the employee's termination was for a
valid or authorized cause. However, before the employer is tasked to discharge this burden, it is incumbent upon the
employee to prove by substantial evidence the fact that he was indeed illegally dismissed from employment.23 Illegal
dismissal must be established by positive and overt acts clearly indicative of a manifest intention to dismiss. This critical
affirmative fact must be proved by the party alleging the same with substantial evidence as required by the nature of this
case.24 Mere allegation is neither proof nor evidence.25cra lawred

Here, we find that petitioner anchored his claims on unfounded and unproven allegations. No positive or direct evidence was
adduced to show that he was indeed illegally dismissed from employment, either factually or constructively. If anything, the
evidence on record showed that petitioner was relieved from his last assignment because of the implementation of a rotation
policy by respondent agency which was requested by its clients; and that as correctly found by the CA, petitioner, from that
point on, was considered on floating status or on temporary off-detail which is not an unusual occurrence for security guards
given that their assignments primarily depend on the contracts entered into by the agency with third parties.26 Placing
petitioner on floating or off-detail status for not more than six months is not prohibited by law and did not amount to
dismissal.27

Petitioner's insistence that he was not given any new assignment after his relief was not corroborated by any evidence.
Significantly, both the NLRC and the CA noted that petitioner never denied or disputed having received copies of the SSDs
directing him to report to his new assignments. Indeed, the duty officer who issued the SSDs attested that petitioner was
offered postings on March 11, 2003 and on March 17, 2003, but were refused by petitioner without any justifiable reason.
The respondent agency's investigator general corroborated this fact in an Affidavit where he affirmed that he was present
when the assignments were offered to petitioner, but that petitioner turned these down. Petitioner never denied or contested
these assertions. If at all, he simply shrugged off the SSDs, claiming that these SSDs were fabricated and contained
inaccurate and falsified entries. Confronted with these conflicting claims, this Court finds no difficulty in upholding the claims
of the duty officer and the investigator general because these claims square with the facts on record.

Petitioner also avers that his alleged refusal to accept his new assignment is utterly immaterial to the resolution of the issue
on the validity of the rotation policy implemented by respondents. In fine, petitioner assails the propriety of the rotation
policy being implemented by respondent agency, claiming that this did not toll the allowable six-months floating period, on
account of which he must be deemed to have retained the regular status he enjoyed in his former assignments.

Notably, these issues are raised for the first time on appeal. In fact, it was only in his motion for reconsideration28 before the
CA where he belatedly insisted that assuming that he received the SSDs, his receipt thereof would not mean that he was not
illegally dismissed as the new assignments embodied in the detail orders were only "reliever" or temporary positions meant
to defeat his right to security of tenure. Needless to say, issues and arguments not raised before the original tribunal cannot
be raised for the first time on appeal.29 To entertain this new theory for the first time on appeal is unfair to the other
party30 and is offensive to the rudimentary rules of fair play, justice and due process.31

At any rate, even if timely raised, such arguments will not hold. The implementation of the rotation policy by respondent
agency is within the ambit of management prerogative. The employer has the inherent right to regulate all aspects of
employment, according to his own discretion and judgment, including the right to transfer an employee as long as the
transfer is not unreasonable, inconvenient, prejudicial and does not involve a demotion in rank or a diminution of the
employee's salaries, benefits, and other privileges.32 In the absence of evident bad faith or a manifest intent to circumvent
the factors and conditions just mentioned, this Court is not prepared to invalidate respondents' stance that this policy reflects
the essence of security planning and the importance of discouraging familiarity between security personnel and the premises
they are guarding. Thus, we here reiterate that contracts for security services may stipulate that the clients may request the
agency for the replacement of the guard/s assigned to it even for want of cause;33 and that such replaced security guard/s
could be placed on temporary "off-detail" or "floating status" which is the period of time when such security guard/s are in
between assignments or when they are made to wait after being relieved from a previous post until they are transferred to a
new one.34

As a matter of record, respondent agency had been consistently rotating its security guards. Petitioner had been assigned
and periodically transferred to different clients since 1992; and there is no indication in the records that petitioner resisted or
opposed these postings. Petitioner therefore had effectively consented to this rotation policy, hence, he cannot now claim
that such rotation policy was an assault on his right to security of tenure. Petitioner is therefore estopped from denouncing
such rotation policy as an infraction of his right to security of tenure.

Neither may petitioner claim that the new assignments offered to him were "reliever" positions that were irregular in nature
as those new assignments allegedly interrupted or temporarily halted his regular employment, because even if his
employment was regular or had been temporarily halted, the employment is nonetheless deemed regular if the employee has
rendered at least one year of service.35More importantly, the primary standard for determining regular employment is the
reasonable connection between the activity performed by the employee vis-a-vis the business or trade of the
employer.36 Here, the new assignment/s offered as "reliever assignments" were not merely temporary assignment/s but
regular ones as the assignment/s were necessary to and essential in the usual business of respondent agency. In that
context, petitioner's repeated refusal of the new assignments offered to him was not justified.

All told, the Labor Arbiter erred in finding that petitioner was illegally dismissed, no substantial evidence having been
adduced to sustain this finding. On the other hand, both the NLRC and the CA correctly found that petitioner was not
dismissed but that petitioner instead unjustifiably refused to accept the new assignments offered to him. His conduct or
action negated his claim that he was illegally dismissed.

WHEREFORE, this Petition is DENIED. The November 30, 2010 Decision and the June 22,2011 Resolution of the Court of
Appeals in CA-G.R. SP No. 99967 are AFFIRMED. No pronouncement as to costs.

SO ORDERED. chanroblesvi rtua llawli bra ry

G.R. No. 202090

ICT MARKETING SERVICES, INC. (now known as SYKES MARKETING SERVICES, INC.), Petitioner,
vs.
MARIPHIL L. SALES, Respondent.

DECISION

DEL CASTILLO, J.:

This Petition for Review on Certiorari1 assails: 1) the Januruy 10, 2012 Decision2 of the Court of Appeals (CA) in CA-
G.R. SP No. 109860 nullifying and setting aside the February 16, 20093 and May 20, 20094 Resolutions of the
National Labor Relations Commission (NLRC) in NLRC LAC CN. 07-002404- 08(7)/(8) and reinstating with
modification the April 30, 2008 Decision5 of the Labor Arbiter in NLRC-NCR Case No. 10-11004-07; and 2) the CA's
May 28, 2012 Resolution6 denying petitioner's Motion for Reconsideration7 of the herein Assailed Decision.

Factual Antecedents

Petitioner ICT Marketing Services, Inc. (ICT) – now known as Sykes Marketing Services, Inc. – is a duly registered
domestic corporation engaged in the business of providing outsourced customer relations management and
business process outsourcing solutions to various clients in government and in the financial services, insurance,
telecommunications, health care, information technology, media, energy, and hospitality industries.

On February 22, 2006, petitioner hired respondent Mariphil L. Sales as its Customer Service Representative (CSR)
or Telephone Service Representative (TSR), and assigned her to its Capital One account. On August 21, 2006,
respondent became a regular employee, and her monthly base salary was increased to P16,350.00 and she was
given monthly transportation and meal allowances.

On February 21, 2007, respondent was assigned to the Washington Mutual account, where she was awarded with a
certificate for being the "Top Converter/Seller (Second Place)" for the month of April 2007.8

On July 3, 2007, respondent wrote to Glen Odom (Odom) – petitioner’s Vice President – complaining about
supposed irregularities in the handling of funds entrusted to petitioner by Washington Mutual which were intended
for distribution to outstanding Washington Mutual CSRs and TSRs as prizes and incentives. However, no action
appears to have been taken on her complaint.

Respondent was then transferred to the Bank of America account on July 30, 2007. Without prior notice to
respondent, petitioner scheduled her for training from July 30 to August 6, 2007 on the very same day of her
transfer. On the third day of training (August 1), respondent was unable to attend. When she reported for training the
next day, respondent was informed that she could not be certified to handle calls for Bank of America due to her
failure to complete the training. From then on, respondent was placed on "floating status" and was not given any
work assignment.
In a September 28, 2007 letter9 to petitioner’s Human Resource (HR) Manager, respondent tendered her resignation
from work, effective upon receipt of the letter. Respondent wrote:

I was forced to resign due to the reason that my employment was made on "floating status" effective August 4, 2007
and up to present (almost two months)

I haven’t receive [sic] any notice from you or the HR department to report for work despite my repeated follow-up
[with] your office thru telephone and mobile phone text messages. Hence, I consider your inaction to my follow-up
as an indirect termination of my work with ICT.

The reason I was placed [on] floating status is that, I was absent during the third day of my training with Bank of
America, the account to which I was transferred from Washington Mutual (WaMu). However, my absence during
such period was justified by the fact that I was sick and I need [sic] to undergo a medical check-up on that date.

Furthermore, I see my transfer from WaMu Account to Bank of America and the continued floating status of my work
was prompted by the fact that I lodged a complaint against managers/supervisors assigned in WaMu account
regarding irregularities in the handling of funds given by ICT clients which were supposed to be distributed as prizes
to TSR’s assigned with WaMu. After the filing of the said complaint, through your office, I was transferred to another
account (Bank of America) for no apparent reason. I was not even included in the original list of those who were
supposed to be transferred because my performance record with WaMu is satisfactory as proven by the fact that I
was even awarded with a certificate as "top converter (seller)" for the month of April and was supposed to be
included again in the top three highest converter[s] for the month of May, but unfortunately irregularities were
committed, that is why I filed the aforementioned complaint [with] your office.

On August 1, 2007, a few days after my transfer [to] Bank of America, my coach, angelo [sic], informed me that I will
be having a training on that same day with Bank of America which is really unexpected. I was not given a notice in
advance about the training. My coach informed me only three hours before the said training. Later on during my
training with Bank of America I was [placed on floating status] indefinitely due to a single absence even though I am
a regular employee having worked in ICT for almost two years. Another instance [of] discrimination [sic] and bad
faith on the part of ICT management is that, all my fellow agents who were [placed on floating status] for the same
reason were all ordered to return to work except me [sic]. Moreover, ICT is continuously hiring TSR’s which only
shows that there are still accounts open or work available in ICT. However despite the availability of work, I was still
on floating status.

Based on the aforementioned facts and circumstance[s], it is very clear that the harassment, pressure, and indefinite
floating of my employment with ICT are retaliatory acts perpetrated by the company because of my complaint/
request for investigation on the irregularities being committed by certain company officials.

Thus, I can no longer bear the above-mentioned abuses and discrimination committed against me by ICT
management. Therefore, I have no option but to sever my relationship with the company, as my continued floating
status had already prejudiced me emotionally and financially.10

Ruling of the Labor Arbiter

On October 2, 2007, respondent filed a complaint for constructive dismissal against petitioner and Odom before the
NLRC NCR, Quezon City, docketed as NLRC-NCR Case No. 10-11004-07.

In her Position Paper,11 Reply,12 Rejoinder,13 and Surrejoinder,14 respondent claimed that for complaining about the
supposed irregularities in the Washington Mutual account, petitioner discriminated against her and unduly punished
her. Although she was not included in the original list of CSRs/TSRs for program transfer, she was transferred to
another account, and then placed on "floating status," which is tantamount to suspending her indefinitely without due
process, despite her satisfactory performance. Respondent averred that petitioner’s claim of multiple absences is
not true, because not once was she penalized therefor, assuming such charge is true. Respondent also alleged that
her one-day absence during the training for the Bank of America program cannot justify her being placed on a
"floating status" because the "no-absence during training" requirement cited by petitioner – using her employment
contract15 and the "New Hire Training Bay"16 as bases – applies only to new hires on probationary status, and not to
regularized employees. In any case, the "New Hire Training Bay" used by petitioner was for the Capital One
program. She also pointed out that during her indefinite suspension or "floating status," petitioner continued to hire
new CSRs, as shown by its newspaper advertisements during the period.17Finally, she asserted that her resignation
was not voluntary, but was forced upon her by petitioner as a result of its unlawful acts. Thus, respondent prayed for
the recovery of backwages, separation pay, P100,000.00 combined moral and exemplary damages, and attorney’s
fees equivalent to 10 per cent (10%) of the total award.

In its Position Paper,18 Reply,19 Rejoinder,20 and Surrejoinder,21 petitioner prayed for the dismissal of the complaint,
arguing that respondent was transferred from the Washington Mutual account as an exercise of management
initiative or prerogative, and due to infractions22 committed by her, as well as attendance and punctuality issues that
arose. It claimed that respondent could not be certified for the Bank of America account for failing to complete the
training. It maintained that respondent was placed on standby status only, and not suspended or constructively
dismissed. In fact, she was directed to report to its HR department, but she did not do so. It also insisted that
respondent resigned voluntarily. It denied committing any act of discrimination or any other act which rendered
respondent’s employment impossible, unreasonable or unlikely. Finally, it claimed that prior notice of her transfer to
the Bank of America account was made through an electronic mail message sent to her; and that respondent has no
cause of action since she resigned voluntarily, and thus could not have been illegally dismissed.

On April 30, 2008, the Labor Arbiter rendered a Decision23 finding complainant to have been constructively
dismissed and awarding separation pay, moral and exemplary damages, and attorney’s fees to respondent. The
Labor Arbiter held:

x x x Complainant was indeed constructively dismissed from her employment and she quitted [sic] because her
continued employment thereat is rendered impossible, unreasonable or unlikely.

Complainant’s resignation was sparked by her transfer of assignment and eventual placing her [sic] by the
respondent company of [sic] a "on floating" status.

x x x [T]here was no x x x evidence x x x that complainant’s transfer was due to the request of a client. Further, if
complainant was indeed remised of [sic] her duties due to her punctuality and attendance problem of committing
twelve (12) absences alone incurred in July 2007 [sic], why was there no disciplinary action taken against her like
reprimand or warning[?]

xxxx

And its effect, complainant is entitled to her claim of separation pay, moral and exemplary damages of P50,000.00
pesos [sic] including an award of attorney’s fees.

WHEREFORE, premises considered, judgment is rendered ordering the respondents to pay complainant of [sic] one
month pay per year of service as separation pay in the total amount of P32,700.00, P50,000.00 moral and
exemplary damages plus 10% of the award as attorney’s fees, hereunder computed:

I Separation Pay
2/21/06 – 8/4/07 = 2 yrs.
P16,350.00 x 2 yrs. = P32,700.00
II Damages P50,000.00

P82,700.00
P8,270.00
10% Attorney’s Fees
P90,970.00

SO ORDERED.24

Ruling of the National Labor Relations Commission


Petitioner appealed before the NLRC arguing that the Labor Arbiter erred in ruling that respondent was
constructively dismissed. It also argued that Odom was not personally liable as he was merely acting in good faith
and within his authority as corporate officer.

Respondent likewise interposed an appeal25 arguing that the award of backwages should be computed from the date
of her dismissal until finality of the Labor Arbiter’s Decision; and that the proportionate share of her 13th month pay
should be paid to her as well.

On February 16, 2009, the NLRC issued a Resolution,26 declaring as follows:

We reverse.

Upon an examination of the pleadings on file, We find that in the past the complainant had been transferred from
one program to another without any objection on her part. Insofar as the instant case is concerned, it appears that
the complainant, aside from having been given a warning for wrong disposition of a call, had been absent or usually
late in reporting for work, constraining the respondent ICT to transfer her to another program/account. Required of
the complainant was for her to undergo Product Training for the program from July 30 to August 6, 2007, and the
records indicate that she attended only two (2) days of training on July 30 and 31, 2007, did not report on August 1,
2007 and again reported for training on August 2, 2007. It was then that ICT’s Operations Subject Matter Expert,
Ms. Suzette Lualhati, informed the complainant that she cannot be certified for the program because she failed to
complete the number of training days, and there was a need for her to report to Human Resources for further
instructions. As the complainant did not report to Human Resources, and due to her derogatory record, the
respondent company could not find another program where the complainant could be transferred.

From what has been narrated above, We come to the conclusion that the respondent company cannot be faulted for
placing the complainant on "floating status." And there does not appear to be any ill will or bad faith that can be
attributed to the respondent.

Finally, it is well to emphasize that the complainant tendered her resignation on October 1, 2007. There is no
evidence that the complainant has presented that would indicate that duress or force has been exerted on her.

All told, We are of the opinion that the findings of the Labor Arbiter are in stark contrast to the evidence on record.

WHEREFORE, in view of the foregoing, the decision appealed from is hereby reversed and set aside. Addordingly
[sic], a new one is entered dismissing the complaint for lack of merit.

SO ORDERED.27

Respondent filed a Motion for Reconsideration,28 but in a May 20, 2009 Resolution,29 the motion was denied.

Ruling of the Court of Appeals

In a Petition for Certiorari30 filed with the CA and docketed as CA-G.R. SP No. 109860, respondent sought a reversal
of the February 16, 2009 and May 20, 2009 Resolutions of the NLRC.

Petitioner filed its Comment,31 to which respondent interposed a Reply.32

On January 10, 2012, the CA issued the assailed Decision containing the following pronouncement:

This Court finds the petition meritorious.

While it is true that management has the prerogative to transfer employees, the exercise of such right should not be
motivated by discrimination, made in bad faith, or effected as a form of punishment or demotion without sufficient
cause. When the transfer is unreasonable, unlikely, inconvenient, impossible, or prejudicial to the employee, it
already amounts to constructive dismissal. In constructive dismissal, the employer has the burden of proving that
the transfer and demotion of an employee are for just and valid grounds, such as genuine business necessity.
Should the employer fail to overcome this burden of proof, the employee’s transfer shall be tantamount to unlawful
constructive dismissal.

In the case at bench, private respondent corporation failed to discharge this burden of proof considering the
circumstances surrounding the petitioner’s July 2007 transfer to another account. Prior to her reassignment,
petitioner’s annual performance merited increase in her salary effective February 2007 and was also awarded a
certificate of achievement for performing well in April 2007. Her transfer was also abrupt as there was no written
transfer agreement informing her of the same and its requirements unlike her previous transfer from Capital One to
Washington Mutual account. It is therefore difficult to see the reasonableness, urgency, or genuine business
necessity to transfer petitioner to a new account. While it may be true that petitioner has attendance and punctuality
issues, her over-all performance as a CSR/TSR cannot be said to be below par given the annual merit increase and
the certificate of achievement awarded to her. If indeed, private respondent corporation had trouble transferring the
petitioner to another post because of her derogatory record, the corporation could just have dismissed her for cause.

After petitioner’s unjustified transfer, she was informed by private respondent corporation that she could not be
"certified" or allowed to handle calls for the new account because of her absence during training. She was later
placed on a floating status and was not given another post.

The Court considers placing the petitioner on a floating status as another unjustified action of the private respondent
corporation prejudicial to petitioner as employee. In this case, except for private respondent corporation’s bare
assertion that petitioner no longer reported to the human resources department as instructed, no proof was offered
to prove that petitioner intended to sever the employer-employee relationship. Private respondent corporation also
offered no credible explanation why it failed to provide a new assignment to petitioner. Its assertion that it is
petitioner’s derogatory record which made it difficult for the corporation to transfer her to another account despite its
efforts is not sufficient to discharge the burden of proving that there are no posts or no accounts available or willing
to accept her.

In Nationwide Security and Allied Services, Inc. vs. Valderama,33 the Supreme Court declared that due to the grim
economic consequences to the employee of being placed on a floating status, the employer should bear the burden
of proving that there are no posts available to which the employee temporarily out of work can be assigned.

These acts by the private respondent corporation, of transferring petitioner to another account without sufficient
cause and proper notice and its subsequent failure to provide a new post for her for two months without credible
explanation, constitute unjustified actions prejudicial to the petitioner as an employee, making it unbearable for her
to continue employment.

Thus, petitioner opted to resign, albeit involuntarily. The involuntariness of her resignation is evident in her letter
which states categorically:

"I was forced to resign due to the reason that my employment was made on ‘floating status’ effective August 4, 2007
and up to the present (almost two months) I haven’t receive [sic] any notice from you or the HR department to report
for work despite my repeated follow-up to your office thru telephone and mobile phone text messages. Hence, I 1avvphi1

consider your inaction to my follow-up as an indirect termination of my work with ICT."

Further, petitioner immediately filed a complaint for illegal dismissal. Resignation, it has been held, is inconsistent
with the filing of a complaint. Thus, private respondent corporation’s mere assertion that petitioner voluntarily
resigned without offering convincing evidence to prove it, is not sufficient to discharge the burden of proving such
assertion. It is worthy to note that the fact of filing a resignation letter alone does not shift the burden of proof and it
is still incumbent upon the employer to prove that the employee voluntarily resigned.

Therefore, we believe and so hold that petitioner was constructively dismissed from employment. Constructive
dismissal exists when the resignation on the part of the employee was involuntary due to the harsh, hostile and
unfavorable conditions set by the employer. The test for constructive dismissal is whether a reasonable person in
the employee’s position would feel compelled to give up his employment under the prevailing circumstances. With
the decision of the private respondent corporation to transfer and to thereafter placed [sic] her on floating status,
petitioner felt that she was being discriminated and this perception compelled her to resign. It is clear from her
resignation letter that petitioner felt oppressed by the situation created by the private respondent corporation, and
this forced her to surrender her position.
Under Article 279 of the Labor Code, an employee who is unjustly dismissed from work shall be entitled to
reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances,
and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from
him up to the time of his actual reinstatement.

As petitioner did not pray for reinstatement but only sought payment of money claims, the labor arbiter is correct in
awarding separation pay equivalent to one month pay for every year of service. We also do not find any cogent
reason to disturb the award of damages and attorney’s fees since we have found bad faith on the part of the private
respondent corporation to abruptly [sic] transfer and place the petitioner on floating status. Individual respondent
Glen Odom is however, exonerated from any liability as there was no clear finding that he acted with malice or bad
faith. Backwages and other monetary benefits must also be included in compliance with the above-mentioned
provision of labor law which shall be reckoned from the time her constructive dismissal took effect until the finality of
this decision.

WHEREFORE, premises considered, the Resolutions dated February 16, 2009 and May 20, 2009 respectively,
issued by the public respondent National Labor Relations Commission (NLRC) in NLRC CA No. 07-002404-08 are
REVERSED and SET ASIDE. The decision of the Labor Arbiter dated April 30, 2008 is REINSTATED with
MODIFICATION that the petitioner Mariphil L. Sales, be awarded backwages and other monetary benefits from the
date of her constructive dismissal up to the finality of this Decision.

SO ORDERED.34

Petitioner filed a Motion for Reconsideration, but the same was denied in a May 28, 2012 Resolution. Hence, the
present Petition.

In a November 11, 2013 Resolution,35 this Court resolved to give due course to the Petition.

Issues

Petitioner submits that –

A.

THE COURT OF APPEALS ERRED WHEN IT HELD THAT RESPONDENT’S TRANSFER WAS UNJUSTIFIED
NOTWITHSTANDING EVIDENCE TO SHOW THAT RESPONDENT WAS NOT DEMOTED AND WAS EVEN
GIVEN THE SAME RANK AND PAY.

B.

THE COURT OF APPEALS ERRED WHEN IT HELD THAT RESPONDENT’S PLACEMENT UNDER FLOATING
STATUS WAS TANTAMOUNT TO CONSTRUCTIVE DISMISSAL AS THIS IS CONTRARY TO NUMEROUS
DECISIONS OF THE HONORABLE COURT.

C.

THE COURT OF APPEALS ERRED WHEN IT REINSTATED LABOR ARBITER MACAM’S DECISION DATED 30
APRIL 2008 WHICH DECLARED THAT RESPONDENT WAS CONSTRUCTIVELY DISMISSED,
NOTWITHSTANDING EVIDENCE THAT CLEARLY SHOWS THAT RESPONDENT VOLUNTARILY RESIGNED.

D.

THE COURT OF APPEALS ERRED IN AWARDING RESPONDENT SEPARATION PAY, BACKWAGES, MORAL
AND EXEMPLARY DAMAGES AND ATTORNEY’S FEES.36

Petitioner’s Arguments
Praying that the assailed CA dispositions be set aside and that the NLRC’s February 16, 2009 and May 20, 2009
Resolutions be reinstated instead, petitioner maintains in the Petition and Reply37 that respondent’s transfer to
another account was done as a valid exercise of management prerogative, which allows it to regulate all aspects of
employment. Her transfer was done in good faith, and without diminution in rank and salary. It contends that
respondent knew very well that any CSR/TSR may be transferred to another program/account anytime for business
reasons; in fact, respondent herself was transferred from Capital One to Washington Mutual, and she did not
complain. Moreover, she knew as well that "schedule adherence" or attendance/punctuality is one of the "metrics" or
standards by which the performance of a CSR is measured, and that she failed to comply in this regard. It claims
that the decision to place her on "floating status" instead of dismissing her was an accommodation and should not
be treated as an illegal or unjustified act; that being on "floating status" is not tantamount to constructive dismissal,
and the failure to place or transfer respondent to another account was due to her derogatory record, and not
petitioner’s bad faith or inaction. It insists that the placing of an employee on "floating status" for up to six months is
allowed in the event of a bona fide suspension of the operations or undertaking of a business.38 In any event,
respondent’s voluntary resignation prior to the expiration of the allowable six-month "floating status" period cannot
constitute constructive dismissal, and her immediate filing of the labor case thereafter is thus premature. Finally,
petitioner posits that since there is no illegal dismissal but rather a voluntary relinquishment of respondent’s post,
then there is no basis for the pecuniary awards in her favor.

Respondent’s Arguments

In her Comment39 praying for dismissal of the Petition and the corresponding affirmance of the assailed dispositions,
respondent insists that she was illegally dismissed. She reiterates that her transfer to the Bank of America account
was an undue penalty for her complaining about supposed anomalies in the Washington Mutual account. She avers
that the documentary evidence of her supposed unauthorized absences were manufactured to support petitioner’s
false allegations and mislead this Court into believing that she was delinquent at work.

She argues that assuming that these absences were true, then they should have merited her dismissal for cause –
yet the fact is she was not dismissed nor punished for these supposed absences. She asserts that petitioner’s claim
that she was transferred on the recommendation of a client is untrue and self-serving, and is unjustified since the
client has no authority to order or recommend her transfer. She maintains that her being placed on "floating status"
was illegal, since a) there is no evidence to prove her alleged "attendance and punctuality issues," and b) there was
no bona fide suspension of petitioner’s business or undertaking for a period not exceeding six months, as prescribed
under Article 286 of the Labor Code,40 which would justify the suspension of her employment for up to six months.
As enunciated in the Philippine Industrial Security Agency Corp. v. Dapiton41 case which petitioner itself cited, Article
286 applies only when there is a bona fide suspension of the employer’s operation or undertaking for a period not
exceeding six months, due to dire exigencies of the business that compel the employer to suspend the employment
of its workers. Respondent points out that petitioner continued with its business, and worse, it in fact continued to
hire new CSRs/TSRs during the period of respondent’s suspension from work. In fine, respondent alleges that she
was constructively dismissed and forced to resign, rather than continue to subject herself to petitioner’s
discrimination, insensibility, harassment, and disdain; and that for such illegal acts, she is entitled to indemnity from
petitioner.

Our Ruling

The Court denies the Petition.

Respondent’s Transfer

Under the doctrine of management prerogative, every employer has the inherent right to regulate, according to his
own discretion and judgment, all aspects of employment, including hiring, work assignments, working methods, the
time, place and manner of work, work supervision, transfer of employees, lay-off of workers, and discipline,
dismissal, and recall of employees. The only limitations to the exercise of this prerogative are those imposed by
labor laws and the principles of equity and substantial justice.

While the law imposes many obligations upon the employer, nonetheless, it also protects the employer’s right to
expect from its employees not only good performance, adequate work, and diligence, but also good conduct and
loyalty. In fact, the Labor Code does not excuse employees from complying with valid company policies and
reasonable regulations for their governance and guidance.
Concerning the transfer of employees, these are the following jurisprudential guidelines: (a) a transfer is a
movement from one position to another of equivalent rank, level or salary without break in the service or a lateral
movement from one position to another of equivalent rank or salary; (b) the employer has the inherent right to
transfer or reassign an employee for legitimate business purposes; (c) a transfer becomes unlawful where it is
motivated by discrimination or bad faith or is effected as a form of punishment or is a demotion without sufficient
cause; (d) the employer must be able to show that the transfer is not unreasonable, inconvenient, or prejudicial to
the employee.42

While the prerogative to transfer respondent to another account belonged to petitioner, it wielded the same unfairly.
The evidence suggests that at the time respondent was transferred from the Washington Mutual account to the
Bank of America program, petitioner was hiring additional CSRs/TSRs.43 This simply means that if it was then hiring
new CSRs/TSRs, then there should be no need to transfer respondent to the Bank of America program; it could
simply train new hires for that program. Transferring respondent – an experienced employee who was already
familiar with the Washington Mutual account, and who even proved to be outstanding in handling the same – to
another account means additional expenses for petitioner: it would have to train respondent for the Bank of America
account, and train a new hire to take her place in the Washington Mutual account. This does not make sense; quite
the contrary, it is impractical and entails more expense on petitioner’s part. If respondent already knew her work at
the Washington Mutual account very well, then it is contrary to experience and logic to transfer her to another
account which she is not familiar with, there to start from scratch; this could have been properly relegated to a new
hire.

There can be no truth to petitioner’s claim either that respondent’s transfer was made upon request of the client. If
she was performing outstanding work and bringing in good business for the client, there is no reason – indeed it is
beyond experience and logic – to conclude that the client would seek her transfer. Such a claim could only be
fabricated. Truly, Experience which is the life of the law — as well as logic and common sense — militates against
the petitioners’ cause.44

Moreover, as the appellate court correctly observed, even if respondent had attendance and punctuality issues, her
overall performance as a CSR/TSR was certainly far from mediocre; on the contrary, she proved to be a top
performer. And if it were true that respondent suddenly became lax by way of attendance in July 2007, it is not
entirely her fault. This may be attributed to petitioner’s failure to properly address her grievances relative to the
supposed irregularities in the handling of funds entrusted to petitioner by Washington Mutual which were intended
for distribution to outstanding Washington Mutual CSRs and TSRs as prizes and incentives. She wrote petitioner
about her complaint on July 3, 2007; however, no explanation was forthcoming from petitioner, and it was only
during these proceedings – or after a case had already been filed – that petitioner belatedly and for no other useful
purpose attempted to address her concerns. This may have caused a bit of disillusionment on the part of
respondent, which led her to miss work for a few days in July 2007. Her grievance should have been addressed by
petitioner; after all, they were serious accusations, and have a bearing on the CSRs/TSRs’ overall performance in
the Washington Mutual account.

Respondent’s work as a CSR – which is essentially that of a call center agent – is not easy. For one, she was made
to work the graveyard shift – that is, from late at night or midnight until dawn or early morning. This certainly takes a
toll on anyone’s physical health. Indeed, call center agents are subjected to conditions that adversely affect their
physical, mental and emotional health; exposed to extreme stress and pressure at work by having to address the
customers’ needs and insure their satisfaction, while simultaneously being conscious of the need to insure efficiency
at work by improving productivity and a high level of service; subjected to excessive control and strict surveillance
by management; exposed to verbal abuse from customers; suffer social alienation precisely because they work the
graveyard shift – while family and friends are at rest, they are working, and when they are at rest, family and friends
are up and about; and they work at a quick-paced environment and under difficult circumstances owing to
progressive demands and ambitious quotas/targets set by management. To top it all, they are not exactly well-paid
for the work they have to do and the conditions they have to endure. Respondent’s written query about the prizes
and incentives is not exactly baseless and frivolous; the least petitioner could have done was to timely address it, if
it cared about its employee’s welfare. By failing to address respondent’s concerns, petitioner exhibited an
indifference and lack of concern for its employees – qualities that are diametrically antithetical to the spirit of the
labor laws, which aim to protect the welfare of the workingman and foster harmonious relations between capital and
labor. By its actions, petitioner betrayed the manner it treats its employees.
Thus, the only conceivable reason why petitioner transferred respondent to another account is the fact that she
openly and bravely complained about the supposed anomalies in the Washington Mutual account; it is not her
"derogatory record" or her "attendance and punctuality issues", which are insignificant and thus irrelevant to her
overall performance in the Washington Mutual account. And, as earlier stated, respondent’s "attendance and
punctuality issues" were attributable to petitioner’s indifference, inaction, and lack of sensitivity in failing to timely
address respondent’s complaint. It should share the blame for respondent’s resultant delinquencies.

Thus, in causing respondent’s transfer, petitioner clearly acted in bad faith and with discrimination, insensibility and
disdain; the transfer was effected as a form of punishment for her raising a valid grievance related to her work.

Furthermore, said transfer was obviously unreasonable, not to mention contrary to experience, logic, and good
business sense. This being the case, the transfer amounted to constructive dismissal.

The managerial prerogative to transfer personnel must be exercised without grave abuse of discretion, bearing in
mind the basic elements of justice and fair play. Having the right should not be confused with the manner in which
that right is exercised. Thus, it cannot be used as a subterfuge by the employer to rid himself of an undesirable
worker. In particular, the employer must be able to show that the transfer is not unreasonable, inconvenient or
prejudicial to the employee; nor does it involve a demotion in rank or a diminution of his salaries, privileges and
other benefits. Should the employer fail to overcome this burden of proof, the employee’s transfer shall be
tantamount to constructive dismissal, which has been defined as a quitting because continued employment is
rendered impossible, unreasonable or unlikely; as an offer involving a demotion in rank and diminution in pay.

Likewise, constructive dismissal exists when an act of clear discrimination, insensibility or disdain by an employer
has become so unbearable to the employee leaving him with no option but to forego with his continued
employment.45(Emphasis and underscoring supplied)

The instant case can be compared to the situation in Veterans Security Agency, Inc. v. Gonzalvo, Jr.,46 where the
employee concerned – a security guard who was brave enough to complain about his employer’s failure to remit its
employees’ Social Security System premiums – was "tossed around" and finally placed on floating status for no
valid reason. Taking the poor employee’s side, this Court declared:

True, it is the inherent prerogative of an employer to transfer and reassign its employees to meet the requirements
of its business. Be that as it may, the prerogative of the management to transfer its employees must be exercised
without grave abuse of discretion. The exercise of the prerogative should not defeat an employee’s right to security
of tenure. The employer’s privilege to transfer its employees to different workstations cannot be used as a
subterfuge to rid itself of an undesirable worker.

Here, riled by respondent’s consecutive filing of complaint against it for nonpayment of SSS contributions, VSAI had
been tossing respondent to different stations thereafter. From his assignment at University of Santo Tomas for
almost a year, he was assigned at the OWWA main [o]ffice in Pasig where he served for more than three years.
After three years at the OWWA main office, he was transferred to the OWWA Pasay City parking lot knowing that
the security services will end forthwith. VSAI even concocted the reason that he had to be assigned somewhere
because his spouse was already a lady guard assigned at the OWWA main office. Inasmuch as respondent was
single at that time, this was obviously a mere facade to [get] rid of respondent who was no longer in VSAIs good
graces.

The only logical conclusion from the foregoing discussion is that the VSAI constructively dismissed the respondent.
This ruling is in rhyme with the findings of the Court of Appeals and the NLRC. Dismissal is the ultimate penalty that
can be meted to an employee. Inasmuch as petitioners failed to adduce clear and convincing evidence to support
the legality of respondent’s dismissal, the latter is entitled to reinstatement and back wages as a necessary
consequence. However, reinstatement is no longer feasible in this case because of the palpable strained relations,
thus, separation pay is awarded in lieu of reinstatement.

xxxx

Indeed, the Court ought to deny this petition lest the wheels of justice for aggrieved workingmen grind to a halt. We
ought to abate the culture of employers bestowing security of tenure to employees, not on the basis of the latter’s
performance on the job, but on their ability to toe the line set by their employer and endure in silence the flagrant
incursion of their rights, zealously protected by our labor laws and by the Constitution, no less.47 (Emphasis and
underscoring supplied)

Respondent’s Floating Status

In placing respondent on "floating status," petitioner further acted arbitrarily and unfairly, making life unbearable for
her. In so doing, it treated respondent as if she were a new hire; it improperly disregarded her experience, status,
performance, and achievements in the company; and most importantly, respondent was illegally deprived of her
salary and other emoluments. For her single absence during training for the Bank of America account, she was
refused certification, and as a result, she was placed on floating status and her salary was withheld. Clearly, this
was an act of discrimination and unfairness considering that she was not an inexperienced new hire, but a promising
and award-winning employee who was more than eager to succeed within the company. This conclusion is not
totally baseless, and is rooted in her outstanding performance at the Washington Mutual account and her complaint
regarding the incentives, which only proves her zeal, positive work attitude, and drive to achieve financial success
through hard work. But instead of rewarding her, petitioner unduly punished her; instead of inspiring her, petitioner
dashed her hopes and dreams; in return for her industry, idealism, positive outlook and fervor, petitioner left her with
a legacy of, and awful examples in, office politicking, intrigue, and internecine schemes.

In effect, respondent’s transfer to the Bank of America account was not only unreasonable, unfair, inconvenient, and
prejudicial to her; it was effectively a demotion in rank and diminution of her salaries, privileges and other benefits.
She was unfairly treated as a new hire, and eventually her salaries, privileges and other benefits were withheld
when petitioner refused to certify her and instead placed her on floating status. Far from being an "accommodation"
as petitioner repeatedly insists, respondent became the victim of a series of illegal punitive measures inflicted upon
her by the former.

Besides, as correctly argued by respondent, there is no basis to place her on "floating status" in the first place since
petitioner continued to hire new CSRs/TSRs during the period, as shown by its paid advertisements and placements
in leading newspapers seeking to hire new CSRs/TSRs and other employees.48 True enough, the placing of an
employee on "floating status" presupposes, among others, that there is less work than there are employees;49 but if
petitioner continued to hire new CSRs/TSRs, then surely there is a surplus of work available for its existing
employees: there is no need at all to place respondent on floating status. If any, respondent – with her experience,
knowledge, familiarity with the workings of the company, and achievements – should be the first to be given work or
posted with new clients/accounts, and not new hires who have no experience working for petitioner or who have no
related experience at all. Once more, experience, common sense, and logic go against the position of petitioner.

The CA could not be more correct in its pronouncement that placing an employee on floating status presents dire
consequences for him or her, occasioned by the withholding of wages and benefits while he or she is not reinstated.
To restate what the appellate court cited, "[d]ue to the grim economic consequences to the employee, the employer
should bear the burden of proving that there are no posts available to which the employee temporarily out of work
can be assigned."50 However, petitioner has failed miserably in this regard.

Resignation

While this Court agrees with the appellate court’s observation that respondent’s resignation was involuntary as it
became unbearable for her to continue with her employment, expounding on the issue at length is unnecessary.

Because she is deemed constructively dismissed from the time of her illegal transfer, her subsequent resignation
became unnecessary and irrelevant. There was no longer any position to relinquish at the time of her resignation.

Pecuniary Awards

With the foregoing pronouncements, an award of indemnity in favor of respondent should be forthcoming. In case of
constructive dismissal, the employee is entitled to full backwages, inclusive of allowances, and other benefits or their
monetary equivalent, as well as separation pay in lieu of reinstatement. The readily determinable amounts, as
computed by the Labor Arbiter and correspondingly reviewed and corrected by the appellate court, should be
accorded finality and deemed binding on this Court.
Settled is the rule that an employee who is unjustly dismissed from work shall be entitled to reinstatement without
loss of seniority rights and other privileges, and to his full backwages, inclusive of allowances and to his other
benefits or their monetary equivalent computed from the time his compensation was withheld up to the time of actual
reinstatement. If reinstatement is not possible, however, the award of separation pay is proper.

Backwages and reinstatement are separate and distinct reliefs given to an illegally dismissed employee in order to
alleviate the economic damage brought about by the employee’s dismissal. "Reinstatement is a restoration to a
state from which one has been removed or separated" while "the payment of backwages is a form of relief that
restores the income that was lost by reason of the unlawful dismissal." Therefore, the award of one does not bar the
other.

In the case of Aliling v. Feliciano, citing Golden Ace Builders v. Talde, the Court explained:

Thus, an illegally dismissed employee is entitled to two reliefs: backwages and reinstatement. The two reliefs
provided are separate and distinct. In instances where reinstatement is no longer feasible because of strained
relations between the employee and the employer, separation pay is granted. In effect, an illegally dismissed
employee is entitled to either reinstatement, if viable, or separation pay if reinstatement is no longer viable, and
backwages.

The normal consequences of respondents’ illegal dismissal, then, are reinstatement without loss of seniority rights,
and payment of backwages computed from the time compensation was withheld up to the date of actual
reinstatement. Where reinstatement is no longer viable as an option, separation pay equivalent to one (1) month
salary for every year of service should be awarded as an alternative. The payment of separation pay is in addition to
payment of backwages.51

WHEREFORE, the Petition is DENIED. The assailed January 10, 2012 Decision and May 28, 2012 Resolution of
the Court of Appeals in CA-G.R. SP No. 109860 are AFFIRMED, with MODIFICATIONS, in that petitioner ICT
Marketing Services, Inc., now known as Sykes Marketing Services, Inc., is ordered to PAY respondent Mariphil L.
Sales the following:

1) Backwages and all other benefits from July 30, 2007 until finality of this Decision;

2) Separation pay equivalent to one (1) month salary for every year of service;

3) Moral and exemplary damages in the amount of P50,000.00;

4) Attorney's fees equivalent to ten percent (10%) of the total monetary award; and

5) Interest of twelve per cent (12%) per annum of the total monetary awards, computed from July 30, 2007
up to June 30, 2013, and thereafter, six percent (6%) per annum from July 1, 2013 until their full satisfaction.

The appropriate Computation Division of the National Labor Relations Commission is hereby ordered to COMPUTE
and UPDATE the award as herein determined WITII DISPATCH.

SO ORDERED.

SECOND DIVISION

G.R. No. 201536, September 09, 2015

GRACE MARINE SHIPPING CORPORATION AND/OR CAPT. JIMMY BOADO, Petitioners, v. ARON S.
ALARCON, Respondent.

DECISION

DEL CASTILLO, J.:


Assailed in this Petition for Review on Certiorari1 are: 1) the December 8, 2011 Decision2 of the Court of Appeals (CA)
dismissing the petition for review in CA-G.R. SP No. 109238; and 2) the CA's April 12, 2012 Resolution3 denying
reconsideration of its assailed Decision.

Factual Antecedents

In 2006, respondent Aron S. Alarcon was hired by petitioner Grace Marine Shipping Corporation (Grace Marine Shipping) for
its foreign principal, Universal Marine Corporation. He was assigned as Messman onboard the vessel "M/V Sunny Napier II."
His nine-month Employment Contract4 dated November 28, 2006 stated among others that he was to receive a monthly
salary of US$403.

After undergoing the mandatory pre-employment medical examination, respondent was declared fit to work and, on January
11, 2007, he boarded "M/V Sunny Napier II."

As Messman, respondent maintained messroom sanitation, washed clothes and dishes, cleaned the area on board and was in
charge of general cabin sanitation. He used cleaning agents such as surfactants, alkalines, phosphates, acids, complexing
and bleaching agents, enzymes and other strong chemical substances.5

On August 6, 2007, while aboard "M/V Sunny Napier II," respondent developed a skin condition. He was examined by a
physician in New Zealand, and was diagnosed as having "infected fungal dermatitis."6 On August 27, 2007, respondent was
diagnosed by another doctor as having "eczema squamosum" and declared unfit for duty.7

Respondent was repatriated on August 29, 2007 and was immediately referred to the company-designated physician, Dr.
Nicomedes G. Cruz (Dr. Cruz). On August 30, 2007, respondent was diagnosed with "nummular eczema" on his arms, body,
legs and scalp by the company-designated dermatopathologist, Dr. Eileen Abesamis-Cubillan (Dr. Abesamis-Cubillan).

Respondent underwent treatment, but his condition was characterized by recurring lesions all over his body.

On January 21, 2008, Dr. Cruz declared respondent's condition as a Grade 12 disability - "slight residuals or disorder of the
skin."8

On January 31, 2008, respondent was declared fit to work, although it was noted that he still had "minimal and resolving"
skin lesions. In his letter-report9 to petitioner Capt. Jimmy Boado (Capt. Boado), Grace Marine Shipping's General Manager
for Crewing, Dr. Cruz wrote: cralawlawli bra ry

Patient was repatriated due to skin lesions incurred last July 2007 x x x.

He had his follow-up today. The skin lesions are minimal and resolving. Our dermatologist have [sic] cleared him to go back
to work.
DIAGNOSIS:
Nummular Eczema,
Psoriasis

RECOMMENDATION:
He is fit to work effective January 31, 2008 chanrobles law

Likewise, in a January 31,2008 letter10 to Dr. Cruz, Dr. Abesamis-Cubillan wrote: cralawlaw lib rary

Lesions are resolving but due to inability to procure meds, residual lesions are present. Patient may resume work at this time
but is advised to continue medications so as to completely resolve lesions and to continue treatment while on board. chanrob leslaw

In February 2008, respondent again consulted with Dr. Abesamis-Cubillan, who certified that respondent was suffering from
nummular dermatitis which can be recurrent depending on exposure to various factors such as cold temperature, use of
harsh soaps like detergents and dishwashing soaps, use of chemicals, and stress.11

In April 2008, respondent consulted an independent physician, Dr. Glenda A. Fugoso (Dr. Fugoso), who declared that he was
unfit to work and was suffering from subacute to chronic spongiotic dermatitis which may require lifetime treatment.12

In another letter13 to Capt. Boado dated June 4, 2008, Dr. Cruz wrote: cralawlawli bra ry

This is in response to your query about the above patient.14

Our dermatologist said that the patient's condition was due to the sensitivity of his skin. The dermatologist also noted that
there was recurrence and flare-up of lesions even when the patient is not on board ship.

During the patient's last follow-up, when he was cleared for work, the lesions were minimal and are resolving hence he was
advised to continue his medication while on board for the lesion to completely resolve. chanro bles law
Petitioners offered to compensate respondent in the amount of US$5,225.00 based on a Grade 12 disability rating, but
respondent claimed entitlement to Grade 5 disability benefits with a higher indemnity. Petitioners insisted on their offer.

Ruling of the National Conciliation and Mediation Board

Respondent filed a complaint against petitioners for the recovery of US$60,000.00 permanent total disability benefits;
P100,000.00 moral and exemplary damages; and 10% attorney's fees before the National Conciliation and Mediation Board
(NCMB). The case was docketed as MVA Case No. AC-890-36-05-07-08.

In his Position Paper15 and Reply,16 respondent stated that his illness entitles him to permanent and total disability benefits
and other claims. He argued that such illness is work-related, dermatitis being an occupational disease under Section 32-A of
the Philippine Overseas Employment Administration- Standard Employment Contract (POEA-SEC); that his illness was caused
by his handling of and exposure to chemical agents at work; and that said chemicals are skin irritants and sensitizers which
triggered his condition. He averred that prior to his employment, he was not suffering from skin disease as shown by the
results of his pre-employment medical examination which declared him as fit to work for petitioners. He asserted that the
company-designated doctor's January 31, 2008 declaration of his fitness to work is not valid, since it is stated therein that he
still had to continue medication and treatment to completely resolve his lesions which were not yet healed. Considering that
he was medically advised to avoid working in an environment that would aggravate his condition, this meant that he may no
longer return to duty under the same conditions he was exposed to.

Petitioners, on the other hand, claimed in their Position Paper17 and Reply18 that respondent is not entitled to his claims since
his ailment - nummular eczema -was caused by his "innate skin sensitivity" and not his work on board "M/V Sunny Napier
II." They pointed out that respondent had been declared fit for work by Drs. Cruz and Abesamis-Cubillan; also it cannot be
said that respondent's ailment was work-related since it recurred even after he was no longer exposed to the working
conditions on board the vessel. They claimed that assuming respondent is entitled to disability benefits, such is limited to
only US$5,225.00 in accordance with the Grade 12 disability assessment issued by Dr. Cruz; and that respondent is not
entitled to damages and attorney's fees since he has no valid claim against them. Petitioners thus prayed for dismissal of the
complaint, and in the alternative, that they be held liable only to the extent of US$5,225.00.

On May 22, 2009, the NCMB issued its Decision,19 decreeing as follows: c ralawlawli bra ry

The main issue to be resolved is whether or not complainant is entitled to disability benefit and attorney's fees.

The Panel of Voluntary Arbitrators herein supports complainant's view.

Indeed Complainant's illness manifested during the term of his employment with respondents as messman as he was
exposed to surfactant, alkaline, phosphates, acids, complexing agents, bleaching agents, enzymes and other strong chemical
substances. Complainant was also constantly exposed to stress and strain because of long hours of work and low staffing
level thus contributing to the decline of his health and resistance to the illness.

Our own research confirms that complainant's illness can be reasonably related to his work as messman and not everyone
who has the gene mutations gets nummular eczema or dermatitis as there are several forms of eczema or dermatitis that
people can develop. Certain "environmental triggers" play a role in causing skin disorder in people who have the gene
mutations. Also, psychological stress has long been understood as a trigger for skin flares, but scientists are still unclear
about exactly how this occurs. Studies do show that not only can a sudden, stressful event trigger a rash or worsen; daily
hassles of life can also trigger a flare. In addition, one study showed that people who are categorize [sic] as "huge worriers"
were almost two times less likely to respond to treatment compared to "low worriers." Sometime [sic] even mild injuries to
the skin such as abrasions can trigger skin flares. This is called the koebner20 phenomenon.

The Panel of Voluntary Arbitrators finds no convincing evidence to show that complainant's illness was caused by genetic
predisposition or drug addiction. Having ruled out these reasons, what remain [sic] is the environmental factor such as
complainant's constant exposure to chemicals while on board the vessel such as surfactant, alkaline, phosphates, acids,
complexing agents, bleaching agents, enzymes and other strong chemical substances that caused the skin injury in addition
to the stress and strain which are present in his work area.

While treatment can help control symptoms of Nummular Eczema/Psoriasis, there is yet no cure for the illness.
Complainant's continued employment on board is deleterious to his health because he will again be exposed to factors that
increases [sic] the risk of further recurrence and aggravation of the skin problem such as strong chemical substances, stress
and including changes in season and climate.

This office finds merit in the contention of complainant that as a result of his work-connected illness, he suffered permanent
disability as he could not return to his work as messman and earn wages in the same kind of work of similar nature [sic] that
he was trained for. In awarding disability compensation, it is not the injury which is compensated, but rather the incapacity
to work resulting in the impairment of one's earning capacity.

The High Tribunal consistently ruled that neither is it necessary, in order for an employee to recover compensation, that he
must have been in perfect condition or health at the time he recurred the injury [sic], or that he be free from disease. Every
workingman brings with him to his employment certain infirmities, and while the employer is not the insurer of the health of
his employees, he takes them as he finds them, and assumes the risk of having a weakened condition aggravated by some
injury which might not hurt or bother a perfectly normal, healthy person (More Maritime Agencies, Inc. vs. NLRC, 307 SCRA
189).

As ruled in Marcopper Manning Corporation vs. NLRC, 200 SCRA 167, the Arbitration Branch is mindful that all labor
legislation and all labor contracts shall be construed in favor of the safety and decent living for the laborer, contractual rights
and duties, such as these arising from the provisions of the POEA Standard Employment Contract and/or the Collective
Bargaining Agreement, should be voluntarily stipulated in good faith and must constitute the law between the parties.

Despite the inability to resume sea duty, this Panel award [sic] Grade 5 disability only to complainant. He is still physically
capable of performing other tasks or jobs besides being a messman even with the skin disorder although not of the same
position as messman. To this panel, despite declaration of fitness to resume work by the company-designated physician in
his 11th report, there is no concrete evidence indicated that respondent allowed him to resume sea duty on January 31,
2008. Likewise, both the company-designated physician and the independent dermatologist consulted by complainant agree
that the illness is recurrent and would be considered as unemployable as this illness would entail lifetime treatment. With
that, we considered his inability to resume x x x sea duty as justification to award x x x disability compensation based on
Grade 5 as evaluated by his attending physician.

For having been compelled to litigate and incur expenses, complainant's claim for attorney's fees is also granted. Other
claims however are dismissed for lack of factual and legal basis.

WHEREFORE, premises considered, respondents are hereby ordered to pay complainant jointly and severally the amount of
US$29,480.00 representing his disability benefit based on the POEA Standard Employment Contract plus (10%) ten percent
attorney's fees, Philippine Currency or the amount of US$2,948.00 at the rate of exchange prevailing at the time of actual
payment. All other claims are dismissed.

SO ORDERED.21 (Underscoring in the original.) cha nro bleslaw

Ruling of the Court of Appeals

In a Petition for Review22 filed with the CA and docketed therein as CA-G.R. SP No. 109238, petitioners sought to set aside
the above NCMB Decision, reiterating mainly their arguments in their pleadings filed with the NCMB. In addition, petitioner
claimed that the NCMB did not provide the medical basis for its findings; that there is no basis to conclude that respondent is
entitled to benefits corresponding to a Grade 5 disability; that on the contrary, it is the opinion of the company-designated
physician, Dr. Cruz, that is the best and most reliable determinant of respondent's fitness to work or degree of disability.
Petitioners argued that the NCMB committed grave abuse of discretion in disregarding the opinion of Dr. Cruz; and that the
opinion of the independent physician consulted by respondent cannot determine his fitness or disability. Petitioners likewise
sought injunctive relief.

On December 8, 2011, the CA issued the herein assailed Decision containing the following pronouncement: c ralawlawli bra ry

Entitlement of seamen on overseas work to disability benefits is a matter governed, not only by medical findings, but by law
and contract. Articles 191 to 193 of the Labor Code of the Philippines provide the basis for the worker's entitlement to
disability benefits. The said provisions equally [apply] to employees actually working in the Philippines and to seafarers. The
respondent claims permanent disability, hence, we should refer to Article 192(c)(l) of the Labor Code which provides: cha nRoblesv irt ual Lawlib rary

ART. 192. Permanent Total Disability, x x x

(c) The following disabilities shall be deemed total and permanent: chanRoblesv irt ual Lawlib rary

(1) Temporary total disability lasting continuously for more than one hundred twenty days, except as otherwise provided for
in the Rules;
By contract, the Philippine Overseas Employment Administration -Standard Employment Contract (POEA-SEC), as provided
under Department Order No. 4, Series of 2000 of the Department of Labor and Employment, and the parties' Collective
Bargaining Agreement (CBA) bind the seaman and his employer to each other. Section 20 (B) of the 2000 POEA-SEC governs
the compensation and benefits to which a seafarer is entitled in case of injury or illness, viz[.]: cralaw lawlib rary

"Section 20-B. Compensation and Benefits for Injury or Illness.

The liabilities of the employer when the seafarer suffers work-related injury or illness during the term of his contract are as
follows:cha nRoblesv irt ual Lawlib rary

xxxx

3. Upon sign-off from the vessel for medical treatment, the seafarer is entitled to sickness allowance equivalent to his basic
wage until he is declared fit to work or the degree of permanent disability has been assessed by the company-designated
physician but in no case shall this period exceed one hundred twenty (120) days.

xxxx
6. In case of permanent total or partial disability of the seafarer caused by either injury or illness the seafarer shall be
compensated in accordance with the schedule of benefits enumerated in Section 32 of this Contract. Computation of his
benefits arising from an illness or disease shall be governed by the rates and the rules of compensation applicable at the time
the illness or disease was contracted." chanrobles law

To be entitled to compensation and benefits under the foregoing provision, it is not sufficient to establish that the seafarer's
illness or injury has rendered him permanently or partially disabled, it must also be shown that there is a causal connection
between the seafarer's illness or injury and the work for which he had been contracted. Work-related injury is defined under
the 2000 POEA-SEC as an injury resulting in disability or death arising out of or in the course of employment. Work-related
illness, on the other hand, is any sickness resulting in disability or death as a result of an occupational disease listed under
Section 32-A of this contract with the conditions set therein satisfied.

Whether the illness of the respondent is work-related x x x does not seem to be an issue in the instant case. As x x x can be
gathered from the pleadings of the petitioners and the position papers submitted by them before the labor tribunal, what
they are only after is the proper determination of the degree of disability of the respondent. Moreover, the company-
designated physician himself did not categorically state that the illness of the respondent is not work-related.

Be that as it may, the records will show that the respondent was treated of nummular dermatitis by the company-designated
physician Nicomedes Cruz.

Dermatitis is listed as an occupational disease under Section 32-A. It is appreciated as an occupational disease if the nature
of employment involves the use or handling of chemical agents which are skin irritants and sensitizers.

The respondent alleged that M/V Sunny Napier II is a chemical tanker[, fjhat he worked therein as a Messman. That being
such, he was in charged [sic] of washing clothes and dishes, cleaning the area on board, the general sanitation using
cleaning agents such as surfactant, alkaline, phosphates, acids, complexing agents, bleaching agents, enzymes, and other
strong chemical substances. The petitioners did not seem to have ever disputed the said claims of the respondent. Based on
the foregoing, it cannot be denied that there is causal connection between the nature of job of the respondent and the illness
he contracted while employed with the petitioners.

The respondent was first seen by the company-designated physician on August 30, 2007. In the course of his treatment, the
respondent was asked several times to return for follow-up check-ups so that his progress could be monitored. On January
31, 2008, he was finally declared fit to work. But despite the pronouncement of the company-designated physician, it
appears that the illness of the respondent was not completely healed since he had to consult two physicians afterwards. One
of the physicians that he consulted, Dr. Glenda A. Fugoso, contradicted the findings of the company-designated physician
and declared the respondent unfit to work. It was further added that his condition might require a lifetime treatment. In view
thereof, the respondent claims permanent total disability benefits from the petitioners.

Permanent total disability means disablement of an employee to earn wages in the same kind of work or work of a similar
nature that he was trained for or accustomed to perform, or any kind of work which a person of his mentality and attainment
can do. It does not mean state of absolute helplessness but inability to do substantially all material acts necessary to the
prosecution of a gainful occupation without serious discomfort or pain and without material injury or danger to life. In
disability compensation, it is not the injury per se which is compensated but the incapacity to work.

Permanent total disability refers to 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. Otherwise stated, what determines the worker's entitlement to permanent disability
benefits is his inability to work for more than 120 days.

In this jurisdiction, jurisprudence abounds holding that failure of the company-designated physician to pronounce a seafarer
fit to work within 120 days entitles the latter to permanent total disability. This was the very ruling in Abante v. KJGS Fleet
Management Manila:23 cralawlawlib ra ry

"It is gathered from the documents emanating from the Office of Dr. Lim that petitioner was seen by him from July 24, 2000
up to February 20, 2001 or a total of 13 times; and except for the medical reports dated February 5, 2001 and February 20,
2001 (when the doctor finally pronounced petitioner fit to work), Dr. Lim consistently recommended that petitioner continue
his physical rehabilitation/therapy and revisit clinic on specific dates for re-evaluation, thereby implying that petitioner was
not yet fit to work.

Given a seafarer's entitlement to permanent disability benefits when he is unable to work for more than 120 days, the failure
of the company-designated physician to pronounce petitioner fit to work within the 120-day period entitles him to permanent
total disability benefit in the amount of US$60,000.00."
chanrobles law

The same ruling is echoed in the case of Oriental Shipmanagement Co., Inc. v. Bastol:24 c ralawlawl ibra ry

"In all, after his repatriation on March 7, 1997, Bastol went to see Dr. Peralta on March 8, 1997, and until the last
examination by Dr. Lim on October 28, 1997, he had been treated by these company-designated doctors for a period
spanning around seven months and 20 days or for approximately 230 days. Clearly then, the maximum period of 120 days
stipulated in the SEC for medical treatment and the declaration or assessment by the company-designated physician of either
being fit to work or the degree of permanent disability had already lapsed. Thus, by law, if Bastol's condition was with the
lapse of the 120 days of post-employment medical examination and treatment, which actually lasted as the records show for
at least over eight months and for over a year by the time the complaint was filed, without his being employed at his usual
job, then it was certainly total permanent disability."
chan robles law

In the case at bar, the respondent was under the treatment of the company-designated physician for five (5) months, or 154
days to be exact, from the time he was taken to the latter for an examination on August 30,2007 until he was declared fit to
work on January 31, 2008. Applying the foregoing jurisprudence in the case at bar, there is no doubt that the respondent is
entitled to permanent total disability benefits. The petitioners cannot take advantage of the pronouncement of the company-
designated physician that the respondent was already fit to work to evade their liability. Indeed, the respondent has been
eventually declared fit to work but the same came only after more than 120 days. The law and jurisprudence is very clear on
the matter, if the company-designated physician failed to declare the seafarer fit to [work] within 120 days, the latter is
entitled to a permanent total disability benefits [sic].

For obvious reason, the company-designated physician did not determine the degree of disability of the respondent. But
being the expert on the matter, we defer to the finding of the public respondent that the respondent is entitled to permanent
disability benefits equivalent to Grade 5 disability under the POEA contract.

The Court also sustains the award of attorney's fees in favor of the respondent. The claim for attorney's fees is granted
following Article 2208 of the New Civil Code which allows its recovery in actions for recovery of wages of laborers and actions
for indemnity under the employer's liability laws. The same fees are also recoverable when the defendant's act or omission
has compelled the plaintiff to incur expenses to protect his interest as in the present case following the refusal by the
petitioners to settle the respondent's claims. Pursuant to prevailing jurisprudence, the respondent is entitled to attorney's
fees of ten percent (10%) of the monetary award.

WHREFORE [sic], premises considered, the instant petition for review is DISMISSED for lack of merit.

SO ORDERED.25 chanrobles law

Petitioners filed a Motion for Reconsideration,26 but the CA denied the same in its April 12, 2012 Resolution. Hence, the
present Petition.

Issues

Petitioners submit the following issues for resolution: cra lawlawlib rary

1. Whether x x x the Court of Appeals had legal basis in awarding US$29,480.00.

2. Whether x x x petitioners are liable to private respondent for disability benefits amounting to US$29,480.00 despite the
fact that he was declared fit to work by the company-designated physician.

3. Whether x x x the medical findings of the company-designated physician should be given more weight than that of the
physician appointed by the seafarer.

4. Whether x x x the private respondent is entitled to attorney's fees.27 chan roble slaw

Petitioners' Arguments

Praying that the assailed CA pronouncements be set aside and that a new judgment be rendered absolving them from the
payment of disability benefits and attorney's fees and dismissing MVA Case No. AC-890-36-05-07-08, petitioners maintain in
their Petition and Reply28 that there is no substantial medical evidence to support the award of indemnity to respondent.
Since he was declared fit to work by the company-designated physician, he should not be entitled to disability benefits.
Moreover, respondent's illness is not work-connected, and he failed to prove that it is so. Petitioners insist that the findings
of the company-designated physician, and his recommendation relative to disability grading and compensation, should be
upheld; that such findings should be the sole basis for determining whether respondent is fit to work; and that since there is
no basis for an award of disability benefits, respondent's claim for attorney's fees should fail as well, and instead his labor
case should be dismissed.

Respondent's Arguments

In his Comment,29 respondent counters that there is substantial evidence to prove that he is entitled to a Grade 1 disability
rating, and not merely Grade 5, which thus entitles him to an award of US$60,000.00 in accordance with the POEA contract
provisions. He maintains that his ailment rendered him unemployable since it is recurrent and requires lifetime treatment;
that such finding was arrived at by the company-designated physician, Dr. Abesamis-Cubillan; and that his illness was
caused by his handling of irritating chemicals during his stint on board the vessel of petitioners' principal.

Our Ruling

The Court denies the Petition.


Respondent was diagnosed by the company-designated physicians, Drs. Cruz and Abesamis-Cubillan to be suffering from
nummular eczema and psoriasis. Although he was initially cleared of psoriasis, the final diagnosis of the said doctors as
contained in Dr. Cruz's January 31, 2008 letter-report to Capt. Boado indicates that respondent suffered from said skin
disease, apart from nummular eczema. Moreover, said letter-report indicated that respondent's illness has not completely
healed, and that there were still "minimal and resolving" lesions. Another letter of Dr. Abesamis-Cubillan to Dr. Cruz dated
January 31, 2008 declared that as of said date, "residual lesions are present" and respondent was "advised to continue
medications so as to completely resolve lesions and to continue treatment while on board." This only means that
respondent's condition has not been completely addressed and his illnesses persisted even after a period of treatment
spanning five (5) months or approximately 150 days, or from August 30, 2007 up to January 31, 2008.

In another handwritten certification dated February 12, 2008, the same company-designated physician Dr. Abesamis-
Cubillan confirmed that respondent's condition can be recurrent depending on exposure to various factors such as cold
temperature, use of harsh soaps like detergents and dishwashing soaps, use of chemicals, and stress. And then again, in an
April 1, 2008 certification, Dr. Fugoso - an independent physician consulted by respondent -declared that respondent was
unfit to work and was suffering from subacute to chronic spongiotic dermatitis which may require lifetime treatment.

Respondent's condition was diagnosed to be psoriasis and nummular eczema by the company-designated doctors, while it
was found to be chronic spongiotic dermatitis by an independent doctor. The conflict in diagnoses can be resolved, as
petitioners correctly argue, by adherence to the company-designated physicians' findings. Thus, for purposes of the present
case, respondent suffered from psoriasis and nummular eczema. Nonetheless, while respondent was declared fit to return to
work, the obvious fact remains that at the time of such declaration, his illness has not been cured, as he continued to suffer
from recurrent lesions - as Drs. Cruz and Abesamis-Cubillan themselves acknowledged in their written communications and
certifications. Thus, Dr. Cruz's declaration of fitness is a nullity.

The evidence further suggests that before respondent was employed by petitioners, he did not suffer from psoriasis and
nummular eczema; if he had been afflicted with these ailments prior to employment, surely he would not have been taken in.
He was given a clean bill of health through the standard pre-employment physical examination. Besides, in any of their
pleadings, petitioners did not contest this fact; nor did they claim that respondent had these conditions prior to his
employment.

The evidence shows that during his eight-month stint aboard "M/V Sunny Napier II," respondent was constantly exposed to
chemicals. His sole responsibility as messman was to maintain overall sanitation - cleaning the messroom, the area on board,
the cabins, washing dishes, clothes, etc.; this cannot be done without the aid of cleaning agents, substances, and chemicals.
Thus, he inhaled and came into direct skin or body contact with such irritating and injurious chemicals and fumes. Certainly,
as with any other seafarer, he was subjected to stress at work, climate changes, and other environmental factors or
elements. As a result, he contracted nummular eczema and psoriasis which spread all over his body.

There is no validity to petitioners' argument that respondent's "innate skin sensitivity" caused his illness. If this were true,
then it did not have to take eight months before he became ill, considering the level of exposure he was subjected to, daily
for at least eight hours. Respondent's immune system was able to ward the disease for quite some time but respondent is
not superhuman; his body can only take so much. At some point, continuous direct exposure to irritating - if not deadly,
harmful or toxic - chemicals can only lead to the inevitable and unfortunate condition he now finds himself in.

Nummular eczema, "also known as discoid eczema and nummular dermatitis, is a common type of eczema that can occur at
any age. It is notable because it looks very different [from] the usual atopic dermatitis and can be much more difficult to
treat. The word "nummular" comes from the Latin word for "coin" as the spots can look coin-shaped x x x. They tend to be
well-defined, [and] may be very itchy or not x x x at all. They can be very dry and scaly or x x x wet and open. The cause of
nummular eczema is unknown, but it tends to be more isolated than atopic dermatitis and does not seem to run in families.
Sometimes there is a triggering event such as: a. an insect bite; b. a reaction to inflammation (including atopic dermatitis)
elsewhere on the body; c. dry skin in the winter."30 Direct exposure to cleaning agents and other chemicals and the fumes
thereof - which naturally cause irritation and thus inflammation as a physiological reaction, as well as climate or temperature
changes, can be said to have triggered respondent's nummular eczema.

In Maersk Filipinos Crewing, Inc./Maersk Services Ltd. v. Mesina,31 this Court held that there is a reasonable connection
between the nature of one's work and his contracting psoriasis when, in the performance of his duties, strong detergents,
fabric conditioners, special soaps, and other chemicals are used. The Court therein declared that — cralawlawlib ra ry

The 2000 POEA-SEC defines "work-related illness" as "any sickness resulting to disability or death as a result of
an occupational disease listed under Section 32-A of this contract with the conditions set therein satisfied."

In interpreting the said definition, the Court has held that for disability to be compensable under Section 20(B)
of the 2000 POEA-SEC, it is not sufficient to establish that the seafarer's illness or injury has rendered him
permanently or partially disabled; it must also be shown that there is a causal connection between the
seafarer's illness or injury and the work for which he had been contracted.

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

Concomitant with such presumption is the burden placed upon the claimant to present substantial evidence that his working
conditions caused or at least increased the risk of contracting the disease. Substantial evidence consists of such relevant
evidence which a reasonable mind might accept as adequate to justify a conclusion that there is a causal connection between
the nature of his employment and his illness, or that the risk of contracting the illness was increased by his working
conditions. Only a reasonable proof of work-connection, not direct causal relation is required to establish compensability of a
non-occupational disease.

xxxx

Psoriasis comes from the Greek word "psora" which means itch. It is a common disfiguring and stigmatising
skin disease associated with profound impaired quality of life. People with psoriasis typically have sharply
demarcated erythematous plaques covered by silvery white scales, which most commonly appear on the elbows,
knees, scalp, umbilicus, and lumbar area. Chronic plaque psoriasis (psoriasis vulgaris) is the most common type
of the disease which manifests thru plaques of varying degrees of scaling, thickening and inflammation [on] the
skin. The plaques are typically oval-shaped, of variable size and clearly distinct from adjacent normal skin.

As a result of the chronic, incurable nature of psoriasis, associated morbidity is significant. Patients in primary
care and hospital settings have similar reductions in quality of life specifically in the functional, psychological
and social dimensions. Symptoms specifically related to the skin (i.e., chronic itch, bleeding, scaling, nail
involvement), problems related to treatments (mess, odor, inconvenience, time), arthritis, and the effect of
living with a highly visible, disfiguring skin disease (difficulties with relationships, difficulties with securing
employment, and poor self- esteem) all contribute to morbidity. About one in four patients experience major
psychological distress, and the extent to which they feel socially stigmatized and excluded is significant.

Current available treatments for the disease are reasonably effective as short-term therapy. Extended disease
control is, however, difficult to achieve as the safety profile of most therapeutic agents limit their long-term
use.

Until now, the exact cause of psoriasis remains a mystery. But several family studies have provided compelling
evidence of a genetic predisposition to psoriasis, although the inheritance pattern is still unclear. Other
environmental factors such as climate changes, physical trauma, infections of the upper respiratory tract, drugs,
and stress may also trigger its onset or development.

After a circumspect evaluation of the conflicting medical certifications of Drs. Alegre and Fugoso, the Court finds that serious
doubts pervade in the former. While both doctors gave a brief description of psoriasis, it was only Dr. Fugoso who
categorically stated a factor that triggered the activity of the respondent's disease - stress, drug or alcohol intake, etc. Dr.
Alegre immediately concluded that it is not work-related on the basis merely of the absence of psoriasis in the
schedule of compensable diseases in Sections 32 and 32-A of the POEA-SEC. Dr. Alegre faUed to consider the
varied factors the respondent could have been exposed to while on board the vessel. At best, his certification was
merely concerned with the examination of the respondent for purposes of diagnosis and treatment and not with the
determination of his fitness to resume his work as a seafarer in stark contrast with the certification issued by Dr. Fugoso
which categorically declared the respondent as "disabled." The certification of Dr. Alegre is, thus, inconclusive for purposes of
determining the compensability of psoriasis under the POEA-SEC. Moreover, Dr. Alegre's specialization is General Surgery
while Dr. Fugoso is a dermatologist, or one with specialized knowledge and expertise in skin conditions and diseases like
psoriasis. Based on these observations, it is the Court's considered view that Dr. Fugoso's certification deserves greater
weight.

It remains undisputed that the respondent used strong detergent, fabric conditioner, special soap and chemicals
in performing his duties as a steward. Stress and climate changes likewise permeate his working environment
as with that of any other seafarer. These factors, taken together with Dr. Fugoso's certification, confirm the
existence of a reasonable connection between the nature of respondent's work and the onset of his psoriasis.

At any rate, even in the absence of an official finding by the company-designated physician or the respondent's own
physician, he is deemed to have suffered permanent total disability pursuant to the following guidelines in Fil-Star Maritime
Corporation v. Rosete, thus:
Permanent disability is 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.

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.

A total disability does not require that the employee be completely disabled, or totally paralyzed. What is necessary is that
the injury must be such that the employee cannot pursue his or her usual work and earn from it. A total disability is
considered permanent if it lasts continuously for more than 120 days. x x x.
It is undisputed that from the time the respondent was medically repatriated on October 7,2005 he was unable to work for
more than 120 days. In fact, Dr. Alegre's certification was issued only after 259 days with the respondent needing further
medical treatments thus rendering him unable to pursue his customary work. Despite the declaration in the medical
reports that psoriasis is not contagious, no profit-minded employer will hire him considering the repulsive
physical manifestation of the disease, its chronic nature, lack of long-term cure and the vulnerability of the
patient to cardiovascular diseases and some cancers. Its inevitable impact [on] the respondent's chances of
being hired and capacity to continue working as a seaman cannot be ignored. His permanent disability thus
effectively became total in nature entitling him to permanent total disability benefits as correctly awarded by
the LA and the CA.32 (Emphasis supplied) c hanro blesl aw

Adopting the pronouncement in Maersk in its entirety and applying it to the present case, the Court finds that respondent's
psoriasis and nummular eczema, which have not been cured, are work-connected and thus compensable. He is unfit to
continue his duties as messman, as his illness prevents him from performing his functions as such. Up to this point, it does
not appear that petitioners took him back to work for their principal, or that a declaration of fitness to work or that his
condition has been resolved or cured has been issued. "[A]n employee's disability becomes permanent and total when so
declared by the company-designated physician, or, in case of absence of such a declaration either of fitness or permanent
total disability, upon the lapse of the 120 or 240-day treatment period under Article 192 (c) (1) of the Labor Code33 and Rule
X, Section 2 of the Amended Rules on Employees' Compensation Commission,34 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. This is true regardless of whether the employee loses the use of
any part of his body or if the injury or disability is classified as Grade 1 under the POEA-SEC."35

On the issue covering the pecuniary award, the Court finds the need to modify the award. Since respondent is entitled to a
declaration of permanent total disability, the corresponding benefit attached thereto in the amount of US$60,000.00 should
be given to him' This is in line with the Maersk pronouncement. Thus, on this score, both the NCMB and the CA patently
erred. Besides, petitioners came to this Court arguing mainly that respondent should not be awarded indemnity because his
illness is not work-connected and not compensable; alternatively, they contend that only the disability grading provided by
the company-designated physician - that is, Dr. Cruz's January 21, 2008 recommendation of a Grade 12 disability rating -
should be recognized.36Thus, apart from the issue of compensability, it became necessary for the Court to determine
the degree of compensability; the facts further indicate that respondent's condition has not been resolved. The fact that
respondent did not interpose a corresponding appeal is therefore of no moment. In any case, petitioner's "appeal, once
accepted by this Court, throws the entire case open to review, and that this Court has the authority to review matters not
specifically raised or assigned as error by the parties, if their consideration is necessary in arriving at a just resolution of the
case."37

As compensability has been established, entitlement to attorney's fees follows since it is evident that respondent had to
litigate to claim his rightful indemnity. On this score, the NCMB and the CA are correct in their pronouncements cited
elsewhere herein; there is no need to further elaborate.

WHEREFORE, the Petition is DENIED. The assailed December 8, 2011 Decision and April 12, 2012 Resolution of the Court
of Appeals in CA-G.R. SP No. 109238 are AFFIRMED, with the MODIFICATIONthat petitioners Grace Marine Shipping
Corporation and/or Capt. Jimmy Boado are ordered to jointly and severally pay respondent Aron S. Alarcon the amounts of
US$60,000.00 as disability compensation and US$6,000.00 as attorney's fees in Philippine pesos, computed at the exchange
rate prevailing at the time of payment.

SO ORDERED,

SECOND DIVISION

G.R. No. 199931, September 07, 2015

INC SHIPMANAGEMENT, INC., INTERORIENT NAVIGATION COMPANY LTD. AND REYNALDO


RAMIREZ, Petitioners, v. RANULFO CAMPOREDONDO, Respondent.

DECISION

DEL CASTILLO, J.:

This Petition for Review on Certiorari1 assails the July 29, 2011 Decision2 of the Court of Appeals (CA) in CA-GR. SP No.
112079 which annulled and set aside the July 31, 2009 Decision3 and October 23, 2009 Resolution4 of the National Labor
Relations Commission (NLRC) and reinstated the April 27, 2009 Decision5 of Labor Arbiter (LA) Thelma M. Concepcion in OFW
(M) 08-12020-08 (LAC No. 06-000303-09). Likewise assailed is the January 2, 2012 Resolution6 of the CA which denied
petitioners' Motion for Reconsideration.7 chan roble svirtual lawlib rary

Factual Antecedents
On July 19, 2007, INC Shipmanagement, Inc. (INC), for and in behalf of Interorient Navigation Company Ltd. (Interorient),
hired respondent Ranulfo Camporedondo (respondent) as chief cook on board the vessel M/V Fortunia for a period of 10
months with a monthly salary of US$578.50 and allowance of US$80.00.8 On July 25, 2007, respondent boarded the vessel.9

As chief cook, respondent's tasks included food preparation and meals of the ship crew, custody, inventory, and budgeting of
food supplies of the vessel.10 Allegedly, keeping in mind his duties, respondent inquired from the captain the budget for the
vessel; he also reported to the latter the insufficiency and poor quality of some of the supplies. These inquiries enraged the
captain. As a result, he reprimanded respondent on a daily basis.11

Furthermore, respondent stated that on September 11, 2007, the captain gave him a return ticket to the Philippines to take
a vacation. He was purportedly promised to be transferred to another vessel.12 On September 12, 2007 or about a month
and a half into his contract, respondent was given a report13 of dismissal, which he refused to accept.14

On August 27, 2008, respondent filed a Complaint15 for illegal dismissal, non-payment of overtime pay and attorney's fees
against INC, Interorient and Reynaldo Elamirez, corporate officer of INC16(collectively referred hereunder as petitioners).

In his Position Paper,17 respondent alleged that he began working as seafarer in August 2001. From 2001 to 2005, he worked
for other employers and finished his contracts with them in good standing. In August 2005, he started working for INC and
prior to his July 19, 2007 contract, he completed two contracts with INC without issue. He stated that petitioners were
claiming that he was dismissed due to his stiff arm. However, he contended that he passed the medical and physical
examination and despite his condition, petitioners engaged his services. Furthermore, he asserted that he was made to sign
a report that terminated his contract without giving him the opportunity to explain or defend himself.

For their part, petitioners stated in their Position Paper18 that respondent joined the vessel on July 25, 2007 but was
repatriated on December 12, 2007.

They contended that the captain complained about his incompetence and/or poor performance. In particular, due to his stiff
right hand, respondent was allegedly unable to serve meals and maintain the cleanliness of the kitchen, store room and mess
room. They averred that eventually the captain served upon him the above-cited Report entitled as "Report of incompetent
action/insubordination/ indiscipline" which he refused to receive.

In addition, petitioners stated that the previous ship captain, under whom respondent was deployed, likewise complained
about his poor performance. They asserted that because they wanted to give respondent another chance, they deployed him
to M/V Fortunia. Allegedly, respondent was allowed to re-apply for assignment in another vessel and he readily agreed to be
repatriated.

Petitioners argued that respondent admitted his faults as he did not outrightly file a case; he even followed up his re-
deployment with their fleet personnel officer. They also emphasized that the complaint against them was barred by
respondent's voluntary execution of a quitclaim;19 and that respondent's complaint was "absolutely malicious and an
afterthought on his part because if he was truly aggrieved by his repatriation, he should not have executed such
quitclaim."20
chan roblesv irt uallawl ibra ry

Riding of the Labor Arbiter

On April 27, 2009, the LA rendered a Decision declaring that petitioners illegally dismissed respondent, the decretal portion
of which reads:

WHEREFORE, foregoing premises considered, we find the complaint against respondents impressed with merit. Accordingly
the latter is held liable to pay complainant the salaries equivalent to eight months unexpired portion of the ten[-]month
employment contract. Further awarded is ten percent of the total judgment award as attorney's fees, the computation of
which is shown in Annex 'A' and made an integral part hereof.

The rest of complainant's monetary claims are dismissed for lack of merit including respondents' counterclaim against the
complainant.

SO ORDERED.21
Ruling of the National Labor Relations Commission

In its Decision dated July 31, 2009, the NLRC set aside the Decision of the LA and dismissed the case for lack of merit.

The NLRC was convinced that respondent's performance as chief cook was below the company's standard. It declared that
the delay in filing the case proved the weakness of respondent's claim. It likewise held against respondent his execution of a
quitclaim discharging petitioners from any liability in his favor.

The NLRC also denied respondent's Motion for Reconsideration22 in a Resolution dated October 23, 2009.

Respondent thus filed a Petition for Certiorari23 before the CA ascribing grave abuse of discretion on the part of the NLRC in
finding that he was legally dismissed and was afforded due process of law.
Ruling of the Court of Appeals

On July 29, 2011, the CA rendered the assailed Decision, the dispositive portion of which reads:
FOR THESE REASONS, the petition is GRANTED. The NLRC Decision and Resolution dated July 31, 2009 and October 23,
2009, respectively, are ANNULLED and SET ASIDE. The Decision of Labor Arbiter Thelma M. Concepcion dated April 27, 2009
is REINSTATED.

SO ORDERED.24
The CA noted that petitioners dismissed respondent because of his alleged incompetence and/or poor performance, as
indicated in the Report of incompetent action/insubordination/indiscipline. The CA, however, found that this Report was
neither authenticated nor supported by credible evidence. It also found that the Report did not explain or give details as
regards the circumstances surrounding the supposed incompetence and poor performance of respondent.

The CA further emphasized that electronic evidence, such as electronic mails (e-mails), must first be proved and
authenticated before they are received in evidence. It also held that even if such e-mails were admitted in evidence, they
could not support respondent's dismissal as they were based upon the self-serving statements of the officers of petitioners.

The CA likewise held that the subject quitclaim did not preclude the filing of an illegal dismissal case against petitioners. It
also held that while respondent executed a quitclaim, the same was invalid for want of fair and credible consideration.

In the assailed Resolution dated January 2, 2012, the CA denied petitioners' Motion for Reconsideration.25 c ralawre d

Hence, petitioners filed this Petition raising the following issues: chanRoble svi rtual Lawli bra ry

Issues

WHETHER xxx THE RESPONDENT IS ESTOPPED OR BARRED BY LACHES FROM CLAIMING THAT HE WAS ILLEGALLY
DISMISSED SINCE IT TOOK HIM ALMOST TWO (2) YEARS TO MAKE SUCH CLAIM AGAINST THE PETITIONERS.

WHETHER xxx RESPONDENT'S CLAIMED ILLEGAL DISMISSAL IS NEGATED BY HIS ACT OF APPLYING FOR RE-DEPLOYMENT
WITH THE PETITIONERS AND WHICH HE EVEN ARBITRARILY DECLINED WHEN HE WAS SO SCHEDULED TO JOIN THE
CROWLEY VESSEL.

WHETHER xxx RESPONDENT'S CLAIMED ILLEGAL DISMISSAL IS NEGATED BY HIS VOLUNTARILY EXECUTED QUITCLAIM
AFTER HIS REPATRIATION AND IN FAVOR OF THE PETITIONERS.

WHETHER xxx PETITIONERS' ADDUCED EVIDENCE WOULD NOT CONSTITUTE AS SUBSTANTIAL EVIDENCE TO PROVE THE
RESPONDENT'S INCOMPETENCE AND POOR PERFORMANCE AND xxx JUSTIFIED HIS DISMISSAL FROM EMPLOYMENT. 26

Petitioners maintain that respondent was aware of the reason for his repatriation and accepted the cause thereof as shown
by his failure to immediately file a claim against them. Besides, he repeatedly followed up his possible redeployment with
them. He was in fact scheduled for deployment in January 2008, but declined it.

Petitioners also contend that respondent voluntarily executed a quitclaim. This quitclaim was based on sufficient
consideration because they paid him his accrued benefits.

Petitioners likewise posit that respondent's incompetence and poor performance were supported by substantial evidence;
that even in his Position Paper respondent admitted that his work performance did not sit well with the captain; that if it
were not for his poor work performance then the captain would have no reason to reprimand him everyday; and that
respondent could not deny that he was hampered by his stiff right arm in performing his duties. Petitioners assert that they
informed respondent of his poor performance through the aforesaid Report which he declined to receive. They likewise argue
that the entries in the Report were based on entries in the vessel's logbook that deserve consideration.

Petitioners moreover argue that the captain of the previous vessel where respondent was deployed also complained about his
poor performance.

Respondent counters that petitioners illegally dismissed him on September 12, 2007 and he filed a Complaint against them
on August 27, 2008 and that in the intervening dates he claimed from petitioners what was rightfully his but to no avail; and
that the filing of this case against petitioners after more than one year from his repatriation did not prove that his action was
weak.

Respondent also argues that the allegation that he repeatedly followed up his possible re-deployment was petitioners' very
own uncorroborated assertion; and that what he actually followed up with petitioners was his monetary claim for benefits
unjustifiably withheld; that even assuming that he did follow up his possible re-deployment, that does not amount to a
waiver of his right to contest his illegal termination.
More than that, respondent avers that the sum he received pursuant to the quitclaim was much less than what was due him;
that he still had at least eight months of salary and allowance due him amounting to more than US$5,200.00; and that the
settlement of only P32,693.63 was way below the amount he deserved to receive from them.

Respondent takes issue with petitioners' claim that there was substantial evidence to support petitioners' allegation of his
incompetence and poor performance; that the above-cited Report was not credible evidence because the same was not
authenticated; and that for the same reason, the unsigned e-mails relied upon by petitioners were not credible as these were
also unauthenticated.

Our Ruling

It is axiomatic that this Court is not a trier of facts; it reviews only questions of law. As such, in petitions for review
on certiorari, only questions of law may be raised. This rule, nevertheless, admits of exceptions, as in this case where the
factual findings of the LA and the CA, on one hand, and the NLRC, on the other, are at odds. There being contradictory
findings of facts, the Court deigns it right to evaluate the pieces of evidence adduced by the parties and draw conclusions
from them.27

It is settled that the employer has the burden to prove that the dismissal of an employee is based on a valid cause. To
discharge this burden, the employer must present substantial evidence - or such amount of relevant evidence that a
reasonable mind might accept as adequate to support a conclusion - that the cause of the employee's dismissal was
valid.28 Specifically, the employer must comply with the following requisites: (1) the dismissal must be for a just or
authorized cause, and (2) the employee to be dismissed must have been afforded due process of law.29

In this case, petitioners failed to discharge this burden.

Petitioners failed to prove just or authorized cause.

First off, we hold that the due execution of the Report of incompetent action/insubordination/indiscipline was established
considering that both parties adduced it to support their respective positions. On one hand, petitioners relied on this Report
to prove that respondent was validly dismissed. On the other hand, respondent admitted that he was furnished a copy of this
Report but he declined to receive it. Thus, as regards the existence of the subject Report, We find that the same was duly
proved here.

However, the contents of this Report were insufficient bases to dismiss respondent. As stated therein, respondent was
dismissed for the following reasons:
DISMISSAL (Brief Details):
HE HAS AN OBVIOUS HANDICAP WHICH IS A STIFF RIGHT ARM. THIS HANDICAP ALLOWS HIM TO COOK, BUT
[REGRETABLY] IT MAKES MR. CAMPOREDONO [sic] UNABLE TO ALSO SERVE THE MEALS AND CLEAN THE KITCHEN,
MESSROOMS, STORES RESPECTABLE [sic]. WITH ASSISTENCE [sic] OF A MESSMAN HE CAN DO HIS JOB RESPECTIVE
[sic].30
As found by the CA, the Report provided no detailed explanation as regards respondent's supposed incompetence and poor
performance. The CA observed that the Report "did not particularly describe such inability that would lead to the conclusion
that he was incompetent."31 With this observation of the CA, we fully agree.

As a general concept, poor performance is tantamount to inefficiency and incompetence in the performance of official duties.
An unsatisfactory rating can be a just cause for dismissal only if it amounts to gross and habitual neglect of duties. Poor or
unsatisfactory performance of an employee does not necessarily mean that he is guilty of gross and habitual neglect of
duties.32

To ascribe gross neglect, there must be lack of or failure to exercise slight care or diligence, or the total absence of care in
the performance of duties. In other words, there is gross neglect when the employee exhibits thoughtless disregard of
consequences without exerting effort to avoid them.33 On the other hand, habitual neglect involves repeated failure to
perform duties for a certain period of time, depending upon the circumstances, and not mere failure to perform duties in a
single or isolated instance.34

As above-discussed, the Report of incompetent action/insubordination/indiscipline against respondent did not describe the
specific acts that would establish his alleged poor performance, or his want of even slight care in the performance of his
official tasks as chief cook for a certain period of time; hence, even assuming that respondent's performance was
unsatisfactory, petitioners failed to show that his poor performance amounted to gross and habitual neglect of duties.

Moreover, as correctly pointed out by the CA, no credence can be given to the e-mails presented by petitioners to support
respondent's purported incompetence because these e-mails were unauthenticated. In addition, they pertained to the
previous contract of respondent, which is unrelated to this present case.

Petitioners did not comply with the two-notice rule required in dismissing an employee.

To amount to a valid dismissal, an erring seafarer must be handed a written notice of the charge against him and must be
given the opportunity to explain himself unless of course there is a clear and existing danger against the safety of, the crew
or the vessel in which case notice may be dispensed with.35Needless to say, this is not the situation here.
Section 17 of the Philippine Overseas Employment Administration-Standard Terms and Conditions Governing the
Employment of Filipino Seafarers On Board Ocean-Going Vessels (Disciplinary Measures) specifically provides that before an
erring seafarer can be validly dismissed, he must be given by the master of the vessel a written notice stating the charge or
charges against him; and, the date, time and place for a formal investigation of such charge. Thereafter, an investigation or
hearing, duly documented and entered in the ship's logbook, must be conducted to give the seaman the opportunity to
explain or defend himself. If found guilty, the seaman shall be given a written notice of the penalty meted out against him.
with the specific reasons for the penalty so imposed. "Dismissal for just cause may be affected by the Master without
furnishing the seafarer with a notice of dismissal if there is a clear and existing danger to the safety of the crew or the
vessel."36

In this case, no hearing was conducted respecting respondent's alleged incompetence and poor performance, and granting
him opportunity to present countervailing evidence to disprove the charge against him. There was also no showing of
imminent danger to the crew or the vessel, so that the required notice may be dispensed with. True, as stated elsewhere,
the above-mentioned Report could somehow pass as a notice of respondent's dismissal. Nevertheless, as earlier discussed,
the allegations in this Report do not permit the conclusion that respondent was guilty of poor performance and incompetence
that would amount to gross and habitual neglect of duties.

Lastly, the quitclaim that respondent executed did not bar him from filing a complaint for illegal dismissal against petitioners.
Said quitclaim was invalid because it did not fully or completely give or grant respondent what was due him as a matter of
law and justice. It only covered respondent's accrued leave credits and his 3-day travel pay. Such payment involved only a
part or portion of the amount of money actually and justly due him under the law; it was not a full and complete satisfaction
of what is due him under the law.37

In view thereof, we find that the CA did not err in setting aside the Decision of the NLRC and in reinstating that of the LA,
which found respondent to have been illegally dismissed and entitled to his salaries for the unexpired portion of his
employment contract and to attorney's fees of 10% of the total award.38

WHEREFORE, the Petition is DENIED. Accordingly, the Decision dated July 29, 2011 and Resolution dated January 2, 2012
of the Court of Appeals in CA-G.R. SP No. 112079 are AFFIRMED.

SO ORDERED. ch

GR. No. 197472

REPUBLIC OF THE PHILIPPINES, represented by Commander Raymond Alpuerto of the Naval Base Camillo
Osias, Port San Vicente, Sta. Ana, Cagayan, Petitioner,
vs.
REV. CLAUDIO R. CORTEZ, SR., Respondent.

DECISION

DEL CASTILLO, J.:

An inalienable public land cannot be appropriated and thus may not be the proper object of possession. Hence,
injunction cannot be issued in order to protect ones alleged right of possession over the same.

This Petition for Review on Certiorari1 assails the June 29, 2011 Decision2 of the Court of Appeals (CA) in CA-GR.
CV No. 89968, which dismissed the appeal therewith and affirmed the July 3, 2007 Decision3 of the Regional Trial
Court (RTC) of Aparri, Cagayan, Branch 8 in Spl. Civil Action Case No. II-2403.

Factual Antecedents

Respondent Rev. Claudio R. Cortez, Sr. (Rev. Cortez), a missionary by vocation engaged in humanitarian and
charitable activities, established an orphanage and school in Punta Verde, Palaui Island, San Vicente, Sta. Ana,
Cagayan. He claimed that since 1962, he has been in peaceful possession of about 50 hectares of land located in
the western portion of Palaui Island in Sitio Siwangag, Sta. Ana, Cagayan which he, with the help of Aetas and other
people under his care, cleared and developed for agricultural purposes in order to support his charitable,
humanitarian and missionary works.4
On May 22, 1967, President Ferdinand E. Marcos issued Proclamation No. 201 reserving for military purposes a
parcel of the public domain situated in Palaui Island. Pursuant thereto, 2,000 hectares of the southern half portion of
the Palaui Island were withdrawn from sale or settlement and reserved for the use of the Philippine Navy, subject,
however, to private rights if there be any.

More than two decades later or on August 16, 1994, President Fidel V. Ramos issued Proclamation No. 447
declaring Palaui Island and the surrounding waters situated in the Municipality of Sta. Ana, Cagayan as marine
reserve. Again subject to any private rights, the entire Palaui Island consisting of an aggregate area of 7,415.48
hectares was accordingly reserved as a marine protected area.

On June 13, 2000, Rev. Cortez filed a Petition for Injunction with Prayer for the Issuance of a Writ of Preliminary
Mandatory Injunction5 against Rogelio C. Biñas (Biñas) in his capacity as Commanding Officer of the Philippine
Naval Command in Port San Vicente, Sta. Ana, Cagayan. According to him, some members of the Philippine Navy,
1âw phi1

upon orders of Biñas, disturbed his peaceful and lawful possession of the said 50-hectare portion of Palaui Island
when on March 15, 2000, they commanded him and his men, through the use of force and intimidation, to vacate
the area. When he sought assistance from the Office of the Philippine Naval Command, he was met with sarcastic
remarks and threatened with drastic military action if they do not vacate. Thus, Rev. Cortez and his men were
constrained to leave the area. In view of these, Rev. Cortez filed the said Petition with the RTC seeking preliminary
mandatory injunction ordering Biñas to restore to him possession and to not disturb the same, and further, for the
said preliminary writ, if issued, to be made permanent.

Proceedings before the Regional Trial Court

After the conduct of hearing on the application for preliminary mandatory injunction6 and the parties’ submission of
their respective memoranda,7 the RTC issued an Order8 dated February 21, 2002 granting the application for a writ
of preliminary mandatory injunction. However, the same pertained to five hectares (subject area) only, not to the
whole 50 hectares claimed to have been occupied by Rev. Cortez, viz.:

It should be noted that the claim of [Rev. Cortez] covers an area of 50 hectares more or less located at the western
portion of Palaui Island which is within the Naval reservation. [Rev. Cortez] presented what he called as a survey
map (Exh. "H") indicating the location of the area claimed by the Church of the Living God and/or Rev. Claudio
Cortez with an approximate area of 50 hectares identified as Exh. "H-4". However, the Survey Map allegedly
prepared by [a] DENR personnel is only a sketch map[,] not a survey map as claimed by [Rev. Cortez]. Likewise,
the exact boundaries of the area [are] not specifically indicated. The sketch only shows some lines without indicating
the exact boundaries of the 50 hectares claimed by [Rev. Cortez]. As such, the identification of the area and its
exact boundaries have not been clearly defined and delineated in the sketch map. Therefore, the area of 50
hectares that [Rev. Cortez] claimed to have peacefully and lawfully possessed for the last 38 years cannot
reasonably be determined or accurately identified.

For this reason, there is merit to the contention of [Biñas] that [Rev. Cortez]’ claim to the 50 hectares of land
identified as Exh. ["]H-4" is unclear and ambiguous. It is a settled jurisprudence that mandatory injunction is the
strong arm of equity that never ought to be extended unless to cases of great injury, where courts of law cannot
afford an adequate and commensurate remedy in damages. The right must be clear, the injury impending or
threatened, so as to be averted only by the protecting preventive process of injunction. The reason for this doctrine
is that before the issue of ownership is determined in the light of the evidence presented, justice and equity demand
that the [status quo be maintained] so that no advantage may be given to one to the prejudice of the other. And so it
was ruled that unless there is a clear pronouncement regarding ownership and possession of the land, or unless the
land is covered by the torrens title pointing to one of the parties as the undisputed owner, a writ of preliminary
injunction should not issue to take the property out of possession of one party to place it in the hands of another x x
x.

Admittedly, the documentary exhibits of [Rev. Cortez] tended only to show that [he] has a pending application of
patent with the DENR. Even so, [Rev. Cortez] failed to present in evidence the application for patent allegedly filed
by [him] showing that he applied for patent on the entire 50 hectares of land which he possessed or occupied for a
long period of time. Under the circumstances, therefore, the title of petitioner to the 50 hectares of land in Palaui
Island remains unclear and doubtful, and [is] seriously disputed by the government.
More significantly, at the time that Proc. No. 201 was issued on May 22, 1967, [Rev. Cortez] has not perfected his
right over the 50 hectares of land nor acquired any vested right thereto considering that he only occupied the land
as alleged by him in 1962 or barely five (5) years before the issuance of the Presidential Proclamation. Proclamation
No. 201 had the effect of removing Palaui Island from the alienable or disposable portion of the public domain and
therefore the island, as of the date of [the] issuance [of the proclamation], has ceased to be disposable public land.

However, the court is not unmindful that [Rev. Cortez] has lawfully possessed and occupied at least five (5) hectares
of land situated at the western portion of the Palaui Island identified as Exh "H-4". During the hearing, Cmdr.

Rogelio Biñas admitted that when he was assigned as Commanding Officer in December 1999, he went to Palaui
Island and [saw only] two (2) baluga families tilling the land consisting of five (5) hectares. Therefore, it cannot be
seriously disputed that [Rev. Cortez] and his baluga tribesmen cleared five (5) hectares of land for planting and
cultivation since 1962 on the western portion identified as Exhibit "H-4". The Philippine Navy also admitted that they
have no objection to settlers of the land prior to the Presidential Proclamation and [Rev. Cortez] had been identified
as one of the early settlers of the area before the Presidential Proclamation. The DENR also acknowledged that
[Rev. Cortez] has filed an application for patent on the western area and that he must be allowed to pursue his
claim.

Although the court is not persuaded by the argument of [Rev. Cortez] that he has already acquired vested rights
over the area claimed by him, the court must recognize that [Rev. Cortez] may have acquired some propriety rights
over the area considering the directive of the DENR to allow [Rev. Cortez] to pursue his application for patent.
However, the court wants to make clear that the application for patent by [Rev. Cortez] should be limited to an area
not to exceed five (5) hectares situated at the western portion of x x x Palaui Island identified in the sketch map as
Exh. "H-4." This area appears to be the portion where [Rev. Cortez] has clearly established his right or title by
reason of his long possession and occupation of the land.9

In his Answer,10 Biñas countered that: (1) Rev. Cortez has not proven that he has been in exclusive, open,
continuous and adverse possession of the disputed land in the concept of an owner; (2) Rev. Cortez has not shown
the exact boundaries and identification of the entire lot claimed by him; (3) Rev. Cortez has not substantiated his
claim of exemption from Proclamation No. 201; (4) under Proclamation No. 447, the entire Palaui Island, which
includes the land allegedly possessed and occupied by Rev. Cortez, was reserved as a marine protected area; and,
(4) injunction is not a mode to wrest possession of a property from one person by another.

Pre-trial and trial thereafter ensued.

On July 3, 2007, the RTC rendered its Decision11 making the injunction final and permanent. In so ruling, the said
court made reference to the Indigenous Peoples’ [Right] Act (IPRA) as follows:

The Indigenous [Peoples’ Right] Act should be given effect in this case. The affected community belongs to the
group of indigenous people which are protected by the State of their rights to continue in their possession of the
lands they have been tilling since time immemorial. No subsequent passage of law or presidential decrees can
alienate them from the land they are tilling.12

Ultimately, the RTC held, thus:

WHEREFORE, finding the petition to be meritorious, the same is hereby GRANTED.

xxxx

SO DECIDED.13

Representing Biñas, the Office of the Solicitor General (OSG) filed a Notice of Appeal14 which was given due course
by the RTC in an Order15 dated August 6, 2007.

Ruling of the Court of Appeals


In its brief,16 the OSG pointed out that Rev. Cortez admitted during trial that he filed the Petition for injunction on
behalf of the indigenous cultural communities in Palaui Island and not in his capacity as pastor or missionary of the
Church of the Living God. He also claimed that he has no interest over the land. Based on these admissions, the
OSG argued that the Petition should have been dismissed outright on the grounds that it did not include the name of
the indigenous cultural communities that Rev. Cortez is supposedly representing and that the latter is not the real
party-in-interest. In any case, the OSG averred that Rev. Cortez failed to show that he is entitled to the issuance of
the writ of injunction. Moreover, the OSG questioned the RTC’s reference to the IPRA and argued that it is not
applicable to the present case since Rev. Cortez neither alleged in his Petition that he is claiming rights under the
said act nor was there any showing that he is a member of the Indigenous Cultural Communities and/or the
Indigenous Peoples as defined under the IPRA.

In its Decision17 dated June 29, 2011, the CA upheld the RTC’s issuance of a final injunction based on the following
ratiocination:

The requisites necesary for the issuance of a writ of preliminary injunction are: (1) the existence of a clear and
unmistakable right that must be protected; and (2) an urgent and paramount necessity for the writ to prevent serious
damage. Here, [Rev. Cortez] has shown the existence of a clear and unmistakable right that must be protected and
an urgent and paramount necessity for the writ to prevent serious damage. Records reveal that [Rev. Cortez] has
been in peaceful possession and occupation of the western portion of Palaui Island, Sitio Siwangag, San Vicente,
Sta. Ana[,] Cagayan since 1962 or prior to the issuance of Proclamation Nos. 201 and 447 in 1967 and 1994,
respectively. There he built an orphanage and a school for the benefit of the members of the Dumagat Tribe, in
furtherance of his missionary and charitable works. There exists a clear and unmistakable right in favor [of Rev.
Cortez] since he has been in open, continuous and notorious possession of a portion of Palaui island. To deny the
issuance of a writ of injunction would cause grave and irreparable injury to [Rev. Cortez] since he will be displaced
from the said area which he has occupied since 1962. It must be emphasized that Proclamation Nos. 201 and 447
stated that the same are subject to private rights, if there be [any]. Though Palaui Island has been declared to be
part of the naval reservation and the whole [i]sland as a marine protected area, both recognized the existence of
private rights prior to the issuance of the same.

From the foregoing, we rule that the trial court did not err when it made permanent the writ of preliminary mandatory
injunction. Section 9, Rule 58 of the Rules of Court provides that if after the trial of the action it appears that the
applicant is entitled to have the act or acts complained of permanently enjoined, the court shall grant a final
injunction perpetually restraining the party or person enjoined from the commission or continuance of the act or acts
or confirming the preliminary mandatory injunction.18

Anent the issue of Rev. Cortez not being a real party-in-interest, the CA noted that this was not raised before the
RTC and therefore cannot be considered by it. Finally, with respect to the RTC’s mention of the IPRA, the CA found
the same to be a mere obiter dictum.

The dispositive portion of the CA Decision reads:

WHEREFORE, premise[s] considered, the instant Appeal is hereby DENIED. The assailed 3 July 2007 Decision of
the Regional Trial Court of Aparri, Cagayan, Branch 8 in Civil Case No. II-2403 is AFFIRMED.

SO ORDERED.19

Hence, this Petition brought by the OSG on behalf of the Republic of the Philippines (the Republic).

The Issue

The ultimate issue to be resolved in this case is whether Rev. Cortez is entitled to a final writ of mandatory
injunction.

The Parties’ Arguments

The bone of contention as the OSG sees it is the injunctive writ since Rev. Cortez failed to prove his clear and
positive right over the 5-hectare portion of Palaui Island covered by the same. This is considering that by his own
admission, Rev. Cortez started to occupy the said area only in 1962. Hence, when the property was declared as a
military reserve in 1967, he had been in possession of the 5-hectare area only for five years or short of the 30-year
possession requirement for a bona fide claim of ownership under the law. The OSG thus argues that the phrase
"subject to private rights" as contained in Proclamation No. 201 and Proclamation No. 447 cannot apply to him since
it only pertains to those who have already complied with the requirements for perfection of title over the land prior to
the issuance of the said proclamations.

Rev. Cortez, for his part, asserts that the arguments of the OSG pertaining to ownership are all immaterial as his
Petition for injunction does not involve the right to possess based on ownership but on the right of possession which
is a right independent from ownership. Rev. Cortez avers that since he has been in peaceful and continuous
possession of the subject portion of Palaui Island, he has the right of possession over the same which is protected
by law. He asserts that based on this right, the writ of injunction was correctly issued by the RTC in his favor and
aptly affirmed by the CA. On the technical side, Rev. Cortez avers that the Republic has no legal personality to
assail the CA Decision through the present Petition since it was not a party in the appeal before the CA.

The Court’s Ruling

We grant the Petition.

For starters, the Court shall distinguish a preliminary injunction from a final injunction.

"Injunction is a judicial writ, process or proceeding whereby a party is directed either to do a particular act, in which
case it is called a mandatory injunction, [as in this case,] or to refrain from doing a particular act, in which case it is
called a prohibitory injunction."20 "It may be the main action or merely a provisional remedy for and as an incident in
the main action."21

"The main action for injunction is distinct from the provisional or ancillary remedy of preliminary injunction." 22 A
preliminary injunction does not determine the merits of a case or decide controverted facts.23 Since it is a mere
preventive remedy, it only seeks to prevent threatened wrong, further injury and irreparable harm or injustice until
the rights of the parties are settled.24 "It is usually granted when it is made to appear that there is a substantial
controversy between the parties and one of them is committing an act or threatening the immediate commission of
an act that will cause irreparable injury or destroy the status quo of the controversy before a full hearing can be had
on the merits of the case."25 A preliminary injunction is granted at any stage of an action or proceeding prior to
judgment or final order.26 For its issuance, the applicant is required to show, at least tentatively, that he has a right
which is not vitiated by any substantial challenge or contradiction.27 Simply stated, the applicant needs only to show
that he has the ostensible right to the final relief prayed for in his complaint.28 On the other hand, the main action for
injunction seeks a judgment that embodies a final injunction.29 A final injunction is one which perpetually restrains the
party or person enjoined from the commission or continuance of an act, or in case of mandatory injunctive writ, one
which confirms the preliminary mandatory injuction.30 It is issued when the court, after trial on the merits, is
convinced that the applicant is entitled to have the act or acts complained of permanently enjoined.31 Otherwise
stated, it is only after the court has come up with a definite pronouncement respecting an applicant’s right and of the
act violative of such right, based on its appreciation of the evidence presented, that a final injunction is issued. To be
a basis for a final and permanant injunction, the right and the act violative thereof must be established by the
applicant with absolute certainty.32

What was before the trial court at the time of the issuance of its July 3, 2007 Decision is whether a final injunction
should issue. While the RTC seemed to realize this as it in fact made the injunction permanent, the Court, however,
finds the same to be wanting in basis.

Indeed, the RTC endeavored to provide a narrow distinction between a preliminary injunction and a final injunction.
Despite this, the RTC apparently confused itself. For one, what it cited in its Decision were jurisprudence relating to
preliminary injunction and/or mandatory injunction as an ancillary writ and not as a final injunction. At that point, the
duty of the RTC was to determine, based on the evidence presented during trial, if Rev. Cortez
has conclusively established his claimed right (as opposed to preliminary injunction where an applicant only needs
to at least tentatively show that he has a right) over the subject area. This is considering that the existence of such
right plays an important part in determining whether the preliminary writ of mandatory injunction should be
confirmed.
Surprisingly, however, the said Decision is bereft of the trial court’s factual findings on the matter as well as of its
analysis of the same vis-a-vis applicable jurisprudence. As it is, the said Decision merely contains a restatement of
the parties’ respective allegations in the Complaint and the Answer, followed by a narration of the ensuing
proceedings, an enumeration of the evidence submitted by Rev. Cortez, a recitation of jurisprudence relating to
preliminary injunction and/or specifically, to mandatory injunction as an ancillary writ, a short reference to the IPRA
which the Court finds to be irrelevant and finally, a conclusion that a final and permanent injunction should issue. No
discussion whatsoever was made with respect to whether Rev. Cortez was able to establish with absolute certainty
hisclaimed right over the subject area.

Section 14, Article VIII of the Constitution, as well as Section 1 of Rule 36 and Section 1, Rule 120 of the Rules on
Civil Procedure, similarly state that a decision, judgment or final order determining the merits of the case shall state,
clearly and distinctly, the facts and the law on which it is based. Pertinently, the Court issued on January 28, 1988
Administrative Circular No. 1, which requires judges to make complete findings of facts in their decision, and
scrutinize closely the legal aspects of the case in the light of the evidence presented, and avoid the tendency to
generalize and to form conclusion without detailing the facts from which such conclusions are deduced.33

Clearly, the Decision of the RTC in this case failed to comply with the aforestated guidelines.

In cases such as this, the Court would normally remand the case to the court a quo for compliance with the form and
substance of a Decision as required by the Constitution. In order, however, to avoid further delay, the Court deems it
proper to resolve the case based on the merits.34

"Two requisites must concur for injunction to issue: (1) there must be a right to be protected and (2) the acts against
which the injunction is to be directed are violative of said right."35 Thus, it is necessary that the Court initially
determine whether the right asserted by Rev. Cortez indeed exists. As earlier stressed, it is necessary that such
right must have been established by him with absolute certainty.

Rev. Cortez argues that he is entitled to the injunctive writ based on the right of possession (jus possesionis) by
reason of his peaceful and continuous possession of the subject area since 1962. He avers that as this right is
protected by law, he cannot be peremptorily dispossessed therefrom, or if already dispossessed, is entitled to be
restored in possession. Hence, the mandatory injunctive writ was correctly issued in his favor.

Jus possessionis or possession in the concept of an owner36 is one of the two concepts of possession provided
under Article 52537 of the Civil Code. Also referred to as adverse possession,38 this kind of possesion is one which
can ripen into ownership by prescription.39 As correctly asserted by Rev. Cortez, a possessor in the concept of an
owner has in his favor the legal presumption that he possesses with a just title and he cannot be obliged to show or
prove it.40 In the same manner, the law endows every possessor with the right to be respected in his possession.41

It must be emphasized, however, that only things and rights which are susceptible of being appropriated may be the
object of possession.42 The following cannot be appropriated and hence, cannot be possessed: property of the public
dominion, common things (res communes) such as sunlight and air, and things specifically prohibited by law.43

Here, the Court notes that while Rev. Cortez relies heavily on his asserted right of possession, he, nevertheless,
failed to show that the subject area over which he has a claim is not part of the public domain and therefore can be
the proper object of possession.

Pursuant to the Regalian Doctrine, all lands of the public domain belong to the State.44 Hence, "[a]ll lands not
appearing to be clearly under private ownership are presumed to belong to the State. Also, public lands remain part
of the inalienable land of the public domain unless the State is shown to have reclassified or alienated them to
private persons."45 To prove that a land is alienable, the existence of a positive act of the government, such as
presidential proclamation or an executive order; an administrative action; investigation reports of Bureau of Lands
investigators; and a legislative act or a statute declaring the land as alienable and disposable must be established.46

In this case, there is no such proof showing that the subject portion of Palaui Island has been declared alienable and
disposable when Rev. Cortez started to occupy the same. Hence, it must be considered as still inalienable public
domain. Being such, it cannot be appropriated and therefore not a proper subject of possession under Article 530 of
the Civil Code. Viewed in this light, Rev. Cortez’ claimed right of possession has no leg to stand on. His possession
of the subject area, even if the same be in the concept of an owner or no matter how long, cannot produce any legal
effect in his favor since the property cannot be lawfully possessed in the first place.

The same goes true even if Proclamation No. 201 and Proclamation No. 447 were made subject to private rights.
The Court stated in Republic v. Bacas,47 viz.:

Regarding the subject lots, there was a reservation respecting ‘private rights.’ In Republic v. Estonilo, where the
Court earlier declared that Lot No. 4319 was part of the Camp Evangelista Military Reservation and, therefore, not
registrable, it noted the proviso in Presidential Proclamation No. 265 requiring the reservation to be subject to
private rights as meaning that persons claiming rights over the reserved land were not precluded from proving their
claims. Stated differently, the said proviso did not preclude the LRC from determining whether x x x the respondents
indeed had registrable rights over the property.

As there has been no showing that the subject parcels of land had been segregated from the military
reservation, the respondents had to prove that the subject properties were alienable or disposable land of
the public domain prior to its withdrawal from sale and settlement and reservation for military purposes
under Presidential Proclamation No. 265. The question is primordial importance because it is determinative if the
land can in fact be subject to acquisitive prescription and, thus, registrable under the Torrens system. Without first
determining the nature and character of the land, all other requirements such as length and nature of
possession and occupation over such land do not come into play. The required length of possession does
not operate when the land is part of the public domain.

In this case, however, the respondents miserably failed to prove that, before the proclamation, the subject lands
were already private lands. They merely relied on such ‘recognition’ of possible private rights. In their application,
they alleged that at the time of their application, they had been in open, continuous, exclusive and notorious
possession of the subject parcels of land for at least thirty (30) years and became its owners by prescription. There
was, however, no allegation or showing that the government had earlier declared it open for sale or settlement, or
that it was already pronounced as inalienable and disposable.48

In view of the foregoing, the Court finds that Rev. Cortez failed to conclusively establish his claimed right over the
subject portion of Palaui Island as would entitle him to the issuance of a final injunction.

Anent the technical issue raised by Rev. Cortez, i. e, that the Republic has no personality to bring this Petition since
it was not a party before the CA, the Court deems it prudent to set aside this procedural barrier. After all, "a party's
standing before [the] Court is a [mere] procedural technicality which may, in the exercise of [its] discretion, be set
aside in view of the importance of the issue raised."49

We note that Rev. Cortez alleged that he sought the injunction so that he could continue his humanitarian works.
However, considering that inalienable public land was involved, this Court is constrained to rule in accordance with
the aforementioned.

WHEREFORE, the Petition is GRANTED. The June 29, 2011 Decision of the Court of Appeals in CA-GR. CV No.
89968 denying the appeal and affirming the July 3, 2007 Decision of the Regional Trial Court of Aparri, Cagayan-
Branch 08 in Spl. Civil Action Case No. II-2403, is REVERSED and SET ASIDE. Accordingly, the final injunction
issued in this case is ordered DISSOLVED and the Petition for Injunction in Spl. Civil Action Case No. II-
2403, DISMISSED.

SO ORDERED.

SECOND DIVISION

G.R. No. 198426, September 02, 2015

REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE PHILIPPINE OVERSEAS EMPLOYMENT ADMINISTRATION


(POEA), Petitioner, v. PRINCIPALIA MANAGEMENT AND PERSONNEL CONSULTANTS, INC., Respondent.

DECISION
DEL CASTILLO, J.:

This Petition for Review on Certiorari1 assails the April 4, 2011 Decision2 of the Court of Appeals (CA) in CA-G.R. SP No.
111874 which denied the Petition for Certiorari and Prohibition3 filed therein by petitioner Republic of the Philippines (the
Republic), through the Philippine Overseas Employment Administration (POEA), questioning the Orders4 dated July 28, 2009
and October 5, 2009 of the Regional Trial Court (RTC) of Mandaluyong City, Branch 212 in Civil Case No. MC09-4043. Also
assailed is the August 31, 2011 CA Resolution5 which denied the Republic's Motion for Reconsideration thereto.

Factual Antecedents

In the Order6 of June 8, 2009 in POEA Case No. RV 07-03-0442, respondent Principalia Management and Personnel
Consultants, Inc. (Principalia), a recruitment agency, was found by the POEA to have collected from complainant Alejandro
Ramos an excessive placement fee. It was thus declared to have violated Section 2(b), Rule I, Part VI 7 of the 2002 POEA
Rules and Regulations (POEA Rules), a serious offense which carries the penalty of cancellation of license for the first
offense.8 Accordingly, upon Principalia's receipt of the aforesaid Order on June 24, 2009, the POEA immediately cancelled its
license based on Section 5, Rule V, Part VI of the POEA Rules, viz.: ChanRoble svi rtual Lawli bra ry

Stay of Execution. The decision of the Administration shall be stayed during the pendency of the appeal; Provided that
where the penalty imposed carries the maximum penalty of twelve months suspension or cancellation of
license, the decision shall be immediately executory despite the pendency of the appeal.

Provided further that where the penalty imposed is suspension of license for one month or less, the decision shall be
immediately executory and may only be appealed on ground of grave abuse of discretion. (Emphasis supplied)

Two days later or on June 26, 2009, Principalia sought to stay the implementation of the June 8, 2009 POEA Order by filing
with the RTC of Mandaluyong City a Complaint for Injunction with Application for Issuance of a Temporary Restraining Order
(TRO) and/or Writ of Preliminary Prohibitory and Mandatory Injunction.9 It contended that the immediate cancellation of its
license not only deprived it of due process but also jeopardized the deployment of hundreds of overseas Filipino workers.
That same day, the Executive Judge of RTC Mandaluyong issued a 72-hour TRO10 to allow the deployment of six workers who
were already scheduled to leave for work abroad.

In the meantime, Principalia appealed the June 8, 2009 POEA Order with the Office of the Secretary of the Department of
Labor and Employment (DOLE Secretary) on July 8, 2009.11 cralaw rednad

On July 22, 2009, POEA filed with the RTC a Motion to Dismiss12 based on the grounds of lack of jurisdiction, failure to
exhaust administrative remedies and forum-shopping. According to it, (1) it is the DOLE Secretary and not the RTC which
has jurisdiction over cases assailing POEA Orders which direct the cancellation of license of a recruitment agency; (2)
assuming that the RTC has jurisdiction, Principalia nevertheless failed to exhaust administrative remedies since it failed to
first seek recourse from the DOLE; and, (3) Principalia committed forum-shopping when it also later appealed the June 8,
2009 POEA Order with the DOLE.

Ruling of the Regional Trial Court

In its July 28, 2009 Order,13 the RTC rejected POEA's arguments in its Motion to Dismiss. It held that: 1) it was conferred
jurisdiction over injunction actions by Section 21 of Batas Pambansa Blg. 129 (BP 129), or the Judiciary Reorganization Act of
1980, as amended by Republic Act No. 7691 (RA 7691); 2) the case falls under the exception to the rule on exhaustion of
administrative remedies since it appears that Principalia may suffer irreparable damage as a result of the immediate
cancellation of its license; and, 3) there is no forum-shopping because there is neither identity of parties nor identity of relief
between the injunction case and the appeal before the DOLE. Hence, the RTC denied the said motion.

POEA moved for reconsideration14 but the RTC remained unconvinced of its contentions that it denied the same in its October
5, 2009 Order.15 cra lawredna d

Recapitulating the arguments in the said Motion to Dismiss, the Republic, through the POEA, questioned by way of Petition
for Certiorari and Prohibition16 the aforementioned July 28, 2009 and October 5, 2009 Orders of the RTC before the CA.

Ruling of the Court of Appeals

In its April 4, 2011 Decision,17 the CA debunked the argument of the Republic that the injunction case is in reality an action
for the reversal of the POEA's order of cancellation of license over which the DOLE Secretary has jurisdiction. It explained
that contrary to the Republic's contention, the injunction case is only meant to determine the legality or propriety of the
immediate cancellation of Principalia's license. This is pursuant to Principalia's claim that under the 2002 POEA Rules, it has
the right to be protected from an unwarranted immediate execution of a cancellation order. Thus, pursuant to BP 129 which
confers upon the RTC jurisdiction over actions for injunction, the trial court correctly assumed jurisdiction over the injunction
case. The CA further noted that the RTC had not even ruled yet on the merits of the injunction case and thus, the Republic
cannot claim that the latter already intruded into a matter that falls under the exclusive realm of authority of the DOLE
Secretary. Lastly, it opined that the provisions of the 2002 POEA Rules upon which the Republic heavily relies cannot deprive
the regular courts of jurisdiction to entertain an injunction complaint. Accordingly, the CA found no grave abuse of discretion
on the part of the RTC in issuing its assailed Orders.

In a Resolution18 dated August 31, 2011, the CA stood its ground by denying the Republic's Motion for Reconsideration.

Unrelenting in its opinion that the RTC should have dismissed outright the injunction suit, the Republic filed this Petition on
October 20, 2011.

However, on May 22, 2013, Principalia, filed a Motion to Dismiss (With Leave of Court)19 before the RTC. It averred that due
to the length of time that the case has been pending, it is no longer interested in pursuing the same. Aside from this,
Principalia believed that the issues involved in this case have already become moot and academic in view of the subsequent
renewal of its license. It thus prayed that its action for injunction be dismissed pursuant to Section 2,20 Rule 17 of the Rules
of Court. On June 5, 2013, the RTC granted the motion and dismissed the case.21 cralawred nad

The Parties' Arguments

Principalia, aside from refuting the substantial arguments of the Republic, asserts that the present Petition is already moot
and academic. This is in view of the fact that its 2007 license which was ordered cancelled by the POEA had already long
expired and in fact has been renewed by the POEA many times over. Principalia thus asserts that a ruling on this Petition will
no longer be of practical value considering that the subject matter that Principalia then sought to enjoin was the immediate
enforcement of the POEA Order cancelling its 2007 license. For this reason, the Petition should be dismissed.22 cra lawredna d

The Republic, on the other hand, argues that the renewal of Principal's license does not bar this Court from ruling on the
matters raised in the Petition. Even assuming that the Petition has indeed become moot and academic, the case at bench
falls under the exceptions that authorize courts to pass upon questions that are already moot. To farther convince the Court,
the Republic avers that in view of the plethora of pending similar cases that seek injunction from regular courts, the
resolution of the instant Petition is necessary in settling once and for all which between the DOLE Secretary and the RTC has
jurisdiction over actions assailing a POEA Order that involves immediate enforcement of penalties for serious offenses such
as cancellation of license. The Republic likewise buttresses its other arguments that Principalia failed to exhaust
administrative remedies when it directly filed the injunction case with the RTC and that it committed forum-shopping.23 c ralawred nad

Issue

The central issue in this case is whether the RTC has jurisdiction over the injunction case.

Our Ruling

At the outset, it must be noted that the Petition is dismissible for being moot and academic. It should be recalled that what
impelled Principalia to file the main action for injunction was the June 8, 2009 POEA Order directing the immediate
cancellation of its license. Since Principalia could not then engage in recruitment activities because of the said Order, it
resorted to the RTC to question and seek to enjoin such immediate cancellation for the obvious reason that it wanted to
continue the operation of its business. Significantly, however, Principalia, to date, is a POEA-accredited recruitment agency
licensed to do business until April 1, 2016.24 As things stand, therefore, Principalia has no more claim for relief against POEA
since this has been mooted by the latter's renewal of its license to do business. In fact and as mentioned, Principalia already
moved for the dismissal of the injunction case before the RTC which the said court correctly granted.

"A case becomes moot and academic when, by virtue of supervening events, there is no more actual controversy between
the parties and no useful purpose can be served in passing upon the merits."25 In Arevalo v. Planters Development
cralawred

Bank,26 the Court expounded: ChanRoblesv irt ual Lawlib rary

The Constitution provides that judicial power 'includes the duty of the courts of justice to settle actual controversies involving
rights which are legally demandable and enforceable.' The exercise of judicial power requires an actual case calling
for it. The courts have no authority to pass upon issues through advisory opinions, or to resolve hypothetical or feigned
problems or friendly suits collusively arranged between parties without real adverse interests. Furthermore, courts do not sit
to adjudicate mere academic questions to satisfy scholarly interest, however intellectually challenging. As a condition
precedent to the exercise of judicial power, an actual controversy between litigants must first exist. An actual
case or controversy involves a conflict of legal rights, an assertion of opposite legal claims susceptible of judicial resolution,
as distinguished from a hypothetical or abstract difference or dispute. There must be a contrariety of legal rights that can be
interpreted and enforced on the basis of existing law and jurisprudence. (Emphases supplied)

However, the Court agrees with the Republic that while the case has indeed been rendered moot, it can still pass upon the
main issue for the guidance of both bar and bench. It is settled that courts will decide a question otherwise moot and
academic if the case is capable of repetition yet evading review.27 c ralawre dnad

In stressing that the RTC is bereft of jurisdiction to entertain the injunction case, the Republic avers that it is the POEA which
has original and exclusive jurisdiction to hear and decide all pre-employment cases which are administrative in character
involving or arising out of violations of recruitment regulations, or violations of conditions for the issuance of license to recruit
workers, under Section 3(d) of Executive Order No. 24728 (EO 247) and as reiterated in Section 1, Rule I, Part VI of the 2002
POEA Rules.29 On the other hand, the remedy of an appeal/petition for review of an Order issued by the POEA in the exercise
of such exclusive jurisdiction is lodged exclusively with the DOLE Secretary as provided under Section 1, Rule V, Part VI of
the 2002 POEA Rules.30 Notably, however, nothing in EO 247 and the 2002 POEA Rules relied upon by the Republic provides
for the grant to a recruitment agency of an injunctive relief from the immediate execution of penalties for serious offenses
(e.g., cancellation to operate, suspension of license for a maximum period of 12 months). Conversely, they do not deprive
the courts of the power to entertain injunction petitions to stay the execution of a POEA order imposing such penalties.

The Court thus agrees with the CA in holding that the RTC can take cognizance of the injunction complaint, which "is a suit
which has for its purpose the enjoinment of the defendant, perpetually or for a particular time, from the commission or
continuance of a specific act, or his compulsion to continue performance of a particular act."31 Actions for injunction and
damages lie within the exclusive and original jurisdiction of the RTC pursuant to Section 1932 of Batas Pambansa Blg. 129,
otherwise known as the Judiciary Reorganization Act of 1980, as amended by RA 7691.33 cralaw rednad

While "[w]ell-entrenched is the rule that courts will not interfere in matters which are addressed to the sound discretion of
the government agency entrusted with the regulation of activities coming under the special and technical training and
knowledge of such agency,"34 it is not entirely correct to say that an action by an administrative agency, such as in the case
at bar, cannot be questioned in an injunction suit. It has been held that "[c]ourts cannot enjoin an agency from performing
an act within its prerogative, except when in the exercise of its authority it gravely abused or exceeded its
jurisdiction."35Indeed, administrative decisions on matters within the executive jurisdiction can be set aside on proof of grave
abuse of discretion, fraud, or error of law, and in such cases, injunction may be granted.36 cralaw rednad

The Republic further argues that Principalia committed forum-shopping when it sought relief both from the RTC and the DOLE
Secretary. The Court, however, finds otherwise. What Principalia questioned before the DOLE Secretary was the merits of the
case which brought about the POEA's issuance of its order cancelling Principalia's license. Whereas before the RTC, the relief
sought by Principalia is limited to enjoining the POEA from immediately enforcing such cancellation. Clearly, the reliefs
sought by Principalia from the two fora were different and this negates forum-shopping.37 Neither would the RTC, in resolving
the injunction suit, encroach upon the DOLE Secretary's authority since Principalia was not asking the said court to prohibit
the DOLE Secretary from resolving the appeal before it or for Principalia to be allowed to continue operating its business
regardless of the judgment in the appeal.

Anent the failure of Principalia to observe the principle of exhaustion of administrative remedies, suffice it to say that this
principle admits of exceptions,38 and notably, Principalia raised one of these exceptions, i.e., deprivation of due process, as
an issue in its suit. And since this issue is a question of fact which the Court can only determine after the trial is had, the RTC
was correct in not dismissing the case and in allowing the same to proceed to trial. Significantly, this likewise goes true with
respect to the main relief for injunction. As the elements for its issuance, i.e., (1) there must be a right to be protected; and
(2) the acts against which the injunction is to be directed are violative of said right,39 are matters that must be proved during
trial, the RTC merely acted in its judicial sphere when it proceeded to try the case.

WHEREFORE, the instant Petition is DENIED. The April 4, 2011 Decision and August 31, 2011 Resolution of the Court of
Appeals in CA-G.R. SP No. 111874 are AFFIRMED.

SO ORDERED. chanrobles virtuallawlibrary

SECOND DIVISION

G.R. No. 203142, August 26, 2015

THE PHILIPPINE PORTS AUTHORITY (PPA), Petitioner, v. COALITION OF PPA OFFICERS AND EMPLOYEES,
REPRESENTED BY HECTOR E. MIOLE, ET AL., Respondents.

DECISION

DEL CASTILLO, J.:

This Petition for Review on Certiorari1 seeks to set aside the July 27, 2011 Decision2 of the Court of Appeals (CA) dismissing
herein petitioner Philippine Ports Authority's (PPA) Petition for Certiorari in CA-G.R SP No. 03843, as well as theCA's August
10, 2012 Resolution3 denying reconsideration of its assailed Decision.

Factual Antecedents

Petitioner is a government-owned and -controlled corporation in charge of port administration and operation in the country.
Respondent Coalition of PPA Officers and Employees, represented by Hector E. Miole, is an aggrupation of PPA employees set
up as a result of the instant case.

In an Amended Petition for Mandamus with Damages4 filed on February 28, 2008 before the Cebu City Regional Trial Court
(RTC), docketed as Civil Case No. CEB-33982, and assigned to RTC Branch 21, respondent sought mainly to compel
petitioner to pay all its employees cost of living allowance (COLA) and amelioration allowance (AA), pursuant to the mandate
of Republic Act No. 67585 (RA 6758). Respondent claimed that the payment of these allowances were withheld by petitioner
on July 15, 1999.
Petitioner filed its Amended Answer with Compulsory Counterclaim.6 As special and affirmative defenses, it argued that
respondent had no legal standing to file the Petition since it did not secure the required powers of attorney from the PPA
employees and that it is not the recognized representative or bargaining/negotiating agent of the employees. Petitioner
alleged that there is another pending case between the parties involving the same subject matter and issues and that the
official documents which constitute the basis for filing the Petition are hearsay as they were obtained without petitioner's
authority/clearance. Moreover, there was no prior demand for the fulfillment of the alleged obligation sued upon. It also
asserted that res judicata exists and that there is no cause of action against it, as COLA and AA payments to the employees
were discontinued on March 16, 1999 pursuant to 1) Section 4 of DBM (Department of Budget and Management) Corporate
Compensation Circular No. 10 (DBM CCC 10), implementing Section 12 of RA 6758 which provides that all allowances, except
those specifically excluded and enumerated in said Section,7 shall be deemed included or integrated in the standardized
salary rates prescribed by said law, and 2) the ruling in Philippine Ports Authority (PPA) Employees Hired After July 1, 1989
v. Commission on Audit8 which states that the integration of COLA and AA into the standardized salaries of the PPA
employees became effective on March 16, 1999. Thus, as of said date, PPA employees were no longer entitled to receive
these two allowances. Petitioner also claimed that mandamus will not lie against the clear mandate of RA 6758 and DBM CCC
10; that respondent failed to exhaust all administrative remedies relative to its claim; that respondent is guilty of laches for
filing the case only in 2008, when the COLA and AA were discontinued in March 1999; and that the case is really for a sum of
money, which thus requires the payment of the appropriate docket fees corresponding to the amount of COLA and AA being
claimed.

During the preliminary conference, petitioner moved to set the case for hearing on its affirmative defenses. The parties were
directed to submit their respective memoranda relative to the motion, and to attend the mediation which was scheduled on
May 27, 2008. The parties thus submitted memoranda9and attended the scheduled mediation.

Ruling of the Regional Trial Court

On June 27, 2008, the RTC issued an Order,10 stating as follows: Lawl ib raryofCRAlaw

Upon examination and review of the records, this Court has found that the instant case refers to a petition for mandamus
with damages filed by the petitioner, thru counsel. It seeks to compel respondent PPA to integrate the amount of Cost of
Living Allowance (COLA) and Amelioration Allowance (AA) into the basic salaries of the petitioners as of July 15, 1999, the
corresponding differentials, and to continue paying them. Respondent PPA filed its Answer with Counterclaim with Special
and Affirmative Defenses (such answer was subsequently amended). Upon order of this Court, parties also submitted their
respective memoranda amplifying their stand on the Special and Affirmative Defenses, apart from some written
manifestations. After evaluation, this Court now believes that it can render judgment based on the pleadings submitted by
the parties without further hearings.

Accordingly, and in order to expedite the disposition of this case, this Court hereby orders the parties to submit their
respective memoranda within thirty (30) days from notice hereof, after which, this case will be deemed submitted for
decision.

Furnish copies of this Order to the counsels of the parties. SO ORDERED.11

Petitioner filed its Motion for Reconsideration12 praying that a hearing on its motion be conducted first before the submission
of memoranda. It argued that there is need to present evidence relative to the actual number or membership of the coalition,
which has bearing on other special and affirmative defenses raised in the Amended Answer, particularly lack of legal
standing/proper representation to sue, litis pendentia, and res judicata. It also averred that documentmy evidence submitted
by respondent during the pre-trial conference - but which petitioner denied specifically - must be presented in court and
identified before they could be admitted for trial. It claimed that there is confusion as to what law to apply if the Petition
for Mandamus were to be granted; that respondent's prayer is in conflict with the trial court's appreciation of the remedy to
be accorded in the case, and thus there is a danger that double compensation could occur; and that until all the foregoing
matters are clarified, it would be unable to prepare and submit an intelligent memorandum. These arguments were reiterated
in a Reply.13
reda rc law

In a September 5, 2008 Order,14 the trial court denied petitioner's Motion for Reconsideration, stating that: Lawlibra ryofCRAlaw

Preliminarily, it must be stressed that the Order dated July 27, 2008, now sought to be reconsidered, is based on the
provisions of Section [sic] 7 and 8, of Rule 65 of the 1997 Rules of Civil Procedure, which pertinently reads [sic]: Lawl ibraryofCRAlaw

Section 7 (supra) provides:Lawl ibra ry ofCRAlaw

"x x x The Court in which the petition is filed may issue orders expediting the proceedings, and it may also grant temporary
restraining order or a writ of preliminary injlll1ction from [sic] the preservation of the rights of the parties pending such
proceedings. x x x"

Section 8 (supra) also provides: Lawli bra ryofCRAlaw

"x x x After the comment or other pleadings required by the court are filed, or the time for the filing thereof has expired, the
court may hear the case or require the parties to submit memoranda. If after such hearing or submission of memorandum or
the expiration of the period for the filing thereof the court finds that the allegations of the petition are true, it shall render
judgment for the relief prayed for or to which the petitioner is entitled.

x x x x"
Counsels for the respondent argue that there is a need for hearing to determine the factual issues, x x x and whether x x x
petitioners made a demand upon the respondent (PPA), among others. On the other hand, petitioners' counsel argue[s] that
the issues to be resolved in this case are legal ones, which can be resolved based on the pleadings submitted by the parties.

The motion is unmeritorious.

After re-examining the records, this Court holds that the primary and principal issue to be resolved in this case, which is a
mandamus suit, is whether x x x respondent can be compelled to perform an act which the law (RA 6758) specifically enjoins
as [sic] a duty. All other issues raised, which respondent insists to be heard, are incidental to the said principal issue. Hence,
the determination of all other issues, which respondent insists to be factual, shall not be allowed to deter the expeditious
resolution of this case.

WHEREFORE, premises considered, the respondent's motion for reconsideration is hereby DENIED, for lack of merit.

Notify the counsels.

SO ORDERED.15

Ruling of the Court of Appeals

Petitioner filed a Petition for Certiorari16 with the CA, docketed as CA G.R SP No. 03843, arguing that the trial court
committed grave abuse of discretion amounting to lack or excess of jurisdiction in issuing its June 27, 2008 and September
5, 2008 Orders. It asserted that under Section 6, Rule 1617 and Section 8, Rule 6518 of the 1997 Rules of Civil Procedure
(1997 Rules), the trial court, by conducting a hearing on its affirmative defenses as if a motion to dismiss had been filed,
may dismiss respondent's Petition if it finds the same to be patently without merit, prosecuted manifestly for delay, or that
the questions raised therein are too unsubstantial to require consideration. Moreover, that the trial court must conduct a
hearing on the factual issues as well, as they are critical to the judicious resolution of the main issues; that the legal and
factual issues raised are substantial and should not have been ignored by the trial court, which was duty-bound instead to
resolve the same. Petitioner claimed that the trial court's refusal to set a hearing constituted a disregard of Rule 3.05 of the
Code of Judicial Conduct19 and Supreme Court Administrative Circular No.1, issued on January 28, 1988.20 redarc law

On July 27, 2011, the CA rendered the assailed judgment, stating as follows: Lawlib ra ryofCRAlaw

To begin with, the sole office of the prerogative writ of certiorari is to correct errors of jurisdiction including the commission
of grave abuse of discretion amounting to lack of jurisdiction. Thus, certiorari is not issued to cure errors in proceedings or
correct erroneous conclusions of law or fact. As long as a court acts within its jurisdiction, any alleged errors committed in
the exercise of its jurisdiction will amount to nothing more than errors of judgment which are reviewable by timely appeal
and not by a special civil action of certiorari.

In the case at bar, We hold that public respondent did not act with grave abuse of discretion when it issued the challenged
orders. It was well within the trial court's discretion to determine whether or not there was a necessity to hear the
affirmative defenses presented by petitioner in its answer.

It is true that Sec. 8 of Rule 65 provides that after the comment or other pleadings required by the court are filed, or the
time for the filing thereof has expired, the court mayhear the case or require the parties to submit memoranda The use of
the permissive word "may" in the aforesaid provision indicates that a hearing is only optional and not mandatory in nature.
In other words, the matter of holding a hearing on the affirmative defense is discretionary on the part of the trial court.

As to petitioner's invocation of Sec. 6, Rule 16 of the Rules of Court, the same provides that a preliminary hearing on the
affirmative defenses is subject to the discretion of the court, thus: Lawlibra ryofCRAlaw

Sec. 6 -Pleading grounds as affirmative defenses -If no motion to dismiss has been filed, any of the grounds for dismissal
provided for in this Rule may be pleaded as an affirmative defense in the answer and, in the discretion of the court, a
preliminary hearing may be had thereon as if a motion to dismiss has been filed.
Moreover, the trial court in order to expedite the petition for mandamus, had a valid reason to dispense with the hearing. As
aptly put by the RTC in its second assailed Order, since the primary issue to be resolved in a mandamus suit is whether or
not private respondent (PPA) could be compelled to perform an act which the law specifically enjoins as a duty, all other
issues which PPA insists to be heard are merely incidental to the principal issue.

Petitioner failed to demonstrate how the issuance of the assailed Orders constituted a whimsical and capricious exercise of
judgment. Even if there was error of judgment on the part of the RTC, nevertheless, the same cannot be considered as grave
abuse of discretion which could be corrected through certiorari. As We have stated, certiorari will issue only to correct errors
of jurisdiction and not to correct errors of procedure or mistake in the findings of [sic] conclusions of the judge.

WHEREFORE, premises considered, the Petition for Certiorari is DENIED.


SO ORDERED.21

Petitioner filed its Motion for Reconsideration,22 reiterating in essence all its arguments in the Petition. However, the appellate
court denied the same in its second assailed August 10, 2012 disposition.

Hence, the instant Petition.

In a November 25, 2013 Resolution,23 this Court resolved to give due course to the Petition.

Issue

Petitioner argues that the CA erred in ruling that the trial court did not commit grave abuse of discretion in issuing the June
27, 2008 and September 5, 2008 Orders.

Petitioner's Arguments

In its Petition and Reply24 praying for reversal of the assailed CA dispositions and that the trial court be ordered to conduct a
hearing on its affirmative defenses, petitioner reiterates its arguments in its CA Petition that it is a matter of urgent necessity
that a hearing be held on its affirmative defenses. It argues that by conducting a hearing on its affirmative defenses as if a
motion to dismiss had been filed, the trial court would be able to properly appreciate and resolve the legal and factual issues
and affirmative defenses raised in its answer, and thus dismiss the case if it finds that respondent's Petition for Mandamus is
patently without merit. Petitioner insists that such procedure is precisely warranted under Section 6, Rule 16 and Section 8,
Rule 65 of the 1997 Rules; and that the trial court's refusal to conduct a hearing on its affirmative defenses violates Rule
3.05 of the Code of Judicial Conduct and Supreme Court Administrative Circular No. 1 of January 28, 1988.

Respondent's Arguments

In its Comment25 seeking denial of the Petition, respondent claims that the Petition should be denied as the CA correctly held
that the trial court did not act with grave abuse of discretion in issuing its assailed Orders, and that the instant Petition has
been rendered moot and academic by judgment on the merits issued by the trial court on December 4, 2008.

Our Ruling

On December 4, 2008, the RTC issued a Decision26 in Civil Case No. CEB-33982, decreeing as follows: Lawlib raryofCR Alaw

WHEREFORE, the petition is GRANTED. Consequently, the respondent is ordered to comply with the mandate of Republic Act
6758 by actually integrating the COLA and AA into the basic salaries of petitioners, and until this was [sic] complied with,
respondent is ordered to pay the COLA and AA differentials from July 15, 1999 until the same shall have been actually
integrated into the petitioners' basic salaries, at the rates of 40% and 10% thereof, respectively.

All other claims and counterclaims are hereby dismissed. No pronouncement as to costs.

SO ORDERED.27

Petitioner appealed the trial court's Decision before the CA, which appeal was docketed as CA-G.R. CEB SP No. 04212. In a
January 21, 2013 Decision,28 the appellate court granted petitioner's appeal and thus reversed and set aside the RTC's
December 4, 2008 Decision in Civil Case No. CEB-33982 and ordered the dismissal of the case.

Respondent filed a Petition for Review on Certiorari before this Court, docketed as G.R. No. 209433. It remains pending.29 reda rc law

Considering that judgment on the merits has been issued in Civil Case No. CEB-33982, there is no need to resolve the instant
Petition, which has been rendered moot and academic. There is no need to scrutinize the actions of the trial court relative to
its issuance of the assailed orders after it has rendered judgment in the case.

Courts of justice constituted to pass upon substantial rights will not consider questions where no actual interests are
involved. Thus, the well-settled rule that courts will not determine a moot question. Where the issues have become moot and
academic, there ceases to be any justiciable controversy, thus rendering the resolution of the same of no practical value.
Courts will decline jurisdiction over moot cases because there is no substantial relief to which petitioner will be entitled and
which will anyway be negated by the dismissal of the petition. The Court will therefore abstain from expressing its opinion in
a case where no legal relief is needed or called for.30

While in their respective pleadings the parties insist on a resolution of the case on its merits -respondent even went so far as
to suggest that the instant case be ordered consolidated with G.R No. 209433 - the Court finds no cogent reason to do so;
indeed, there are no exceptional circumstances to justify such action. The case involves a simple controversy regarding the
application of a clear-cut law that has become the subject of a number of precedents; no constitutional question or
paramount public interest is involved. As we have held in Mattel, Inc. v. Francisco,31 redarclaw
Admittedly, there were occasions in the past when the Court passed upon issues although supervening events had rendered
those petitions moot and academic. After all, the "moot and academic" principle is not a magical formula that can
automatically dissuade the courts from resolving a case. Courts will decide cases, otherwise moot and academic, if:
first, there is a grave violation of the Constitution; second, the exceptional character of the situation and the
paramount public interest is involved; third, when the constitutional issue raised requires formulation of
controlling principles to guide the bench, the bar, and the public; and fourth, the case is capable of repetition
yet evading review.

Thus, in Constantino v. Sandiganbayan (First Division), Constantino, a public officer, and his co-accused, Lindong, a private
citizen, filed separate appeals from their conviction by the Sandiganbayan for violation of Section 3(e) of Republic Act No.
3019 or the Anti-Graft and Corrupt Practices Act. While Constantino died during the pendency of his appeal, the Court still
ruled on the merits thereof, considering the exceptional character of the appeals of Constantino and Lindong in relation to
each other; that is, the two petitions were so intertwined that the absolution of the deceased Constantino was determinative
of the absolution of his co-accused Lindong.

In Public Interest Center, Inc. v. Elma, the petition sought to declare as null and void the concurrent appointments of
Magdangal B. Elma as Chairman of the Presidential Commission on Good Government (PCGG) and as Chief Presidential Legal
Counsel (CPLC) for being contrary to Section 13, Article VII and Section 7, par. 2, Article IX-B of the 1987 Constitution. While
Elma ceased to hold the two offices during the pendency of the case, the Court still ruled on the merits thereof, considering
that the question of whether the PCGG Chairman could concurrently hold the position of CPLC was one capable of repetition.

In David v. Arroyo, seven petitions for certiorari and prohibition were filed assailing the constitutionality of the declaration of
a state of national emergency by President Gloria Macapagal-Arroyo. While the declaration of a state of national emergency
was already lifted during the pendency of the suits, this Court still resolved the merits of the petitions, considering that the
issues involved a grave violation of the Constitution and affected the public interest.

The Court also affirmed its duty to formulate guiding and controlling constitutional precepts, doctrines or rules, and
recognized that the contested actions were capable of repetition.

In Pimentel, Jr. v. Ermita, the petition questioned the constitutionality of President Gloria Macapagal-Arroyo's appointment of
acting secretaries without the consent of the Commission on Appointments while Congress was in session. While the
President extended ad interim appointments to her appointees immediately after the recess of Congress, the Court still
resolved the petition, noting that the question of the constitutionality of the President's appointment of department
secretaries in acting capacities while Congress was in session was one capable of repetition.

In Atienza v. Villarosa, the petitioners, as Governor and Vice-Governor, sought for clarification of the scope of the powers of
the Governor and Vice Governor under the pertinent provisions of the Local Government Code of 1991. While the terms of
office of the petitioners expired during the pendency of the petition, the Court still resolved the issues presented to formulate
controlling principles to guide the bench, bar and the public.

In Gayo v. Verceles, the petition assailing the dismissal of the petition for quo warranto filed by Gayo to declare void the
proclamation of Verceles as Mayor of the Municipality of Tubao, La Union during the May 14, 2001 elections, became moot
upon the expiration on June 30, 2004 of the contested term of office of Verceles. Nonetheless, the Court resolved the petition
since the question involving the one-year residency requirement for those running for public office was one capable of
repetition.

In Albaña v. Commission on Elections, the petitioners therein assailed the annulment by the Commission on Elections of their
proclamation as municipal officers in the May 14, 2001 elections. When anew set of municipal officers was elected and
proclaimed after the May 10, 2004 elections, the petition was mooted but the Court resolved the issues raised in the petition
in order to prevent a repetition thereof and to enhance free, orderly, and peaceful elections.

The instant case does not fall within the category of any of these exceptional cases in which the Court was persuaded to
resolve moot and academic issues to formulate guiding and controlling constitutional principles, precepts, doctrines or rules
for future guidance of both bench and bar. The issues in the present case call for an appraisal of factual considerations which
are peculiar only to the transactions and parties involved in this controversy. The issues raised in this petition do not call for
a clarification of any constitutional principle. Perforce, the Court dispenses with the need to adjudicate the instant case.
(Emphasis supplied)
Similarly, this case is not among those exceptional cases that must be adjudicated although the issues have become moot
and academic.

WHEREFORE, the Petition is DISMISSED for being moot and academic.

SO ORDERED. cralawlawlib

SECOND DIVISION

G.R. No. 201405, August 24, 2015


LIWAYWAY ANDRES, RONNIE ANDRES, AND PABLO B. FRANCISCO, Petitioners, v. STA. LUCIA REALTY &
DEVELOPMENT, INCORPORATED, Respondent.

DECISION

DEL CASTILLO, J.:

Not all may demand for an easement of right-of-way. Under the law, an easement of right-of-way may only be demanded by
the owner of an immovable property or by any person who by virtue of a real right may cultivate or use the same.

This Petition for Review on Certiorari assails the November 17, 2011 Decision1 of the Court of Appeals in CA-G.R. CV No.
87715, which reversed and set aside the May 22, 2006 Decision2 of the Regional Trial Court (RTC), Binangonan, Rizal,
Branch 68 granting petitioners Pablo B. Francisco (Pablo), Liwayway Andres (Liwayway), Ronnie Andres (Ronnie) and their
co-plaintiff Liza Andres (Liza) a 50-square meter right-of-way within the subdivision of respondent Sta. Lucia Realty and
Development, Incorporated (respondent).

Likewise assailed is the March 27, 2012 CA Resolution3 which denied petitioners and Liza's Motion for Reconsideration
thereto.

Factual Antecedents

Petitioners and Liza filed a Complaint4 for Easement of Right-of-Way against respondent before the RTC on November
28,2000. They alleged that they are co-owners and possessors for more than 50 years of three parcels of unregistered
agricultural land in Pag-asa, Binangonan, Rizal with a total area of more or less 10,500 square meters (subject property). A
few years back, however, respondent acquired the lands surrounding the subject property, developed the same into a
residential subdivision known as the Binangonan Metropolis East, and built a concrete perimeter fence around it such that
petitioners and Liza were denied access from subject property to the nearest public road and vice versa. They thus prayed for
a right-of-way within Binangonan Metropolis East in order for them to have access to Col. Guido Street, a public road.

In its Answer,5 respondent denied knowledge of any property adjoining its subdivision owned by petitioners and Liza. At any
rate, it pointed out that petitioners and Liza failed to sufficiently allege in their complaint the existence of the requisites for
the grant of an easement of right-of-way.

During trial, Pablo testified that he bought a 4,000-square meter-portion of the subject property from Carlos Andres (Carlos),
the husband of Liwayway and father of Ronnie and Liza.6 According to Pablo, he and his co-plaintiffs are still in possession of
the subject property as evidenced by an April 13, 1998 Certification7 issued by the Barangay Chairman of Pag-asa.8 Further,
Pablo clarified that the easement of right-of-way that they are asking from respondent would traverse the latter's subdivision
for about 50 meters from the subject property all the way to another subdivision that he co-owns, Victoria Village, which in
turn, leads to Col. Guido Street.9 He claimed that the prevailing market value of lands in the area is about P600.00 per
square meter. Pablo also explained that the subject property is still not registered under the Land Registration Act since no
tax declaration over the same has been issued to them despite application with the Municipal Assessor of
Binangonan.10 When required by the court to submit documents regarding the said application,11 Pablo attached in his
Compliance,12 among others, Carlos' letter13 of Maty 18, 1998 to the Municipal Assessor of Binangonan requesting for the
issuance of a tax declaration and the reply thereto dated August 5, 199814 of the Provincial Assessor of Rizal. In the aforesaid
reply, the Provincial Assessor denied the request on the ground that the subject property was already declared for taxation
purposes under the name of Juan Diaz and later, in the name of Juanito15Blanco, et al. (the Blancos).

Liwayway testified next. According to her, she and her children Ronnie and Liza are the surviving heirs of the late Carlos who
owned the subject property.16 Carlos acquired ownership over the same after he had been in continuous, public and peaceful
possession thereof for 50 years,17 the circumstances of which he narrated in a Sinumpaang Salaysay18 that he executed while
he was still alive. Carlos stated therein that even before he was born in 1939, his father was already in possession and
working on the subject property; that in 1948, he started to help his father in tilling the land; that when his father became
weak and eventually died, he took over the land; and, that he already sought to register his ownership of the property with
the Department of Environment and Natural Resources (DENR) and to declare the same for taxation purposes.

For its part, respondent presented as a lone witness the then Municipal Assessor of Binangonan, Virgilio Flordeliza
(Flordeliza). Flordeliza confirmed that Carlos wrote him a letter-request for the issuance of a tax declaration.19 He, however,
referred the matter to the Provincial Assessor of Rizal since the property for which the tax declaration was being applied for
was already declared for taxation purposes in the name of one Juan Diaz.20 Later, the tax declaration of Juan Diaz was
cancelled and in lieu thereof, a tax declaration in the name of the Blancos was issued.21 For this reason, the Provincial
Assessor of Rizal denied Carlos' application for issuance of tax declaration.22 cralawredna d

Ruling of the Regional Trial Court

The RTC rendered its Decision23 on May 22, 2006. It observed that petitioners and Liza's allegation in their Complaint that
they were in possession of the subject property for more than 50 years was not denied by respondent in its Answer. Thus,
the same is deemed to have been impliedly admitted by the latter. It then ratiocinated that based on Article 113724 of the
Civil Code, petitioners and Liza are considered owners of the subject property through extraordinary prescription. Having real
right over the same, therefore, they are entitled to demand an easement of right-of-way under Article 64925 of the Civil
cralawred

Code.

The RTC further held that Pablo's testimony sufficiently established: (1) that the subject property was surrounded by
respondent's property; (2) the area and location of the right-of-way sought; (3) the value of the land on which the right-of-
way is to be constituted which was P600.00 per square meter; and (4) petitioners and Liza's possession of the subject
property up to the present time.

In the ultimate, said court concluded that petitioners and Liza are entitled to an easement of right-of-way, thus: cralawlawl ibra ry

WHEREFORE, judgment is hereby rendered giving the plaintiffs a right of way of 50 square meters to reach Victoria Village
towards Col. Guido Street. Defendant Sta. Lucia is hereby ordered to grant the right of way to the plaintiffs as previously
described upon payment of an indemnity equivalent to the market value of the [50-square meter right of way].

SO ORDERED.26
Respondent filed a Notice of Appeal27 which was given due course by the RTC in an Order28 dated June 27, 2006.

Ruling of the Court of Appeals

On appeal, respondent argued mat petitioners and Liza were neither able to prove that they were owners nor that they have
any real right over the subject property intended to be the dominant estate. Hence, they are not entitled to demand an
easement of right-of-way. At any rate, they likewise failed to establish that the only route available from their property to
Col. Guido Street is through respondent's subdivision.

In a Decision29 dated November 17, 2011, the CA held that the evidence adduced by petitioners and Liza failed to sufficiently
establish their asserted ownership and possession of the subject property. Moreover, it held that contrary to the RTC's
observation, respondent in fact denied in its Answer the allegation of petitioners and Liza that they have been in possession
of subject property for more than 50 years. In view of these, the CA concluded that petitioners and Liza have no right to
demand an easement of right-of-way from respondent, thus: cralawlawli bra ry

WHEREFORE, in view of the foregoing, the appeal is hereby GRANTED. Accordingly, the May 22, 2006 Decision of the
Regional Trial Court of Binangonan, Rizal, Branch 68 is REVERSED and SET ASIDE. Civil Case No. 00-037-B is ordered
DISMISSED.

SO ORDERED.30
Petitioners and Liza's Motion for Reconsideration31 was denied in the CA Resolution32 dated March 27, 2012.

Hence, petitioners seek recourse to this Court through this Petition for Review on Certiorari.

Issue

Whether petitioners are entitled to demand an easement of right-of-way from respondent.

Our Ruling

The Petition has no merit.

Under Article 649 of the Civil Code, an easement of right-of-way may be demanded by the owner of an immovable or by any
person who by virtue of a real right may cultivate or use the same.

Here, petitioners argue that they are entitled to demand an easement of right-of-way from respondent because they are the
owners of the subject property intended to be the dominant estate. They contend that they have already acquired ownership
of the subject property through ordinary acquisitive prescription.33 This is considering that their possession became adverse
as against the Blancos (under whose names the subject property is declared for taxation) when Carlos formally registered his
claim of ownership with the DENR and sought to declare the subject property for taxation purposes in 1998. And since more
than 10 years34 had lapsed from that time without the Blancos doing anything to contest their continued possession of the
subject property, petitioners aver that ordinary acquisitive prescription had already set in their favor and against the Blancos.

In the alternative, petitioners assert that they have already become owners of the subject property through extraordinary
acquisitive prescription since (1) they have been in open, continuous and peaceful possession thereof for more than 50
years; (2) the subject property, as depicted in the Survey Plan they caused to be prepared is alienable and disposable; (3)
Carlos filed a claim of ownership over the property with the DENR, the agency charged with the administration of alienable
public land; and (4) Carlos' manifestation of willingness to declare the property for taxation purposes not only had the effect
of giving notice of his adverse claim on the property but also strengthened his bona fide claim of ownership over the same.

It must be stressed at the outset that contrary to petitioners' allegations, there is no showing that Carlos filed a claim of
ownership over the subject property with the DENR. His April 13, 1998 letter35 to the said office which petitioners assert to
be an application for the registration of such claim is actually just a request for the issuance of certain documents and
nothing more. Moreover, while Carlos indeed attempted to declare the subject property for taxation purposes, his application,
as previously mentioned, was denied because a tax declaration was already issued to the Blancos.

Anent petitioners' invocation of ordinary acquisitive prescription, the Court notes that the same was raised for the first time
on appeal. Before the RTC, petitioners based their claim of ownership on extraordinary acquisitive prescription under Article
1137 of the Civil Code36 such that the said court declared them owners of the subject property by virtue thereof in its May
22, 2006 Decision.37 Also with the CA, petitioners initially asserted ownership through extraordinary acquisitive
prescription.38 It was only later in their Motion for Reconsideration39 therein that they averred that their ownership could also
be based on ordinary acquisitive prescription.40 "Settled is the rule that points of law, theories, issues and arguments not
brought to the attention of the lower court need not be considered by a reviewing court, as they cannot be raised for the first
time at that late stage. Basic considerations of fairness and due process impel this rule."41cralaw rednad

Even if timely raised, such argument of petitioners, as well as with respect to extraordinary acquisitive prescription, fails.
"Prescription is one of the modes of acquiring ownership under the Civil Code."42 There are two modes of prescription
through which immovables may be acquired - ordinary acquisitive prescription which requires possession in good faith and
just title for 10 years and, extraordinary prescription wherein ownership and other real rights over immovable property are
acquired through uninterrupted adverse possession for 30 years without need of title or of good faith.43 However, it was
clarified in the Heirs of Mario Malabanan v. Republic of the Philippines,44 that only lands of the public domain subsequently
classified or declared as no longer intended for public use or for the development of national wealth, or removed from the
sphere of public dominion and are considered converted into patrimonial lands or lands of private ownership, may be
alienated or disposed through any of the modes of acquiring ownership under the Civil Code.45 And if the mode of acquisition
is prescription, whether ordinary or extraordinary, it must first be shown that the land has already been converted to private
ownership prior to the requisite acquisitive prescriptive period. Otherwise, Article 1113 of the Civil Code, which provides that
property of the State not patrimonial in character shall not be the subject of prescription, applies.46 c ralawred nad

Sifting through petitioners' allegations, it appears that the subject property is an unregistered public agricultural land. Thus,
being a land of the public domain, petitioners, in order to validly claim acquisition thereof through prescription, must first be
able to show that the State has -
expressly declared through either a law enacted by Congress or a proclamation issued by the President that the subject
[property] is no longer retained for public service or the development of the national wealth or that the property has been
converted into patrimonial. Consequently, without an express declaration by the State, the land remains to be a property of
public dominion and hence, not susceptible to acquisition by virtue of prescription.47
In the absence of such proof of declaration in this case, petitioners' claim of ownership over the subject property based on
prescription necessarily crumbles. Conversely, they cannot demand an easement of right-of-way from respondent for lack of
personality.

All told, the Court finds no error on the part of the CA in reversing and setting aside the May 22, 2006 Decision of the RTC
and in ordering the dismissal of petitioners' Complaint for Easement of Right-of-Way against respondent.

WHEREFORE, the Petition is DENIED. The November 17, 2011 Decision and March 27, 2014 Resolution of the Court of
Appeals in CA-G.R. CV No. 87715 are AFFIRMED.

SO ORDERED. chanrobles virtua

SECOND DIVISION

G.R. No. 200114, August 24, 2015

SOCIAL SECURITY SYSTEM, Petitioner, v. DEBBIE UBAÑA, Respondent.

DECISION

DEL CASTILLO, J.:

This Petition for Review on Certiorari1 assails: 1) the July 29, 2011 Decision2 of the Court of Appeals (CA) denying the
Petition for Certiorari in CA-G.R. SP No. 110006 and affirming the March 6, 2007 Order3 of the Regional Trial Court (RTC) of
Daet, Camarines Norte, Branch 39 in Civil Case No. 7304; and 2) the CA's January 10, 2012 Resolution4 denying petitioner's
Motion for Reconsideration of the herein assailed Decision.

Factual Antecedents

On December 26, 2002, respondent Debbie Ubana filed a civil case for damages against the DBP Service Corporation,
petitioner Social Security System (SSS), and the SSS Retirees Association5 before the RTC of Daet, Camarines Norte. The
case was docketed as Civil Case No. 7304 and assigned to RTC Branch 39.

In her Complaint,6 respondent alleged that in July 1995, she applied for employment with the petitioner. However, after
passing the examinations and accomplishing all the requirements for employment, she was instead referred to DBP Service
Corporation for "transitory employment." She took the pre-employment examination given by DBP Service Corporation and
passed the same. On May 20, 1996, she was told to report for training to SSS, Naga City branch, for immediate deployment
to SSS Daet branch. On May 28, 1996, she was made to sign a six-month Service Contract Agreement7 by DBP Service
Corporation, appointing her as clerk for assignment with SSS Daet branch effective May 27, 1996, with a daily wage of only
P171.00. She was assigned as "Frontliner" of the SSS Members Assistance Section until December 15, 1999. From December
16, 1999 to May 15, 2001, she was assigned to the Membership Section as Data Encoder. On December 16, 2001, she was
transferred to the SSS Retirees Association as Processor at the Membership Section until her resignation on August 26, 2002.
As Processor, she was paid only P229.00 daily or P5,038.00 monthly, while a regular SSS Processor receives a monthly
salary of P18,622.00 or P846.45 daily wage. Her May 28, 1996 Service Contract Agreement with DBP Service Corporation
was never renewed, but she was required to work for SSS continuously under different assignments with a maximum daily
salary of only P229.00; at the same time, she was constantly assured of being absorbed into the SSS plantilla. Respondent
claimed she was qualified for her position as Processor, having completed required training and passed the SSS qualifying
examination for Computer Operations Course given by the National Computer Institute, U.P. Diliman from May 16 to June 10,
2001, yet she was not given the proper salary. Because of the oppressive and prejudicial treatment by SSS, she was forced
to resign on August 26, 2002 as she could no longer stand being exploited, the agony of dissatisfaction, anxiety,
demoralization, and injustice. She asserted that she dedicated six years of her precious time faithfully serving SSS, foregoing
more satisfying employment elsewhere, yet she was merely exploited and given empty and false promises; that defendants
conspired to exploit her and violate civil service laws and regulations and Civil Code provisions on Human Relations,
particularly Articles 19, 20, and 21.8 As a result, she suffered actual losses by way of unrealized income, moral and
exemplary damages, attorney's fees and litigation expenses.

Respondent prayed for an award of P572,682.67 actual damages representing the difference between the legal and proper
salary she should have received and the actual salary she received during her six-year stint with petitioner; P300,000.00
moral damages; exemplary damages at the discretion of the court; P20,000.00 attorney's fees and P1,000.00 appearance
fees; and other just and equitable relief.

Petitioner and its co-defendants SSS Retirees Association and DBP Service Corporation filed their respective motions to
dismiss, arguing that the subject matter of the case and respondent's claims arose out of employer-employee relations,
which are beyond the RTC's jurisdiction and properly cognizable by the National Labor Relations Commission (NLRC).

Respondent opposed the motions to dismiss, arguing that pursuant to civil service rules and regulations, service contracts
such as her Service Contract Agreement with DBP Service Corporation should cover only a) lump sum work or services such
as janitorial, security or consultancy services, and b) piece work or intermittent jobs of short duration not exceeding six
months on a daily basis.9 She posited that her service contract involved the performance of sensitive work, and not merely
janitorial, security, consultancy services, or work of intermittent or short duration. In fact, she was made to work
continuously even after the lapse of her 6-month service contract. Citing Civil Service Commission Memorandum Circular No.
40, respondent contended that the performance of functions outside of the nature provided in the appointment and receiving
salary way below that received by regular SSS employees amount to an abuse of rights; and that her cause of action is
anchored on the provisions of the Civil Code on Human Relations.

Ruling of the Regional Trial Court

On October 1, 2003, the RTC issued an Order10 dismissing respondent's complaint for lack of jurisdiction, stating that her
claim for damages "has a reasonable causal connection with her employer-employee relations with the defendants"11 and "is
grounded on the alleged fraudulent and malevolent manner by which the defendants conspired with each other in exploiting
[her], which is a clear case of unfair labor practice,"12 falling under the jurisdiction of the Labor Arbiter of the NLRC. Thus, it
decreed: cralawlaw lib rary

WHEREFORE, premises considered, the aforementioned Motion to Dismiss the complaint of the herein plaintiff for lack of
jurisdiction is hereby GRANTED. The above-entitled complaint is hereby DISMISSED.

SO ORDERED.13
Respondent moved for reconsideration. On March 6, 2007, the RTC issued another Order14 granting respondent's motion for
reconsideration. The trial court held:c ralawlawli bra ry

Section 2(1), Art. K-B, 1987 Constitution, expressly provides that "the civil service embraces all branches, subdivisions,
instrumentalities, and agencies of the government, including government-owned or controlled corporation[s] with original
charters." Corporations with original charters are those which have been created by special law[s] and not through the
general corporation law. In contrast, labor law claims against government-owned and controlled corporations without original
charters fall within the jurisdiction of the Department of Labor and Employment and not the Civil Service Commission. (Light
Rail Transit Authority vs. Perfecto Venus, March 24, 2006.)

Having been created under an original charter, RA No. 1161 as amended by R.A. 8282, otherwise known as the Social
Security Act of 1997, the SSS is governed by the provision[s] of the Civil Service Commission. However, since the SSS
denied the existence of an employer-employee relationship, and the case is one for Damages, it is not the Civil Service
Commission that has jurisdiction to try the case, but the regular courts.

A perusal of the Complaint filed by the plaintiff against the defendant SSS clearly shows that the case is one for Damages.

Paragraph 15 of her complaint states, thus: ChanRoblesvirt ual Lawlib rary


xxx. Likewise, they are contrary to the Civil Code provisions on human relations which [state], among others, that Every
person, must in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due and
observe honesty and good faith (Article 19) and that Every person who, contrary to law, willfully or negligently [causes]
damages to another, shall indemnify the latter for the same. (Art. 20)

"Article 19 provides a rule of conduct that is consistent with an orderly and harmonious relationship between and among men
and women It codifies the concept of what is justice and fair play so that abuse of right by a person will be prevented. Art.
20 speaks of general sanction for all other provisions of law which do not especially provide their own sanction. Thus,
anyone, who, whether willfully or negligently, in the exercise of his legal right or duty, causes damage to another, shall
indemnify his or her victim for injuries suffered thereby." (Persons and Family Relations, Sta. Maria, Melencio, Jr. (2004) pp.
31-32.)

Wherefore, all premises considered, the Motion for Reconsideration is hereby GRANTED. The case against defendant Social
Security System represented by its President is hereby reinstated in the docket of active civil cases of this court.

SO ORDERED.15 [Italics in the original]


Petitioner moved for reconsideration, but the RTC stood its ground in its June 24, 2009 Order16 c ralawre dnad

Ruling of the Court of Appeals

In a Petition for Certiorari17 filed with the CA and docketed as CA-G.R. SP No. 110006, petitioner sought a reversal of the
RTC's June 24, 2009 and March 6, 2007 Orders and the reinstatement of its original October 1, 2003 Order dismissing Civil
Case No. 7304, insisting that the trial court did not have jurisdiction over respondent's claims for "unrealized salary income"
and other damages, which constitute a labor dispute cognizable only by the labor tribunals. Moreover, it claimed that the
assailed Orders of the trial court were issued with grave abuse of discretion. It argued that the trial court gravely erred in
dismissing the case only as against its co-defendants DBP Service Corporation and SSS Retirees Association and maintaining
the charge against it, considering that its grounds for seeking dismissal are similar to those raised by the two. It maintained
that DBP Service Corporation and SSS Retirees Association are legitimate independent job contractors engaged by it to
provide manpower services since 2001, which thus makes respondent an employee of these two entities and not of SSS; and
that since it is not the respondent's employer, then there is no cause of action against it.

On July 29, 2011, the CA issued the assailed Decision containing the following pronouncement: cralawlawli bra ry

Hence, petitioner seeks recourse before this Court via this Petition for Certiorarichallenging the RTC Orders. For the
resolution of this Court is the sole issue of:
c ralawlawl ibra ry

WHETHER OR NOT THE RTC HAS JURISDICTION TO HEAR AND DECIDE CIVIL CASE NO. 7304.
The petition is devoid of merits.

The rule is that, the nature of an action and the subject matter thereof, as well as, which court or agency of the government
has jurisdiction over the same, are determined by the material allegations of the complaint in relation to the law involved and
the character of the reliefs prayed for, whether or not the complainant/plaintiff is entitled to any or all of such reliefs. A
prayer or demand for relief is not part of the petition of the cause of action; nor does it enlarge the cause of action stated or
change the legal effect of what is alleged. In determining which body has jurisdiction over a case, the better policy is to
consider not only the status or relationship of the parties but also the nature of the action that is the subject of their
controversy.

A careful perusal of Ubana's Complaint in Civil Case No. 7304 unveils that Ubana's claim is rooted on the principle of abuse of
right laid in the New Civil Code. She was claiming damages based on the alleged exploitation [perpetrated] by the
defendants depriving her of her rightful income. In asserting that she is entitled to the damages claimed, [she] invoked not
the provisions of the Labor Code or any other labor laws but the provisions on human relations under the New Civil Code.
Evidently, the determination of the respective rights of the parties herein, and the ascertainment whether there were abuses
of such rights, do not call for the application of the labor laws but of the New Civil Code. Aproposthereto, the resolution of
the issues raised in the instant complaint does not require the expertise acquired by labor officials. It is the courts of general
jurisdiction, which is the RTC in this case, which has the authority to hear and decide Civil Case No. 7304.

Not every dispute between an employer and employee involves matters that only labor arbiters and the NLRC can resolve in
the exercise of their adjudicatory or quasi-judicial powers. Where the claim to the principal relief sought is to be resolved not
by reference to the Labor Code or other labor relations statute or a collective bargaining agreement but by the general civil
law, the jurisdiction over the dispute belongs to the regular courts of justice and not to the Labor Arbiter and the NLRC. In
such situations, [resolution] of the dispute requires expertise, not in labor management relations nor in wage structures and
other terms and conditions of employment, but rather in the application of the general civil law. Clearly, such claims fall
outside the area of competence or expertise ordinarily ascribed to Labor Arbiters and the NLRC and the rationale for granting
jurisdiction over such claims to these agencies disappears.

It is the character of the principal relief sought that appears essential in this connection. Where such principal relief is to be
granted under labor legislation or a collective bargaining agreement, the case should fall within the jurisdiction of the Labor
Arbiter and the NLRC, even though a claim for damages might be asserted as an incident to such claim.

The pivotal question is whether the Labor Code has any relevance to the principal relief sought in the complaint. As pointed
out earlier, Ubana did not seek refuge from the Labor Code in asking for the award of damages. It was the transgression of
Article[s] 19 and 20 of the New Civil Code that she was insisting in wagering this case. The primary relief sought herein is for
moral and exemplary damages for the abuse of rights. The claims for actual damages for unrealized income are the natural
consequence for abuse of such rights.

While it is true that labor arbiters and the NLRC have jurisdiction to award not only reliefs provided by labor laws, but also
damages governed by the Civil Code, these reliefs must still be based on an action that has a reasonable causal connection
with the Labor Code, other labor statutes, or collective bargaining agreements. Claims for damages under paragraph 4 of
Article 217 must have a reasonable causal connection with any of the claims provided for in the article in order to be
cognizable by the labor arbiter. Only if there is such a connection with the other claims can the claim for damages be
considered as arising from employer-employee relations. In the present case, Ubana's claim for damages is not related to
any other claim under Article 217, other labor statutes, or collective bargaining agreements.

All told, it is ineluctable that it is the regular courts that has [sic] jurisdiction to hear and decide Civil Case No. 7304.
In Tolosa v. NLRC,18 the Supreme Court held that, "[i]t is not the NLRC but the regular courts that have jurisdiction over
action for damages, in which the employer-employee relations is merely incidental, and in which the cause of action proceeds
from a different source of obligation such as tort. Since petitioner's claim for damages is predicated on a quasi-delict or tort
that has no reasonable causal connection with any of the claims provided for in Article 217, other labor statutes or collective
bargaining agreements, jurisdiction over the action lies with the regular courts not with the NLRC or the labor arbiters." The
same rule applies in this case.

WHEREFORE, premises considered, the instant petition is DENIED and the Order dated March 6, 2007 of the Regional Trial
Court, Branch 39 of Daet, Camarines Norte in Civil Case No. 7304 is hereby AFFIRMED.

SO ORDERED.19
Petitioner filed a Motion for Reconsideration,20 but the CA denied the same in its January 10, 2012 Resolution.21 Hence, the
present Petition.

Issue

Petitioner simply submits that the assailed CA dispositions are contrary to law and jurisprudence.

Petitioner's Arguments

Praying that the assailed CA dispositions be set aside and that the RTC's October 1, 2003 Order dismissing Civil Case No.
7304 be reinstated, petitioner essentially maintains in its Petition and Reply22that respondent's claims arose from and are in
fact centered on her previous employment. It maintains that there is a direct causal connection between respondent's claims
and her employment, which brings the subject matter within the jurisdiction of the NLRC. Petitioner contends that
respondent's other claims are intimately intertwined with her claim of actual damages which are cognizable by the NLRC.
Moreover, petitioner alleges that its existing manpower services agreements with DBP Service Corporation and SSS Retirees
Association are legitimate; and that some of respondent's claims may not be entertained since these pertain to benefits
enjoyed by government employees, not by employees contracted via legitimate manpower service providers. Finally,
petitioner avers that the nature and character of the reliefs prayed for by the respondent are directly within the jurisdiction
not of the courts, but of the labor tribunals.

Respondent's Arguments

In her Comment,23 respondent maintains that her case is predicated not on labor laws but on Articles 19 and 20 of the Civil
Code for petitioner's act of exploiting her and enriching itself at her expense by not paying her the correct salary
commensurate to the position she held within SSS. Also, since there is no employer-employee relationship between her and
petitioner, as the latter itself admits, then her case is not cognizable by the Civil Service Commission (CSC) either; that since
the NLRC and the CSC have no jurisdiction over her case, then it is only the regular courts which can have jurisdiction over
her claims. She argues that the CA is correct in ruling that her case is rooted in the principle of abuse of rights under the Civil
Code; and that the Petition did not properly raise issues of law.

Our Ruling

The Court denies the Petition.

In Home Development Mutual Fund v. Commission on Audit,24 it was held that while they performed the work of regular
government employees, DBP Service Corporation personnel are not government personnel, but employees of DBP Service
Corporation acting as an independent contractor. Applying the foregoing pronouncement to the present case, it can be said
that during respondent's stint with petitioner, she never became an SSS employee, as she remained an employee of DBP
Service Corporation and SSS Retirees Association - the two being independent contractors with legitimate service contracts
with SSS.

Indeed, "[i]n legitimate job contracting, no employer-employee relation exists between the principal and the job contractor's
employees. The principal is responsible to the job contractor's employees only for the proper payment of wages."25 cralawred cralaw rednad
In her Complaint, respondent acknowledges that she is not petitioner's employee, but that precisely she was promised that
she would be absorbed into the SSS plantilla after all her years of service with SSS; and that as SSS Processor, she was paid
only P229.00 daily or P5,038.00 monthly, while a regular SSS Processor receives a monthly salary of P18,622.00, or P846.45
daily wage. In its pleadings, petitioner denied the existence of an employer-employee relationship between it and
respondent; in fact, it insists on the validity of its service agreements with DBP Service Corporation and SSS Retirees
Association - meaning that the latter, and not SSS, are respondent's true employers. Since both parties admit that there is
no employment relation between them, then there is no dispute cognizable by the NLRC. Thus, respondent's case is premised
on the claim that in paying her only P229.00 daily - or P5,038.00 monthly - as against a monthly salary of P18,622.00, or
P846.45 daily wage, paid to a regular SSS Processor at the time, petitioner exploited her, treated her unfairly, and unjustly
enriched itself at her expense.

For Article 217 of the Labor Code to apply, and in order for the Labor Arbiter to acquire jurisdiction over a dispute, there
must be an employer-employee relation between the parties thereto. cha nrob leslaw

x x x It is well settled in law and jurisprudence that where no employer-employee relationship exists between the parties and
no issue is involved which may be resolved by reference to the Labor Code, other labor statutes or any collective bargaining
agreement, it is the Regional Trial Court that has jurisdiction, x x x The action is within the realm of civil law hence
jurisdiction over the case belongs to the regular courts. While the resolution of the issue involves the application of labor
laws, reference to the labor code was only for the determination of the solidary liability of the petitioner to the respondent
where no employer-employee relation exists. Article 217 of the Labor Code as amended vests upon the labor arbiters
exclusive original jurisdiction only over the following: Cha nRoblesvi rt ual Lawlib rary

1. Unfair labor practices;

2. Termination disputes;

3. If accompanied with a claim for reinstatement, those cases that workers may file involving wages, rates of pay, hours of
work and other terms and conditions of employment;

4. Claims for actual, moral, exemplary and other forms of damages arising from employer-employee relations;

5. Cases arising from any violation of Article 264 of this Code, including questions involving legality of strikes and lockouts;
and

6. Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all other claims, arising from
employer- employee relations, including those of persons in domestic or household service, involving an amount exceeding
five thousand pesos (P5,000.00) regardless of whether accompanied with a claim for reinstatement.

In all these cases, an employer-employee relationship is an indispensable jurisdictional requisite x x x.26


Since there is no employer-employee relationship between the parties herein, then there is no labor dispute cognizable by
the Labor Arbiters or the NLRC.

There being no employer-employee relation or any other definite or direct contract between respondent and petitioner, the
latter being responsible to the former only for the proper payment of wages, respondent is thus justified in filing a case
against petitioner, based on Articles 19 and 20 of the Civil Code, to recover the proper salary due her as SSS Processor. At
first glance, it is indeed unfair and unjust that as, Processor who has worked with petitioner for six long years, she was paid
only P5,038.00 monthly, or P229.00 daily, while a regular SSS employee with the same designation and who performs
identical functions is paid a monthly salary of P18,622.00, or P846.45 daily wage. Petitioner may not hide under its service
contracts to deprive respondent of what is justly due her. As a vital government entity charged with ensuring social security,
it should lead in setting the example by treating everyone with justice and fairness. If it cannot guarantee the security of
those who work for it, it is doubtful that it can even discharge its directive to promote the social security of its members in
line with the fundamental mandate to promote social justice and to insure the well-being and economic security of the
Filipino people.

In this jurisdiction, the "long honored legal truism of 'equal pay for equal work'" has been "impregnably institutionalized;"
"[p]ersons who work with substantially equal qualifications, skill, effort and responsibility, under similar conditions, should be
paid similar salaries."27 "That public policy abhors inequality and discrimination is beyond contention. Our Constitution and
laws reflect the policy against these evils. The Constitution in the Article on Social Justice and Human Rights exhorts
Congress to 'give highest priority to the enactment of measures that protect and enhance the right of all people to human
dignity, reduce social, economic, and political inequalities.' The very broad Article 19 of the Civil Code requires every person,
'in the exercise of his rights and in the performance of his duties, [to] act with justice, give everyone his due, and observe
honesty and good faith'."28 cralawrednad

WHEREFORE, the Petition is DENIED. The assailed July 29, 2011 Decision and January 10, 2012 Resolution of the Court of
Appeals in CA-G.R. SP No. 110006 are AFFIRMED. The case is ordered remanded with dispatch to the Regional Trial Court
of Daet, Camarines Norte, Branch 39, for continuation of proceedings.

SO ORDERED. chanrobles virtuallawlib

A.C. No. 8084, August 24, 2015


PATROCINIA H. SALABAO, Complainant, v. ATTY. ANDRES C. VILLARUEL, JR., Respondent.

RESOLUTION

DEL CASTILLO, J.:

This is a complaint for disbarment filed by Patrocinia H. Salabao (complainant) against Atty. Andres C. Villaruel, Jr.
(respondent) for abuse of court processes in violation of Canons 10 and 12 of the Code of Professional Responsibility.1 After
respondent filed his Answer2 we referred this case to the Integrated Bar of the Philippines (IBP) for investigation, report and
recommendation.3 redarclaw

Factual Background

The facts pertinent to this complaint are summarized in the Report and Recommendation of Investigating Commissioner
Oliver A. Cachapero as follows: Lawlib raryofCR Alaw

Complainant narrates that in 1995 she filed a case against Elmer Lumberio for his deceitful or fraudulent conduct of taking
her precious real property situated in Taguig City. After hearing, the Regional Trial Court (RTC), Branch 162, Pasig City
issued its resolution in her favor in 2002.

Respondent then entered the picture as counsel for Lumberio. From then on, Complainant complained that Respondent had
made her suffer because of his abuse of processes and disregard for her rights as a litigant.

She narrates as follows: Lawlib raryofCRAlaw

In 2002, the Regional Trial Court, Branch 162, Pasig City which tried Civil Case No. 65147 issued its resolution in her favor.
In order to delay the case, Respondent brought the case on appeal to the Court of Appeals under CA-GR CV No. 76360. The
Court of Appeals decided in her favor on January 13, 2004 but Respondent again filed an appeal before the Supreme Court
under GR No. 167413. Lumberio lost and the case became final and executory.

Undeterred, respondent tried to defer the execution of the decision of the RTC, Branch 162, by bringing to the Court of
Appeals a Petition for Annulment of Judgment under CA-GR SP No. 97564. When rebuffed, he again appealed to the
Supreme Court under GR No. 181243 sans a clear or new arguments other than what he had presented before the Court of
Appeals.

Still, Respondent filed a Petition for Certiorari seeking to annul the 29 November 2007 Order of the RTC before the Court of
Appeals under CA-GR SP No. 101992 which was however dismissed. From hereon, there was not stopping the Respondent.
Once again he filed a new complaint before the RTC of Mauban, Quezon, Branch 64 under Civil Case No. 08-0666-M. Apart
from this, Respondent filed several Motion, Inhibition and Contempt that were meant to delay the resolution of the case. He
likewise filed an administrative case against Judge Briccio Ygaña of RTC Branch 153, Taguig City. Complainant then
complained that Respondent had done more than enough to suppress her rights as a winning litigant and filed this case for
abuse of processes pursuant to Rule 10.03 and Rule 10.02 of Canon 10 and Rule 12.04 of Canon 12 of the Code of
Professional Responsibility (CPR).

Respondent, for his part, denied the accusation and clarified that the several pleadings he had filed had centered on the
legality of the court's decision ordering the cancellation of the title of Lumberio in such ordinary proceeding for cancellation of
the title. To his mind, the said ordinary proceeding for cancellation of title before the RTC Branch 153, Taguig City was void
because the law vests upon the government through the Solicitor General the power to initiate a reversion case if there is
such a ground to cancel the title issued by the Land Management Bureau in favor of Lumberio.

With respect to the civil case before the RTC of Ma[u]ban, Branch 64, he explained that the said case does not show that
herein counsel committed any act of dishonesty which may subject him to any prosecution as he is just exercising his
profession to the best of his ability.4

In his Report and Recommendation, the Investigating Commissioner found at respondent "relentlessly filed petitions and
appeals in order to exhaust all possible remedies to obtain relief for his client"5 which he considered as tantamount to
"abusive and a spiteful effort to delay the execution of Judgment."6 He noted that after the Regional Trial Court (RTC) of
Pasig City, Branch 162 issued a Resolution in Civil Case No. 65147 adverse to his client, respondent filed a barrage of
cases/pleadings such as an appeal to the Court of Appeals (CA) which affirmed the RTC ruling, a petition for review with the
Supreme Court which was denied for having been filed out of time; a petition for annulment of the RTC judgment which was
dismissed by the CA; another petition for review before this Court which was again denied; a petition for certiorari which was
dismissed by the CA; another civil case before the RTC of Mauban, Quezon which was dismissed for "improper venue, res
judicata, and violation of the anti-forum shopping law"7 and that it involved the same issues as the one filed in Pasig RTC.
Moreover, he filed several inhibitions, motions and an administrative complaint against the presiding judge. The Investigating
Commissioner, stated: Lawlibra ryofCRAlaw
x x x [O]ne can immediately appreciate and see the abusive and spiteful conduct of Respondent. He as a lawyer could have
hardly missed knowing that his subsequent actions were merely meant to harass the opposing litigant as in fact the Supreme
Court had already issued its final ruling on the matter. After the ruling of the High Court, Respondent should have known
that the case had been finally adjudicated and no amount of judicial exercise could turn the decision in his client's favor.
From then on, he should have saved his efforts of filing cases and motions in court, as they are futile anyway, because he
has his duty to the court above that to his client.

Needless to state, the Respondent is found herein to have violated Canon 12, Rule 12.02 and Rule 12.04 of the CPR for which
he should be meted with the appropriate administrative penalty.8

He thus recommended that respondent be meted out the penalty of suspension for four months.

In its Resolution No. XX-2013-251 dated 20 March 2013, the IBP Board of Governors adopted and approved the findings and
recommendation of the Investigating Commissioner.

Respondent filed a Motion for Reconsideration on July 20, 2013, stating that: Lawlibra ryofCRAlaw

2. x x x he had only exhausted all possible remedies available under the premises;

xxxx

With all candor and honesty, undersigned believes that he was only doing his legal duty as a lawyer to exhaust all legal
remedies taking steps within its framework. He has not done any wrongdoing while taking such routes. He has never been
dishonest;

xxxx

4. Respondent believes that undersigned deserves an acquittal given the fact that it was not shown that he acted in bad:
faith in taking such legal remedies.

5. Respondent cannot also be charged with abuse of judicial process because complainant has other recourse available to
execute the said decision in her favor while there were petitions filed, complainant also did not allege that respondent has
abused the judicial process. The courts to which the said petitions were filed also did not cite the respondent in contempt of
court [nor was a warning] given.

xx x x

6. Moreover, respondent is now suffering from renal failure which requires him to undergo dialysis three (3) times in a week.
To suspend him for four months would mean that he would stop his dialysis for four moths [sic] which may cause his
immediate death. This Honorable Commission would not be too happy to see one of its members begging for alms from
PCSO and government officials to shoulder his dialysis of about P100,000.00 per month.9

In a subsequent Resolution No. XXI-2014-182 dated March 23, 2014, the IBP Board of Governors affirmed its earlier
Resolution and denied respondent's Motion for Reconsideration, saying that there was no cogent reason to reverse the
findings of the Commission on Bar Discipline.

The Court's Ruling

While it is true that lawyers owe "entire devotion" to the cause of their clients,10 it cannot be emphasized enough that their
first and primary duty is "not to the client but to the administration of justice."11 Canon 12 of the Code of Professional
Responsibility states that "A lawyer shall exert every effort and consider it his duty to assist in the speedy and efficient
administration of justice." Thus, in the use of Court processes, the lawyer's zeal to win must be tempered by the paramount
consideration that justice be done to all parties involved, and the la|wyer for the losing party should not stand in the way of
the execution of a valid judgment. This is a fundamental principle in legal ethics and professional responsibility that has
iterations in various forms: Lawli bra ryof CRAlaw

The Lawyer's Oath: LawlibraryofCR Alaw

x x x I will not wittingly or willingly promote or sue any groundless, false or unlawful suit, nor give aid nor consent to the
same; I will delay no man for money or malice, and will conduct myself as a lawyer according to the best of my knowledge
and discretion with all good fidelity as well to the courts as to my clients x x x (Emphasis supplied)

Rule 138, Section 20, Rules of Court: Lawlibra ryofCRAlaw

Duties of attorneys. - It is the duty of an attorney: xxxx

(c) To counsel or maintain such actions or proceedings only as appear to him to be just, and such defenses only as he
believes to be honestly debatable under the law;
xxxx

(g) Not to encourage either the commencement or the continuance of an action or proceeding, or delay any man's
cause, from any corrupt motive or interest; (Emphasis supplied)

Code of Professional Responsibility: Law lib raryofCRAlaw

Rule 1.03 - A lawyer shall not, for any corrupt motive or interest, encourage any suit or proceeding or delay any man's
cause.

Rule 10.03 - A lawyer shall observe the rules of procedure and shall not misuse them to defeat the ends of justice.

Rule 12.02 - A lawyer shall not file multiple actions arising from the same cause.

Rule 12.04 - A lawyer shall not unduly delay a case, impede the execution of a judgment or misuse Court processes.
(Emphasis supplied)

Because a lawyer is an officer of the court called upon to assist in the administration of justice, any act of a lawyer that
obstructs, perverts, or impedes the administration of justice constitutes misconduct and justifies disciplinary action against
him.12redarclaw

In this case, the judgment in favor of complainant had become final and executory by July 27, 2005. Respondent however
proceeded to file no less than twelve (12) motions and cases in various courts subsequent to the Entry of Judgment: Lawlib raryofCR Alaw

Regional Trial Court of Taguig City:

Urgent Motion for Reconsideration of the Order dated April 27,2006

Motion to Admit Affidavit of Third-Party Claimant

Motion for Early Resolution

Motion to Observe Judicial Courtesy while the case is pending appeal with the Court of Appeals

Urgent Motion to Defer/Suspend Execution in view of the Order of the CA

Urgent Motion to Reconsider Order

Court of Appeals:

Urgent Motion for Issuance of Temporary Restraining Order with the Court of Appeals

Motion for Reconsideration

Petition for Certiorari

Urgent Motion to Reiterate the Issuance of Order for Judicial Courtesy

Supreme Court:

Petition for Certiorari

Motion for Issuance of Temporary Restraining Order

From the nature and sheer number of motions and cases filed, it is clear that respondent's intention was to delay the
execution of the final judgment.

But even assuming for the sake of argument that respondent was only doing his duty as a lawyer to exhaust all legal
remedies to protect the interest of his client, his other actions belie his claim of good faith. Respondent filed a civil case for
damages with the Regional Trial Court of Mauban, Quezon in what was clearly a case of forum-shopping. Moreover,
respondent filed three Motions to Inhibit against the three judges hearing these cases, and even a motion to cite the sheriff
in contempt of court who was simply carrying out his duty to execute the decision.

In his defense, respondent argued that the Courts did not call attention to his improper behavior and dilatory tactics. This is
not true. In her Order inhibiting herself from the case, Judge Homena-Valencia stated: Lawl ibra ryofCRAlaw

This presiding judge would like to emphasize that, having assumed her position as acting presiding judge of this branch only
last September 2005, she does not know any of the parties from Adam. As such, she could not be inclined to show bias in
favor of one of them. She refuses, however, to be drawn into a discussion, to put it mildly, with respondent's counsel as to
her knowledge of the law.

However, to obviate any suspicion as to her objectivity, she inhibits herself from further hearing this case although the
reasons stated by the defendant are not one of those provided for in the Rules for the voluntary inhibition of a judge.

Respondent's counsel is hereby advised to be more professional in his language, he, being a lawyer, is first and foremost an
officer of the court.13

In the October 23, 2007 Decision14 of the CA in CA-G.R. SP No. 97564, respondent was rebuked for the misuse of court
processes, thus: Lawlibra ryofCRAlaw

This Petition for Annulment of Judgment is petitioner's last-ditch effort to defer the execution of the 31 July 2002 Decision of
the Regional Trial Court of Pasig City, Branch 162, which has long attained finality.

xxxx

In epitome, to sustain petitioner's insinuation of extrinsic fraud is to make a mockery of Our judicial system. We take
exception to the unjustified delay in the enforcement of the RTC Decision dated 31 July 2002 which has long become final
and executory. This is obviously a spiteful ploy to deprive respondent of the fruits of her victory.

WHEREFORE, the Petition for Annulment of Judgment is hereby DISMISSED.15


Moreover, in his Omnibus Order16 dated September 18, 2008, Judge Briccio C. Ygaña17 stated: Lawlibra ryofCRAlaw

This case is a clear example of how a party, aided by a smart lawyer, could unduly delay a case, impede the execution of
judgment or misuse court processes. Defendant and counsel are very lucky that the herein plaintiff has the patience of Job.
Should this case reach the attention of the Supreme Court, where the whole story will be known, they will have a lot of
explaining to do.18

It is quite clear that respondent has made a mockery of the judicial process by abusing Court processes, employing dilatory
tactics to frustrate the execution of a final judgment, and feigning ignorance of Ms duties as an officer of the court. He has
breached his sworn duty to assist in the speedy and efficient administration of justice, and violated the Lawyer's Oath, Rules
10.03 and 12.04 of the Code of Professional Responsibility, and Rule 138, Sec. 20 (c) and (g) of the Rules of Court. In so
doing, he is administratively liable for his actions.

Rule 138, Sec. 27 of the Rules of Court provides the penalties of disbarment and suspension as follows: Lawli bra ryofCRAlaw

Disbarment or suspension of attorneys by Supreme Court; grounds therefor. - A member of the bar may be disbarred or
suspended from his office as attorney by the Supreme Court for any deceit, malpractice, or other gross misconduct in such
office, grossly immoral conduct, or by reason of his conviction of a crime involving moral turpitude, or for any violation of the
oath which he is required to take before admission to practice, or for a wilful disobedience of any lawful order of a superior
court, or for corruptly or wilfully appearing as an attorney for a party to a case without authority so to do x x x.

In previous decisions involving abuse of court processes,19 this Court has imposed the penalty of suspension ranging from six
months to two years. In light of the following aggravating circumstances - multiplicity of motions and cases filed by
respondent, the malice evinced by his filing of various motions to prevent the judges and sheriff from fulfilling their legal
duties, feigned ignorance of his duties as an officer of the court, and his lack of remorse for his actions - the Court finds that
a penalty of suspension for 18 months would be commensurate to the damage and prejudice that respondent has inflicted on
complainant Salabao for his actions.

WHEREFORE, premises considered, respondent Atty. Andres C. Villaruel, Jr. is hereby found GUILTY of violation of the
Lawyer's Oath and Rules 10.03 and 12.04 of the Code of Professional Responsibility and is hereby suspended from the
practice of law for a period of eighteen (18) months.

Let copies of this Resolution be furnished the Office of the Bar Confidant and noted in Atty. Villaruel's record as a member of
the Bar.

SO ORDERED. cralawlawlibra ry

SECOND DIVISION
G.R. No. 198643, August 19, 2015

MARSMAN & COMPANY AND QUIRINO R. ILEDAN, Petitioners, v. ARTEMIO M. LIGO, Respondent.

DECISION

DEL CASTILLO, J.:

An employee who was wrongly accused of criminal acts, illegally arrested and detained, presented to the media at a
humiliating press conference against his will, and prosecuted in an unfounded criminal suit is entitled to damages for
malicious prosecution.

This Petition for Review on Certiorari1 seeks to set aside the April 29, 2011 Decision2 of the Court of Appeals in CA-G.R. CV
No. 87004, as well as its September 16, 2011 Resolution3 denying reconsideration thereof.

Factual Antecedents

Petitioner Marsman & Company, Inc. (Marsman) - now Metro Drug, Inc. - is a domestic corporation engaged in the business
of distributing pharmaceutical products. Petitioner Quirino R. Iledan (Iledan) was Marsman's Warehouse Manager during the
time material to this case.

Respondent Artemio M. Ligo was then Marsman's Warehouse Supervisor and was primarily responsible for the destruction of
bad order and expired drugs.4 Bad order drugs are those that are retrieved from the market for being unfit for human
consumption, while expired drugs are those which have reached their expiry date.5 re darclaw

Sometime in February 1993, Iledan supposedly received a telephone call from Isabelito Miguel (Miguel), informing him that
some of Marsman's bad order and expired drugs that were intended for destruction were not actually destroyed but were
sold at the back of the Sto. Nino Church in Parañaque. Iledan relayed this information to Marsman President and Chief
Executive Officer Dr. Eligio Santos (Santos), who called a meeting with Iledan and Marsman Assistant Vice-President for
Human Resources Manolette Pilapil (Pilapil). During the meeting, Santos instructed Pilapil to seek the assistance of the
National Bureau of Investigation (NBI) in the investigation of the matter. Thus, Pilapil sent a letter-request dated March 15,
1993 to NBI Director Epimaco Velasco (NBI Director Velasco).6 redarclaw

The NBI7 conducted surveillance on several dates in coordination with Iledan. On May 7, 1993, it arrested several individuals
who were supposedly caught in the act of distributing these medicines that should have been destroyed.8 However,
respondent was not one of them.

The following day, or on May 8, 1993, Iledan asked respondent to accompany him to the NBI office on the pretext of visiting
one of the suspects arrested, Francisco Mercado (Mercado),9 one of respondent's colleagues at work. Tjhey proceeded to the
NBI headquarters in Manila, where respondent was arrested and placed in a detention cell.10 Thereafter, respondent and
other individuals were presented to the media during a live conference as the suspects in the distribution and sale of bad
order and expired medicines. Their photographs were taken, and later published, by news reporters of The Daily Inquirer,
Philippine Star, Bulletin, Taliba, Balita, and Tempo.11
redarclaw

Respondent was detained at the NBI headquarters for at least 10 days, after which he was provisionally released after
posting bond.12 He was criminally charged with violation of Republic Act No. 372013 as amended by Executive Order No.
17514 (RA 3720) which prohibits the sale, dispensing or delivery of expired or rejected pharmaceutical products. The criminal
case was docketed with the Metropolitan Trial Court of Taguig City, Branch 74 as Criminal Case No. 9070. However, the court
issued an Order15 on October 12, 1994 acquitting respondent of the charge. The Order held in part: Lawlib raryofCR Alaw

From this evidence, the court finds that indeed the prosecution has miserably failed to prove the principal elements of the
crime charged, that is there was no showing that the accused has [sic] sold or was [sic] selling much less dispensing the
expired medicines. While it is true that the destructing [sic] or transferring [sic] the expired drugs is prohibited as defined in
Section 11 of Republic Act 3720, the destruction or transfer referred to in the act is distributing or transferring the drugs to
any third person or persons. From the testimony of witness NBI Agent Arnel Azul is [sic] that when they arrested the
accused, the accused were transferring the expired drugs from one vehicle to another, to be exact from a 10 wheeler truck to
[a] white delivery van and this transfer is not the transfer contemplated, defined and penalized; under Section 11 of R.A.
3720.

It is also the observation that from the evidences [sic] adduced by the prosecution that assuming arguendo that the transfer
of the expired drugs from one vehicle to another is a crime by itself, from the evidence, it appears that the transfer was done
and consummated in Angono, Rizal and therefore not within the territorial jurisdiction of this court and it is elementary in
criminal prosecution that criminal cases has [sic] to be filed and prosecuted in the place [sic] it was committed except those
continuing offenses, in the case at bar nowhere from the prosecution's evidence shows [sic] that the crime charged or any of
its ingredient [sic] has been committed here in [Taguig], Metro Manila, the territorial jurisdiction of this court. Of course this
is not impugned in the demurrer to evidence, this is but the observation of this court from the evidence adduced by the
prosecution.
Viewed [from] the foregoing, the court finds that the prosecution has failed to establish the elements of the crime charged
amounting to failure to prove the guilt of the accused beyond reasonable doubt and accordingly therefore, the above-entitled
case is hereby dismissed with costs de officio.

xxxx

SO ORDERED.16

Respondent was likewise charged with serious misconduct, breach of trust, and commission of a crime against Marsman.
After several hearings, was terminated from employment on the ground of "negligence and breach of trust and confidence"
as well as failure to perform the "sensitive task of supervising the burning and destroying of expired, obsolete, bad order
drugs and medicines,"17 but not for commission of a crime against Marsman.

In October 1995, respondent filed a Complaint18 for damages against petitioners Marsman and Iledan with the Regional Trial
Court of Las Piñas, docketed as Civil Case No. LP-95-022 and assigned to Branch 275. Respondent alleged that petitioners
maliciously conspired to frame him and fabricate a criminal charge against him by making it appear that he feloniously sold,
dispensed or delivered expired or bad order medicines; that he was illegally arrested by the NBI on May 8, 1993, humiliated
in a press conference, and unlawfully detained for 10 days; that photographs taken during the press conference were
published in major dailies, and he became the object of embarrassing news reports on radio and television; that he was
falsely charged criminally with violation of RA 3720 (Criminal Case No. 9070) and illegally dismissed from employment; that
he was subsequently acquitted in Criminal Case No. 9070; that as a result of the frame-up, he and his family became the
object of ridicule in the community, school and workplace, which thus forced them to relocate in order to avoid further shame
and embarrassment; and that in a demand letter to petitioners, he sought restitution, but was ignored. He thus prayed for
indemnity in the amount of P5 million as moral damages, P1 million as exemplary damages, P50,000.00 as actual damages,
25% of the total amount as attorney's fees, and costs of suit.

Respondent's complaint particularly noted that when Iledan assumed his position as warehouse manager, he was arrogant
and hostile toward the employees and even manifested his desire to replace respondent and other employees assigned at
respondent's warehouse.19 redarclaw

In their Answer with Counterclaim,20 petitioners insisted that respondent was involved in a scheme of selling expired and bad
order drugs which he was supposed to destroy; that respondent's modus operandi became the subject of three preliminary
surveillances conducted by the NBI, which revealed that the scheduled destruction of medicines through burning did not take
place, and that respondent left the site without supervising the complete destruction of the medicines, while his cohorts
transferred the medicines from the company truck to another vehicle; that on May 7, 1993, respondent's cohorts were
intercepted and arrested by the NBI; that boxes of expired medicines scheduled for destruction were confiscated from them;
that the next day, May 8, 1993, respondent reported for work and submitted a false Certificate of Destruction stating that all
medicines scheduled for destruction the day before were destroyed; that respondent was arrested and charges were lodged
against him and his cohorts; that an investigation for serious misconduct, breach of trust and commission of felony was also
conducted by Marsman; that while photographs of respondent were taken at the NBI and published, they could not be held
responsible therefor; that the dismissal of Criminal Case No. 9070 was grounded on lack of jurisdiction and not based on the
merits; and that they acted in good faith, pursuant to duty, and in defense of Marsman's rights in reporting the suspected
illegal operation to the NBI. By way of counterclaim, petitioners prayed to be awarded P10 million as moral damages; PI
million as exemplary damages; and P250,000.00 as attorney's fees and litigation expenses.

Trial ensued. The evidence of the parties were summed up by the trial court, as follows: Lawlib raryofCR Alaw

EVIDENCE FOR THE PLAINTIFF

xxxx

ARTEMIO LIGO, x x x testified that he was employed by defendant Marsman & Co., Inc. from February 5, 1970 to July 15,
1993. He was then the Warehouse Supervisor x x x receiving and supervising stocks, burning and destroying condemned
medicines, x x x.

xxxx

x x x The last lime plaintiff led the destruction was on May 7, 1993 at Angono, Rizal. Defendant Iledan requested a BIR
representative and a Duncan pharmacist by the name of Rolando Rotoni and Susan Ferrer, respectively, xxx Loading of
medicines started at about 8:00 in the morning xxx. With him in the van were Mr. Rotoni, Ms. Ferrer and Francisco Mercado,
the company driver. They left for Angono, Rizal at around 9:30 and arrived at site at around 12:00 noon. The medicines were
unloaded which took them more than 1 hour. During the unloading, Mr. Rotoni and Ms. Ferrer saw the bottled medicines x x
x. At around 2:00 in the afternoon, the representatives wanted to leave because of heat, bad odor and flies in the area xxx.
Defendant Iledan instructed him to attend to the representatives' needs.

x x x Around 6:30 in the morning of May 8, 1993, he reported to defendant Iledan on the accomplished mission, to which
[Iledan remarked] "very good." Then Francisco's son arrived and informed him about Francisco's arrest in the afternoon of
May 7, 1993. Surprised, he reported the matter immediately to defendant Iledan who pretended not to know it and [said]
that they will go to NBI headquarters. They left at around 10:00 in the morning. Upon arrival, he was suddenly arrested
while defendant Iledan who was beside him turned his back and left. Defendant Iledan did nothing when he was arrested. He
was brought to the detention cell and then [to] the 2nd floor where he was forced to admit the accusation, xxx (A)t the 2nd
floor, he saw Francisco and companions. Director Epimaco Velasco entered the room and called them [to] the table where
expired medicines were placed. Then news reporters of Balita, Tempo and others went inside and took them [sic] pictures,
during which defendant Iledan was at his back, hiding. He had no occasion to talk to defendant Iledan. Then they were
brought back to the detention cell x x x.

After 10 days, he was able to post a bond and was provisionally released. [A criminal] charge was filed against him by the
NBI at the instance of defendant Iledan x x x. Hearings were conducted on the case and after a period of less than 2 years,
the case was dismissed x x x.

Plaintiff had clean record in his 21 years of service at defendant company and received [an] award, a plaque of loyalty and
appreciation letters x x x. Defendant Iledan would have caused the filing of the fabricated case because he was angry with
union members as they were organizing a supervisors' union [in] which he was active. He engaged the services of a lawyer
to protect his rights and interest at a fee of more than P50,000.0. He was restless, experienced sleepless nights, felt
humiliated and was ashamed to his friends, relatives and neighbors, co-teachers of his wife and classmates of his children,
being labeled "manloloko." He got sick often and they were constrained to transfer their residence x x x to avoid the hurling
of bad remarks, x x x.

xxxx

He left the site at Angono on May 7,1993 when some items were not yet burned[,] x x x as he was instructed by defendant
Iledan to attend to the needs of the representatives when they leave the site. At [the] time he left, there were still bad order
and expired medicines to be burned. During the burning, present were Mr. Rotoni, Ms. Ferrer, Francisco Mercado and brother
and nephews, several scavengers and a policeman of Angono whom Francisco paid to help maintain peace and order, x x x
(TSN, 12 September 1997).

xxxx

FRANCISCO MERCADO testified that he knows defendant company because he worked in that office from April 1, 1977 until
May 7, 1993 when he was apprehended by NBI agents for selling condemned medicines, x x x [T]he last time [he was
assigned to destroy the bad order medicines] was on May 7, 1993. xxx The representatives were from the BIR, DFA [sic] and
pharmacist of the companies that have the bad order medicines. Plaintiff called the representatives. The destruction site on
May 7, 1993 was at Angono, Rizal (TSN, 22 May 1998).

x x x On December 18, 1992, he invited defendant Iledan x x x for dinner [during which] Iledan said "kayong mga unionista,
ida-down ko kayong lahat sa warehouse." Defendant was mad with the unionista and those in the warehouse, x x x On May
7, 1993, he was arrested by the NBI agents who blocked his way near the dump site at Angono. Around 8:00 in the morning,
defendant Iledan called up their office and instructed him and plaintiff to burn the medicines. In the office, he saw the BIR
representative and pharmacist of Duncan Co. They loaded the medicines to be burned [inside] the 10-wheeler truck xxx. The
zebra van he was driving was not loaded with medicines. At [the] site, he was instructed by plaintiff to unload the medicines
to be burned. Due to stingy bad odor and heat of the sun, plaintiff and the representatives left the area at about 2:30 in the
afternoon. He stayed to conduct the burning as instructed by defendant Iledan (TSN, 28 September 1998).

The bottled medicines were ordered separated and placed [inside] the van as they cannot be burned as they will explode.
These were brought to Taguig, the contents thrown and the bottles given to the helpers x x x. He was not able to reach the
shop because the NBI agents, 7 of them on board 3 vehicles blocked [his path] and arrested him. Two agents were armed,
asked him to alight from the vehicle and poked a gun at him. He was handcuffed and was asked the key of the van which he
refused to give because it was his responsibility, x x x. They left and while on their way, somebody called by radio,
introduced himself as defendant Iledan x x x.

x x x On December 27 or 28, 1992, x x x defendant Iledan said that the union members will not stay long because he will file
cases against them and he will terminate [the] witness from the service, x x x The arrest was masterminded by defendant
Iledan x x x (TSN, 24 February 1999).

xxxx

ROLANDO ROTONI testified that he was a Revenue Examiner of the BIR x x x. Per referral by the Revenue District Officer, he
represented the BIR in the destruction of bad order and expired medicines of defendant company on May 7, 1993. x x x.
There was also a representative from Duncan Pharmaceuticals, Susan. They left the site at about 12:00 noon to 1:00 in the
afternoon. Destruction started after arriving at the place. He was present during the burning of all the medicines, x x x

On cross-examination, he admitted that x x x [n]ot all the medicines were destructed [sic] when they left the site, but [he]
made sure that substantially all the medicines were actually destroyed, x x x. All the medicines were placed in 1 fire and
were burned, using gasoline. He was checking while the medicines were being unloaded from the truck. No medicine was
left, [the] truck was empty. None of the medicines were returned to any of the vehicles undestroyed. He was not sure that at
the time he left the site, there were medicines still not destroyed. xxx. He left without making sure that all trie medicines
were actually destroyed because they were already x x x on fire. He would not know the other procedure for bottled
medicines for destruction. The bottled medicines were not crushed as they were placed in 1 fire together with the capsules
and tablets, then gasoline [was] poured on the single [pile] xxx and [set on fire].

xxxx

EVIDENCE FOR THE DEFENSE

Evidence for the defense consists of the testimonies of defendant Quirino Iledan, Efren Cruz, Leonora Pacson, Atty. Ferdinand
Lavin and Exhibits "1" to "15," inclusive of submarkings.

QUIRINO ILEDAN testified that he was x x x the Warehouse Operations Manager since March 1984, responsible for the
operations of the entire warehouse, xxx. He knew plaintiff being the warehouse supervisor, responsible for the receipt of
good stocks from manufacturers and x x x the destruction of expired and bad order medicines, xxx. Francisco Mercado
assisted plaintiff in the destruction, x x x. Stocks were to be destroyed, tablets should be crushed, bottles should be crushed
and liquids should be thrown out of the bottles and the bottles should be crushed or perforated so that [they become]
valueless. They should be unfit for human consumption as it is a requirement of the manufacturer to prevent its reuse. The
certificate of destruction should be signed by plaintiff, representatives of the BIR, BFAD, Auditor and the manufacturer which
certifies that the products have been destroyed. It was plaintiffs responsibility to make sure that the bad order medicines
were completely destroyed.

hi February 1998,21 he received a call from Isabelito Miguel that expired and bad order medicines were being sold at the back
of Sto. Nino church. He immediately informed Mr. Santos by telephone who called up the AVP, HRD to report the matter to
the NBI. x x x. He informed the agents of the dates when to conduct the surveillance operations during the scheduled
destruction, x x x. On May 8, 1993, he received a call from plaintiff informing him that Francisco was arrested by the NBI. x x
x. He went to the NBI headquarters with plaintiff to visit Francisco in the afternoon and looked for the arresting officer, x x x

After he left the NBI headquarters, he was informed that plaintiff was arrested, x x x. The NBI filed a criminal case against
plaintiff in which he had no participation, x x x. When plaintiff was informed that Francisco was arrested by NBI agents, he
already heard but pretended not to know because he had the idea that plaintiff was involved and he might flee. He denied
the truth of plaintiffs statement on June 4, 1997 that upon arrival at the NBI headquarters with plaintiff, the latter was
suddenly arrested. Instead, they were told to execute [a] statement, after which he asked that he x x x be allowed to leave.
He knew of the pictures taken by the NBI x x x but he did not know who took the pictures and who asked the photographers
to go to the premises. He denied the truth in the statement of plaintiff taken on July 1, 1997 that the reason why defendant
Iledan caused the filing of complaint that led to his arrest was because defendant Iledan was angry with union members
knowing that plaintiff organized and was an active union member, x x x. He also denied the plaintiffs testimony on July 30,
1997 that he manifested hostility and was angry with plaintiff and other employees especially at the warehouse division x x x
(TSN, 15 February 2001).

He recalled that he has gone to Francisco's residence in December 1992, but denied x x x having stated "kayong mga
unionista, ida-down ko kayong lahat sa warehouse." As a matter of procedure, plaintiff was authorized to leave the
destruction site before the bad order medicines were destroyed, to have lunch with the representatives. After which, plaintiff
must go back to the destruction site to witness the complete destruction. In that case, plaintiff no longer returned which was
not the correct procedure, x x x

xxxx

EFREN CRUZ testified that he x x x was then the Employee Relations Manager x x x and was aware of [plaintiffs] termination
due to violation of company policies and procedures, on the basis of NBI surveillance reports[,] x x x particularly in the
conduct of destruction of expired and bad order drugs.

x x x The surveillance reports furnished by the NBI to the company served as basis for the investigation they conducted, x x
x

xxxx

On redirect examination, he confirmed that he did not know if the surveillance reports were accurate or not. The basis of
plaintiff s termination was his breach of trust and confidence and negligence in the performance of his duty based on such
report and information gathered during the investigation that they conducted x x x (TSN, 24 April 2003).

xxxx

ATTY. FERDINAND LAVESf testified that he x x x was employed as Chief, Anti-Organized Crime Division of the NBI. x x x. He
knew defendant company because they investigated its complaint (Exh. "1") requesting for investigative assistance, x x x.
Then [a] series of case conferences and surveillance operations were conducted, x x x.22

Ruling of the Regional Trial Court

On February 28, 2005, the trial court issued its Decision23 in Civil Case No. LP-95-022, decreeing thus: Lawl ibra ryofCRAlaw
PREMISES CONSIDERED, judgment is rendered in favor of the plaintiff and against the defendants who hereby are found to
have maliciously prosecuted the plaintiff and they are directed to pay the plaintiff, jointly and severally, the following
amounts, to wit: Lawlib raryofCRAlaw

1. Three Million (P3,000,000.00) Pesos by way of moral damages;

2. Five Hundred Thousand (P500,000.00) Pesos by way of exemplary damages;

3. 25% of the total amount awarded to plaintiff as attorney's fees and pay the cost of the suit.

SO ORDERED.24

The trial court held that all the elements of malicious prosecution have been proved, namely, that (1) the prosecution did
occur and the defendant was himself the prosecutor, and the criminal action terminated in an acquittal; (2) in bringing the
action, the prosecutor acted without probable cause; and (3) the prosecutor was actuated or impelled by legal malice, i.e. by
improper or sinister motive.25 It declared that petitioners knowingly and deliberately caused the investigation and
prosecution of respondent through a false and unfounded letter-complaint coursed through the NBI that was based on the
supposed tip of Miguel who was not even called to testify in court. Acting without probable cause and with full knowledge
that respondent and his colleagues were proceeding in accordance with accepted company practices regarding the
destruction of the bad order and expired medicines and subsequent disposition of the medicine bottles - which, after
emptying and destroying their contents, were cleaned and then awarded to the helpers as their compensation or sold,
petitioners nonetheless caused the unlawful arrest of respondent and his colleagues while the latter were on their way to
dispose of the bottled medicines (in accordance with said company-accepted procedure) on May 7, 1993 - on the false
supposition or pretext that they were carrying out their modus operandi of selling and distributing the company's bad
medicines. The trial court added that all the surveillance operations previously conducted by the NBI proved nothing other
than that the employees were transporting the medicines to places where they would be destroyed and disposed of pursuant
to accepted practices.

The trial court added that respondent and his colleagues were subjected to a humiliating press conference, and petitioners
failed to assist them or shield them from embarrassment despite the fact that Iledan was then present at the press briefing;
that he was detained for 10 days together with 40 other hardened criminal-inmates who threatened him every now and then
and made him their servant for the whole duration of his detention, in a cell where they were packed like sardines; that he
was then falsely charged in Criminal Case No. 9070 and subsequently acquitted for lack of evidence; and that he was
terminated from employment.

The trial court concluded that for petitioners' malicious acts resulting in his unwarranted arrest, detention, prosecution, public
humiliation, and suffering, respondent was entitled to indemnity.

Ruling of the Court of Appeals

Petitioners interposed an appeal with the CA contending essentially that not all the elements of malicious prosecution were
present; that there was probable cause in filing the complaint and in requesting NBI assistance; that based on the
surveillance reports, respondent committed anomalies which thus warranted a finding of probable cause; that the trial court
erred in awarding damages to respondent; and that it was erroneous for the trial court to dismiss their counterclaim.

On April 29, 2011, the CA issued the assailed Decision, finding that there was indeed malicious prosecution of respondent;
that the trial court was correct in declaring that Iledan knew from the start that the accusation against respondent was false
and baseless; that the NBI surveillance operations merely revealed an irregularity in the manner of destruction of Marsman's
expired and bad order medicines, and that no destruction took place on the dates when these surveillance operations were
conducted - not that respondent was guilty of selling, dispensing or delivering expired or rejected pharmaceutical products;
that Iledan knew and approved of the practice of reselling the empty medicine bottles rather than destroying ithem, which
practice he should have disclosed to Marsman; and that Marsman should have conducted its own internal investigation of the
case, instead of immediately seeking NBI assistance and subjecting respondent to a humiliating experience and unnecessary
media exposure. The CA likewise sustained the trial court's award of moral and exemplary damages, noting that respondent's
detention, media exposure, and unwarranted prosecution in an unfounded suit caused him and his family great damage,
mental anguish, and serious anxiety. Thus, the appellate court decreed: Lawlib raryofCRAlaw

WHEREFORE, PREMISES CONSIDERED, the court a quo's decision dated 28 February 2005 is hereby AFFIRMED IN TOTO.

SO ORDERED.26

Petitioners moved for reconsideration, but in its September 16, 2011 Resolution, the CA stood its ground. Hence, the instant
Petition.

Issues

Petitioners raise the following issues: Lawli bra ryofCRAlaw

THREE OUT OF THE FOUR ELEMENTS OF MALICIOUS PROSECUTION WERE NOT ESTABLISHED; chanRoblesvi rtua lLawl ibra ry
THERE IS NO BASIS TO AWARD DAMAGES, ATTORNEY'S FEES AND COSTS; AND

THE AWARD OF P3,500,000.00 IN MORAL AND EXEMPLARY DAMAGES AND P875,000.00 IN ATTORNEY'S FEES IS EXCESSIVE
AND UNJUST.27

Petitioners' Arguments

In their Petition and Reply,28 petitioners seek a reversal of the assailed CA dispositions and the consequent dismissal of
respondent's complaint in Civil Case No. LP-95-022. They argue that three of the four elements required for a malicious
prosecution suit to prosper are lacking, namely: 1) that the defendant in the malicious prosecution case is himself the
prosecutor in the criminal, civil or other legal proceeding or case, or that he instigated its commencement; 2) that in bringing
the action, the defendant acted without probable cause; and 3) that the defendant was impelled by legal malice -- an
improper or sinister motive. In connection with the first requisite, petitioners contend that they did not act as prosecutors,
nor did they commence the criminal case against respondent; that it was the NBI that investigated and caused the filing of
Criminal Case No. 9070, and their role was limited to requesting the NBI's assistance in investigating the respondent's
alleged pilferage of bad medicines; that they did not seek NBI assistance to prosecute respondent, but merely
to investigate him; and that it was the NBI alone which determined what crime respondent should be charged with.

Relative to the second element, petitioners insist that they acted with probable cause in seeking the investigation of
respondent and his colleagues, based on the tip provided by Miguel that bad medicines were being sold in Parañaque; that
probable cause was established through the surveillance operations of the NBI and the State Prosecutor's recommendation to
file Criminal Case No. 9070; that acquittal does not disprove the existence of probable cause,29 and so it was erroneous for
the CA to declare that respondent's acquittal implies lack of probable cause, as his acquittal was based on failure to prove
guilt beyond reasonable doubt - not lack of probable cause.

On the third element, or the issue of legal malice, petitioners argue that since there was probable cause to charge
respondent, then this is tantamount to absence of malice; stated otherwise, the absence of probable cause and malice must
concur in an action for malicious prosecution.30 Moreover, good faith is presumed in the absence of clear and convincing
evidence of malice.

Petitioners add that they should not be penalized for exercising their right to litigate or for requesting NBI assistance in
investigating respondent and his colleagues; that the mere act of submitting a case to the authorities for prosecution does
not make them liable for malicious prosecution, since the law does not mean to impose a penalty on the right to
litigate;31 and that they acted as a sensible and prudent citizen would upon being told by the informant Miguel of the
purported sale of bad medicines in Parañaque.

Finally, on the issue of indemnity, petitioners submit that since all the elements of malicious prosecution were not proved,
there is no ground to hold them liable for damages, attorney's fees and costs; that the award is excessive; and that
respondent's case should suffer the same fate as that instituted by Mercado,32 which was dismissed for lack of merit - and
which dismissal was affirmed with finality by the CA in CA-G.R. CV No. 88732.

Respondent's Arguments

On the other hand, respondent - seeking affirmation of the assailed CA pronouncements - maintains in his Comment and
Addendum33 thereto that the Petition is a rehash of petitioners' arguments in the CA; that Iledan's malice and hostile attitude
toward his subordinates are the reasons for filing the criminal case against him; that instead of aiding his subordinates when
they were arrested on May 7 and 8, 1993, Iledan instigated a humiliating press conference where photographs and footage
of respondent and his companions were taken and published in the newspapers and aired on television; that Mercado's civil
case is different from his, in that he and Mercado are not similarly situated - a fact which the trial court itself realized in
disposing of Civil Case No. LP-96-0040; and that overall, the CA's pronouncements are correct and must be upheld.

Our Ruling

The Court denies the Petition.

In Magbanua v. Junsay,34 malicious prosecution was defined and characterized as follows: Lawlib raryofCRAlaw

In this jurisdiction, the term 'malicious prosecution' has been defined as 'an action for damages brought by one against
whom a criminal prosecution, civil suit, or other legal proceeding has been instituted maliciously and without probable cause,
after the termination of such prosecution, suit, or other proceeding in favor of the defendant therein.' While generally
associated with unfounded criminal actions, the term has been expanded to include unfounded civil suits instituted just to
vex and humiliate the defendant despite the absence of a cause of action or probable cause.

This Court, in Drilon v. Court of Appeals, elucidated, viz.:


Lawlib ra ryofCRAlaw

The term malicious prosecution has been defined in various ways. In American jurisdiction, it is defined as: Lawlib ra ryofCRAlaw
One begun in malice without probable cause to believe the charges can be sustained (Eustace v. Dechter, 28 Cal. App. 2d.
706, 83 P. 2d. 525). Instituted with intention of injuring defendant and without probable cause, and which terminates in
favor of the person prosecuted. For this injury an action on the case lies, called the action of malicious prosecution (Hicks v.
Brantley, 29 S.E. 459, 102 Ga. 264; Eggett v. Allen, 96 N.W. 803, 119 Wis. 625).'
In Philippine jurisdiction, it has been defined as:
Lawlib raryofCRAlaw

'An action for damages brought by one against whom a criminal prosecution, civil suit, or other legal proceeding has been
instituted maliciously and without probable cause, after the termination of such prosecution, suit, or other proceeding in
favor of the defendant therein. The gist of the action is the putting of legal process in force, regularly, for the mere purpose
of vexation or injury (Cabasaan v. Anota, 14169-R, November 19,1956).'

The statutory basis for a civil action for damages for malicious prosecution are found in the provisions of the New Civil Code
on Human Relations and on damages particularly Articles 19, 20, 21, 26, 29, 32, 33, 35, 2217 and 2219 (8). To constitute
malicious prosecution, however, there must be proof that the prosecution was prompted by a sinister design to vex and
humiliate a person, and that it was initiated deliberately by the defendant knowing that his charges were false and
groundless. Concededly, the mere act of submitting a case to the authorities for prosecution does not make one liable for
malicious prosecution.
This Court has drawn the four elements that must be shown to concur to recover damages for malicious prosecution.
Therefore, for a malicious prosecution suit to prosper, the plaintiff must prove the following: (1) the prosecution did occur,
and the defendant was himself the prosecutor or that he instigated its commencement; (2) the criminal action finally ended
with an acquittal; (3) in bringing the action, the prosecutor acted without probable cause; and (4) the prosecution was
impelled by legal malice — an improper or a sinister motive. The gravamen of malicious prosecution is not the filing of a
complaint based on the wrong provision of law, but the deliberate initiation of an action with the knowledge that the charges
were false and groundless.35

The CA is correct in declaring that all the elements of malicious prosecution exist in this case. First of all, there is no question
that the investigation of respondent for alleged participation in a purported syndicate that sells Marsman's bad medicines was
prompted by a supposed telephone call tip from Miguel, which resulted in Pilapil's March 15, 1993 request to then NBI
Director Velasco for an investigation of the matter. Secondly, respondent was acquitted in the resulting criminal case -
Criminal Case No. 9070 - for lack of evidence and lack of jurisdiction, through an October 12, 1994 Order of the Taguig City
Metropolitan Trial Court, Branch 74. There is no doubt that Marsman instigated the investigation and prosecution of
respondent and his colleagues. Petitioners cannot claim that they merely sought to investigate - and not prosecute -
respondent; certainly, prosecution follows as a necessary consequence if the NBI believes that a crime has been committed,
and petitioners cannot prevent the filing of charges, even if they wanted to. As correctly observed by the appellate court, if
indeed petitioners simply sought to investigate and not prosecute respondent, they should have first conducted their own
internal investigation of the matter instead of immediately referring the case to the NBI; the option to prosecute may be
exercised later. In fact, this should have been the case; nothing prevented them from fielding confidential personnel to pose
as buyers of these bad medicines they believe were being sold in Parañaque. Their so-called informant Miguel - if he actually
existed - could have produced more than a simple telephone report.

On the question of probable cause,36 it must be said that against the respondent, no probable cause existed to warrant his
prosecution for violation of the provisions of RA 3720. There is no legal ground to suppose that respondent was involved in a
syndicate which sold Marsman's bad medicines in Parañaque; the supposed tipster Miguel was not presented in court to
identify the alleged perpetrators of the illegal act - hence, the basis for the accusation is lacking. Although informants are
usually not presented in court because of the need to hide their identity and maintain their valuable service to the
police,37 this rule cannot apply in Miguel's case because he was not a confidential informant; his identity was precisely
divulged. Likewise, there is no evidence to prove that respondent was involved in or committed any act violative of RA 3720.
He was not even part of the group that was arrested by the NBI on May 7, 1993; he was arrested and detained - illegally, in
fact - only the next day. His participation in any manner or degree has not been shown. Quite the contrary, the evidence
indicates that on May 7, 1993, respondent was with the BIR representative Rotoni and Duncan Pharmaceuticals employee
Ferrer the whole time. Rotoni testified as well that on that day, all the bad medicines were placed in a single pile, poured
with gasoline, and burned, and nothing was left in the 10-wheeler truck and van that brought the bad medicines to the
destruction site; this he made sure before he left - only that he, Ferrer and respondent left without making sure that all the
bad medicines in the pile were completely destroyed. Nonetheless, if anything was recovered from the burning pile after
Rotoni and respondent left, respondent did not actually participate in the recovery as he had to take Rotoni and Ferrer home.
Moreover, if it is true that the NBI recovered bad medicines from respondent's colleagues on May 7, 1993 when they were
arrested, this does not appear to constitute a violation of RA 3720: according to Mercado, the bottled bad medicines could
not be burned in the pile because they would explode - which is true as a matter of experience -and thus, they had to be
brought to a location in Taguig where their contents would be emptied, destroyed and the bottles recovered and given to the
helpers as compensation, in accordance with accepted practice sanctioned by the petitioners. However, before they could get
to the said location, they were intercepted and arrested by the NBI. Also, prior surveillance operations conducted by the NBI
in March 1993 do not even indicate that respondent and his colleagues were involved in a syndicate relative to the sale of
bad medicines; the testimony of NBI agent Lavin yields nothing other than that they conducted surveillance and tailing
operations; he does not even know the identities of the individuals they were tailing at the time. The photographs taken
during the operations do not show that respondent was there, or that he was performing illegal acts or omissions. Petitioners'
very own witness, Marsman Employee Manager Efren Cruz, admitted that he doubted the accuracy of the surveillance
operations.38reda rclaw

In short, while Marsman officials confined themselves to their secure and relaxed offices, they simply relied on Iledan's claim
that he received a tip from a so-called informant and did not even lift a finger to verify the truth of allegations that their bad
medicines were being peddled in Parañaque. On the strength of a questionable and unreliable third party tip - by telephone
at that, petitioners set into motion an investigative and prosecutorial process that resulted in a bungled, crackpot operation
and the inevitable acquittal of the respondent. If petitioners and the NBI were prudent and clever enough, they would have
taken the surveillance operations all the way to the point where the bad medicines were being actually sold to the public,
before any arrests were made; instead, their half-baked and poorly planned operation yielded nothing to build a case on. As
expected, Criminal Case No. 9070 could only be dismissed.

The fact that the plaintiff in a malicious prosecution case is acquitted of the criminal charge precisely places the prior finding
of probable cause in issue, which must be determined in the malicious prosecution case. If the plaintiff was acquitted for
reasons other than lack of probable cause, then certainly the malicious prosecution case cannot prosper. Thus, petitioners
are correct in arguing that acquittal does not disprove the existence of probable cause. However, they are mistaken in
concluding that respondent's acquittal was based on failure to prove guilt beyond reasonable doubt and not lack of probable
cause. As a matter of fact, respondent's acquittal was due to lack of evidence, which presupposes lack of probable cause.

The Court is inclined to believe respondent and Mercado's statements that there is a standing company practice not to
include bottled medicines in the burning process and that, instead, these are emptied of their contents and the bottles given
to helpers as compensation or sold to the junk shops. Firstly, if these bottled medicines are burned, they would in all
likelihood explode and potentially harm respondent and his colleagues; in short, it is not - from a practical point of view -
acceptable procedure to burn them. Secondly, notwithstanding petitioners' claim that such procedure is not sanctioned, they
have not offered any proof of strict protocol regarding disposal of bottled medicines other than to say that these medicine
bottles should be crushed - which procedure, again, is unsafe and potentially harmful to respondents, his colleagues, and the
public in general, since it is apparent that petitioners have not provided respondent and his colleagues the appropriate
equipment and venue for crushing the bottles safely and efficiently. Quite the opposite, it appears that petitioners have
adopted an irresponsible, unsafe, unhygienic, dangerous, unconscientious and lax procedure relative to the disposal of
Marsman's bad medicines; their overwhelming attitude appears to be that it does not matter where or how the bad
medicines are disposed, so long as they are gotten rid of. Indeed, the lack of safeguards and the multiple loopholes relative
to the procedure of disposal, as well as the indifference and unconcerned attitude adopted by petitioners, are simply
astounding. There is an absolute lack of strict protocol and procedure in the disposal of bad medicines. There is no controlled
environment for the complete destruction of these potentially harmful chemicals: they are simply brought to a vacant lot or
open space - where scavengers gather and ogle, hoping to salvage something from the pile of hazardous substances - or
private residential or commercial lot, there to be burned without regard for the health and safety of bystanders and
residents. The bad medicines are burned openly and the fumes allowed to escape freely, contaminating the environment,
wreaking havoc and causing unimaginable damage and deadly disease; worse, the resultant chemical reactions caused by
burning - which have permanent effects on the soil, groundwater, and all animal life in general - are of no concern to
petitioners. The destruction is carried out and witnessed by lowly employees of Marsman - bereft of proper accountability and
training — and whose attention is distracted as they must simultaneously attend to the personal needs of the BIR and
pharmaceutical company representatives, feed them and men drive them home.39 The warehouse head Iledan, all the while,
simply sits idly in his comfortable office, there to conveniently await the return of his supervisor. It is as if Marsman actually
encourages the pilferage of bad medicines. If any such pilferage occurs, Marsman and its officials should be prosecuted
together with the perpetrators; indeed, Marsman should be held responsible for downright negligence in failing to carry out
strict procedure for the disposal of its bad medicines, which promotes permanent environmental damage and the introduction
of these harmful products to the public at large. If there is anyone who should be prosecuted criminally for flagrant violations
of RA 3720 and environmental laws, it should be the petitioners.

On the issue of legal malice, the Court notes respondent's complaint which specifically alleged that when Iledan assumed his
position as warehouse manager, he was arrogant and hostile toward the employees and even manifested his desire to
replace respondent and other employees of the respondent's warehouse. Respondent testified particularly that Iledan did not
relish his attempt in 1992 at establishing a supervisors' union, and that Iledan was angry at union members. Mercado
corroborated this, testifying that in December 1992, he invited Iledan and his family to their house for dinner, where Iledan
became intoxicated and said "Kayong mga unionista, ida-down ko kayong lahat sa warehouse;" that was "mad with the
unionista and those in the warehouse;" that union members like him will not stay long because Iledan will file cases against
them; that Iledan will terminate him from the service; that Iledan was not able to say anything more as his wife - Malou,
whom he knew - persuaded him to leave because what he was doing was wrong; and that he reported the incident to the
union president, which prompted the union to send a letter to Iledan. For his part, Iledan affirmed that he and his family
attended the December 1992 dinner at Mercado's home, but simply denied that he was intoxicated and made the remark
about targeting union members. He did not present his wife to testify in his favor; nor did he refute the letter sent to him by
the union pertaining to the December 1992 incident.

As against Iledan's denial, respondent's declarations and Mercado's testimony deserve weight. Iledan was prompted by
hatred, malice and bad faith in deliberately initiating a baseless action against respondent, Mercado and their colleagues,
with the solitary purpose of humiliating and harassing them and ultimately causing their removal from Marsman. It must be
recalled that Iledan was the recipient of the supposed telephone tip from Miguel, whose identity and existence is exceedingly
questionable since he was not presented in court. Relying blindly on I