CASE DOCTRINES IN LABOR LAWS Prepared by:

Penned by Justice Del Castillo Atty. Alloysius R. Yebra

Bar Exams 2018

ILLEGAL RECRUITMENT; LIABILITY FOR BOTH ILLEGAL RECRUITMENT AND

ESTAFA – If an individual illegally recruits another for employment abroad, he shall be meted
the penalty of life imprisonment and fined. The same individual could also be held liable for the
crime of Estafa under the Revised Penal Code. (People v. Dulay, G.R. No. 158627, March 5, 2010)

ILLEGAL RECRUITMENT; SOLIDARY LIABILITY OF A MANAGER WITH THE

RECRUITMENT AGENCY – It bears emphasizing that the statutorily granted privilege of a
corporate veil may be used only for legitimate purposes. The corporate vehicle cannot be used as
a shield to protect fraud or justify wrong. (Nahas v. Olarte, G.R. No. 169247, June 2, 2014)

ILLEGAL RECRUITMENT; PROFIT OR GAIN NOT MATERIAL FOR PROSECUTION –

Suffice is to say that money is not material to a prosecution of illegal recruitment considering that
the definition of “illegal recruitment” under the law includes the phrase “whether for profit or not”.
Besides, even if there is no receipt for the money given by the private complainants to appellants,
the former’s respective testimonies and affidavits clearly narrate the latter’s involvement in the
prohibited recruitment. (People of the Philippines v. Mateo and Lapiz, G.R. No. 198012, April 22, 2015)

GENERAL RULE: NON-DIMUTION OF BENEFITS; EXCEPTIONS: – The Labor Code

expressly prohibits employers from eliminating or reducing the benefits received by their
employees. This Rule, however, applies only if the benefit is based on an express policy, a written
contract, or has ripened into a practice. To be considered a practice, it must be consistently and
deliberately made by the employer over a long period of time. An exception to the rule is when
the practice is due to error in the construction or application of a doubtful or difficult question of
law. The error, however, must be corrected immediately after its discovery; otherwise, the rule
on Non-Diminution of Benefits would apply. (Wesleyan University Philippines v. Wesleyan University-
Philippines Faculty and Staff Association, G.R. No. 181806, March 12, 2014)

LEGITIMATE JOB CONTRACTING: ELEMENTS – A person is considered engaged in

legitimate job contracting or subcontracting if the following conditions concur: (1) the contractor
carries on a distinct and independent business and partakes the contract work on his own
account, under his own responsibility, according to his own manner and method, free from the
control and direction of his principal in all matters connected with the performance of his work
except as to the results thereof; (2) the contractor has substantial capital or investment; AND (3)
the agreement between the principal and the contractor or subcontractor assures the contractual
employees’ entitlement to all labor and occupational safety and health standards, free exercise of
the right to self-organization, security of tenure, and social welfare benefits. (Petron v. ARMZ
Caberte, G.R. No. 182255, June 15, 2015)

LEGITIMATE JOB CONTRACTING: JURISDICTION – In legitimate job contracting, no

employer-employee relationship 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. In order for the Labor Arbiter to acquire jurisdiction over a dispute, there must be an
employer-employee relation between the parties. There being none, and the principal being
responsible only for proper payment of wages, the job contractor’s employees are justified in
filing a civil case against the former, based on Article 19 and 20 of the Civil Code, to recover
unpaid wages. (SSS v. Ubaña, G.R. No. 200114, August 14, 2015)

LABOR-ONLY CONTRACTING: ELEMENTS – There is “labor-only contracting” when the

contractor or subcontractor merely recruits, supplies or places workers to perform a job, work or
service for a principal. In labor-only contracting, the following elements are present: (1) the

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person supplying workers to an employer does not have substantial capital or investment in the
form of tools, equipment, machineries, work premises, among others; and (2) the workers
recruited and placed by such person are performing activities which are directly related to the
principal business of the employer. (Sy v. Fairland Knitcraft, G.R. No. 182915, December 12, 2011)

LABOR-ONLY CONTRACTING: EFFECTS – Where labor-only contracting exists, the

contractor is considered merely as an agent of the principal employer and the latter is responsible
to the employees of the labor-only contractor as if such employees had been directly employed
by the principal employer. In such a case, there exists an employer-employee relationship
between the principal and the contractor’s employees. (Aliviado v. Procter, G.R. No. 160506, June 6,
2011)

LABOR-ONLY CONTRACTING: BURDEN OF PROOF – As a general rule, the contractor is

presumed to be a labor-only contractor, unless such contractor overcomes the burden of proving
that it has substantial capital, investment, tools and the like. However, where the principal is the
one claiming that the contractor is a legitimate contractor, said principal has the burden of
proving that supposed status. (Alilin v. Petron, G.R. No. 177592, June 9, 2014)

SPECIAL PROBATIONARY PERIOD FOR TEACHERS – For the entire duration of the three
(3) year period, the teacher remains under probation. However, this scheme of fixed-term contract
is a system that operates during the probationary period and for this reason is subject to Article
281 of the Labor Code, which provides that the services of an employee who has been engaged
on a probationary basis may be terminated for a (1) just cause or (2) when he fails to qualify as a
regular employee in accordance with reasonable standards made known by the employer to the
employee at the time of his engagement. (CSR and Mofada v. Rojo, G.R. No. 170388, September 18,
2013)

CONTROL TEST; RULES AND REGULATIONS THAT SERVE AS MERE GUIDELINES

NOT INDICATIVE OF CONTROL – Not every form of control that a hiring party imposes on
the hired party is indicative of employer-employee relationship. Rules and regulations that
merely serve as guidelines towards the achievement of a mutually desired result without
dictating the means and methods of accomplishing it do not establish employer-employee
relationship. (Royal Homes v. Alcantara, G.R. No. 195190, July 28, 2014)

PROJECT-BASED EMPLOYEES; PRINCIPAL TEST TO DETERMINE EXISTENCE– The

services of project-based employees are co-terminous with the project and may be terminated upon
the end or completion of the project or phase thereof for which they were hired. The principal test
in determining whether particular employees were engaged as project-based employees, as
distinguished from regular employees, is whether they were assigned to carry out a specific
project or undertaking, the duration and scope of which was specified at, and made known to
them, at the time of their engagement. Moreover, the repeated rehiring of project employees to
different projects does not ipso facto make them regular employees. Case law states that length of
service (through rehiring) is not the controlling determinant of the employment tenure [of project-
based employees but, as earlier mentioned], whether the employment has been fixed for a specific
project or undertaking, with its completion having been determined at the time of their
agreement. (Herma Shipyard v. Oliveros, G.R. No. 208936, April 17, 2017)

PROJECT-BASED EMPLOYEES; ACQUISITION OF REGULAR EMPLOYEE STATUS – A

project employee may acquire the status of a regular employee when the following factors concur:
(1) there is continuous rehiring of project employees even after cessation of a project; AND (2) the
tasks performed by the alleged project employee are vital, necessary and dispensable to the usual
business or trade of the employer. (Exodus Int’l Construction Corporation v. Biscocho, G.R. No.
166109, February 23, 2011)

JUST CAUSES; LOSS OF TRUST AND CONFIDENCE ON MANAGERIAL EMPLOYEES –

Well-settled is the rule that the mere existence of a basis for believing that a managerial employee
has breached the trust of his employer would suffice for his dismissal. Proof beyond reasonable
doubt is not required. A mere intention of the managerial employee to violate the trust of his

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employer will suffice a just cause for his dismissal from service. (Equitable PCI Bank v. Dompor,
G.R. Nos. 163293 & 163297, December 13, 2010)
JUST CAUSES; LOSS OF TRUST AND CONFIDENCE MUST STILL BE BASED ON
WILLFUL BREACH OF TRUST – In cases of managerial employees, the existence of a mere basis
for believing that a managerial employee breached the trust of his employer would suffice for his
dismissal. However, to be a valid ground, loss of trust and confidence must be based on “willful”
breach of trust, that is done intentionally, knowingly and purposely, without justifiable excuse,
as distinguished from an act done carelessly, thoughtlessly, heedlessly, or inadvertently.
(Intradent v. Simbillo, G.R. No. 207315, November 23, 2016)

JUST CAUSES; LOSS OF TRUST AND CONFIDENCE MUST BE RELATED TO THE

PERFORMANCE OF EMPLOYEE’S DUTIES – As provided for in Article 282, an employer may
terminate an employee’s employment for fraud or willful breach of trust reposed in him. But, in
order to constitute a just cause for dismissal, the act complained of must be “work-related” such as
would show the employee concerned to be unfit to continue working for the employer. (Jerusalem
v. Keppel Monte Bank, et al., G.R. No. 169564, April 6, 2011)

JUST CAUSES; TWO (2) ESSENTIAL REQUISITES OF ABANDONMENT– For abandonment

to constitute a just cause for the termination of one’s employment, jurisprudence provides for two
essential requisites which must be established: (1) the failure of the employee to report for work
or absence without valid or justifiable reason; AND (2) clear intention to sever the employer-
employee relationship manifested by some overt acts. The fact that the dismissed employee never
prayed for reinstatement and has sought employment in another company which is a competitor
of his previous employer cannot be construed as his over acts of abandoning employment.
Neither can the delay of four months be taken as an indication that the filing of a complaint for
illegal dismissal is a mere afterthought. (Harpoon Marine Services v. Francisco, G.R. No. 167751,
March 2, 2011)

JUST CAUSES; MERE ABSENCE OR FAILURE TO REPORT TO WORK NOT

ABANDONMENT – It is a well settled rule that mere absence or failure to report to work is not
enough to amount to abandonment of work. To constitute abandonment of work, two elements
must concur: (1) the employee must have failed to report for work or must have been absent
without valid or justifiable reason; and (2) there must have been a clear intention on the part of
the employee to sever the employer-employee relationship manifested by some overt act.
Moreover, it is the employer who has the burden of proof to show deliberate and unjustified
refusal of the employee to resume his employment without any intention of returning. (Exodus
Int’l Construction Corporation v. Biscocho, G.R. No. 166109, February 23, 2011)

JUST CAUSES; A SERIES OF IRREGULARITIES CONSTITUTE SERIOUS MISCONDUCT

– A series of irregularities when put together may constitute serious misconduct. Gross neglect
of duty becomes serious in character due to frequency of instances. (Quiambao v. Manila Electric,
G.R. No. 171023, December 18, 2009)

JUST CAUSES; PREVIOUS INFRACTIONS AND PENALTIES STILL CONSIDERED –

Although the employee already suffered the corresponding penalties for his past misconduct,
those infractions are still relevant and may be considered in assessing his liability for his present
infraction. (Mapili v. Philippine Rabbit, G.R. No. 172506, July 27, 2011)

JUST CAUSES; CONVICTION OF A CRIME NOT REQUIRED – Conviction in a criminal case

is not necessary to find just cause for termination of employment. Criminal cases require proof
beyond reasonable doubt while labor disputes require only substantial evidence. In addition,
length of service and a previously clean employment record cannot simply erase the gravity of
the betrayal exhibited by a malfeasant employee. Length of service is not a bargaining chip that
can simply be stacked against the employer. After all, an employer-employee relationship is
symbiotic where both parties benefit from mutual loyalty and dedicated service. If an employer
had treated his employee well, has accorded him fairness and adequate compensation as
determined by law, it is only fair to expect a long-time employee to return such fairness with at
least some respect and honesty. Thus, it may be said that betrayal by a long-time employee is

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more insulting and odious for a fair employer. (Reno Foods, Inc., v. Nagkakaisang Lakas ng
Manggagawa – Katipunan, G.R. No. 164016, March 15, 2010)

JUST CAUSES; GROSS AND HABITUAL NEGLECT OF DUTY – To warrant a removal from
the service, the negligence committed should be gross and habitual. Although it was the
employee’s second time to commit mis-posting, it cannot be considered gross as to warrant her
termination from employment. “Gross neglect of duty” denotes flagrant and culpable refusal or
unwillingness of a person to perform a duty. It refers to negligence characterized by the want of
even slight care, acting or omitting to act in a situation where there is a duty to act, not
inadvertently but willfully and intentionally with a conscious indifference to consequences
insofar as other persons may be affected. (PNB v. Arcobillas, G.R. No. 179648, August 7, 2013)

JUST CAUSES; UNSATISFACTORY RATING CAN BE A JUST CAUSE FOR DISMISSAL

ONLY IF IT AMOUNTS TO GROSS AND HABITUAL NEGLECT OF DUTY – 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. 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. 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. (INC Shipmanagement, Inc., v.
Camporedondo, G.R. No. 199931, September 7, 2015)

CONSTRUCTIVE DISMISSAL; REQUISITES OF A VALID TRANSFER – 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
tantamount to constructive dismissal. 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. (ICT
Marketing Services v. Sales, G.R. No. 202090, September 9, 2015)

CONSTRUCTIVE DISMISSAL; EMPLOYER HAS BURDEN OF PROOF TO JUSTIFY A

VALID TRANSFER – In constructive dismissal cases, the employer has the burden of proving
that the transfer of an employee is for just and valid ground, such as genuine business necessity.
The employer must demonstrate that the transfer is not unreasonable, inconvenient, or prejudicial
to the employee and that the transfer does not involve a demotion in rank or a diminution in
salary and other benefits. If the employer fails to overcome this burden of proof, the employee’s
transfer is tantamount to unlawful constructive dismissal. (Bakeshop v. Arnaiz, et. al., G.R. No.
173882, February 15, 2012)

CONSTRUCTIVE DISMISSAL; PRINCIPAL TEST – The principal test of constructive

dismissal is whether a reasonable person in the employee’s position would have felt compelled
to give up his position under the circumstances. The purpose of a time record is to show an
employee’s attendance in the office for work and to be paid accordingly, considering the policy
of “No Work, No Pay”. By destroying the employee’s time cards, the employer discontinued and
severed his relationship with respondents. The employer virtually removed the employee from
payroll and erased all vestiges of his employment. The act may be considered as an outright – not
only symbolic – termination of the parties’ employment relationship. (Ang v. San Joaquin, G.R. No.
185549, August 7, 2013)

CONSTRUCTIVE DISMISSAL; CONTINUED REPORT FOR WORK DOES NOT NEGATE

CONSTRUCTIVE DISISSAL – The fact that the employee continued to report for work does not
necessarily suggest that constructive dismissal has not occurred, nor does it operate as a waiver.
Constructive dismissal occurs not when the employee ceases to report for work, but when
unwarranted acts of the employer are committed to the end that the employee’s continued
employment shall become so intolerable. In these difficult times, an employee may be left with

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no choice but to continue with his employment despite abuses committed against him. (The
Orchard Golf and Country Club v. Francisco, G.R. No. 178125, March 18, 2013)

CONSTRUCTIVE DISMISSAL; VALID EXERCISE OF MANAGEMENT PREROGATIVES

NEGATES CONSTRUCTIVE DISMISSAL – The implementation of a rotation policy by the
employer 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 judgement, 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. 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 the
employer’s 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. (Carique
v. Philippine Scout Veterans Security, G. R. No. 197484, September 16, 2015)

CONSTRUCTIVE DISMISSAL; BARE ALLEGATIONS OF THREAT AND FORCE DO NOT

CONSTITUTE SUBSTANTIAL EVIDENCE OF FORCED RESIGNATION – Bare allegations
of threat and force do not constitute substantial evidence to support a finding of forced
resignation. Resignation is the voluntary act of an employee who is in a situation where one
believes that personal reasons cannot be sacrificed in favor of the exigency of the service, and one
has no other choice but to disassociate oneself from employment. It is a formal pronouncement
or relinquishment of an office, with the intention of relinquishing the office accompanied by the
act of relinquishment. (Iladan v. La Suerte International Manpower Agency, Inc., G.R. No. 203882,
January 11, 2016)

PRIOR AND SUBSEQUENT ACTS MAY BE CONSIDERED AS EVIDENCE OF INTENT TO

RELINQUISH EMPLOYMENT– As intent to relinquish must concur with the overt act of
relinquishment, the acts of the employee before and after the alleged resignation must be
considered in determining whether he or she, in fact, intended to sever his or her employment.
Clearly, expressions of gratitude and appreciation as well as manifestation of regret in leaving
the company negates that the employee was forced or coerced to resign. (Malixi v. Mexicali
Philippines, G.R. No. 205061, June 8, 2016)

AUTHORIZED CAUSES; REQUISITES FOR A VALID RETRENCHMENT – To effect a valid

retrenchment, the following elements must concur: (1) the retrenchment is reasonably necessary
and likely to prevent business losses which, if already incurred, are not merely de minimis, but
substantial, serious and real, or only if expected, are reasonably imminent as perceived
objectively and in good faith by the employer; (2) the employer serves a written notice both to the
employee/s concerned and the DOLE at least one month before the intended date for the
retrenchment; (3) the employer pays the retrenched employee separation pay equivalent to one
month pay or at least one-half (½) month pay for every year of service, whichever is higher; (4)
the employer exercises its prerogative to retrench in good faith; AND (5) the employer uses fair
and reasonable criteria in ascertaining who would be retrenched or retained. (Lambert Pawnbrokers
v. Binamira, G.R. No. 170464, July 12, 2010)

AUTHORIZED CAUSES; A MERE DECLINE IN GROSS INCOME DOES NOT

CONSTITUTE SERIOUS BUSINESS LOSSES AS TO JUSTIFY RETRENCHMENT OF
EMPLOYEES – The losses must be supported by sufficient and convincing evidence. Decrease
from Php1 Million to only Php665,000.00 is not the business losses contemplated by the Labor
Code that would justify a valid retrenchment. A mere decline in gross income cannot in any
manner be considered as serious business losses. It should be substantial, sustained and real.
There was also no showing that employers adapted other cost-saving measures before resorting
to retrenchment. (Lambert Pawnbrokers v. Binamira, G.R. No. 170464, July 12, 2010)

AUTHORIZED CAUSES; REQUISITES FOR A VALID CLOSURE OR TERMINATION OF

BUSINESS – The decision to close business or temporarily suspend operations is a management
prerogative exclusive to the employer, the exercise of which no court or tribunal can meddle with,
except only when the employer fails to prove compliance with the following requisites: (1) the

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closure/cessation of business is bona fide; (2) that written notice was served on the employees and
the DOLE at least one month before the intended date of closure or cessation of business; AND
(3) in case of closure/cessation of business is not due to financial losses, that the employees
affected have been given separation pay equivalent to one month pay or one-half (1/2) month
pay for every year of service, whichever is higher. A fraction of at least six months shall be
considered one whole year. (Sy v. Fairland Knitcraft Co., G.R. No. 182915, December 12, 2011)

TERMINATION DUE TO DISEASE; PROCEDURAL DUE PROCESS – The Labor Code and
its IRR are silent on the procedural due process required in terminations due to disease. In Sy v.
CA, the Supreme Court finally pronounced that the employer must furnish the employee two
written notices in terminations due to disease, namely: (1) the notice to apprise the employee of
the ground for which dismissal is sought; and (2) the notice informing the employee of his
dismissal, to be issued after the employee has been given reasonable opportunity to answer and
to be heard on his defense. This ruling reinforces the State policy of protecting the workers from
being terminated without cause and without affording them the opportunity to explain their side
of the controversy. Similarly, Section 2, Rule 1, Book VI of the Labor Code’s IRR expressly states
that the employee should be afforded procedural due process in all cases of dismissal. (Deoferio
v. Intel Technology Philippines, Inc., G.R. No. 101996, June 18, 2014)

ILLEGAL DISMISSAL; CORPORATE OFFICERS ARE LIABLE ONLY IF THEY ACTED

WITH MALICE AND BAD FAITH – As a general rule, only the employer-corporation,
partnership, association or any other entity, and not its officers, may be held liable for illegal
dismissal of employees or for other wrongful acts. It is settled that in the absence of malice and
bad faith, a stockholder or an officer of a corporation cannot be made personally liable for
corporate liabilities. They are only solidarily liable with the corporation for the illegal termination
of services of employees if they acted with malice or bad faith. (Lambert Pawnbrokers v. Binamira,
G.R. No. 170464, July 12, 2010)

ILLEGAL DISMISSAL; EMPLOYER HAS BURDEN OF PROOF TO SHOW VALID CAUSE

OF TERMINATION – 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. 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. (INC Shipmanagement, Inc., v. Camporedondo, G.R. No. 199931, September 7, 2015)

ILLEGAL DISMISSAL; PAYMENT OF NOMINAL DAMAGES – The law and jurisprudence

allow the award of nominal damages in favor of an employee in a case where a valid cause for
dismissal exists, but the employer fails to observe due process in dismissing the employee. On
the other hand, financial assistance is granted to a dismissed employee as a measure of equity
and social justice and is in the nature or takes the place of severance compensation. (LIBCAP
Marketing Corp., v. Baquial, G.R. No. 192011, June 30, 2014)

TERMINATED EMPLOYEES MAY BE ENTITLED TO BOTH SEPARATION PAY AND

RETIREMENT BENEFITS – An employee is entitled to recover both separation pay and
retirement benefits in the absence of a specific prohibition in the Retirement Plan or CBA.
Retirement benefits are not mutually exclusive. Retirement benefits are a form of reward for an
employee’s loyalty and service to an employer and are earned under existing laws, CBAs,
employment contracts and company policies. Separation pay is that amount which an employee
receives at the time of his severance from employment designed to provide the employee with
the wherewithal during the period that he is looking for another employment and is recoverable
only: (1) in instances enumerated under Articles 283 and 284 of the Labor Code; or (2) in illegal
dismissal cases when reinstatement not feasible. (Goodyear Philippines v. Angus, G.R. No. 185449,
November 12, 2014)

EFFECTS OF REINSTATEMENT PENDING APPEAL – Employees are entitled to their accrued

salaries during the period between the Labor Arbiter’s order of reinstatement pending appeal
and the resolution of the NLRC overturning that of the Labor Arbiter. Otherwise stated, even if
the order of reinstatement of the Labor Arbiter is reversed on appeal, the employer is still obliged

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to reinstate and pay the wages of the employee during the period of appeal until revered by a
higher court or tribunal. (IsIriz Trading v. Capada, G.R. No. 168501, January 31, 2011)

BASIS OF COMPUTATION OF BACKWAGES – It is settled that the base figure to be used in

the computation of backwages is pegged at the wage rate at the time of the employee’s dismissal
unqualified by deductions, increases and/or modifications. Under R.A. No. 6715, and as
provided in jurisprudence, “full backwages” means backwages without any deduction or
qualification, including benefits or their monetary equivalent the employee is enjoying at the time
of his dismissal. Consequently, any benefit or allowance over and above that allowed and
provided by said law is deemed excluded. (BPI Employees Union – Metro Manila v. Bank of the
Philippine Islands, G.R. No. 178699, September 21, 2011)

VALIDITY OF QUITCLAIMS – Although quitclaims are generally against public policy,

voluntary agreements entered into and represented by a reasonable settlement are binding on the
parties which may not be later 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 the settlement are unconscionable, that the law will step in to bail out the employee.
(Auza v. MOL Philippines, G.R. No. 175481, November 21, 2012)

SEAFARERS; AVAILMENT OF DEATH BENEFITS – In order to avail of death benefits under

the Standard Employment Contract for Seafarers (POEA-SEC), the death of the employee should
occur during the effectivity of the employment contract. For emphasis, the Supreme Court
reiterated that the death of a seaman during the term of employment makes the employer liable
for his heirs for death compensation benefits, but if the seaman dies after the termination of his
contract of employment, his beneficiaries are not entitled to the death benefits. (Southeastern
Shipping v. Navarra, G.R. No. 167678, June 22, 2010)

SEAFARERS; EXEMPTION TO THE AVAILMENT OF DEATH BENEFITS – 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 be successfully established that the
seafarer’s death was due to a cause attributable to his own willful act (i.e., suicide). (New Filipino
Maritime Agencies, Inc., v. Datayan, G.R. No. 202859, November 11, 2015)

SEAFARERS; COMPENSABILITY OF ILLNESS OR INJURY – Two elements must concur for

an injury or illness of a seafarer to be compensable: (1) the injury or illness must be work-related;
AND (2) the work-related injury or illness must have existed during the term of the seafarer’s
employment contract. Under the POEA-SEC, an illness suffered by a seafarer during the term of
his contract is presumed to be work-related and compensable. Concomitant with this
presumption is the burden placed upon the claimant to present substantial evidence that his work
conditions caused or at least increased the risk of contracting the disease and only a reasonable
proof of work-connection, not direct causal relation is required to establish compensability of
illness not included in the list of occupational disease. (Dohle-Philman Manning Agency v. Heirs of
Gazzingan, G.R. No. 199568, June 17, 2015)

SEAFARERS; “THE INCREASED RISK THEORY” – Under the “Increased Risk Theory”, there
must be a reasonable proof that the employees’ working conditions increased his risk of
contracting the disease, or that there is a connection between his work and the cause of his disease.
Only a reasonable proof of work-connection, not direct causal relation, however, is required to
establish compensability of a non-occupational disease. Probability, and not certainty, is the
yardstick in compensation proceedings. (GSIS v. Besitan, G.R. No. 178901, November 23, 2011)

SEAFARERS; CORONARY ARTERY DISEASE, AND OTHER HEART AILMENTS ARE

WORK-RELATED AND, THUS, COMPENSABLE – In many cases decided in the past, the
Court has held that cardiovascular disease, coronary artery disease, and other heart ailments are
compensable. It is a matter of judicial notice that an overseas worker, having to ward off
homesickness by reason of being physically separated from his family for the entire duration of
his contract, bears a great degree of emotional strain while trying to perform his work well. The
strain is even greater in the case of a seaman who is constantly subjected to the perils of the sea

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while at work abroad and away from his family. (Magsaysay Mitsui Osk Marine, Inc., and /or Mol
Tankship Management (Asia) Pte Ltd., v. Bengson, G.R. No. 198528, October 13, 2014)

SEAFARERS; SECTION 32-A OF THE 2000 POEA-SEC IS NOT AN EXCLUSIVE LIST – 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 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. (Grace Marine Shipping Corporation and/or Capt. Jimmy Boado v. Alarcon, G.R. No.
201536, September 9, 2015)

SEAFARERS; EMPOYEE HAS BURDEN OF PROVING THAT HIS ILLNESS IS WORK-

RELATED WHEN IT IS NOT LISTED AS AN OCCUPATIONAL DISEASE – Considering that
respondent did not suffer from any occupational disease listed under Section 32-A of the POEA-
SEC, then to be entitled to disability benefits, the respondent has the burden to prove that his
illness is work-related. Unfortunately, he failed to discharge such burden. Although his heart
condition manifested while respondent was aboard the vessel, he did not adduce substantial
evidence that his work conditions caused, or at the least increased the risk of contracting his
illness. (Doehle-Philman Manning Agency, Inc., et al., v. Haro, G.R. No. 206522, April 18, 2016)

SEAFARERS; MANDATORY EXAMINATION OF THE COMPANY-DESIGNATED

PHYSICIAN WITHIN 3 DAYS FROM REPATRIATION – For a seaman’s claim for disability
to prosper, it is mandatory that within three (3) days from his repatriation, he is examined by a
company-designated physician. Non-compliance with this mandatory requirement results in the
forfeiture of the right to claim for compensation and disability benefits. (Interorient Maritime
Enterprises, Inc., v. Creer III, G.R. No. 181921, September 17, 2014)

SEAFARERS; CONFLICT BETWEEN COMPANY-DESIGNATED PHYSICIAN AND

EMPLOYEE’S DOCTOR-OF-CHOICE – The POEA-SEC clearly provides that when a seafarer
sustains a work-related illness or injury while on board the vessel, his fitness or unfitness for
work shall be determined by the company-designated physician. However, if the doctor
appointed by the seafarer makes a finding contrary to that of the assessment of the company-
designated physician, a third Doctor may be agreed jointly between the employer and the seafarer
and the latter’s decision shall be final and binding on both of them. (TSM Shipping Phil., Inc., and/or
Dalvipskibsselskabet Norden A/S and/or Capt. Castillo v. Patiño, G.R. No. 210289, March 20, 2017)

SEAFARERS; TEMPORARY TOTAL DISABILITY WHEN CONSIDERED PERMANENT –

Temporary total disability of an employee is considered permanent when: (1) so declared by the
company-designated physician within the period allowed; and (2) upon expiration of the
maximum 240-day medical treatment period in case of absence of a declaration of fitness or
permanent disability. 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 or permanently disabled. Consequently, if after the lapse of
the stated periods, the seafarer is still incapacitated to perform his usual sea duties and the
company-designated physician had not yet declared him fit to work or permanently disabled,
whether total or permanent, the conclusive presumption that the latter is totally and permanently
disabled arises. (Alpha Ship Management Corporation v. Calo, G.R. No. 192034, January 13, 2014)

SEAFARERS; RULES ON DISABILITY BENEFITS – The following rules shall be applicable: (1)
the 120 days provided under Section 20B(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; (2) 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 (3) 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 said periods
without a declaration of either fitness to work or disability assessment and the seafarer is still

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unable to resume his regular seafaring duties. (Island Overseas v. Beja, G.R. No. 203115, December
7, 2015)

SEAFARERS; SIGNIFICANCE OF THE 120 DAYS and 240 DAYS IN DETERMING

DISABILITY – A 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. 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 may
be extended up to a maximum period of 240 days, subject to the right of the employer to declare
within this period that a partial or total disability exists. The seaman may of course also be
declared fit to work at any time such declaration is justified by his medical condition (Wallen
Maritime Services v. Quillao, G.R. No. 202885, January 20, 2016)

SEAFARERS; WHEN ENTITLED TO TOTAL AND PERMANENT DISABILITY BENEFITS –

A seafarer may have basis to pursue an action for total and permanent disability benefits in any
of the following conditions:

1) The company-designated physician failed to issue a declaration as to his fitness

to engage in sea duty or disability even after the lapse of the 120-day period and
there is no indication that further medical treatment would address his
temporary total disability, hence, justify an extension of the period to 240 days;
2) 240 days had lapsed without any certification being issued by the company-
designated physician;
3) 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 choice and
the doctor chosen under Section 20B(3) of the POEA-SEC are of contrary
opinion;
4) The company-designated physician acknowledged the he is partially
permanently disabled but other doctors whom he consulted, on his own and
jointly with his employer, believed that his disability is not only permanent but
total as well;
5) The company-designated physician recognized that he is totally and
permanently disabled but there is a dispute in the disability grading;
6) 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 third doctor selected under Section 20B(3) of the POEA-SEC found
otherwise and declared him unfit to work;
7) The company-designated physician declared him totally and permanently
disabled but the employer refuses to pay him the corresponding benefits; and
8) The company-designated physician declared him partially and permanently
disabled within the 120 days or 240 days period, but he remains incapacitated
to perform his usual sea duties after the lapse of the said periods. (TSM Shipping
Phils., v. Patiño, G.R. No. 210289, March 20, 2017)

SEAFARERS; PRESCRIPTION OF EMPLOYEE’S CLAIMS – Section 28 of the POEA-SEC states

that all claims arising from the contract shall be made within one (1) year from the date of the
seafarer’s return to the point of hire. On the other hand, the Labor Code states that all money
claims arising from employer-employee relations accruing during the effectivity of the Code shall
be filed within three (3) years from the time the cause of action accrued; otherwise, they shall be
forever barred. According to Southerneast Shipping v. Navarra, Article 291 of the Labor Code is the
law governing prescription of money claims of seafarers and prevails over the POEA-SEC.
(Medine Management v. Rosalinda, G.R. No. 168715, September 15, 2010)

ENTITLEMENT TO SSS PENSION BENEFITS; MEANING OF THE TERM “DEPENDENT” –

For a spouse to qualify as a primary beneficiary under the SSS Law, he/she must not only be a

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legitimate spouse but must also be a dependent as defined, that is, one who is dependent upon
the SSS member for support. From prevailing jurisprudence, a wife who is already separated de
facto from her husband cannot be said to be dependent for support upon the husband, absent any
showing to the contrary. (SSS v. Favila, G.R. No. 170195, March 28, 2011)

NO COLLATERAL ATTACK ON THE LEGAL PERSONALITY OF A CERTIFIED UNION

DURING CERTIFICATION ELECTIONS – An order to hold a certification election is proper
despite the pendency of the petition for cancellation of the registration certificate of the union.
The rationale for this is that at the time the union filed the petition, it still had the legal personality
to perform such act absent an order directing the cancellation. Furthermore, the legitimacy of the
legal personality of a union cannot be collaterally attacked in a Petition for Certification Election.
(Legend International Resorts Limited v. Kilusang Manggagawa ng Legenda, G.R. No. 169754, February
23, 2011)

COLLECTIVE BARGAINING AGREEMENT (CBA); EXHAUSTION OF ADMINISTRATIVE

REMEDIES – Under Article 260 of the Labor Code, grievances arising from the interpretation or
implementation of the parties’ CBA should be resolved in accordance with the grievance
procedure embodied therein. It also provides that all unsettled grievances shall be automatically
referred for voluntary arbitration as prescribed in the CBA. It is settled that when parties have
validly agreed on a procedure for resolving grievances and to submit a dispute to voluntary
arbitration then that procedure should be strictly observed. Moreover, before a party is allowed
to seek the intervention of the court, it is a precondition that he should have availed of all the
means of administrative processes afforded to him. The premature invocation of the court’s
judicial intervention is fatal to one’s cause of action. (Octavio v. PLDT, G.R. No. 175492, February
27, 2013)

UNION’S CHARTER CERTIFICATE NEED NOT BE EXECUTED UNDER OATH –

Considering that the charter certificate is prepared and issued by the national union and not the
local/chapter, it does not make sense to have the local/chapter’s officers certify or attest to a
document which they had no hand in the preparation of. In accordance with this ruling, petitioner
union’s charter certificate need not be executed under oath. Consequently, it validly acquired the
status of a legitimate labor organization upon submission of (1) its charter certificate; (2) the
names of its officers, their addresses, and its principal office; AND (3) its constitution and by-laws
– the last two requirements having been executed under oath by the proper union officials as
borne out by the records. (Samahang Manggagawa sa Charter Chemical (SMCC-SUPER) v. Charter
Chemical and Coasting Corp., G.R. No. 1697171, March 16, 2011)

JURISDICTION; “THE BETTER POLICY” IN INTRA-CORPORATE CONTROVERSIES –

Jurisprudence has developed this “better policy” to be followed in determining jurisdiction over a
case involving stockholders or officers of a corporation. The better policy to be followed in
determining whether or not the matter involves an intra-corporate controversy is to consider
concurrent factors such as (1) the status or relationship of the parties; and (2) the nature of the
question that is the subject of their controversy. The fact alone that the petitioner is a stockholder
and director of the respondent corporation will not automatically classify the case as an intra-
corporate controversy because not all conflicts between stockholders and the corporation are
classified intra-corporate. There are other factors to consider in determining whether the dispute
involves corporate matters as to consider them as intra-corporate controversies. (Real v. Sangu
Philippines, G.R. No. 168757, January 19, 2011)

JURISDICTION; CLAIMS FOR UNPAID SSS CONTRIBUTIONS – Under the Labor Code, the
Labor Arbiter shall have original and exclusive jurisdiction over claims for damages arising from
employer-employee relations. The observation that the matter of SSS contributions necessarily
flowed from the employer-employee relationship between the parties – shared by the lower
courts and the CA - is correct; thus, the claims for unpaid SSS contributions should have been
referred to the labor tribunals. It is noteworthy to state that the Labor Arbiter has jurisdiction to
award not only the reliefs provided by labor laws, but also damages governed by the Civil Code.
(Amecos v. Lopez, G.R. No. 178055, July 2, 2014)

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JURISDICTION; PLENARY POWERS OF THE SECRETARY OF LABOR TO ASSUME
JURISDICTION OVER LABOR DISPUTES – The authority of the Secretary of Labor to assume
jurisdiction over a labor dispute causing or likely to cause a strike or lockout in an industry
indispensable to national interest includes and extends to all questions and controversies arising
therefrom. The power is plenary and discretionary in nature to enable him to effectively and
efficiently dispose of the primary dispute. This wide latitude of discretion given to the Secretary
of Labor may not be the subject of appeal. (Philtranco Service Enterprises, Inc., v. PWU-AGLO, G.R.
No. 180962, February 26, 2014)

APPEAL; WHEN PERFECTED – Perfection of an appeal in the manner and within the period
prescribed by law is not only mandatory but also jurisdictional. The failure to conform to the rules
will render the judgement sought to be reviewed final and unappealable. Article 223 of the Labor
Code provides in part that decisions, awards, or orders of the Labor Arbiter are final and
executory unless appealed to the Commission by any or both parties within ten (10) calendar days
from receipt of such decisions, awards, or orders. In case of a judgement involving a monetary
award, an appeal by the employer may be perfected only upon the posting of a cash or surety
bond issued by a reputable bonding company duly accredited by the Commissions in the amount
equivalent to the monetary award in the judgement appealed from. (U-bix Corporation v. Hollero,
G.R. No. 199660, July 13, 2015)

APPEAL; PURPOSE OF THE CASH OR SURETY BOND – This indispensable requisite (posting
of a cash or surety bond) for the perfection of an appeal is to assure the workers that if they finally
prevail in the case, the monetary award will be given to them upon the dismissal of the
employer’s appeal and is further meant to discourage employers from using the appeal to delay
or evade payment of their obligations to the employees. (Turks Shawarma Company/Gem Zeñarosa
v. Pajaron and Carbonilla, G.R. No. 207156, January 16, 2017)

APPEAL; REDUCTION OF BOND – The posting of a bond is indispensable to the perfection of

an appeal in cases involving monetary awards from the decision of the labor arbiter. However,
under Section 6, Rule VI of the NLRC’s Revised Rules of Procedure, the bond may be reduced
albeit only: (1) on meritorious grounds; AND (2) upon posting of a partial bond in a reasonable
amount in relation to the monetary award. Hence, employer’s financial difficulties may not be
easily invoked as a valid ground to reduce bond. (UPI v. Solano, G.R. No. 170416, June 22, 2011)

DUE PROCESS IN LABOR CASES; AMPLE OPPORTUNITY TO BE HEARD – The following

are the guiding principles in connection with the hearing requirement in dismissal cases: (1)
ample opportunity to be heard; means any meaningful opportunity (verbal or written) given to
the employee to answer the charges against him and submit evidence in support of his defense
whether in a hearing, conference or some other fair, just and reasonable way; (2) a formal hearing
or conference becomes mandatory only when requested by the employee in writing or substantial
evidentiary disputes exist or a company rule or practice requires it, or when similar circumstances
justify it; and (3) ample opportunity to be heard standards in the Labor Code prevails over the
hearing or conference requirement in the Implementing Rules and Regulations. (Reyes-Rayel v.
Philippine Luen Thai, G.R. No. 174893, July 11, 2012)

QUANTUM OF PROOF IN LABOR CASES; BURDEN OF PROVING EMPLOYMENT

RELATIONSHIP RESTS ON EMPLOYEE – In labor cases, as in other administrative and quasi-
judicial proceedings, the quantum of proof necessary is substantial evidence, or such amount of
relevant evidence which a reasonable mind might accept to justify a conclusion. The burden of
proof rests upon the party who asserts the affirmative of an issue. An employee filing a case for
illegal dismissal has the burden to prove that an employer-employee relationship exists before
the presumption of the illegality of his termination and/or dismissal may apply. (Valencia v.
Classique Vinyl Products Corp., G.R. No. 206390, January 20, 2017)

BURDEN OF PROVING PAYMENT RESTS ON THE EMPLOYER – The burden of proving

payment of benefits rests on the employer. It is a rule that one who pleads payment has the
burden of proving it. Even when the plaintiff alleges non-payment, still the general rule is that
the burden rests on the defendant to prove payment, rather than on the plaintiff to prove non-

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payment. (Pigcaulan v. Security and Credit Investigation, Inc., and/or Rene Amby Reyes, G.R. No.
173648, January 16, 2012)

UNAUDITED FINANCIAL STATEMENTS ARE INADMISSIBLE FOR PURPOSES OF

DETERMINING THE PROPER WAGE AWARD – The Secretary of Labor gravely abused her
discretion when she relied on the unaudited financial statements of petitioner corporation in
determining the wage award because such evidence is self-serving and inadmissible. Not only
did this violate the Order of the Secretary of Labor herself to petitioner corporation to submit its
complete and audited financial statements but this may also have resulted to a wage award that
is based on inaccurate and biased picture of petitioner corporation’s capacity to pay – one of the
more significant factors in making a wage award. (Asia Brewery, Inc., v. Tunay na Pagkakaisa ng
mga Manggagawa sa Asia (TPMA), G.R. Nos. 171594-96, September 18, 2013)

TECHNICAL RULES IN EVIDENCE DO NO APPLY IN LABOR CASES – The rules of

evidence are not strictly observed in proceedings before the NLRC, which are summary in nature
and decisions may be made on the basis of position papers. The argument that the statements
made by other employees (regarding fraudulent schemes employed by the dismissed employee)
are considered hearsay because the authors where not presented for cross-examination does not
persuade. (Castillo v. Prudential Life, G.R. No. 196142, March 26, 2014)

ALTHOUGH TECHNICAL RULES ARE NOT BINDING IN LABOR CASES, LATE

SUBMISSION OF EVIDENCE IS NOT ALLOWABLE IF DELAY IS UNJUSTIFIED – Although
labor tribunals are not precluded from receiving evidence submitted on appeal as technical rules
are not binding in cases before them, any delay in the submission of evidence should be
adequately explained and should adequately prove the allegations sought to be proven. For
petitioner’s unexplained submission of evidence, coupled with its failure to support its
allegations that the transfer of the respondent was for a legitimate purpose, its plea that evidence
be admitted in the interest of justice does not deserve merit. (Misamis Oriental II Electric Service
Cooperative (MORESCO II) v. Cagalawan, G.R. No. 175170, September 5, 2012)

PRESUMPTION IN FAVOR OF LABOR – In this case, there are serious doubts in the evidence
on record as to the factual basis of the charges against the employee. These doubts shall be
resolved in his favor in line with the policy under the Labor Code to afford protection to labor
and construe doubts in favor of labor. The consistent rule is that if doubts exist between the
evidence presented by the employer and the employee, the scales of justice must be tilted in favor
of the latter. (Malabunga, Jr., v. Cathay Pacific Steel Corp., G.R. No. 198515, June 15, 2015)

Good Luck!!!

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