Consolidated Cases in Labor Law

LABOR LAW DIGESTS 2014-June 2016
RECRUITMENT AND PLACEMENT
REPUBLIC OF THE PHILIPPINES, REPRESENTED BY HONORABLE LOURDES M.

TRASMONTE IN HER CAPACITY AS UNDERSECRETARY OF THE DEPARTMENT OF
LABOR AND EMPLOYMENT, AND HONORABLE JENNIFER JARDIN-MANALILI, IN HER
CAPACITY AS THEN PHILIPPINE OVERSEAS EMPLOYMENT ADMINISTRATOR v.
HUMANLINK MANPOWER CONSULTANTS, INC. (FORMERLY MHY NEW
RECRUITMENT INTERNATIONAL, INC.)
G.R. No. 205188, April 22, 2015, VILLARAMA, JR., J.
Aware that overseas workers are vulnerable to exploitation, the State sought to protect the
interests and well-being of these workers with creation of specialized bodies such as the POEA under
the direct supervision of the DOLE Secretary.
Facts:
Renelson Carlos applied at Worldview Internation Services Corporation as a heavy

equipment driver with a salary of U$700 in Doha, Qatar. His recruiting agency Humanlink
Manpower Consultants, Inc. made him sign an employment contract stating that he was going
to work as a duct man instead of the position he applied for but he was told that this is only for
purposes of entering the country. Humanlink promised that he would work as a heavy equipment
driver as applied for. However, upon his arrival in Doha, he worked as a duct installer with a
salary of U$400. Carlos filed a complaint with the Philippine Overseas Labor Office but the
complaint was not acted upon. This prompted him to speak with the Qatar Labor Office where
he discussed his grievance. Consequently, Carlos was informed that his visa was cancelled and
that he was being repatriated at his own expense.
POEA Adjudication Office found Carlos’ assertions credible. POEA cancelled

Humanlink’s license and automatically disqualified it from participating in any overseas
employment program.
Issue:
Whether the POEA can automatically disqualify officers and directors from participating
in the government's overseas employment program upon the cancellation of a license
Ruling:
Yes. One of the roles of the POEA is the regulation and adjudication of private sector
participation in the recruitment and placement of overseas workers. Article 25 of the Labor Code,
as amended, reads that pursuant to national development objectives and in order to harness and
maximize the use of private sector resources and initiative in the development and
implementation of a comprehensive employment program, the private employment sector shall
participate in the recruitment and placement of workers, locally and overseas, under such
guidelines, rules and regulations as may be issued by the Secretary of Labor.
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This is echoed in Article 35 of the Labor Code, as amended, and Section 23(b.l), R.A. No.
8042 as amended by R.A. No. 9422, where the legislature empowered the DOLE and POEA to
regulate private sector participation in the recruitment and overseas placement of workers, to
wit: The Secretary of Labor shall have the power to suspend or cancel any license or authority to
recruit employees for overseas employment for violation of rules and regulations issued by the
Secretary of Labor, the Overseas Employment Development Board, and the National Seamen
Board, or for violation of the provisions of this and other applicable laws, General Orders and
Letters of Instruction. (Emphasis supplied)
Section 23 (b.1) states that the Philippine Overseas Employment Administration shall
regulate private sector participation in the recruitment and overseas placement of workers by
setting up a licensing and registration system.
Sections 1 and 2, Rule I, Part II of the POEA Rules and Regulations provide the
qualifications and disqualifications for private sector participation in the overseas employment
program. Section 1 of this rule provides that for persons to participate in recruitment and
placement of land-based overseas Filipino workers, they must not possess any of the
disqualifications as provided in Section
2. xxx
Section 2. Disqualification. The following are not qualified to engage in the business of
recruitment and placement of Filipino workers overseas.
d. Persons, partnerships or corporations which have derogatory records, such as but

not limited to the following:
xxx Those agencies whose licenses have been previously revoked or cancelled by the
Administration for violation of RA 8042, PD 442 as amended and their implementing rules and
regulations as well as these rules and regulations.
f. Persons or partners, officers and Directors of corporations whose licenses have

been previously cancelled or revoked for violation of recruitment laws. (Emphases supplied)
Thus, upon the cancellation of a license, persons, officers and directors of the concerned
corporations are automatically prohibited from engaging in recruiting and placement of land-
based overseas Filipino workers. The grant of a license is a privilege and not a right thus making
it a proper subject of its regulatory powers.
MA. CONSOLACION M. NAHAS, doing business under the name and style
PERSONNEL EMPLOYMENT AND TECHNICAL RECRUITMENT AGENCY vs. JUANITA L.
OLARTE
G.R. No. 169247, June 2, 2014, J. Del Castillo
Under Section 64 of the Omnibus Rules and Regulations Implementing the Migrant
Workers and Overseas Filipinos Act of1995 (RA 8024), the liability of the principal/employer and
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the recruitment placement agency on any and all claims under this Rule shall be joint and solidary.
If the recruitment/placement agency is a juridical being, the corporate officers and directors and
partners as the case may be, shall themselves be jointly and solidarily liable with the corporation or
partnership for the aforesaid claims and damages. Hence, Petra Agency/Royal Dream International
Services/Consolacion "Marla" Nahas were held jointly and severally ordered to pay complainant
Olarte her unpaid salaries.
Facts:
Olarte was deployed as a domestic helper to Hail, Saudi Arabia for a contract term of two
years. Per her employment contract, she was to serve her employer, (Fahad) for a basic monthly
salary of US$200.00. Fajad’s information sheet, on the other hand, provides that there are two
adults and three children living in his household and that no disabled or sick person is to be put
under Olarte’s care.
Upon arriving in Fahad’s home, Olarte was surprised that there were four children with
one suffering from serious disability. This notwithstanding, Olarte served Fahad’s family
diligently. However, she was not paid her salaries. It was only in December 1999 that she was
given US$200.00 which was the only pay she received for the whole duration that she worked for
Fahad.
In the succeeding months, Olarte started feeling intense pain in her legs. Since she was
not given immediate medical attention, her condition became critical such that in February 2000
she had to be operated on due to water retention in her leg bones. She was later diagnosed to be
suffering from ostro-arthritis. Because of her condition, Olarte requested Fahad to just allow her
go home to the Philippines. But her pleas fell on deaf ears. At that point, Fahad was already
frequently maltreating her since she could no longer accomplish all the household chores due to
her illness.
Olarte finally saw an opportunity to escape from the abusive hands of her employer when
she was allowed to go to Riyadh, Saudi Arabia on June 16, 2000 and there sought refuge at the
Philippine Embassy. Notwithstanding her worsening condition, she could not be repatriated
immediately because her passport was being withheld by Fahad and had to stay for a while in the
office of the Overseas Workers Welfare Administration (OWWA). When at last she was able to
return to the Philippines on August 21, 2000, Olarte had to be brought home from the airport by
an emergency ambulance.
Several months later, Olarte filed a Complaint for illegal dismissal, damages, attorney’s
fees and refund of placement fees against her foreign employer Fahad and Nahas/PETRA/Royal
Dream.
Issue:
Whether or not Royal Dream is solely responsible for Olarte’s deployment and thus
should be the one to answer for her claims.
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Ruling:
No. Nahas’ solidary liability with Royal Dream is in accordance with Section 64 of the
Omnibus Rules and Regulations Implementing the Migrant Workers and Overseas Filipinos Act
of1995 (RA 8024).
Section 64 of the Omnibus Rules and Regulations Implementing the Migrant Workers
and Overseas Filipinos Act of1995 (RA 8024), provides:
‘Section 64. Solidary Liability – The liability of the principal/employer and the recruitment
placement agency on any and all claims under this Rule shall be joint and solidary. If the
recruitment/placement agency is a juridical being, the corporate officers and directors and
partners as the case may be, shall themselves be jointly and solidarily liable with the
corporation or partnership for the aforesaid claims and damages.
The Labor Arbiter, the NLRC, and the CA are one in their factual conclusion that Nahas,
acting for and in behalf of PETRA and Royal Dream, interviewed Olarte, caused her to sign an
employment contract, and facilitated and made possible her deployment abroad. The Court is,
therefore, not duty-bound to inquire into the accuracy of this factual finding, particularly in this
case where there is no showing that it was arbitrary and bereft of any rational basis.
Nahas’ inconsistent positions militate against her case; her claim of lack of service of
summons upon Royal Dream is likewise untenable.
The Court notes that in her quest to evade liability, Nahas introduced several conflicting
assertions. Before the Labor Arbiter, she admitted that Olarte indeed applied with PETRA and
was interviewed by her but later withdrew the application. While Nahas intended to support this
position with a document showing that Olarte requested for the withdrawal of her application,
the same was, however, never submitted. What was instead unwittingly attached to her Position
Paper was Olarte’s accomplished bio-data bearing the letterhead of Royal Dream.
More significantly, Hilario Consolacion "Marla" Nahas never denied Olarte’s claim that it
was Nahas who interviewed her. It is basic that mere allegation is neither equivalent to proof nor
evidence.
Furthermore, Anent the assertion that Royal Dream was not served with summons, it
must be stressed that Olarte had categorically declared at the outset that it was in the office of
PETRA/Royal Dream at Room 401, Gochangco Building, T.M. Kalaw, Ermita, Manila where she
applied for work as domestic helper, was interviewed, and made to sign an employment contract.
This was effectively corroborated by Nahas herself when she admitted before the Labor Arbiter
that Olarte was a walk-in applicant in the said office. When finally deployed, the local agency
appearing in Olarte’s papers was Royal Dream. Hence, when Olarte was repatriated and later
filed a Complaint, she lodged it against Nahas and PETRA/Royal Dream and summons was served
upon them at Room 401, Gochangco Building, T.M., Kalaw, Ermita, Manila. Besides, to concede
to this claim of Nahas would in effect allow her, PETRA and Royal Dream to hide behind the
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cloak of corporate fiction in order to evade the rightful claims of Olarte. 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,"
which clearly in this case is what Nahas, PETRA and Royal Dream are attempting to achieve but
which the Court cannot allow.
ABOSTA SHIP MANAGEMENT and/or ARTEMIO CORBILLA vs. WILHILM M. HILARIO

G.R. No. 195792, November 24, 2014, C.J. Sereno
The contract was already perfected on the date of its execution, which occurred when
Abosta and Hilario agreed on the object and the cause, as well as on the rest of the terms and
conditions therein. Naturally, contemporaneous with the perfection of the employment contract
was the birth of certain rights and obligations, a breach of which may give rise to a cause of action
against the erring party. Also, the POEA Standard Contract must be recognized and respected.
Thus, neither the manning agent nor the employer can simply prevent a seafarer from being
deployed without a valid reason.
Facts:
On 24 October 2002, an employment contract was executed by Abosta Ship Management,

on behalf of its foreign principal Panstar Shipping Co., Ltd., and Wilhilm Hilario. In this contract,
the latter was hired as a bosun (boatswain) of the foreign vessel Grand Mark for a period of nine
months, with a monthly salary of USD566. The contract was duly approved by the Philippine
Overseas Employment Agency (POEA) on 25 October 2002.
Hilario was informed that the latter’s deployment had been postponed due to shifting
demands of the foreign principal. It appears, though, that the foreign principal decided to
promote an able seaman on board the vessel instead of hiring Hilario. Abosta thus requested
Hilario to wait for another two to three months for a vacancy to occur.
Hilario filed a Complaint with the POEA against Abosta Ship Managment for violation of
Section 2(r), Rule I, Part VI of the 2002 POEA Rules by failing to deploy Hilario within the
prescribed period without any valid reason. Hilario likewise filed a Complaint with the Labor
Arbiter. Abosta alleged that the Labor Arbiter has no jurisdiction over the matter. However, the
Labor Arbiter denied the motion. On appeal with the NLRC, the NLRC revised and set aside the
ruling of the Labor Arbiter. The NLRC held that considering no employer-employee relationship
existed between the parties, the POEA had jurisdiction over the case.
Hilario appealed with the Court of Appeals, the CA granted Hilario’s petition and ordered
that the case be reinstated. Upon reinstatement, the Labor Arbiter found that the contract
executed between the parties and the non-fulfillment thereof entitled Hilario to his salary for the
whole duration of the contract. On appeal with the NLRC, the NLRC dismissed the Complaint,
but ordered Abosta "to comply with our directive to deploy Hilario as soon as possible or face the
inevitable consequences.”
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Hilario then appealed the adverse ruling of the NLRC to the CA. The CA granted his
petition and stated that since Hilario had already been hired for the same position, then there
was no longer any vacant position to which to promote the able seaman. Hence, this petition.
Issue:
Whether or not such breach in the employment contract (promotion of a seaman as a

bosun) would entitle Hilario to the payment of actual damages for the failure of Abosta to comply
with the latter’s obligations in accordance with the employment contract
Ruling:
Yes, Hilario is entitled to damages.
The foreign principal of Abosta had already chosen Hilario from among the other
candidates as BSN (bosun or boatswain). Pursuant to this communication, Abosta entered into
an employment contract and hired Hilario on 24 October 2002. Subsequent communications,
though, show that the foreign principal approved a different candidate for the position of BSN.
Thus, Abosta did not deploy Hilario.
There was an apparent violation of the contract at the time that the foreign principal
decided to promote another person. The vacancy for the position of boatswain ceased to exist
upon the execution of the contract between Abosta and Hilario on 24 October 2002, a contract
subsequently approved by the POEA on 25 October 2002. Clearly, there was no vacancy when the
foreign principal changed its mind, since the position of boatswain had already been filled up by
Hilario.
The contract was already perfected on the date of its execution, which occurred when
Abosta and Hilario agreed on the object and the cause, as well as on the rest of the terms and
conditions therein. Naturally, contemporaneous with the perfection of the employment contract
was the birth of certain rights and obligations, a breach of which may give rise to a cause of action
against the erring party. Also, the POEA Standard Contract must be recognized and respected.
Thus, neither the manning agent nor the employer can simply prevent a seafarer from being
deployed without a valid reason.
Under the principle of equity and substantial justice, change of mind was not a valid
reason for the non-deployment of Hilario. He lost the opportunity to apply for other positions in
other agencies when he signed the contract of employment with Abosta. Simply put, that
contract was binding on the parties and may not later be disowned simply because of a change
of mind of either one of them.
Considering that it was Abosta who entered into the contract of employment with Hilario
for and on behalf of the foreign principal, it has the primary obligation to ensure the
implementation of that contract. Indeed, this Court has consistently held that private
employment agencies are held jointly and severally liable with the foreign-based employer for
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any violation of the recruitment agreement or contract of employment. This joint and solidary
liability imposed by law on recruitment agencies and foreign employers is meant to assure the
aggrieved worker of immediate and sufficient payment of what is due him.
ASIAN INTERNATIONAL MANPOWER SERVICES, INC., vs. DEPARTMENT OF LABOR

AND EMPLOYMENT.
G.R. No. 210308, April 6, 2016
FACTS:
On November 8, 2006, the Anti-Illegal Recruitment Branch of the POEA, pursuant to

Surveillance Order No. 033, Series of 2006, conducted a surveillance of Asian International
Manpower Services, Inc. (AIMS) with office address at 1653 Taft Avenue comer Pedro Gil Street,
Malate, Manila to determine whether it was operating as a recruitment agency despite the
cancellation of its license on August 28, 2006. The operatives reported that their surveillance did
not reveal the information needed, so another surveillance was recommended.
On February 20, 2007, another surveillance was conducted on the premises of AIMS' office
pursuant to Surveillance Order No. 011. This time the POEA operatives observed that there were
people standing outside its main entrance, and there were announcements of job vacancies
posted on the main glass door of the office. Posing as applicants, the POEA operatives, Atty.
Romelson E. Abbang and Edilberto V. Alogoc, inquired as to the requirements for the position of
executive staff: and a lady clerk of AIMS handed them a flyer. Through the flyer, they learned
that AIMS was hiring hotel workers for deployment to Macau and grape pickers for California.
They also saw applicants inside the office waiting to be attended to. The POEA operatives later
confirmed through the POEA Verification System that AIMS had regained its license and good
standing on December 6, 2006, but that it had no existing approved job orders yet at that time.
On March 26, 2007, the POEA issued a Show Cause Order directing AIMS and its covering surety,
Country Bankers Insurance Corporation, to submit their answer or explanation to the
Surveillance Report dated November 8, 2006 of the POEA operatives. However, no copy of the
Surveillance Report dated February 21, 2007 was attached.
In compliance thereto, Danilo P. Pelagio, AIMS President, wrote to the POEA on April 3, 2007
maintaining that AIMS was not liable for any recruitment misrepresentation. Invoking the
Surveillance Report dated November 8, 2006, he cited the POEA operatives' own admission that
when they first came posing as applicants, the AIMS staff advised them that it had no job
vacancies for waiters and that its license had been cancelled. He also called POEA's attention to
the notice issued to AIMS, which was received on November 27, 2006, that the cancellation of its
license had been set aside on December 6, 2006; and that the POEA Adjudication Office even
circulated an advise to all its operating units of the restoration of AIMS' license.
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During the hearing on May 9, 2007, AIMS representative, Rommel Lugatiman (Lugatiman),
appeared, and averring that it had already filed its answer, he then moved for the resolution of
the complaint.
In the Order dated June 30, 2008, then POEA Administrator Rosalinda Baldoz ruled that on the
basis of the Surveillance Report dated February 21, 2007 of the POEA operatives, AIMS was liable
for misrepresentation under Section 2(e), Rule I, Part VI of the 2002 POEA Rules, since the POEA
records showed that AIMS had no job orders to hire hotel workers for Macau, nor grape pickers
for California, as its flyer allegedly advertised.
AIMS filed a motion for reconsideration before the DOLE. It alleged that its right to due process
was violated because the POEA did not furnish it with a copy of the Surveillance Report dated
February 21, 2007, which was the basis of the POEA Administrator's factual findings.
ISSUE
Whether AIMS’s right to due process was violated.
RULING
In concluding that, through Lugatiman, AIMS was "obviously informed of the charges" during
the preliminary hearing, the CA overlooked the crucial fact that, as the POEA itself admitted, it
did not furnish AIMS with a copy of its Surveillance Report dated February 21, 2007, which
contains the factual allegations of misrepresentation supposedly committed by AIMS. It is
incomprehensible why the POEA would neglect to furnish AIMS with a copy of the said report,
since other than the fact that AIMS was represented at the hearing on May 9, 2007, there is no
showing that Lugatiman was apprised of the contents thereof. In fact, as AIMS now claims, the
alleged recruitment flyer distributed to its applicants was not even presented.
Since AIMS was provided with only the Surveillance Report dated November 8, 2006, it could
only have been expected to respond to the charge contained in the Show Cause Order. Thus, in
its answer, it needed only to point to the POEA operatives' own admission in their Surveillance
Report dated November 8, 2006 that when they came posing as job applicants, the staff of AIMS
advised them that it had no job vacancies for waiters and that its license had been cancelled. As
POEA now also admits, AIMS's license to recruit was restored on December 6, 2006.
The CA faulted AIMS for failing to avail itself of the opportunity to rebut the allegations of the
POEA operatives in the two Surveillance Reports, as well as "to clarify the issues or the charges,"
during the May 9, 2007 preliminary hearing. Considering that AIMS was not furnished with the
Surveillance Report dated February 21, 2007, it cannot be expected to second-guess what charges
and issues it needed to clarify or rebut in order to clear itself. Needless to say, its right to due
process consisting of being informed of the charges against it has been grossly violated.
Moreover, AIMS also points out that the flyer advertising the jobs in Macau and California was
never presented or made part of the record, and neither was the AIMS lady clerk who allegedly
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distributed the same even identified, as AIMS demanded. Besides, granting that AIMS did
advertise with flyers for hotel workers or grape pickers, for which it allegedly had no existing
approved job orders, it is provided in Sections I and 2 of Rule VII (Advertisement for Overseas
Jobs), Part II of the 2002 POEA Rules28 that the said activity is permitted for manpower pooling
purposes, without need of prior approval from the POEA, upon the following conditions: (1) it is
done by a licensed agency; (2) the advertisement indicates in bold letters that it is for manpower
pooling only; (3) no fees are collected from the applicants; and ( 4) the name, address and POEA
license number of the agency, name and worksite of the prospective registered/accredited
principal and the skill categories and qualification standards are indicated.
It is true that in administrative proceedings, as in the case below, only substantial evidence is
needed, or such relevant evidence as a reasonable mind may accept as adequate to support a
conclusion. Unfortunately, there is no evidence against AIMS to speak of, much less substantial
evidence. Clearly, AIMS 's right to be informed of the charges against it, and its right to be held
liable only upon substantial evidence, have both been gravely violated.
LABOR STANDARDS
EDILBERTO P. ETOM, JR. v. AROMA LODGING HOUSE THROUGH EDUARDO G. LEM,

PROPRIETOR AND GENERAL MANAGER
G.R. No. 192955, November 09, 2015, DEL CASTILLO, J.
Once the employee has asserted with particularity that his employer failed to pay his
benefits, the burden is on the employer to prove payment, rather than on the employee to establish
non-payment.
Facts:
Etom filed a complaint against Aroma Lodging House for illegal dismissal and money claims.
When the case reached the CA, it explained that for having executed an earlier notarized affidavit
stating that he received wages above the required minimum salary, Etom could not subsequently
claim that he was underpaid by respondent. Etom argued that he was pressured to sign the
affidavit which was executed during the pendency of a criminal case against him. He likewise
averred that he is illiterate and does not understand the implication of said affidavit.
Issue:
Whether the affidavit executed by an employee sufficiently proves payment by employer
Ruling:
No. 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. Etom is an unlettered employee who
may not have understood the full import of his statements in the affidavit. Also, respondent did
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not present substantial evidence that it paid Etom’s benefits. 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.
MONCHITO R. AMPELOQUIO vs. JAKA DISTRIBUTION, INC

G.R. No. 196936, July 2, 2014, J. Jose Portugal Perez
Seniority rights refer to the creditable years of service in the employment record of the
illegally dismissed employee as if he or she never ceased working for the employer. In other words,
the employee’s years of service is deemed continuous and never interrupted. Such is likewise the
rationale for reinstatement’s twin relief of full backwages.
The phrase without loss of seniority rights applies with practical and real effect to
Ampeloquio upon his retirement because he will reach earlier than other regular employees of JAKA
the required number of years of service to qualify for retirement.
Reinstatement without loss of seniority rights and benefits does not necessarily mean equal
or more rights than those employees hired by JAKA prior or subsequent to his reinstatement. The
rule on how much pay a reinstated employee shall receive is governed by paragraph 3 of Article 223
of the Labor Code. To repeat, Ampeloquio is not entitled to all benefits or privileges received by
other employees subsequently hired by JAKA just by the fact of his seniority in the service with
JAKA.
Facts:
Respondents RMI Marketing Corp., (now known as JAKA DISTRIBUTION, INC.) and
Teodoro Barzabal, are ordered to reinstate, petitioner, Monchito Ampeloquio in his former
position as merchandiser without loss of seniority rights and other benefits and to pay him
backwages and attorney’s fees.
Ampeloquio resumed work as merchandiser at JAKA and reported at JAKA’s outlets

within Metro Manila, Shopwise Makati and Alabang. He received a daily wage of P252.00, without
meal and transportation allowance.
Later, Ampeloquio was transferred outside of Metro Manila, to Lucena City and
subsequently to San Pablo City. At that time, he was receiving the same daily wage of P252.00,
without meal and transportation allowance. Ampeloquio was given a monthly cost of living
allowance (COLA) of P720.00.
In a Letter addressed to JAKA’s general manager, Ampeloquio requested for salary

adjustment and benefits retroactive to the date of his reinstatement and payment of salary
differential. In another Letter, Ampeloquio wrote JAKA reiterating his request for salary
adjustment and payment of benefits retroactive to his reinstatement, and an increase from his
previous request of salary differential.
Page 10 of 827
Because of the discrepancy in wages, Ampeloquio filed anew before the NLRC, a
complaint for underpayment of wages, COLA, non-payment of meal and transportation
allowances which was granted by Labor Arbiter. NLRC modified the amounts ordered by the
Labor Arbiter to be paid by JAKA to Ampeloquio. CA dismissed Ampeloquio’s petition for
certiorari finding no grave abuse of discretion in the NLRC’s ruling and finding that, in fact, it is
supported by substantial evidence.
Issue:
Whether or not Ampeloquio is entitled to all benefits or privileges received by other

employees subsequently hired by JAKA just by the fact of his seniority in the service with JAKA.
Ruling:
No, Ampeloquio is not entitled to all benefits or privileges received by other employees
subsequently hired by JAKA just by the fact of his seniority in the service with JAKA.
illegally dismissed employee as if he or she never ceased working for the employer. In other
words, the employee’s years of service is deemed continuous and never interrupted. Such is
likewise the rationale for reinstatement’s twin relief of full backwages.
Ampeloquio is correct in asserting that he is a senior employee compared to the other

merchandisers whom he himself designates as casual or contractual merchandisers. He is
likewise senior to other regular employees subsequently hired by JAKA, specifically two regular
messenger employees which Ampeloquio claims receive wages higher than what he is receiving
from JAKA.
However, the case of Ampeloquio is outside the ordinary. His reinstatement was ordered
when merchandisers like him were no longer employed by JAKA. He is not entitled to the same
terms and conditions of employment as that which was offered to the other regular employees
(not merchandisers) subsequently hired by JAKA. JAKA’s decision to grant or withhold certain
benefits to other employees is part of its management prerogative as a function of an employer’s
constitutionally protected right to reasonable return on investments.
Ampeloquio upon his retirement because he will reach earlier than other regular employees of
JAKA the required number of years of service to qualify for retirement.
In all, the labor tribunals were right in using as guidepost the existing statutory minimum
wages and COLA during the three (3) year prescriptive period within which Ampeloquio can
make his money claims.
The Court is not unaware that reinstatement is the rule and such covers reinstatement to
the same or substantially equivalent position without loss of seniority rights and privileges.
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In this case, JAKA did not claim exceptions to the rule of reinstatement, i.e.,(1) strained relations,
or (2) abolition of the position; JAKA immediately complied with the Labor Arbiter’s order of
reinstatement even if such position no longer exists and has been abolished with the contracting
of this job function.
The option of reinstatement to a substantially equivalent position does not apply herein
as reinstatement to a substantially equivalent position entails the same or similar job functions
and not just same wages or salary. As applied to this case, Ampeloquio cannot be reinstated to a
messengerial position although such is a regular employment enjoying the same employment
benefits and privileges. His employment cannot likewise be converted into a contractual
employment as such is actually a downgrade from his regular employment enjoying security of
tenure with JAKA.
As the sole regular merchandiser of JAKA, Ampeloquio’s reinstatement entitles him, at

the minimum, to the standard minimum wage at the time of his employment and to the wages
he would have received from JAKA had he not been illegally dismissed, as if there was no
cessation of employment. Ampeloquio is likewise entitled to any increase which JAKA may have
given across the board to all its regular employees. To repeat, Ampeloquio is not entitled to all
benefits or privileges received by other employees subsequently hired by JAKA just by the fact of
his seniority in the service with JAKA.
Without loss of seniority rights and benefits, does not necessarily mean equal or more
rights than those employees hired by JAKA prior or subsequent to his reinstatement. The rule
on how much pay a reinstated employee shall receive is governed by paragraph 3 of Article 223
of the Labor Code.
OUR HAUS REALTY DEVELOPMENT CORPORATION vs. ALEXANDER PARIAN, JAY C.

ERINCO, ALEXANDER CANLAS, BERNARD TENEDERO AND JERRY SABULAO
G.R. No. 204651, August 6, 2014, J. Brion
The employer’s’ argument is a vain attempt to circumvent the minimum wage law by trying
to create a distinction where none exists. There is no substantial distinction between deducting and
charging a facility’s value from the employee’s wage. Hence, the legal requirements for creditability
apply to both. These requirements are (a) proof must be shown that such facilities are customarily
furnished by the trade; (b) the provision of deductible facilities must be voluntarily accepted in
writing by the employee; and (c) the facilities must be charged at fair and reasonable value.
Facts:
Alexander Parian, Jay Erinco, Alexander Canlas, Jerry Sabulao and Bernardo Tenedero
(respondents) were all laborers working for Our Haus Realty Development Corporation (Our
Haus), a company engaged in the construction business.
Page 12 of 827
Sometime in May 2010, Our Haus experienced financial distress. To alleviate its condition,
Our Haus suspended some of its construction projects and asked the affected workers, including
the respondents, to take vacation leaves.
Eventually, the respondents were asked to report back to work but instead of doing so, they
filed with the LA a complaint for underpayment of their daily wages. They claimed that except
for respondent Bernardo N. Tenedero, their wages were below the minimum rates prescribed in
the following wage orders from 2007 to 2010.
Our Haus primarily argued that there is a distinction between deduction and charging. A
written authorization is only necessary if the facility’s value will be deducted and will not
be needed if it will merely be charged or included in the computation of wages. Our Haus claimed
that it did not actually deduct the values of the meals and housing benefits. It only considered
these in computing the total amount of wages paid to the respondents for purposes of compliance
with the minimum wage law. Hence, the written authorization requirement should not apply.
On the other hand, the respondents argued that the value of their meals should not be
considered in determining their wages’ total amount since the requirements set under Section 4
of DOLE Memorandum Circular No. 2 were not complied with. The respondents pointed out that
Our Haus never presented any proof that they agreed in writing to the inclusion of their meals’
value in their wages. Also, Our Haus failed to prove that the value of the facilities it furnished
was fair and reasonable.
Issue:
Whether there is a substantial distinction between deducting and charging a facility’s value
from the employee’s wage
Ruling:
No, the legal requirements for creditability apply to both.
Our Haus’ argument is a vain attempt to circumvent the minimum wage law by trying to
create a distinction where none exists. In reality, deduction and charging both operate
to lessen the actual take-home pay of an employee.
In both, the employee receives a lessened amount because supposedly, the facility’s value,
which is part of his wage, had already been paid to him in kind. As there is no substantial
distinction between the two, the requirements set by law must apply to both.
As the CA correctly ruled, these requirements, as summarized in Mabeza, are the following:
1.Proof must be shown that such facilities are customarily furnished by the trade;
2.The provision of deductible facilities must be voluntarily accepted in writing by the
employee; and
3.The facilities must be charged at fair and reasonable value
A. The facility must be customarily furnished by the trade

Page 13 of 827
In a string of cases, we have concluded that one of the badges to show that a facility is
customarily furnished by the trade is the existence of a company policy or guideline showing
that provisions for a facility were designated as part of the employees’ salaries.
We agree with the NLRC’s finding that the sinumpaang salaysay statements submitted by
Our Haus are self-serving. For one, Our Haus only produced the documents when the NLRC had
already earlier determined that Our Haus failed to prove that it was traditionally giving the
respondents their board and lodging. This document did not state whether these benefits had
been consistently enjoyed by the rest of Our Haus’ employees. Moreover, the records reveal that
the board and lodging were given on a per project basis. Our Haus did not show if these benefits
were also provided in its other construction projects, thus negating its claimed customary nature.
B. The provision of deductible facilities must be voluntarily accepted in writing by the

employee.
In Mayon Hotel, we reiterated that a facility may only be deducted from the wage if the
employer was authorized in writing by the concerned employee. As it diminishes the take-
home pay of an employee, the deduction must be with his express consent.
Again, in the motion for reconsideration with the NLRC, Our Haus belatedly submitted five
kasunduans, supposedly executed by the respondents, containing their conformity to the
inclusion of the values of the meals and housing to their total wages. Oddly, Our Haus only
offered these documents when the NLRC had already ruled that respondents did not accomplish
any written authorization, to allow deduction from their wages. These five kasunduans were also
undated, making us wonder if they had really been executed when respondents fi`rst assumed
their jobs.
C. The facility must be charged at fair and reasonable value.
Our Haus admitted that it deducted the amount of P290.00 per week from each of the
respondents for their meals. But it now submits that it did not actually withhold the entire
amount as it did not figure in the computation the money it expended for the salary of the cook,
the water, and the LPG used for cooking, which amounts to P249.40 per week per person. From
these, it appears that the total meal expense per week for each person is P529.40, making Our
Haus’ P290.00 deduction within the 70% ceiling prescribed by the rules.
In the present case, Our Haus never explained how it came up with the values it
assigned for the benefits it provided; it merely listed its supposed expenses without any
supporting document. Since Our Haus is using these additional expenses (cook’s salary, water
and LPG) to support its claim that it did not withhold the full amount of the meals’ value, Our
Haus is burdened to present evidence to corroborate its claim. The records however, are bereft
of any evidence to support Our Haus’ meal expense computation. Even the value it assigned for
the respondents’ living accommodations was not supported by any documentary evidence.
Without any corroborative evidence, it cannot be said that Our Haus complied with this third
requisite.
Page 14 of 827
EMER MILAN, RANDY MASANGKAY, WILFREDO JAVIER, RONALDO DAVID,

BONIFACIO MATUNDAN, NORA MENDOZA, ET AL. vs. NATIONAL LABOR RELATIONS
COMMISSION, SOLID MILLS, INC., AND/OR PHILIP ANG
G.R. No. 202961, February 04, 2015, J. Leonen
An employer is allowed to withhold terminal pay and benefits pending the employee’s return
of its properties.The return of the property owned by their employer Solid Mills became an
obligation or liability on the part of the employees when the employer-employee relationship
ceased. Thus, respondent Solid Mills has the right to withhold petitioners’ wages and benefits
because of this existing debt or liability.
Facts:
As Solid Mills’ employees, petitioners Milan, et al. and their families were allowed to
occupy SMI Village, a property owned by respondent Solid Mills. According to Solid Mills, this
was “out of liberality and for the convenience of its employees . . . and on the condition that the
employees . . . would vacate the premises anytime the Company deems fit.”
Subsequently, petitioners were informed that Solid Mills would cease its operations due
to serious business losses. NAFLU (petitioner’s labor union) recognized Solid Mills’ closure due
to serious business losses in the memorandum of agreement. The memorandum of agreement
provided for Solid Mills’ grant of separation pay less accountabilities, accrued sick leave benefits,
vacation leave benefits, and 13th month pay to the employees. Later on, Solid Mills, through
Alfredo Jingco, sent to petitioners individual notices to vacate SMI Village. As a consequence,
petitioners were no longer allowed to report for work. They were required to sign a memorandum
of agreement with release and quitclaim before their vacation and sick leave benefits, 13th month
pay, and separation pay would be released. Employees who signed the memorandum of
agreement were considered to have agreed to vacate SMI Village, and to the demolition of the
constructed houses inside as condition for the release of their termination benefits and
separation pay. Petitioners refused to sign the documents and demanded to be paid their benefits
and separation pay.
Hence, petitioners filed complaints before the Labor Arbiter for alleged non-payment of
separation pay, accrued sick and vacation leaves, and 13th month pay. They argued that their
accrued benefits and separation pay should not be withheld because their payment is based on
company policy and practice. Moreover, the 13th month pay is based on law, specifically,
Presidential Decree No. 851. Their possession of Solid Mills property is not an accountability that
is subject to clearance procedures. They had already turned over to Solid Mills their uniforms
and equipment when Solid Mills ceased operations.
Issue:
Whether or not Solid Mills is allowed to withhold terminal pay and benefits pending the
petitioners’ return of its properties.
Page 15 of 827
Ruling:
Yes.
Requiring clearance before the release of last payments to the employee is a standard
procedure among employers, whether public or private. Clearance procedures are instituted to
ensure that the properties, real or personal, belonging to the employer but are in the possession
of the separated employee, are returned to the employer before the employee’s departure.
The Civil Code also provides that the employer is authorized to withhold wages for debts
due:Article 1706. Withholding of the wages, except for a debt due, shall not be made by the
employer.
“Debt” in this case refers to any obligation due from the employee to the employer. It
includes any accountability that the employee may have to the employer. There is no reason to
limit its scope to uniforms and equipment, as petitioners would argue.
More importantly, respondent Solid Mills and NAFLU, the union representing
petitioners, agreed that the release of petitioners’ benefits shall be “less accountabilities.”
“Accountability,” in its ordinary sense, means obligation or debt. The ordinary meaning
of the term “accountability” does not limit the definition of accountability to those incurred in
the worksite. As long as the debt or obligation was incurred by virtue of the employer-employee
relationship, generally, it shall be included in the employee’s accountabilities that are subject to
clearance procedures.
It may be true that not all employees enjoyed the privilege of staying in respondent Solid
Mills’ property. However, this alone does not imply that this privilege when enjoyed was not a
result of the employer-employee relationship. Those who did avail of the privilege were
employees of respondent Solid Mills. Petitioners’ possession should, therefore, be included in
the term “accountability.” The return of the property owned by their employer Solid Mills became
an obligation or liability on the part of the employees when the employer-employee relationship
PMI-FACULTY AND EMPLOYEES UNION v. PMI COLLEGES BOHOL

G.R. No. 211526, June 29, 2016
FACTS
Respondent PMI Colleges Bohol (respondent) is an educational institution that offers maritime
and customs administration courses to the public. Petitioner PMI-Faculty and Employees Union
Page 16 of 827
(Union) is the collective bargaining representative of the respondent's rank-and-file faculty

members and administrative staff.
On October 2, 2009, the Union filed a notice of strike with the National Conciliation and
Mediation Board (NCMB) in Cebu City, against the respondent, on grounds of gross violation of
Sections 3 and 3(a) of their collective bargaining agreement (CBA). The Union threatened to go
on strike on the first working day of the year 2010 following the failure of the conciliation and
mediation proceedings to settle the dispute. In an order dated December 29, 2009, Secretary
Marianito D. Roque of the Department of Labor and Employment (DOLE) certified the dispute
to the National Labor Relations Commission (NLRC) for compulsory arbitration.
On July 19, 2010, the Union filed a second notice of strike allegedly over the same CBA violation.
On July 28, 2010, the respondent filed a Motion to Strike Out Notice of Strike and to Refer the
Dispute to Voluntary Arbitration, claiming that the Union failed to exhaust administrative
remedies before resorting to a 2nd notice of strike. On August 5, 2010, the respondent filed a
Motion for Joinder of Issues under the 2nd notice of strike with those of the 1st notice.
On August 2, 2010, the Union submitted its strike vote. It alleged that while waiting for the
expiration of the 15-day cooling-off period and/or the completion of the 7-day strike vote period,
its members religiously reported for duty. On August 9, 2010, the last day of the cooling-off and
strike vote periods, the Union officers and members reported for work (except for Union
President Alberto Porlacin who was attending to his sick wife at the time), but they were allegedly
not allowed entry to the school premises. This incident, according to the Union, was confirmed
under oath by its officers/members.
In protest of what it considered a lock-out by the respondent, the Union staged a strike on the
same day. The respondent reacted with a Petition to Declare the Strike Illegal, also filed on the
same day. DOLE Secretary Rosalinda D. Baidoz assumed jurisdiction over the dispute through
an order dated August 10, 2010. She directed the strikers to return rework, and the school to
resume operations.
ISSUE
Whether or not the NLRC correctly found illegal the strike declared by the Union on August 9,
2010.
RULING
The declaration of the strike a day before the completion of the cooling-off and strike vote periods
was but a reaction to the respondent's locking out the officers and members of the Union. The
Union does not deny that it staged the strike on August 9, 2010, or on the 21st day after the filing
of the strike notice on July 19, 2010, and the submission of the strike vote on August 2, 2010, a day
earlier than the 22 days required by law (15 days strike notice, plus 7 days strike vote period). It,
however, maintained that it was left with no choice but to go on strike a day earlier because the
respondent had barred its officers and members from entering the school premises.
Page 17 of 827
The NLRC had been too quick in rejecting the sworn statements of the Union officers and
members that they had been locked out by the respondent when they reported for duty in the
morning of August 9, 2010, branding their affidavits as self-serving, without providing any basis
for such a conclusion other than who submitted the statements in evidence, which it implied to
be the Union.
On the contrary, we find the statements credible, particularly those of Engr. Teodomila
Mascardo, Engr. Conchita Bagaslao, Ms. Mary Jean Enriquez, and Mr. Cirilo Fallar that they had
classes at 7:30 a.m. to 8:30 a.m. on Monday, August 9, 2010, and that, in compliance with their
teaching load, they had to be in the school premises at 7:00 a.m. but were surprised when they
were not allowed to enter on that day by the guards on duty. They protested, they added, and
insisted on entering the school premises, but they were pushed out of the school grounds by the
guards who said that they were just following orders from the PMI management.
Under the circumstances, we find no reason for Mascardo, Bagaslao, Enriquez, and Fallar to make
self-serving and therefore false statements on their failure to hold their classes in the morning of
August 9, 2010 because they were refused entry by the security guards. While they are Union
members, they are first and foremost teachers who were reporting for duty on that day. The same
thing can be said of the Union officers who were also refused entry by the guards. We likewise
find no reason for the officers to throw away all their preparations for a lawful strike on the very
last day, had they not been pushed to act by the respondent's closing of the gates on August 9,
2010.
It was thus grave abuse of discretion for the NLRC to completely ignore the affidavits of the
officers and members of the Union directly saying that they were refused entry into the school
premises on August 9, 2010, especially when LA Montenegro intimated that the respondent could
have presented the testimonies of the guards on duty at the time to belie .the statements of the
Union officers and members.
In sharp contrast, the NLRC readily admitted the video footage of the strike area on August 9,
2010, which the respondent offered in evidence only on appeal or more than a year (15 months)
after it was supposed to have been taken. The much belated submission of the video footage puts
in question, as the Union argued in its certiorari petition, the authenticity and. therefore, the
credibility of the footage. Why was the footage not presented to the labor arbiter, considering
that the respondent reserved the right to adduce additional evidence, documentary and
testimonial, in the resolution of the case? Why did it take more than a year to present it when
the footage was taken on the first day of the strike?
The respondent's explanation for the 15-month delay in the presentation of the compact disc
contents to prove that the school did not lock out the Union members and officers deserves scant
consideration. We are not convinced that the respondent spent more than a year to secure the
affidavits of the personnel of Ramasola Superstudio, based in Tagbilaran City, that purportedly
took the footage. As the Union pointed out,-a member of the school's management, lawyer
Evaneliza Cloma-Lucero, who resides in Tagbilaran City could have been asked to depose the
studio's personnel. Neither are we persuaded by the excuse that the respondent's counsel is
Page 18 of 827
residing in Pasig City. Again, as observed by the Union, air travel can bring the lawyer to
Tagbilaran City in just a little over an hour to take the deposition.
The inordinate delay in the submission of the compact disc cannot but generate negative
speculations on why it took so long for the respondent to introduce it in evidence. We thus find
the Union's apprehension about the authenticity and credibility of the compact disc not
surprising; 15 months are too long a period to wait for the submission of a piece of evidence which
existed on the first day of the strike way back on August 9, 2010.
Like its immediate rejection of the affidavits of the Union members and officers for being "self-
serving," without giving any credible basis for its sweeping declaration, we find the NLRC to have
overstepped the bounds of its discretionary authority in "swallowing hook, line, and sinker," as
the Union put it, the compact disc submitted by the school, as it is obvious that it was suffering
from a serious doubt in credibility because of its much belated submission. The doubt should
have been resolved in favor of the Union.
At this point, it is well to stress that under Article 4 of the Labor Code, "all doubts in the
implementation and interpretation of the provisions of this Code, including its implementing rules
and regulations, shall be resolved in favor of labor." In Peñaflor v. Outdoor Clothing Manufacturing
Corporation, the Court reiterated that the principle laid down in the law has been extended by
jurisprudence to cover doubts in the evidence presented by the employer and the employee. As
discussed earlier, the Union has raised serious doubt on the evidence relied on by the NLRC.
Consistent with Article 4 of the Labor Code, we resolve the doubt in the Union's favor.
In sum, we find merit in the petition. The CA reversibly erred when (1) it decided the present
labor dispute and dismissed the Union's certiorari petition purely on technical grounds, and (2)
in blindly ignoring the blatant grave abuse of discretion on the part of the NLRC that completely
disregarded the affidavits of the officers and members of the Union and readily admitted the
respondent's belatedly submitted video footage.
WAGES
MONCHITO R. AMPELOQUIO vs. JAKA DISTRIBUTION, INC

G.R. No. 196936, July 2, 2014, J. Jose Portugal Perez
illegally dismissed employee as if he or she never ceased working for the employer. In other words,
the employee’s years of service is deemed continuous and never interrupted. Such is likewise the
rationale for reinstatement’s twin relief of full backwages
Ampeloquio upon his retirement because he will reach earlier than other regular employees of JAKA
the required number of years of service to qualify for retirement.
Page 19 of 827
Reinstatement without loss of seniority rights and benefits does not necessarily mean equal
or more rights than those employees hired by JAKA prior or subsequent to his reinstatement. The
rule on how much pay a reinstated employee shall receive is governed by paragraph 3 of Article 223
of the Labor Code. To repeat, Ampeloquio is not entitled to all benefits or privileges received by
other employees subsequently hired by JAKA just by the fact of his seniority in the service with
JAKA.
Facts:
Respondents RMI Marketing Corp., (now known as JAKA DISTRIBUTION, INC.) and
Teodoro Barzabal, are ordered to reinstate, petitioner, Monchito Ampeloquio in his former
position as merchandiser without loss of seniority rights and other benefits and to pay him
backwages and attorney’s fees.
Ampeloquio resumed work as merchandiser at JAKA and reported at JAKA’s outlets

within Metro Manila, Shopwise Makati and Alabang. He received a daily wage of P252.00, without
meal and transportation allowance.
Later, Ampeloquio was transferred outside of Metro Manila, to Lucena City and
subsequently to San Pablo City. At that time, he was receiving the same daily wage of P252.00,
without meal and transportation allowance. Ampeloquio was given a monthly cost of living
allowance (COLA) of P720.00.
In a Letter addressed to JAKA’s general manager, Ampeloquio requested for salary

adjustment and benefits retroactive to the date of his reinstatement and payment of salary
differential. In another Letter, Ampeloquio wrote JAKA reiterating his request for salary
adjustment and payment of benefits retroactive to his reinstatement, and an increase from his
previous request of salary differential.
Because of the discrepancy in wages, Ampeloquio filed anew before the NLRC, a
complaint for underpayment of wages, COLA, non-payment of meal and transportation
allowances which was granted by Labor Arbiter. NLRC modified the amounts ordered by the
Labor Arbiter to be paid by JAKA to Ampeloquio. CA dismissed Ampeloquio’s petition for
certiorari finding no grave abuse of discretion in the NLRC’s ruling and finding that, in fact, it is
Issue:
Whether or not Ampeloquio is entitled to all benefits or privileges received by other

employees subsequently hired by JAKA just by the fact of his seniority in the service with JAKA.
Ruling:
No, Ampeloquio is not entitled to all benefits or privileges received by other employees
subsequently hired by JAKA just by the fact of his seniority in the service with JAKA.
Page 20 of 827
illegally dismissed employee as if he or she never ceased working for the employer. In other
words, the employee’s years of service is deemed continuous and never interrupted. Such is
likewise the rationale for reinstatement’s twin relief of full backwages.
Ampeloquio is correct in asserting that he is a senior employee compared to the other

merchandisers whom he himself designates as casual or contractual merchandisers. He is
likewise senior to other regular employees subsequently hired by JAKA, specifically two regular
messenger employees which Ampeloquio claims receive wages higher than what he is receiving
from JAKA.
However, the case of Ampeloquio is outside the ordinary. His reinstatement was ordered
when merchandisers like him were no longer employed by JAKA. He is not entitled to the same
terms and conditions of employment as that which was offered to the other regular employees
(not merchandisers) subsequently hired by JAKA. JAKA’s decision to grant or withhold certain
benefits to other employees is part of its management prerogative as a function of an employer’s
constitutionally protected right to reasonable return on investments.
Ampeloquio upon his retirement because he will reach earlier than other regular employees of
JAKA the required number of years of service to qualify for retirement.
In all, the labor tribunals were right in using as guidepost the existing statutory minimum
wages and COLA during the three (3) year prescriptive period within which Ampeloquio can
make his money claims.
The Court is not unaware that reinstatement is the rule and such covers reinstatement to
the same or substantially equivalent position without loss of seniority rights and privileges.
In this case, JAKA did not claim exceptions to the rule of reinstatement, i.e.,(1) strained
relations, or (2) abolition of the position; JAKA immediately complied with the Labor Arbiter’s
order of reinstatement even if such position no longer exists and has been abolished with the
contracting of this job function.
The option of reinstatement to a substantially equivalent position does not apply herein
as reinstatement to a substantially equivalent position entails the same or similar job functions
and not just same wages or salary. As applied to this case, Ampeloquio cannot be reinstated to a
messengerial position although such is a regular employment enjoying the same employment
benefits and privileges. His employment cannot likewise be converted into a contractual
employment as such is actually a downgrade from his regular employment enjoying security of
tenure with JAKA.
As the sole regular merchandiser of JAKA, Ampeloquio’s reinstatement entitles him, at

the minimum, to the standard minimum wage at the time of his employment and to the wages
he would have received from JAKA had he not been illegally dismissed, as if there was no
Page 21 of 827
cessation of employment. Ampeloquio is likewise entitled to any increase which JAKA may have
given across the board to all its regular employees. To repeat, Ampeloquio is not entitled to all
benefits or privileges received by other employees subsequently hired by JAKA just by the fact of
his seniority in the service with JAKA.
Without loss of seniority rights and benefits, does not necessarily mean equal or more
rights than those employees hired by JAKA prior or subsequent to his reinstatement. The rule
on how much pay a reinstated employee shall receive is governed by paragraph 3 of Article 223
of the Labor Code.
OUR HAUS REALTY DEVELOPMENT CORPORATION vs. ALEXANDER PARIAN, JAY C.

ERINCO, ALEXANDER CANLAS, BERNARD TENEDERO AND JERRY SABULAO
The employer’s’ argument is a vain attempt to circumvent the minimum wage law by trying
to create a distinction where none exists. There is no substantial distinction between deducting and
charging a facility’s value from the employee’s wage. Hence, the legal requirements for creditability
apply to both. These requirements are (a) proof must be shown that such facilities are customarily
furnished by the trade; (b) the provision of deductible facilities must be voluntarily accepted in
writing by the employee; and (c) the facilities must be charged at fair and reasonable value.
Facts:
Alexander Parian, Jay Erinco, Alexander Canlas, Jerry Sabulao and Bernardo Tenedero
(respondents) were all laborers working for Our Haus Realty Development Corporation (Our
Haus), a company engaged in the construction business.
Sometime in May 2010, Our Haus experienced financial distress. To alleviate its condition,
Our Haus suspended some of its construction projects and asked the affected workers, including
the respondents, to take vacation leaves.
Eventually, the respondents were asked to report back to work but instead of doing so, they
filed with the LA a complaint for underpayment of their daily wages. They claimed that except
for respondent Bernardo N. Tenedero, their wages were below the minimum rates prescribed in
the following wage orders from 2007 to 2010.
Our Haus primarily argued that there is a distinction between deduction and charging. A
written authorization is only necessary if the facility’s value will be deducted and will not
be needed if it will merely be charged or included in the computation of wages. Our Haus claimed
that it did not actually deduct the values of the meals and housing benefits. It only considered
these in computing the total amount of wages paid to the respondents for purposes of compliance
with the minimum wage law. Hence, the written authorization requirement should not apply.
On the other hand, the respondents argued that the value of their meals should not be
considered in determining their wages’ total amount since the requirements set under Section 4
of DOLE Memorandum Circular No. 2 were not complied with. The respondents pointed out that
Page 22 of 827
Our Haus never presented any proof that they agreed in writing to the inclusion of their meals’
value in their wages. Also, Our Haus failed to prove that the value of the facilities it furnished
was fair and reasonable.
Issue:
Whether there is a substantial distinction between deducting and charging a facility’s value
from the employee’s wage
Ruling:
No, the legal requirements for creditability apply to both.
Our Haus’ argument is a vain attempt to circumvent the minimum wage law by trying to
create a distinction where none exists. In reality, deduction and charging both operate
to lessen the actual take-home pay of an employee.
In both, the employee receives a lessened amount because supposedly, the facility’s value,
which is part of his wage, had already been paid to him in kind. As there is no substantial
distinction between the two, the requirements set by law must apply to both.
As the CA correctly ruled, these requirements, as summarized in Mabeza, are the following:
4.Proof must be shown that such facilities are customarily furnished by the trade;
5.The provision of deductible facilities must be voluntarily accepted in writing by the
employee; and
6.The facilities must be charged at fair and reasonable value
A. The facility must be customarily furnished by the trade
In a string of cases, we have concluded that one of the badges to show that a facility is
customarily furnished by the trade is the existence of a company policy or guideline showing
that provisions for a facility were designated as part of the employees’ salaries.
We agree with the NLRC’s finding that the sinumpaang salaysay statements submitted by
Our Haus are self-serving. For one, Our Haus only produced the documents when the NLRC had
already earlier determined that Our Haus failed to prove that it was traditionally giving the
respondents their board and lodging. This document did not state whether these benefits had
been consistently enjoyed by the rest of Our Haus’ employees. Moreover, the records reveal that
the board and lodging were given on a per project basis. Our Haus did not show if these benefits
were also provided in its other construction projects, thus negating its claimed customary nature.
B. The provision of deductible facilities must be voluntarily accepted in writing by the

employee.
In Mayon Hotel, we reiterated that a facility may only be deducted from the wage if the
employer was authorized in writing by the concerned employee. As it diminishes the take-
home pay of an employee, the deduction must be with his express consent.
Page 23 of 827
Again, in the motion for reconsideration with the NLRC, Our Haus belatedly submitted five
kasunduans, supposedly executed by the respondents, containing their conformity to the
inclusion of the values of the meals and housing to their total wages. Oddly, Our Haus only
offered these documents when the NLRC had already ruled that respondents did not accomplish
any written authorization, to allow deduction from their wages. These five kasunduans were also
undated, making us wonder if they had really been executed when respondents fi`rst assumed
their jobs.
C. The facility must be charged at fair and reasonable value.
Our Haus admitted that it deducted the amount of P290.00 per week from each of the
respondents for their meals. But it now submits that it did not actually withhold the entire
amount as it did not figure in the computation the money it expended for the salary of the cook,
the water, and the LPG used for cooking, which amounts to P249.40 per week per person. From
these, it appears that the total meal expense per week for each person is P529.40, making Our
Haus’ P290.00 deduction within the 70% ceiling prescribed by the rules.
In the present case, Our Haus never explained how it came up with the values it
assigned for the benefits it provided; it merely listed its supposed expenses without any
supporting document. Since Our Haus is using these additional expenses (cook’s salary, water
and LPG) to support its claim that it did not withhold the full amount of the meals’ value, Our
Haus is burdened to present evidence to corroborate its claim. The records however, are bereft
of any evidence to support Our Haus’ meal expense computation. Even the value it assigned for
the respondents’ living accommodations was not supported by any documentary evidence.
Without any corroborative evidence, it cannot be said that Our Haus complied with this third
requisite.

An employer is allowed to withhold terminal pay and benefits pending the employee’s return
of its properties.The return of the property owned by their employer Solid Mills became an
Facts:
As Solid Mills’ employees, petitioners Milan, et al. and their families were allowed to
occupy SMI Village, a property owned by respondent Solid Mills. According to Solid Mills, this
was “out of liberality and for the convenience of its employees . . . and on the condition that the
employees . . . would vacate the premises anytime the Company deems fit.”
Page 24 of 827
Alfredo Jingco, sent to petitioners individual notices to vacate SMI Village. As a consequence,
petitioners were no longer allowed to report for work. They were required to sign a memorandum
and separation pay.
Issue:
Whether or not Solid Mills is allowed to withhold terminal pay and benefits pending the
petitioners’ return of its properties.
Ruling:
Yes.
Requiring clearance before the release of last payments to the employee is a standard
procedure among employers, whether public or private. Clearance procedures are instituted to
ensure that the properties, real or personal, belonging to the employer but are in the possession
of the separated employee, are returned to the employer before the employee’s departure.
The Civil Code also provides that the employer is authorized to withhold wages for debts
due:Article 1706. Withholding of the wages, except for a debt due, shall not be made by the
employer.
“Debt” in this case refers to any obligation due from the employee to the employer. It
includes any accountability that the employee may have to the employer. There is no reason to
limit its scope to uniforms and equipment, as petitioners would argue.
Page 25 of 827
More importantly, respondent Solid Mills and NAFLU, the union representing
petitioners, agreed that the release of petitioners’ benefits shall be “less accountabilities.”
“Accountability,” in its ordinary sense, means obligation or debt. The ordinary meaning
of the term “accountability” does not limit the definition of accountability to those incurred in
the worksite. As long as the debt or obligation was incurred by virtue of the employer-employee
relationship, generally, it shall be included in the employee’s accountabilities that are subject to
clearance procedures.
It may be true that not all employees enjoyed the privilege of staying in respondent Solid Mills’
property. However, this alone does not imply that this privilege when enjoyed was not a result
of the employer-employee relationship. Those who did avail of the privilege were employees of
respondent Solid Mills. Petitioners’ possession should, therefore, be included in the term
“accountability.” The return of the property owned by their employer Solid Mills became an
BENEFITS
ONE SHIPPING CORP., AND/OR ONE SHIPPING KABUSHIKI KAISHA/JAPAN v. IMELDA

C. PEÑAFIEL
G.R. No. 192406, January 21, 2015, PERALTA, J.
For death benefits to be awarded, the employee’s death should occur during the
effectivity of the employment contract.
Facts:
One Shipping Corp. hired the late Ildefonso S. Peñafiel as Second Engineer on
board the vessel MV/ACX Magnolia. Peñafiel boarded the vessel on August 29, 2004 and
died on July 2, 2005. His wife then filed for monetary claims arising from his death.
Petitioners admitted that they contracted the services of the late Ildefonso to work on
board MV/ACX Magnolia for a period of 12 months. However, they denied any liability
for the claims of the respondent and maintained that at the time Ildefonso died, the
latter was no longer an employee of the petitioners as he voluntarily terminated his
employment contract with the petitioners when Ildefonso requested for a leave and
pre-terminated his contract.
Issue:
Whether petitioners are liable for the death benefits
Page 26 of 827
Ruling:
No. At the time of Ildefonso's repatriation, the employer-employee relationship

had already been terminated. Thus, the LA was correct in concluding that the terms and
conditions contained in the contract of employment ceased to have force and effect,
including the payment of death compensation benefits to the heirs of a seafarer who dies
during the term of his contract.
The death of a seaman during the term of employment makes the employer liable
to his heirs for death compensation benefits. Once it is established that the seaman died
during the effectivity of his employment contract, the employer is liable. Ildefonso died
after he pre-terminated the contract of employment. That alone would have sufficed
for his heirs not to be entitled for death compensation benefits. Furthermore, there is
no evidence to show that Ildefonso's illness was acquired during the term of his
employment with petitioners. The Court cannot allow claims for compensation based
on surmises, or when the evidence negates compensability.
UNI COL MANAGEMENT SERVICES, INC., LINK MARINE PTE. LTD. and/or VICTORIANO B.
TIROL, III, v. DELIA MALIPOT, in behalf of GLICERIO MALIPOT
G.R. No. 206562, January 21, 2015, PERALTA, J.
The employer may be exempt from liability if it can prove that the seaman’s death
was caused by an injury directly attributable to his deliberate or willful act.
Facts:
Delia Malipot is the surviving spouse of the deceased seaman Glicerio. She filed a
Complaint before the LA claiming death compensation under seaman Glicerio’s
POEA contract. Petitioners, however, insisted that seaman Glicerio committed
suicide and therefore they are exempted from paying the death compensation benefits.
Issue:
Whether petitioners are exempted from paying the death compensation benefits
Ruling:
Yes. The employer is liable to pay the heirs of the deceased seafarer for death
benefits once it is established that he died during the effectivity of his employment
contract. However, petitioners were able to substantially prove that seaman Glicerio’s
death is directly attributable to his deliberate act of hanging himself. His death,
therefore, is not compensable and his heirs not entitled to any compensation or
benefits. Finally, absent substantial evidence from which reasonable basis for the grant
Page 27 of 827
of benefits prayed for can be drawn, the Court must deny her petition. While labor
contracts are impressed with public interest and the provisions of the POEA
Employment Contract must be construed liberally in favor of Filipino seamen, justice
is in every case for the deserving, to be dispensed with in the light of established facts,
the applicable law, and existing jurisprudence.
FLOR G. DAYO v. STATUS MARITIME CORPORATION and/or NAFTO TRADE SHIPPING

COMMERCIAL S.A.
G.R. No. 210660, January 21, 2015, LEONEN, J.
For illness to be compensable, it is not necessary that the nature of the employment be
the sole reason for the illness suffered by the seafarer.
Facts:
Eduardo P. Dayo was hired by Status Maritime Corporation for Nafto Trade
Shipping Commercial S.A. as a bosun. Prior to embarkation, he was declared fit to work
but while at work he experienced severe pain and was later diagnosed with hypertension
which became the reason for his repatriation. Eduardo’s private physician found the
results of his 2D echocardiogram as normal. Later, he was granted medical assistance
and was referred to a company-designated physician who diagnosed him with diabetes
mellitus.
Later, Eduardo died due to cardiopulmonary arrest. Flor G. Dayo, Eduardo’s wife,
requested for death benefits but to no avail. Thus, she filed a complaint. Status
Maritime Corporation contends that the illness suffered by Eduardo was pre-existing
and was not work-related.
Issue:
Whether Dayo can claim the death benefits
Ruling:
No. It is sufficient that there is a reasonable linkage between the disease
suffered by the employee and his work to lead a rational mind to conclude that his work
may have contributed to the establishment or, at the very least, aggravation of any
pre-existing condition he might have had. However, petitioner did not allege how the
nature of Eduardo’s work as a bosun contributed to the development or the
aggravation of his illness. Further, he himself admitted that he had diabetes and
hypertension prior to his embarkation. Considering that diabetes mellitus is not
listed as an occupational disease under the 2000 POEA-SEC and considering that
petitioner did not prove how Eduardo’s occupation contributed to the development of
his illness, no error can be attributed to the CA when it affirmed the NLRC’s Decision and
Resolution.
Page 28 of 827
C.F. SHARP CREW MANAGEMENT, INC. AND REEDEREI CLAUS PETER OFFEN v. CLEMENTE
M. PEREZ
G.R. No. 194885, January 26, 2015, VILLARAMA, JR., J.
Under the 1996 POEA-SEC, it is enough that the seafarer proves that his or her injury
or illness was acquired during the term of employment to support a claim for disability
benefits.
Facts:
C.F. Sharp Crew Management and Peter Offen hired Perez as oiler on board a
vessel. They signed an employment contract, which was covered by a CBA and agreed
to comply with the 1996 POEA Standard Employment Contract. While on board the
vessel, Perez failed to report for duty, and later on showed up at the crew mess confused.
The master of the vessel then decided that Perez will be a high risk for the safety of the
ship and its crew and must be repatriated. Perez was diagnosed with acute psychosis
and was declared unfit for sea duty. When he arrived in Manila, he was referred for
another psychiatric evaluation which stated that Perez had only recurrent acute
psychotic disorder for it does not show all the time. He was referred to another
clinic and was likewise diagnosed with the same disorder, that there is no significant
manifestation of personality and mental disturbances, and that he is still fit to work
abroad. Perez then sued petitioners for disability benefits claiming that while he was told
that he is already fit to work as seaman, the doctor refused to issue a medical certificate
on the ground that he has yet to fully recover from his illness; and when sought for re-
employment, petitioners rejected him. His claim for disability benefits under the CBA
was also denied. Petitioners argued that Perez is not entitled to disability benefits
because he is already fit to work, citing the result of his psychological examination after
his repatriation.
Issue:
Whether Perez is entitled to permanent and total disability benefits
Ruling:
Yes. Perez is entitled to the benefits in accordance with the 1996 POEA-SEC, and
not under the CBA, since the parties agreed that they will comply with the former. Perez
became ill during the term of his employment contract. The initial diagnosis that he
has acute psychosis confirmed the observation of the master of the vessel. Perez’s
claim for disability benefits finds support from established facts. Petitioners cannot
claim that their designated doctors declared Perez as fit to work after his repatriation
and treatment. Without a declaration that Perez is already fit to work or an
assessment of the degree of his disability by petitioners’ own doctors, respondent’s
disability is therefore permanent and total. This is equivalent to a Grade 1
impediment/disability entitling Perez to permanent and total disability benefits under
Page 29 of 827
the 1996 POEA-SEC.
DOHLE-PHILMAN MANNING AGENCY, INC., DOHLE (IOM) LIMITED AND/OR CAPT.

MANOLO T. GACUTAN v. HEIRS OF ANDRES G. GAZZINGAN, REPRESENTED BY LENIE L.
GAZZINGAN
G.R. No. 199568, June 17, 2015, DEL CASTILLO, J.
Under the POEA-SEC, an illness suffered by a seafarer during the term of his contract
is presumed compensable.
Facts:
Dohle-Philman Manning Agency Inc (DOHLE), employed Andres Gazzingan as
messman on board the vessel M/V Gloria. Prior to his employment, Gazzingan underwent
pre-employment medical examination which yielded normal results except for a
finding of left ventricular hypertrophy in his electrocardiogram test. Gazzingan was
pronounced fit for sea duty. During his employment, Gazzingan experienced severe
chest pain which required him to be medically repatriated back to the Philippines. A
company-designated physician declared that Gazzingan is suffering from a non-work-
related illness. Gazzingan was allegedly suffering from Dissecting Aneurysm. This
prompted DOHLE to cease from shouldering Gazzingan’s medical bills, causing his
discharge from the hospital. Gazzingan filed a complaint with the LA for non-payment
or under payment of wages, sickness allowance, disability benefits and reimbursement
of medical expenses and attorney’s fees.
Issue:
Whether Gazzingan’s disease is compensable under the law
Ruling:
Yes. Gazzingan’s work as a messman is not confined mainly to serving food and
beverages to all officers and crew; he was likewise tasked to assist the chief cook/chef
steward, and performed most duties in the ship’s steward department. He is bound
to suffer chest and back pains, which could have caused or aggravated his illness.
Gazzingan’s strenuous duties caused him to suffer physical stress which exposed him
to injuries. His employment has contributed to some degree to the development of his
disease.
Gazzingan was fit to work when he was engaged to work on board the vessel M/V
Gloria. His PEME showed normal findings with no hypertension and without any heart
problems. It was only while rendering duty that he experienced symptoms. This is
supported by a medical report issued by Cartagena de Indias Hospital in Colombia.
Even assuming that Gazzingan had a pre-existing condition, this does not negate
the probability that his aortic dissection was aggravated by his work conditions. The
stress caused by his job actively contributed to the aggravation of his illness. It is
Page 30 of 827
sufficient that there is a reasonable linkage between the disease suffered by the
employee and his work to lead a rational mind to conclude that his work may have
contributed to the establishment or, at the very least, aggravation of any pre-existing
condition he might have had.
The 2000 POEA-SEC has created a presumption of compensability for those

illnesses which are not listed as an occupational disease. Section 20 (B), paragraph (4)
states that “those illnesses not listed in Section 32 of this Contract are disputably
presumed as work-related.” 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 illnesses
not included in the list of occupational diseases. A causal link was established between
Gazzingan’s employment and his ailment. The presumption now operates in favor of
respondents and the burden is on the petitioners to overcome the presumption.
Petitioners failed to discharge such burden.
MA. SUSANA A. AWATIN, and on behalf of the heirs/beneficiaries of deceased

ALBERTO AWATIN v. AVANTGARDE SHIPPING CORPORATION and MRS. DORA G.
PASCUAL, OFFSHORE MARITIME MANAGEMENT INT'L., INC. (SWITZERLAND), SEABULK
TREASURE ISLAND
G.R. No. 179226, June 29, 2015, PERALTA, J.
The mere death of a seaman during the term of his employment is not sufficient to
give rise to compensation.
Facts:
Alberto B. Awatin was recruited and hired as Master for the vessel M/V Seabulk
Treasure Island by Avantgarde Shipping Corporation, for its principal, Offshore Marine
Management International, Inc. (Switzerland). Awatin joined the vessel M/V Seabulk
Treasure Island after being found to be "fit to work" by the company-designated
physician. Awatin was repatriated back to the Philippines after completing his
employment contract. Thereafter, he was diagnosed to have "Massive Ascitis, Secondary
to Adenocarcinoma, Moderate Pleural Effusion, Right Lung" and "repeated abdominal
paracentesis due to recurrent ascitis." Eventually, Awatin died of "multi-organ failure
and adenocarcinoma." Susana Awatin, wife of Alberto, for herself and on behalf of her
two minor children, filed a complaint for recovery of death benefits, burial allowance,
sickness allowance, additional benefits for her two minor children, reimbursement of
medical and hospitalization expenses, moral and exemplary damages and attorney's fees
against Avantgarde, its officer, Ms. Dora Pascual, Switzerland and Seabulk before the
NLRC.
Page 31 of 827
Issue:
Whether Awatin is entitled to death benefits
Ruling:
No. The records do not show that Awatin's illness, adenocarcinoma, was
contracted during the term of his last employment contract. Awatin was declared fit
to work in the mandatory pre- employment medical examination prior to his
deployment. There was no showing that he complained of any illness while on board
the vessel nor was it established that Awatin was repatriated due to an illness. For a
seafarer's death to be compensable, it must have occurred during the term of the
employment contract. The determination of whether the death was the result of a
work-related illness becomes necessary only when the above condition has been satisfied
NEW FILIPINO MARITIME AGENCIES, INC. TAIYO NIPPON KISEN CO., LTD. AND ANGELITA
T. RIVERA v. VINCENT DATAYAN
G.R. NO. 202859, November 11, 2015, DEL CASTILLO, J.
The death of a seafarer during the term of his employment makes his employer liable
for death benefits. However, 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.
Facts:
Simon Vincent Datayan II was hired as deck cadet on board Corona Infinity by
New Filipino Maritime Agencies, Inc. (NFMA) on behalf of St. Paul Maritime Corp. (SPMC).
Sometime thereafter, his master conducted an emergency fire drill in which the crew
participated. After that, a crew meeting was held in which he was reprimanded for
his poor performance. Just before the meeting was concluded, Simon left.
Subsequently, one of the crew members named allegedly saw Simon jumped overboard.
The vessel retraced its course to where he fell. The Master also informed the Japan Coast
Guard about the incident. The Yokohama Coastguard Patrol conducted a search-
and-rescue operation to no avail. Consequently, the crew found Simon’s suicide note.
Simon was declared missing and was presumed dead. His father, Vincent H.
Datayan, went to NFMA to claim death benefits but his claim went unheeded. He filed a
complaint for death benefits and attorney’s fees against NFMA, Taiyo Nippon Kisen Co.,
Ltd., and Angelina T. Rivera contending that Simon’s death was due to the master’s
negligence and instruction in conducting the emergency fire drill at the time when the
water temperature was expected to cause hypothermia.
Issue:
Whether Datayan is entitled to death benefits
Ruling:
No. 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. 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. Petitioners have the burden to prove this circumstance
by substantial evidence. They discharged their burden by proving that Simon committed
suicide.
The fact that Simon committed suicide is bolstered by the suicide note that he
executed. 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.
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 signature in the suicide note and the signature of Simon in his employment
contract appear to be the same.
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.
JAY H. LICAYAN v. SEACREST MARITIME MANAGEMENT, INC., CLIPPER FLEET

MANAGEMENT, A/S AND/OR REDENTOR ANAYA
G.R. No. 213679, November 25, 2015, MENDOZA, J.
The POEA-SEC cannot be presumed to contain all the possible injuries that render a
seafarer unfit for further sea duties. Section 20 (B) (4) of the same provides that "[t]he liabilities
of the employer when the seafarer suffers work-related injury or illness during the term of his
contract are as follows: (t)hose illnesses not listed in Section 32 of this Contract are disputably
presumed as work related." A disputable presumption is created in favor of compensability.
Illnesses not listed in Section 32 are disputably presumed as work-related. Even if the illness
is not listed as an occupational disease or illness, it will be presumed as work-related, and it
becomes incumbent on the employer to overcome the presumption.
Facts:
Licayan was hired as Fitter for the vessel, MT Clipper Ann, by Seacrest Maritime
Management, Inc. Licayan underwent a pre-employment medical examination (PEME)
and was declared fit for sea service. Months after Licayan boarded the vessel, he
experienced severe headache. Licayan was diagnosed with Panic Disorder and was
repatriated back to Manila. Upon his arrival, Licayan was advised by Seacrest to report to
the company-designated doctor, Dr. Alegre, who issued a certification finding Licayan to
be suffering from Panic Disorder and that he was unfit to work. In the hope of recovering
from his mental illness, Licayan sought the opinion of Dr. Adamos, a clinical psychologist,
who certified that he was incapacitated to work permanently as a seafarer. On account
of the findings of the company-designated physician together with the above-
mentioned findings of Dr. Adamos, Licayan filed a case for payment of total and permanent
disability benefits.
Issue:
Whether Licayan's illness is compensable
Ruling:
Yes. Licayan was able to prove by substantial evidence that his work conditions
caused his panic disorder. He stated in his position paper that: “(7) Complainant was
always exposed to the harsh conditions of the elements, the perils at sea, severe stress
while being away from his family and fatigue while doing his duties and responsibilities
on board the vessel. (8) This demanding nature of his job was his routine since he
boarded the vessel. For this reason, he was not able to have proper rest. He has also an
irregular sleep pattern since he is on call by his supervisor 24 hours a day. (9)
Notwithstanding the extraordinary work load, Mr. Licayan was given an overall
assessment of a conscientious worker with good engineering knowledge and experience
on sea trade. (10) In addition to the principal functions and duties as Fitter, Mr. Licayan
[would] perform and install the water and oil separation fixtures. This job can only be
done normally when the vessel is on dry dock so that the equipment are properly installed
and fixed. However, due to excellence skill and dexterity of Mr. Licayan, he is asked by
his superiors to do the same while the vessel was on voyage. (11) He also would install
the safe equipment of the engine. He would also install the steel platforms which serve
as the path walk of the crew when the vessel is loaded with chemicals. (12) This
extraordinary difficult job [of] Mr. Licayan unduly put him into pressure resulting to loss
of sleep, loss of appetite and emotional disorder.”
Licayan also presented Dr. Adamos' diagnosis to prove that his illness was work-
related and, therefore, compensable. The reasonable connection between the nature of
his work and the medical condition he acquired during his stint as Fitter in the vessel
was substantially proven. As such, pursuant to Section 20 (B) (4) of the POEA-SEC,
the disputable presumption that the panic disorder he contracted was work-related
arose. This condition, although not listed under Section 32-A of the POEA-SEC as an
occupational disease or illness, is presumed to be work-related. It is now incumbent
upon the employer to overcome this presumption. A reexamination of the evidence
presented by Seacrest, however, fails to overcome the presumption.
PHILIPPINE TRANSMARINE CARRIERS, INC. AND NORTHERN MARINE MANAGEMENT v.

JOSELITO A. CRISTINO, DECEASED AND REPRESENTED BY HIS WIFE SUSAN B. BERDOS
G.R. No. 188638, December 09, 2015, PEREZ, J.
For a disease to be compensable, it is enough that the employment had contributed,

even in a small degree, to its development.
Facts:
Joselito Cristino was a seaman and employed as a Fitter by Philippine
Transmarine Carriers, Inc. (PTCI), a manning agency. While on board a vessel, Cristino
spotted a palpable mass growing in his leg. He was hospitalized in Denmark and was
repatriated to the Philippines. PTCI’s affiliated physician, Dr. Pedro S. De Guzman,
reported that Cristino had Carcinoma (probably metastasis) which was not
considered work-related. Cristino was informed by PTCI that additional treatment
would be at his own expense and so he continued his medical treatment with Dr. Jorge
G. Ignacio, a medical oncologist. He concluded that Cristino's illness was malignant
melanoma (a type of skin cancer), of which sun exposure is a recognized risk factor,
and that the nature of Cristino's work possibly increased the development of his
illness. Cristino filed a complaint for disability benefits, illness allowance, damages, and
attorney's fees.
Issue:
Whether Cristino's illness is compensable
Ruling:
Yes. Sun exposure as an occupational necessity particularly holds true in this

case. Among Cristino's daily tasks as a fitter is to clean and repair pipes, ladders,
antenna, hose and to paint the deck, for which exposure to sunlight could not be
avoided. Hence, the nature of his work may have caused or at least contributed to his
illness. For illness to be compensable, the nature of employment need not be the lone
reason for the illness suffered by the seafarer. Just a reasonable connection, and not
absolute certainty, between the danger of contracting the illness and its aggravation
resulting from the working conditions is enough to sustain its compensability. It is
not required that the employment be the sole factor in the growth, development or
acceleration of the illness to entitle the claimant to the benefits provided therefor.
NORIEL R. MONTIERRO v. RICKMERS MARINE AGENCYPHILS., INC.

G. R. No. 210634, January 14, 2015, SERENO, C.J.
In case of conflict between the disability assessment of the company-designated physician

and that of the seafarer’s chosen physician, the procedure in the 2000 POEA-SEC must be strictly
followed. Otherwise, if not availed of or followed strictly by the seafarer, the assessment of the
company- designated physician stands.
Facts:
Rickmers Marine Agency Phils., Inc., on behalf of its foreign principal, Global Management
Limited, hired Noriel Montierro as Ordinary Seaman. While on board the vessel and going down
from a crane ladder, Montierro lost his balance and twisted his legs, injuring his right knee. On
4 June 2010, two days after his repatriation, Montierro reported to Dr. Natalio G. Alegre II, the
company- designated physician, upon whose recommendation Montierro underwent
arthroscopic partial medical meniscectomy of his right knee. On the 91st day of Montierro’s
treatment, Dr. Alegre issued an interim Disability Grade of 10 for “stretching leg of ligaments of
a knee resulting in instability of the joint.” On 3 January 2011, the 213th day of Montierro’s
treatment, Dr. Alegre issued a final assessment of Disability Grade of 10 based on Section 32 of
the POEA contract. Meanwhile, one month before Dr. Alegre’s issuance of the final disability
grading, Montierro filed with the LA a complaint for recovery of permanent disability
compensation.
The LA held that Montierro was entitled to permanent total disability benefits under the
Philippine Overseas Employment Agency Standard Employment Contract (POEA-SEC). The LA
relied on the 120-day rule introduced by Crystal Shipping, Inc. v. Natividad (510 Phil. 332 (2005)).
The NLRC affirmed the Decision of the LA. The CA however, downgraded the claim of Montierro
to “Grade 10” permanent partial disability benefits only, the CA ruled that his disability could not
be deemed total and permanent under the 240-day rule established by Vergara v. Hammonia
Maritime Services, Inc. (588 Phil. 895 (2008)). Vergara extends the period to 240 days when,
within the first 120-day period (reckoned from the first day of treatment), a final assessment
cannot be made because the seafarer requires further medical attention, provided a declaration
has been made to this effect.
Issues:
1. Whether the 240-day rule applies

2. Whether the company doctor’s opinion should prevail
Ruling:
1. Yes. The Court has already delineated the effectivity of the Crystal Shipping and Vergara
rulings in Kestrel Shipping Co. Inc. v. Munar (G.R. No. 198501, 30 January 2013; 689 SCRA 795)
which held that if the maritime compensation complaint was filed prior to 6 October 2008, the
120-day rule applies; if, on the other hand, the complaint was filed from 6 October 2008 onwards,
the 240-day rule applies. Montierro filed his Complaint on 3 December 2010, which was after the
promulgation of Vergara on 6 October 2008. Hence, the 240-day rule applies.
2. Yes. When a seafarer sustains a work-related illness or injury while on board the vessel,
his fitness for work shall be determined by the company-designated physician. The physician has
120 days, or 240 days, if validly extended, to make the assessment. If the physician appointed by
the seafarer disagrees with the assessment of the company-designated physician, the opinion of
a third doctor may be agreed jointly between the employer and the seafarer, whose decision shall
be final and binding on them. Montierro, however, preempted the procedure when he filed on 3
December 2010 a Complaint for permanent disability benefits based on his chosen physician’s
assessment, which was made one month before the company-designated doctor issued the final
disability grading on 3 January 2011, the 213th day of Montierro’s treatment. For Montierro’s
failure to observe the procedure provided by the POEA-SEC, the company doctor’s assessment
should prevail.
ROMMEL B. DARAUG v. KGJS FLEET MANAGEMENT MANILA, INC., KRISTIAN

GERHARD JEBSEN SKIPSREDER, MR. GUY DOMINO A. MACAPAYAG
G.R. No. 211211, January 14, 2015, MENDOZA, J.
A seafarer’s non-compliance with the mandated procedure under the POEA-SEC and the
CBA militates against his claims.
Facts:
Rommel Daraug was employed by KGJS Fleet Management Manila, Inc. (KGJS) to serve as
motorman on board the vessel M/V Fayal Cement. While Daraug was working in the storage
room, several steel plates fell and hit his leg. After his treatment, Dr. Lim and Dr. Chua concluded
that petitioner’s right leg was fully healed and that he was fit to work. In 2009, Daraug was hired
again by KGJS for and in behalf of its foreign principal, Kristian Gerhard Jebsen Skipsreder AS
(KGJS AS), as a motorman on board M/V Ibis Arrow. On October 31, 2009, while Daraug was
working in the engine room, he accidentally slipped and fell, injuring his right leg again. After
re-evaluating him on December 4, 2009, and again on December 21, 2009, Dr. Lim found that
Daraug had recovered from his injuries and declared him fit to work. From the time Daraug was
repatriated until he was declared fit to work, he was paid his sick wages.
About two and a half months later, on March 5, 2010, Daraug filed a complaint against KGJS and
KGJS AS, seeking permanent disability benefits under the CBA, sick wages, damages, and
attorney’s fees. In his Affidavit-Complaint, he claimed that his latest injury which occurred on
board the M/V Ibis Arrow, together with his previous accident on board the M/V Fayal Cement,
rendered him permanently disabled. It appears that on April 13, 2009, after the filing of his
complaint, Daraug sought the services of Dr. Manuel C. Jacinto, Jr. who issued a medical
Certificate attesting that Daraug had an open fracture on his right fibula and that he was no
longer fit to work.
Issue:
Whether the seafarer’s chosen physician should be given credence
Ruling:
No. The company physician’s finding should be upheld due to the non-compliance with CBA and
POEA-SEC 2000. The CBA states that the degree of disability which the employer, subject to this
Agreement, is liable to pay shall be determined by a doctor appointed by the Employer. If a doctor
appointed by the seafarer and his Union disagrees with the assessment, a third doctor may be
agreed jointly between the Employer and the Seafarer and his Union, and the third doctor’s
decision shall be final and binding on both parties. The copies of the medical certificate and other
relevant medical reports shall be made available by the Company to the seafarer.
Daraug failed to observe the prescribed procedure of having the conflicting assessments on his
disability referred to a third doctor for a binding opinion as laid down in the POEA-SEC and CBA.
The Court upholds the certification issued by the respondents’ physicians with respect to his
fitness or disability.
AL O. EYANA v. PHILIPPINE TRANSMARINE CARRIERS, INC., ALAIN A. GARILLOS,

CELEBRITY CRUISES, INC. (U.S.A.)
G.R. No. 193468, January 28, 2015, REYES, J.
In disability compensation, it is not the injury per se which is compensated but the
incapacity to work.
Facts:
Philippine Transmarine Carriers, Inc. (PTCI) hired Eyana as a utility cleaner on board one of its
ships. His tasks were manual in nature, involving lifting, carrying, loading, and the like. Eyana
felt a sudden pain in his back after lifting a 30-kilo block of cheese. He was confined in a hospital
and was medically repatriated to the Philippines. PTCI referred Eyana to Dr. Alegre for treatment.
He was then advised to undergo physical therapy. When he was advised later on to undergo
surgery, Eyana refused. Thus, Dr. Alegre recommended steroid injection and continuation of
physical therapy. Dr. Alegre then informed PTCI that Eyana still suffered from persistent back
pains and restricted truncal mobility, and was given Disability Grade of 8. Eyana sought the
opinion of Dr. Garduce, who concluded that he had a Disability Grade of 1 and was unfit for sea
duty. Eyana then filed a complaint for disability benefits.
Issue:
Whether Eyana is entitled to total and permanent disability benefits

Ruling:
Yes. 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. What clearly determines the seafarer’s entitlement to permanent
disability benefits is his inability to work for more than 120 days. Although the company-
designated physician already declared the seafarer fit to work, the seafarer’s disability is still
considered permanent and total if such declaration is made belatedly, that is, more than 120 days
after repatriation.
Dr. Alegre’s report to PTCI clearly indicated that the Eyana’s back pains remained. Hence, the
continuation of physical therapy was recommended. The Court did not disregard the fact that
the Eyana was a utility cleaner before he was injured. His tasks in the ship were predominantly
manual in nature involving a lot of moving, lifting and bending. At the time Dr. Alegre belatedly
issued the disability assessment, Eyana could not revert back to his customary gainful occupation
without subjecting himself to serious discomfort and pain.
VERITAS MARITIME CORPORATION AND/OR ERICKSON MARQUEZ v. RAMON A.

GEPANAGA, JR.
G.R. No. 206285, February 04, 2015, MENDOZA, J.
For failure to observe the prescribed procedure of having the conflicting assessments on the
disability referred to a third doctor for a binding opinion, the certification issued by the company-
designated physician that the respondent was “fit to go back to work” must be upheld.
Facts:
Gepanaga was employed as Wiper Maintenance for 6 months on board the vessel M.V.
Melbourne Highway. The parties entered into a contract of employment in accordance with the
POEA-SEC and CBA. While doing maintenance work, his middle finger got caught between the
cast metal piston liners of the diesel generator. Company physician Dr. Cruz declared Gepanaga
was “cleared fit to go back to work.” Unconvinced that he had fully recovered from his injury,
Gepanaga filed a complaint against Veritas, Marquez and “K” Line Ship Management, Inc.
Afterwards, Gepanaga sought the opinion of Dr. Villa of the Sogod District Hospital in Leyte.
That same day, Dr. Villa gave his medical report finding that Gepanaga suffered from “permanent
disability due to old compound fracture of the 3rd left phalanx/middle finger-left.
Issue:
Whether the personal physician’s determination should be upheld
Ruling:
No. Gepanaga failed to observe the prescribed procedure. The POEA Standard Employment
Contract and the CBA clearly provide that when a seafarer sustains a work-related illness or injury
while on board the vessel, his fitness or unfitness for work shall be determined by the company-
designated physician. If the physician appointed by the seafarer disagrees with the company-
designated physician’s assessment, the opinion of a third doctor may be agreed jointly between
the employer and the seafarer to be the decision final and binding on them. While Gepanaga had
the right to seek a second and even a third opinion, the final determination of whose decision
must prevail must be done in accordance with an agreed procedure.
SEALANES MARINE SERVICES, INC./ARKLOW SHIPPING NETHERLAND and/or

CHRISTOPHER DUMATOL v. ARNEL G. DELA TORRE
G.R. No. 214132, February 18, 2015, REYES, J.
The law does not require that the illness should be incurable. What is important is that the
employee 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.
Facts:
Arnel G. Dela Torre was hired by Sealanes Marine Services, Inc., a local manning agency, in behalf
of its foreign principal, Arklow Shipping Netherland, as an able seaman on board M/V Arklow
Venture for a period of nine months.
During the crew’s rescue boat drill at the port of Leith, Scotland, he figured in an accident and
injured his lower back. An X-ray of his lumbosacral spine was taken at a hospital at the port.
According to his attending physician he sustained no major injury but the pain in his back
persisted and he was repatriated. The respondent underwent several physical therapy sessions,
and the company-designated physician assessed him with a Grade 11 disability for slight rigidity
or one-third loss of motion or lifting power of trunk. The respondent filed a complaint for
disability benefits, medical reimbursement, underpaid sick leave, damages and attorney’s fees.
Issue:
Whether the respondent is entitled to disability benefits
Ruling:
Yes. Article 192(c) (1) of the Labor Code provides that a "temporary total disability lasting
continuously for more than [120] days, except as otherwise provided in the Rules," shall be
deemed total and permanent. Section 2(b), Rule VII of the AREC, likewise provides that "a
disability is total and permanent if as a result of the injury or sickness the employee is unable to
perform any gainful occupation for a continuous period exceeding 120 days, except as otherwise
provided under Rule X of these Rules."
Under Section 20(B) (3) of the POEA SEC, it is the company-designated physician who should
determine the disability grading or fitness to work of the seafarer. Also, under Article 21.4.1 of the
Dutch CBA governing the parties, it is the doctor appointed by the company’s medical advisor
who shall determine the degree of disability suffered by a seafarer.
In Kestrel Shipping Co., Inc. v. Munar (G.R. No. 198501, 30 January 2013; 689 SCRA 795), the Court
read the POEA SEC in harmony with the Labor Code and the AREC, and explained that: (a) the
120 days provided under Section 20(B)(3) of the POEA SEC is the period given to the employer to
determine fitness to work and when the seafarer is deemed to be in a state of total and temporary
disability; (b) the 120 days of total and temporary disability may be extended up to a maximum
of 240 days should the seafarer require further medical treatment; and (c) a total and temporary
disability becomes permanent when so declared by the company-designated physician within 120
or 240 days, as the case may be, or upon the expiration of the said periods without a declaration
of either fitness to work or permanent disability and the seafarer is still unable to resume his
regular seafaring duties.
Respondent was repatriated on August 4, 2010 and underwent treatment and rehabilitation
which lasted until July 20, 2011, exceeding the 240 days allowed to declare him either fit to work
or permanently disabled. Although he was given a Grade 11 disability rating on March 10, 2011, the
assessment may be deemed tentative because he continued his physical therapy sessions beyond
240 days. Despite his long treatment and rehabilitation, he was eventually unable to go back to
work as a seafarer, which entitled him under the Dutch CBA to maximum disability benefits.
According to Kestrel, while the seafarer is partially injured or disabled, he must not be 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 may be the case, then he shall be deemed totally
and permanently disabled.
BAHIA SHIPPING SERVICES, INC. AND/OR V-SHIP NORWAY AND/OR CYNTHIA C.

MENDOZA v. CARLOS L. FLORES, JR.
G.R. No. 207639, July 01, 2015, PERLAS-BERNABE, J.
If after the lapse of the 240-day period, 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 seafarer is
totally and permanently disabled arises.
Facts:
Flores was hired by Bahia Shipping as a “fitter.” While on board overhauling the relief valve of
the vessel, a spring valve flew and hit the left side of respondent's face, causing severe injuries to
his teeth as well as multiple abrasions to his cheek, lips, and nose. He filed a complaint before
the NLRC for disability benefits. The LA found Flores to be suffering from a permanent total
disability, given that from the time of his repatriation until the case was decided, there was no
declaration from either the company-designated or the independent physicians that respondent
was fit to work.
Issue:
Whether Flores is entitled to disability benefits
Ruling:
Yes. Flores is deemed to be suffering from a permanent total disability. After he was repatriated
on April 18, 2009, he underwent continuous medical care from the company-designated
physician. He was even given an interim disability rating of Grade 7 (moderate residual or
disorder) on July 17, 2009, and thereafter, went through further tests and procedures. However,
after October 12, 2009, his treatment stopped without him recovering from his ailment. Notably,
the company- designated physician neither issued to Flores a fit-to-work certification nor a final
disability rating on or before December 14, 2009, the 240th day since his repatriation. Flores is
entitled to the corresponding benefits under the CBA.
JAKERSON G. GARGALLO v. DOHLE SEAFRONT CREWING (MANILA), INC., DOHLE

MANNING AGENCIES, INC., AND MR. MAYRONILO B. PADIZ
G.R. No. 215551, September 16, 2015, PERLAS-BERNABE, J.
It is only upon the lapse of 240 days, or when so declared by the company-designated
physician, that a seafarer may be deemed totally and permanently disabled.
Facts:
Jakerson, an employee of Dohle Seafront Crewing (Manila), Inc., was injured while in the line of
duty. Jakerson underwent medical procedures and was repatriated on March 11, 2012. Thereafter,
Jakerson was closely looked after by the company physician.
On July 20, 2012, Jakerson filed a complaint against Dohle Seafront, et al. to recover permanent
total disability benefits. After 180 days from initial repatriation, he was declared as “fit to work”
by the same company physician. Jakerson sought a second opinion from an independent
physician, which declared that he was not fit to work as of October 2, 2012. Jakerson, however,
was unable to make a joint appointment of a third doctor, contrary to the conflict-resolution
procedures of the CBA and the POEA-SEC.
Issue:
Whether Jakerson is entitled to permanent total disability benefits

Ruling:
No. A disability shall be deemed as permanent and total if the “temporary total disability last[ed]
continuously for more than one hundred twenty days, except as otherwise provided for in the
Rules (Art. 192, Labor Code).” On the other hand, according to the Implementing Rules,
temporary total disability benefits “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.”
The company-designated physician is given an additional 120 days, or a total of 240 days from
repatriation, to provide the seafarer further treatment and thereafter make a declaration as to
the nature of the latter's disability. Since Jakerson filed his complaint within the 240-day period,
his complaint for permanent total disability benefits is premature. Likewise, the seafarer's non-
compliance with the mandated conflict-resolution procedure under the POEA-SEC and the CBA
militates against his claims, and results in the affirmance of the fit to work certification of the
company-designated physician.
MAERSK-FILIPINAS CREWING, INC./A.P. MOLLER A/C v. ROMMEL RENE O. JALECO

G.R. No. 182151, September 21, 2015, SERENO, C.J.
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 of fitness or
permanent total disability, upon the lapse of the 120-day or the 240-day treatment period. 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 the seaman is fit to
work or that the permanent partial or total disability already exists.
Facts:
Rommel Rene O. Jaleco suffered from a slipped disc while working for A.P. Moller A/S (Moller),
on board the vessel "M/T Else Maersk." Rommel underwent medical examination and was
declared not fit for duty. He was repatriated and was medically treated by respondents' company-
designated physician.
After 127 days from date of repatriation, the company physician declared Rommel fit for duty.
Dissatisfied, Rommel sought independent opinions from other physicians. Thereafter, without
the parties securing the opinion of a third physician jointly appointed by the parties, Rommel
filed a complaint for illegal dismissal and recovery of permanent total disability benefits.
Issue:
Whether Rommel may recover payment of permanent total disability benefits
Ruling:
No. Since the company physician already declared the employee fit for work within 127 days from
date of repatriation, there is no permanent total disability to speak of. While there is nothing
wrong with Rommel’s act of seeking a second opinion, Rommel should have secured together
with the employer the opinion of a third physician pursuant to Sec. 20(B)(3) of the POEA
Standard Employment Contract, prior to the filing of the complaint against the employer.
Otherwise, the company physician’s opinion stands.
It was Rommel’s duty, as the employee pursuing a claim, to initiate the procedure for the
appointment of the third physician. By disregarding the joint appointment of a third physician,
which is the conflict-resolution procedure under the parties' POEA-SEC, Rommel’s claims
against Maersk et al. should have been denied.
OLIMPIO O. OLIDANA v. JEBSENS MARITIME, INC.

G.R. No. 215313, October 21, 2015, MENDOZA, J.
A seafarer may pursue an action for total and permanent disability benefits if the company-
designated physician declared him partially and permanently disabled within the 120-day or 240-
day period but he remains incapacitated to perform his usual sea duties after the lapse of the said
periods.
Facts:
Olidana was employed by Jebsens Maritime as chief cook since 2007 under different employment
contracts. While cooking in the ship’s kitchen he accidentally bumped a kettle full of hot water
injuring his left hand. The vessel’s master simply advised him to buy ointment. When the vessel
docked, he was brought to the clinic for a check-up and was diagnosed to be suffering from
Tendinitis, but he was allowed to go back to work. His condition worsened when his hand became
swollen with numbness of the fingers. He was treated again in Japan where abscess of the left
palm with infection of the whole hand was noted. He was admitted to the hospital, discharged
after a week and then repatriated to the Philippines on November 18, 2011.
Olidana reported to Jebsens and was immediately referred for medical treatment. The company-
designated physician classified his disability as a Grade 10 disability but recommended that he
was not fit for duty. Olidana, through a second opinion, discovered that he had permanent
disability affecting his left hand.
The parties agreed to submit the case to a voluntary arbitration. The VA ruled that the disability
is a total and permanent one. On review, the CA reduced the award noting that Olidana only
suffered a partial disability.
Issue:
Whether Olidana is entitled to permanent disability benefits

Ruling:
Yes. 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. If those injuries or disabilities with a disability
grading from 2 to 14 would incapacitate a seafarer from performing his usual sea duties for a
period for more than 120 or 240 days, depending on the need for further treatment, then he is,
under legal contemplation, totally and permanently disabled.
Despite the lapse of the extended 240-day period, Olidana was still incapacitated to perform his
sea duties. Due to the injury he sustained, he could no longer perform his usual tasks as chief
cook in any vessel. This clearly indicates Olidana’s permanent disability.
MARLOW NAVIGATION PHILIPPINES INC., MARLOW NAVIGATION CO. LTD./

CYPRUS, LIGAYA C. DELA CRUZ AND ANTONIO GALVEZ, JR., v. BRAULIO A. OSIAS
G.R. No. 215471, November 23, 2015, MENDOZA, J.
The current rule provides: (1) that mere inability to work for a period of 120 days does not
entitle a seafarer to permanent and total disability benefits; (2) that the determination of the fitness
of a seafarer for sea duty is within the province of the company-designated physician, subject to the
periods prescribed by law; (3) that the company-designated physician has an initial 120 days to
determine the fitness or disability of the seafarer; and (4) that the period of treatment may only be
extended to 240 days if a sufficient justification exists such as when further medical treatment is
required or when the seafarer is uncooperative. Also, absent proper compliance, the final medical
report and the certification of the company-designated physician declaring him fit to return to work
must be upheld.
Facts:
Osias entered into an employment contract with Marlow Navigation. He was to work as a chief
cook on board M/V OOCL MUMBAI for a period of nine months for a monthly salary of
US$698.00. While working in the gallery, Osias fainted and hit his head and shoulder on the
garbage bin. There were no injuries found on him, but he experienced shivers. When the ship
arrived in Virginia, U.S.A., he was treated by Dr. Kevin P. Murray and was advised to return home.
Osias was medically repatriated. He arrived in the Philippines on February 15, 2010 and
immediately reported to Marlow Navigation. He was referred to the company-designated
physician, Dr. Michael Tom J. Arago of the Manila Doctor's Hospital. Dr. Arago issued a medical
report stating that Osias was diagnosed with "left shoulder contusion, lumbar strain and
osteoarthritis, right and left knees." Dr. Arago issued a final medical report stating that Osias
underwent physical capacity evaluation and that he was already "fit to return to work effective 13
July 2010." A certification of fitness to work was issued to Osias. Unconvinced, Osias sought the
medical opinion of Dr. Orencia. In her medical certificate, dated September 14, 2010, Dr. Orencia
opined that the osteoarthritis of Osias would prevent him from returning to his former work as
chief cook. Consequently, Osias filed a complaint for permanent and total disability benefits. He
asserted that his incapacity to work for more than 120 days entitled him to permanent and total
disability benefits. Petitioners countered that Osias was not entitled to the said benefits because
the company-designated physician certified that he was fit to return to work and he himself
caused the delay in his treatment.
Issue:
Whether Osias is entitled to permanent and total disability benefits
Ruling:
No. Permanent total disability is disablement of an employee to earn wages in the same kind of
work, or work of similar nature that he was trained for, or accustomed to perform, or any other
kind of work which a person of his mentality and attainments could do. The present controversy
involves the permanent and total disability claim of a specific type of laborer—a seafarer. The
substantial rise in the demand for seafarers in the international labor market led to an increase
of labor standards and relations issues, including claims for permanent and total disability
benefits.
Osias' doctor of choice, Dr. Orencia, issued a medical certificate which conflicted with the
assessment of the company-designated physician. Dr. Orencia opined that the osteoarthritis of
Osias prevented him from returning to his work. Osias, however, never signified his intention to
resolve the disagreement with petitioners by referring the matter to a third doctor. It is only
through the procedure provided by the POEA-SEC, in which he was a party, can he question the
timely medical assessment of the company-designated physician and compel petitioners to
jointly seek an appropriate third doctor. Absent proper compliance, the final medical report and
the certification of the company-designated physician declaring him fit to return to work must
be upheld. Ergo, he is not entitled to permanent and total disability benefits.
FIL-PRIDE SHIPPING COMPANY, INC., CAPTAIN NICOLAS T. DOLLOLASA and OCEAN

EAGLE SIDPMANAGEMENT COMPANY, PTE.LTD. vs. EDGAR A. BALASTA
G.R. No. 193047, March 3, 2014
J. DEL CASTILLO
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, pursuant to Article 192
(c)(l) of the Labor Code and Rule X, Section 2 of the Amended Rules on Employees Compensation
(AREC). If he fails to do so and the seafarer's medical condition remains unresolved, the latter shall
be deemed totally and permanently disabled. On the other hand, an employee's disability becomes
permanent and total even before the lapse of the statutory 240-day treatment period, when it
becomes evident that the employee's disability continues and he is unable to engage in gainful
employment during such period because, for instance, he underwent surgery and it evidently
appears that he could not recover therefrom within the statutory period.
Facts:
Edgar A. Balasta (Balasta) was hired by Fil-Pride Shipping Company, Inc. (Fil-Pride) for its foreign
principal, Ocean Eagle Ship Management Company, PTE. Ltd. (Ocean Eagle). Balasta was
assigned as Able Seaman onboard M/V Eagle Pioneer. He was declared fit to work after
undergoing the mandatory Pre-Employment Medical Examination (PEME). He commenced his
duties as Able Seaman aboard M/V Eagle Pioneer on February 23, 2005.
Sometime in August and September 2005, while aboard M/V Eagle Pioneer, Balasta experienced
chest pains, fatigue, and shortness of breath. He was examined by a physician in Gangyou
Hospital in Tianjin, China, and was diagnosed as having myocardial ischemia and coronary heart
disease. He was declared unfit for duty and was recommended for repatriation. Upon arrival, he
was immediately referred to the company-designated physician, Dr. Nicomedes G. Cruz (Dr.
Cruz). He was subjected to different medidal and laboratory tests. In Dr. Cruz’s September 18,
2005 medical report, respondent was diagnosed with hypertension and myocardial ischemia. On
his own initiative, respondent underwent coronary angiogram at the St. Luke’s Medical Center
(St. Luke’s) on October 14, 2005. In a medical report of even date signed by St. Luke’s Cardiac
Catheterization Laboratory Interventional Cardiologist Paterno F. Dizon, Jr., respondent was
diagnosed with coronary artery atherosclerosis and severe three-vessel coronary artery disease.
Respondent filed a claim for permanent disability benefits with petitioners, but the latter denied
the same. Hence, Balasta filed a claim.
Labor Arbiter (LA) ruled in favor of Balasta ordering Fil-Pride and Ocean Eagle to pay, jointly
and severally the former. NLRC reversed LA’s ruling, declaring that Balasta’s illness was not work-
related. CA reversed the decision of the NLRC reinstating the ruling of the LA.
Issue:
Whether Balasta’s illness is compensable.
Ruling:
The Court denies the Petition.
Regarding the issue of compensability, it has been the Court’s consistent ruling that 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." Moreover, "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."
Just the same, in several cases, cardiovascular disease, coronary artery disease, as well as other
heart ailments were held to be compensable. Likewise, petitioners failed to refute respondent’s
allegations in his Position Paper that in the performance of his duties as Able Seaman, he inhaled,
was exposed to, and came into direct contact with various injurious and harmful chemicals, dust,
fumes/emissions, and other irritant agents; that he performed strenuous tasks such as lifting,
pulling, pushing and/or moving equipment and materials on board the ship; that he was
constantly exposed to varying temperatures of extreme hot and cold as the ship crossed ocean
boundaries; that he was exposed as well to harsh weather conditions; that in most instances, he
was required to perform overtime work; and that the work of an Able Seaman is both physically
and mentally stressful. It does not require much imagination to realize or conclude that these
tasks could very well cause the illness that respondent, then already 47 years old, suffered from
six months into his employment contract with petitioners. The following pronouncement in a
recent case very well applies to respondent:
x x x His constant exposure to hazards such as chemicals and the varying temperature, like the
heat in the kitchen of the vessel and the coldness outside, coupled by stressful tasks in his
employment caused, or at least aggravated, his illness. It is already recognized that any kind of
work or labor produces stress and strain normally resulting in wear and tear of the human body.
Notably, it is "a matter of judicial notice that an overseas worker, having to ward off homesickness
by reason of being physically separated from his family for the entire duration of his contract,
bears a great degree of emotional strain while making an effort to perform his work well. The
strain is even greater in the case of a seaman who is constantly subjected to the perils of the sea
while at work abroad and away from his family."
Assessment by company-designated physician
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, pursuant to Article 192 (c)(1)
of the Labor Code and Rule X, Section 2 of the AREC. If he fails to do so and the seafarer’s medical
condition remains unresolved, the latter shall be deemed totally and permanently disabled.
Respondent was repatriated on September 18, 2005. He was further examined by the company-
designated physician Dr. Cruz on September 21, 23 and 30, 2005; October 6, 2005; February 2, 13
and 17, 2006; March 6 and 20, 2006; and on April 19, 2006. And beginning from the February 2,
2006 medical report, respondent was diagnosed by Dr. Cruz with severe 3-vessel coronary artery
disease, and was scheduled for coronary artery bypass surgery on February 24, 2006. After
surgery, respondent continued his treatment with Dr. Cruz, who on the other hand continued to
diagnose respondent with severe coronary artery disease even on respondent’s last consultation
on April 19, 2006.
Concededly, the period September 18, 2005 to April 19, 2006 is less than the statutory 240-day –
or 8-month – period. Nonetheless, it is impossible to expect that by May 19, 2006, or on the last
day of the statutory 240-day period, respondent would be declared fit to work when just recently
– or on February 24, 2006 – he underwent coronary artery bypass graft surgery; by then,
respondent would not have sufficiently recovered. In other words, it became evident as early as
April 19, 2006 that respondent was permanently and totally disabled, unfit to return to work as
seafarer and earn therefrom, given his delicate post-operative condition; a definitive assessment
by Dr. Cruz before May 19, 2006 was unnecessary. Respondent would to all intents and purposes
still be unfit for sea-duty. Even then, with Dr. Cruz’s failure to issue a definite assessment of
respondent’s condition on May 19, 2006, or the last day of the statutory 240-day period,
respondent was thus deemed totally and permanently disabled pursuant to Article 192 (c)(1) of
the Labor Code and Rule X, Section 2 of the AREC.
MARTIN K. AYUNGO vs. BEAMKO SHIPMANAGEMENT CORPORATION, EAGLE
MARITIME RAK FZE, AND JUANITO G. SALVATIERRA, JR.,
G.R. No. 203161, February 26, 2014
J. Perlas-Bernabe
For a disability to be compensable, the seafarer must establish that there exists a reasonable
linkage between the disease suffered by the employee and his work to lead a rational mind to
conclude that his work may have contributed to the establishment or, at the very least, aggravation
of any pre-existing condition he might have had.
Facts:
On October 11, 2007, Ayungo entered into a twelve (12) month Contract of Employment with
respondent Beamko Ship Management Corporation (Beamko) on behalf of its foreign principal,
respondent Eagle Maritime RAK FZE (Eagle Maritime), whereby he was engaged as Chief
Engineer for the vessel M/V World Star (vessel). Prior to his embarkation, or on October 10, 2007,
he underwent a pre-employment medical examination (PEME) at the Sagrada Corazon Medical
and Allied Services Center, Inc. (SCMASCI) in Ermita, Manila. During his PEME, he disclosed
that he had Diabetes Mellitus. However, when asked if he suffered from High Blood Pressure
(Hypertension), he answered in the negative. With these representations, Dr. Janilyn M. Ong and
Dr. Catalina P. Ricohermoso of SCMASCI declared Ayungo "FIT FOR SEA DUTY." Thereafter, he
left Manila and boarded the vessel on October 14, 2007. In the morning of March 15, 2008, he
suddenly lost his sense of hearing while on duty in the engine room, and only heard a continuous
ringing noise. But since the vessel was about to reach the port of Yokohama, Japan, he continued
to work until 8:00 in the evening of that day. After three (3) hours, he woke up and felt like his
surroundings were spinning. Then, he vomited, lost consciousness, and was later found by Oiler
Desiderio Sumalinog lying on the floor. Upon reaching the port of Yokohama, Japan on March
16, 2008, he was confined at the Yokohama Red Cross Hospital and was initially diagnosed with
"sudden dysacousis" – a condition in which certain sounds produce discomfort (auditory
dysesthesia). On March 25, 2008, he was repatriated to the Philippines for further medical
treatment and examination. Following his repatriation, he was attended to by Dr. Robert Lim
(Dr. Lim) of the Metropolitan Medical Center (MMC), the designated physician of Beamko. In a
Medical Certificate12 dated March 26, 2008, his tests reflected the following impressions: (a) to
consider Meniere’s Syndrome (Endolymphatics Hydrops); (b) Hypertension; and (c) Diabetes
Mellitus. It was also revealed that he was previously diagnosed with Hypertension which he
maintained by taking the prescriptive drug Lifezar. On July 9, 2008, Dr. Mylene Cruz-Balbon (Dr.
Cruz-Balbon) and Dr. Lim of the MMC issued another report, finding that Ayungo’s
Hypertension and Diabetes Mellitus were both pre-existing and not work-related.
Unconvinced, Ayungo consulted another physician, Dr. May S. Donato-Tan (Dr. Donato-Tan) of
the Philippine Heart Center. In an undated medical certificate, the latter declared him to be
suffering from CAD, Hypertension and Diabetes Mellitus that rendered him unfit for sea duty in
any capacity, the status thereof being that of a permanent total disability. Thus, On September
2, 2008, he filed a complaint before the NLRC for the payment of permanent total disability
benefits, sickness allowance, reimbursement of medical expenses, damages and attorney’s fees
against respondents. In his Position Paper, he claimed that he is entitled to permanent total
disability benefits considering that: (a) his medical records disclose that his Hypertension caused
the impairment of his heart and kidney organs; (b) his Hypertension and CAD developed and/or
became aggravated as a result of the conditions of his employment; and (c) by employing him
despite the disclosure in his PEME that he had Diabetes Mellitus, Beamko and Eagle Maritime
assumed the risk of liability arising from his weakened medical condition. In opposition,
respondents contended that: (a) he was already suffering from his illnesses when he entered into
the contract of employment with Beamko and Eagle Maritime; and (b) his illnesses were not
work-related under the 2000 Philippine Overseas Employment Agency Standard Employment
Contract.
Contrary to the ruling of the LA and the NLRC, the CA found that while Ayungo indeed disclosed
that he had Diabetes Mellitus, this fact alone does not entitle him to disability benefits as he
failed to show the causal connection between his illness and the work for which he was
contracted.
Issue:
Whether or not Ayungo was entitled to disability benefits
Ruling:
The instant petition is not meritorious.
Ayungo was not able to demonstrate, through substantial evidence, that his Diabetes Mellitus
was related to his work as Chief Engineer during the course of his employment. It is well-settled
that for a disability to be compensable, the seafarer must establish that there exists "a reasonable
linkage between the disease suffered by the employee and his work to lead a rational mind to
conclude that his work may have contributed to the establishment or, at the very least,
aggravation of any pre-existing condition he might have had." In other words, not only must the
seafarer establish that his injury or illness rendered him permanently or partially disabled, it is
equally pertinent that he shows a causal connection between such injury or illness and the work
for which he had been contracted. Thus, despite the pre-existing nature of his Diabetes Mellitus
and the concomitant disputable presumption that it is work-related, he still had the burden to
prove the causal link between his Diabetes Mellitus and his duties as Chief Engineer.
As for his Hypertension, suffice it to state that he did not disclose that he had been suffering from
the same and/or had been actually taking medications therefor (i.e., Lifezar) during his PEME. It
was only revealed after his repatriation. To the Court’s mind, Ayungo’s non-disclosure constitutes
fraudulent misrepresentation which, pursuant to Section 20(E) of the 2000 POEA-SEC,49
disqualifies him from claiming any disability benefits from his employer. In fact, even if the Court
were to discount Ayungo’s misrepresentation on the premise that his Hypertension was not pre-
existing, his claim for disability benefits therefor should remain dismissible given that he had still
failed to satisfy the requirements stated in Section 32-A(20) of the 2000 POEA-SEC, viz.:
20. Essential Hypertension.
Hypertension classified as primary or essential is considered compensable if it causes

impairment of function of body organs like kidneys, heart, eyes and brain, resulting in
permanent disability; Provided, that the following documents substantiate it: (a) chest x-
ray report, (b) ECG report (c) blood chemistry report, (d) funduscopy report, and (e) C-T
scan. (Emphasis supplied)
Finally, the Court deems it worthy to note that Ayungo failed to comply with the procedure laid
down under Section 20(B)(3) of the 2000 POEA-SEC which provides that "[i]f a doctor appointed
by the seafarer disagrees with the assessment [of the company doctor], a third doctor may be
agreed jointly between the Employer and the seafarer," and that "[t]he third doctor’s decision
shall be final and binding on both parties." In Philippine Hammonia Ship Agency, Inc. v.
Dumadag, the Court held that the seafarer’s non-compliance with the said conflict-resolution
procedure results in the affirmance of the fit-to-work certification of the company-designated
physician. The findings of Beamko and Eagle Maritime' s physicians that Ayungo's illnesses were
not work-related were, in turn, controverted by Ayungo's personal doctor stating otherwise. In
light of these contrasting diagnoses, Ayungo prematurely filed his complaint before the NLRC
without any regard to the conflict-resolution procedure under Section 20(B)(3) of the 2000
POEA-SEC. Thus, consistent with Philippine Hammonia, the Court is inclined to uphold the
opinion of Beamko and Eagle Maritime's physicians that Ayungo's illnesses were pre-existing and
not work-related, hence, non-compensable.
INTEL TECHNOLOGY PHILIPPINES, INC. vs. NATIONAL LABOR RELATIONS

COMMISSION AND JEREMIAS CABILES,
G.R. No. 200575, February 5, 2014
J. Mendoza
Resignation is the formal relinquishment of an office, the overt act of which is coupled with
an intent to renounce. This intent could be inferred from the acts of the employee before and after
the alleged resignation.
Facts:
Jeremias Cabiles was initially hired by Intel Phil. on April 6, 1997 as an Inventory Analyst. He was
subsequently promoted several times over the years and was also assigned at Intel Arizona and
Intel Chengdu. He later applied and was offered the position of Finance Manager at Intel
Semiconductor Limited Hong Kong (Intel HK). Before accepting the offer, he inquired from Intel
Phil., through an email, the consequences of accepting the same. Said communication was
centered on his query regarding his entitlement to retirement benefits which has been given to
employees who has completed ten years of service with Intel Phil. He has only rendered 9.5 years
of service and as he will be moving to Intel HK, he also inquired if the number of years of service
will be rounded up as it has been close enough to the required ten years. On January 23, 2007,
Intel Phil replied in the negative stating that they do not round up the number of years of service
and that he was not eligible to receive his retirement benefit. On January 31, 2007, he signed the
job offer. On March 8, 2007, Intel Phil issued Cabiles his “Intel Final Pay Separation Voucher”
and consequently, he executed a Release, Waiver and Quitclaim in favor of the former
acknowledging receipt of P165, 857.62 as full and complete settlement of all benefits due him by
reason of his separation from the said company. After seven months of employment in Intel HK,
he resigned. After two years, he filed a complaint for non-payment of retirement benefits and for
moral and exemplary damages. He insisted that he was employed by Intel for 10 years and 5
months – a period which included his seven month stint with Intel HK. Thus, he believed he was
qualified to avail of the benefits under the company’s retirement policy.
Issue:
Whether or not Cabiles resigned from Intel Phil. when he moved to Intel HK causing
discontinuance in his years of service with the former and thus affecting his entitlement to its
retirement benefits
Ruling:
Cabiles was not eligible to receive his retirement benefits as he failed to meet the required ten
years length of service when he resigned from Intel Phil. when he moved to Intel HK. Resignation
is the formal relinquishment of an office, the overt act of which is coupled with an intent to
renounce. This intent could be inferred from the acts of the employee before and after the alleged
resignation.
The Court is not convinced with Cabiles’ contention that his employment with Intel HK is a
continuation of his service with Intel Phil alleging that it was but an assignment by his principal
employer, similar to his assignments to Intel Arizona and Intel Chengdu.
First, he still accepted the offer of Intel HK despite a non-favorable reply to his retirement
concerns. Thus, such acceptance meant letting go of the retirement benefits he now claims.
Clearly, it was his choice to forego his tenure with Intel Phil., with all its associated benefits, in
favor of a more lucrative job for him and his family with Intel HK.
Second, the court do not agree with his argument that his employment in Hong Kong is an
assignment or extension of his employment with Intel Phil. The continuity, existence or
termination of an employer-employee relationship in a typical secondment contract or any
employment contract for that matter is measured by the following yardsticks: first, the selection
and engagement of the employee; second, the payment of wages; third, the power of dismissal;
and fourth, the employer’s power to control the employee’s conduct. When he assumed duties
with Intel HK, the latter became the new employer. It provided his compensation. He then
became subject to Hong Kong labor laws, and necessarily, the rights appurtenant thereto,
including the right of Intel HK to fire him on available grounds. Lastly, it had control and
supervision over him as its new Finance Manager. Evidently, Intel Phil. no longer had any control
over him.
Third, although in various instances, his move to Hong Kong was referred to as an “assignment,”
it bears stressing that it was categorized as a “permanent transfer.” It is clear that his decision to
move to Hong Kong required the abandonment of his permanent position with Intel Phil. in
order for him to assume a position in an entirely different company, with a different employer,
rank, compensation and benefits.
INC SHIPMANAGEMENT, INC. CAPTAIN SIGFREDO E. MONTERROYO

AND/OR INTERORIENT NAVIGATION LIMITED
vs. ALEXANDER L. MORADAS
G.R. NO. 178564, JANUARY 15, 2014
J. PERLAS-BERNABE
The prevailing rule under Section 20 (B) of the 1996 POEA-SEC on compensation and
benefits for injury or illness was that an employer shall be liable for the injury or illness suffered by
a seafarer during the term of his contract
Facts:
On July 17, 2000, respondent was employed as wiper for the vessel MV Commander (vessel) by
petitioner INC Shipmanagement, Inc. for its principal, petitioner Interorient Navigation, Ltd.
(petitioners). On October 13, 2000, respondent claimed that while he was disposing of the
garbage in the incinerator room of the vessel, certain chemicals splashed all over his body because
of an explosion. He was sent to the Burns Unit of the Prince of Wales Hospital on the same day
wherein he was found to have suffered deep burns. Eventually, upon his own request, respondent
was sent home.
On October 21, 2000, he was admitted to the St. Luke’s Medical Center. Subsequently, he was
diagnosed to have sustained "thermal burns, upper and lower extremities and abdomen, 2º-3º,
11% for which he underwent debridement. He was referred to a physical therapist for his
subsequent debridement through hydrotherapy. On November 10, 2000, the attending physician,
Dr. Natalio G. Alegre II, reported that the respondent’s thermal burns were healing well and that
they were estimated to fully heal within a period of 3 to 4 months.
Claiming that the burns rendered him permanently incapable of working again as a seaman,
respondent demanded for the payment of his full disability benefits under Section 20 (B) in
relation to Sections 30 and 30-A of the Philippine Overseas Employment Agency (POEA)
Standard Employment Contract (POEA-SEC), in the amount of US$60,000.00, which petitioners
refused to heed. Thus, respondent filed a complaint against petitioners for the same, seeking as
well moral and exemplary damages, including attorney’s fees.
In their position paper, petitioners denied respondent’s claims, contending that his injury was
self-inflicted and, hence, not compensable under Section 20 (D) of the POEA-SEC. They denied
that the vessel’s incinerator exploded and claimed that respondent burned himself by pouring
paint thinner on his overalls and thereafter set himself on fire. They averred that he was led to
commit such act after he was caught last October 10, 2000 stealing the vessel’s supplies during a
routine security inspection conducted by Captain Bodo Wirth (Captain Wirth) where respondent
was informed that he was to be dismissed.
Issue:
Whether respondent is entitled to compensation and benefits for injury or illness he suffered
Ruling:
The prevailing rule under Section 20 (B) of the 1996 POEA-SEC on compensation and benefits
for injury or illness was that an employer shall be liable for the injury or illness suffered by a
seafarer during the term of his contract. There was no need to show that such injury was work-
related except that it must be proven to have been contracted during the term of the contract.
The rule, however, is not absolute and the employer may be exempt from liability if he can
successfully prove that the cause of the seaman’s injury was directly attributable to his deliberate
or willful act as provided under Section 20 (D) thereof, to wit:
D. No compensation shall be payable in respect of any injury, incapacity, disability or death of

the seafarer resulting from his willful or criminal act, provided however, that the employer can
prove that such injury, incapacity, disability or death is directly attributable to seafarer.
Hence, the onus probandi falls on the petitioners herein to establish or substantiate their claim
that the respondent’s injury was caused by his willful act with the requisite quantum of evidence.
In labor cases, as in other administrative proceedings, only substantial evidence or such relevant
evidence as a reasonable mind might accept as sufficient to support a conclusion is required.
Records bear out circumstances which all lead to the reasonable conclusion that respondent was
responsible for the flooding and burning incidents.
Respondent’s version that the burning was caused by an accident is hardly supported by the
evidence on record.
ALPHA SHIP MANAGEMENT CORPORATION et al. vs. ELEOSIS CALO

G.R. No. 192034, 13 January 2014
J. Del Castillo
An employee’s disability becomes permanent and total when so declared by the company-
designated physician, or, in case of absence of such a declaration either of fitness or permanent
total disability, upon the lapse of the 120 or 240-day treatment period. Calo was repatriated on
October 12, 2004 and underwent treatment until October 14, 2005. The period was over 1 year which
is more than the statutory 120 or 240-day period. During the 1 year period, Dr. Cruz did not make
any conclusive findings that Calo was fit for work.
Facts:
Beosis Calo is an employee of Alpha Ship Management Corp, (Alpha), Junel Chan and their
foreign principal, Chuo-kaiun company limited (CKCL). Calo was later on transferred to CKCL’s
vessel as Chief Cook on board. When the ship was in Shanghai, China, Calo was diagnosed with
urinary tract infection and renal colic. Later on when they were in Chile, Calo was found to have
kidney problems and urinary tract infection. Due to these circumstances, he was declared fit for
work on light duty basis.
When the ship reached to Japan, Calo was diagnosed with suspected renal and/or ureter calculus.
Due to its severity, he was declared unfit for work. Accordingly, Calo was repatriated and was
refereed to Dr. Cruz, the company-designated physician, for medical examination. Accordingly,
Calo was diagnosed with a stone in his left kidney. Dr. Cruz claims that Calo’s health was
improving with the given medication. However, feeling otherwise, Calo consulted Dr. Vicaldo
who claims that Calo was unfit fot work and that the illness was caused by Calo’s work as seaman.
The Labor Arbiter ruled that Calo suffered permanent disability entitling him for disability
benefits. NLRC reversed the decision arguing that it permanent disability should be determined
by Dr. Cruz who was the company-designated physician and not Dr. Vicaldo. CA sought the
reversal of the Cecision of the NLRC, arguing that Dr. Cruz’s findings are not conclusive.
Issue:
Whether or not Calo is entitled to disability benefits.
Ruling:
Calo is entitled to disability benefits. The treatment to Calo’s illness lasted for more than a year,
or the statutory period of 120 or 240-day period provided for by the Labor Code. A day later than
the statutory period raises the presumption that the employee is permanently disabled.
Permanent total disability, provided for by the Labor Code, is the temporary total disability for
more than 120 days except as provided for in the Rules. However, this is not the sole basis for
determining employees’ rights as regards work-related injury, illness or death.
An employee’s disability becomes permanent and total when so declared by the company-
designated physician, or, in case of absence of such a declaration either of fitness or permanent
total disability, upon the lapse of the 120 or 240-day treatment period. Calo was repatriated on
October 12, 2004 and underwent treatment until October 14, 2005. The period was over 1 year
which is more than the statutory 120 or 240-day period. During the 1 year period, Dr. Cruz did
not make any conclusive findings that Calo was fit for work.
CARLO F. SUNGA vs.VIRJEN SHIPPING CORPORATION, NISSHO ODYSSEY SHIP

MANAGEMENT PTE. LTD., and/or CAPT. ANGEL ZAMBRANO
G.R. No. 198640, April 23, 2014, J. Brion
When an employee’s injury was the result of the accidental slippage in handling of the 200-
kilogram globe valve, such employee is eligible for disability benefits under the Collective Bargaining
Agreement executed between his employer and its union.
Facts:
Virjen Shipping Corporation (Virjen), acting in behalf of its foreign principal, Nissho
Odyssey Ship Management Pte. Ltd., entered into a contract of employment with Sunga. Under
the contract, Sunga would be working as a fitter on board the ocean-going vessel MT Sunway.
As a registered member of the Associated Marine Officers’ and Seamen’s union of the
Philippines (AMOSUP), Sunga’s employment was covered by the IBF JUS/AMOSUP-IMMAJ
Collective Bargaining Agreement (CBA) executed between Virjen and Nissho Odyssey, All Japan
Seamen’s Union and AMOSUP.
While MT Sunway was docked at Singapore, Sunga, together with two other oilers, was
assigned to change MT Sunway’s globe valves. Aside from lifting the 200-kilogram globe valve from
the lower floor of the engine room to its installing position, Sunga also has to bear its entire weight
while it was being positioned by the other oilers. Unfortunately, one of the oilers lost his grip,
causing the whole weight of the globe valve to crash on Sunga. At that instant, he felt his back
snap, causing intense pain at his lower back which persisted for several days. Unable to even stand
up just to go to the bathroom, Sunga was forced to request for repatriation.
The doctor who examined Sunga, issued a medical certificate recommending a Grade 8
disability (Moderate rigidity or 2/3 loss of motion or lifting power of the trunk) based on the
Philippine Overseas Employment Administration (POEA) Standard Employment Contract for
Seafarers. Dr. Cruz also issued another medical certificate recommending a disability grading of
25% (Back pains with considerable reduction of mobility) in accordance with the parties’ CBA.
On the strength of these two certificates, Virjen immediately offered Sunga the amount of
in accordance with the POEA Standard Employment Contract for Seafarers, as full settlement for
the latter’s disability benefits. However, Sunga rejected the offer; he demanded instead that his
disability benefits be based on the disability grading of 25%, pursuant to the provisions of the
parties’ CBA.
Virjen denied Sunga’s demand stating that it had no liability to pay Sunga any disability
benefits under the CBA. Virjen claimed that the CBA requires that for permanent disability to be
compensable, the disability should be the result of an accident incurred during the course of the
seafarer’s employment. Virjen argued that Sunga failed to present any proof that his disability
was indeed the result of an accident. It was simply an illness or an anatomical defect.
Hence, Sunga filed a complaint before the NLRC against Virjen for disability benefits as
stated in the parties’ CBA (not under the POEA Standard Employment Contract for Seafarers).
Issue:
Whether Sunga is eligible for disability benefits under the parties’ CBA since he had
incurred injury, by accident, in the performance of his duties
Ruling:
Yes.
The Court ruled that an accident pertains to an unforeseen event in which no fault or
negligence attaches to the defendant. It is "a fortuitous circumstance, event or happening; an
event happening without any human agency, or if happening wholly or partly through human
agency, an event which under the circumstances is unusual or unexpected by the person to whom
it happens.
In the present case, Sunga did not incur the injury while solely performing his regular
duties; an intervening event transpired which brought upon the injury. The two other oilers who
were supposed to help carry the weight of the 200-kilogram globe valve lost their grasp of the
globe valve. As a result, Sunga’s back snapped when the entire weight of the item fell upon him.
The sheer weight of the item is designed not to be carried by just one person, but as was observed,
meant to be undertaken by several men and expectedly greatly overwhelmed the physical limits
of an average person. Notably, this incident cannot be considered as foreseeable, nor can it be
reasonably anticipated. Sunga’s duty as a fitter involved changing the valve, not to routinely carry
a 200-kilogram globe valve singlehandedly. The loss of his fellow workers’ group was also
unforeseen in so far as Sunga was concerned.
Since Sunga encountered an accident on board MT Sunway, Sunga's disability benefits

should fall within the coverage of the parties' CBA, which provides:
Article 28: Disability
28.1 A seafarer who sutlers permanent disabilitv as a result of an accident whilst in the
employment of the Company regardless of fault, including accidents occurring while traveling to
or from the ship, and whose ability to work as a seafarer is reduced as a result thereof, but
excluding permanent disability due to willful acts, shall in addition to sick pay, be entitled to
compensation according to the provisions of this Agreement.
REMEDIOS O. YAP vs. ROVER MARITIME SERVICES CORPORATION, MR. RUEL

BENISANO and/or UCO MARINE CONTRACTING W.L.L.
G.R. No. 198342, August 13, 2014, J. Peralta
The records would reveal that Remedios Yap failed to prove by substantial evidence that the
death of her husband occurred during the term of his employment contract and that the cause of
death was work-related. There is no established link connecting Dovee Yap’s accidental slip to the
lung cancer and pneumonia that killed him. Neither can it be said that Dovee Yap’s working
conditions increased the risk of contracting the disease for which he died. In order for the
beneficiaries of a seafarer to be entitled to death compensation from the employer, it must be proven
that the death of the seafarer (1) is work-related; and (2) occurred during the term of his contract.
Facts:
The deceased, Dovee M. Yap, was a seafarer who had been employed by Rover Maritime
Services Corporation, its foreign principal, UCO-Marine Contracting W. L. L., and Ruel Benisano,
in various capacities under different contracts of employment continuously for a period of ten
years. In his last contract with Rover, he was hired as Third Mate on board vessel UCO XX for a
period of one year with a basic monthly salary of Six Hundred Dollars. He boarded the vessel on
July 23, 2005. On July 23, 2006, the last day of Dovee Yap’s contract, he met an accident. While
inspecting a lifeboat, he slipped and hit his back on the steel lifeboat ladder. He was brought to
a hospital in Bahrain and was confined thereat for two weeks. Dovee Yap was repatriated to the
Philippines. He was admitted at the Doctors Medical Center in Iloilo City for three weeks for
further treatment. Dovee Yap was again confined at the Western Visayas Medical Center, with
the diagnosis of "squamous cell carcinoma of the lungs with metastasis to the spine and probably
the brain."
Dovee Yap filed against Rover a complaint for permanent disability benefits, sick wages,
reimbursement of hospital, medical, and doctor’s expenses, actual, moral and exemplary
damages, and attorney’s fees. During the pendency of the case, Dovee Yap died of "Multiple
Organ Failure Secondary To Pulmonary Squamous Cell CA With Distant Metastasis And
Obstructive Pneumonia Secondary To Electrolyte Imbalance Secondary To Gastric Ulcer
Secondary To S/P Radio Therapy." His widow, Remedios O. Yap, substituted him as party-
complainant and the claim for disability benefits was then converted into a claim for death
benefits. On February 28, 2008, the Labor Arbiter dismissed the Complaint for lack of merit. The
NLRC reversed the Labor Arbiter’s Decision and ordered Rover to pay Yap. The CA reversed the
ruling of the NLRC in its Decision. Hence, the present petition.
Issue:
Whether or not the Remedios is entitled to compensation for the death of her husband,
Dovee Yap.
Ruling:
No, Dovee Yap is not entitled for compensation.
The terms and conditions of a seafarer’s employment, including claims for death and
disability benefits, is a matter governed, not only by medical findings, but by the contract he
entered into with his employer and the law which is deemed integrated therein. For as long as
the stipulations in the contract are not contrary to law, morals, public order, or public policy,
they have the force of law between the parties.
Section 20 (A) of the POEA Standard Employment Contract, pursuant to the provision,
and a long line of Jurisprudence explaining the same, in order for the beneficiaries of a seafarer
to be entitled to death compensation from the employer, it must be proven that the death of the
seafarer (1) is work-related; and (2) occurred during the term of his contract. It is an oft-repeated
rule that whoever claims entitlement to the benefits provided by law should establish his right
thereto by no less than substantial evidence. The evidence must be real and substantial, and not
merely apparent; for the duty to prove work-causation or work-aggravation imposed by law is
real and not merely apparent. As such, the burden to prove entitlement to death benefits lies on
the Yaps.
A perusal of the records would reveal that Remedios failed to prove by substantial
evidence that the death of her husband occurred during the term of his employment contract
and that the cause of death was work-related. It is clear from the evidence presented that
Remedios’ husband did not pass away during the term of his employment. Second, petitioner
failed to adduce proof that the death of Dovee Yap was work-related. While the evidence
presented bear results of his "slightly enhancing hypointense lesions, with vertebral body
compression," "multiple mass lesions in the brain," and "squamous cell carcinoma of the lungs
with metastasis to the spine and probably to the brain," there is no established link connecting
Dovee Yap’s accidental slip to the lung cancer and pneumonia that killed him. Without
competent evaluation and interpretation by medical experts on how the findings actually relate
to the facts surrounding the case, we cannot just automatically conclude that his death was a
product of his accident on board the ship.
Neither can it be said that Dovee Yap’s working conditions increased the risk of
contracting the disease for which he died. In addition, while Dovee Yap’s pneumonia may be
listed as an occupational disease under Section 32-A of the POEA Standard Employment
Contract, Remedios Yap’s failure to comply with its conditions bars the award of death
compensation benefits. The mere fact that Dovee Yap was declared fit to work in his pre-medical
examinations for the past ten years of his employment does not necessarily follow that his
pulmonary illness and cancer of the lungs was brought about by the accident he encountered.
We are neither convinced by Remedios Yap’s argument that by virtue of Article 26.3 in relation
to Articles 22 and 23 of the CBA, her husband may still be considered as "in the employment of
the company." There is doubt as to whether the parties are actually covered under the CBA since
not only is the same unsigned by the parties concerned, but Remedios did not present any proof
to indicate Dovee Yap’s membership in the particular union covered therein.
FLOR G. DAYO vs. STATUS MARITIME CORPORATION, ET AL.

G.R. No. 210660, January 21, 2015, J. Leonen
The nature of employment can possibly aggravate a pre-existing illness. However, the
causation between the nature of employment and the aggravation of the illness must still be proven
before compensation may be granted. For illness to be compensable, it is not necessary that the
nature of the employment be the sole and only reason for the illness suffered by the seafarer. It is
sufficient that there is a reasonable linkage between the disease suffered by the employee and his
work to lead a rational mind to conclude that his work may have contributed to the establishment
or, at the very least, aggravation of any pre-existing condition he might have had.
Facts:
P. Dayo (Eduardo) was hired by Status Maritime Corporation for and on.behalf of Nafto
Trade Shipping Commercial S.A. He was hired as a bosun on board the "MV Naftocement l" for
a period of 10 months, designated with a monthly salary of US$500.00. Prior to embarkation, he
underwent a pre-employment medical examination and was declared fit to work.
Eduardo embarked on June 8, 2008. On September 5, 2008, he “experienced severe pain

on his hips and both knees, and total body weakness.” He was given medical attention in
Bridgetown, Barbados, where he was diagnosed with hypertension. He was repatriated on
September 7, 2008.
The next day, Eduardo went to Status Maritime Corporation’s office, but he was informed
that it was waiting for Nafto Trade Shipping Commercial S.A.’s notification. He was also told
that he could seek medical attention and that his expenses would be reimbursed. On September
9, 2008, he went to the Lucena United Doctors Hospital. Dr. Olitoquit, Eduardo’s private
physician, found the results of his 2D echocardiogram as normal.
Eduardo repeatedly requested for medical assistance, but it was only in November 2008
when he was referred to a company-designated physician. Dr. Bolanos of the Metropolitan
Hospital diagnosed him with diabetes mellitus.
Status Maritime Corporation stopped giving Eduardo medical assistance in February

2009. He died on June 11, 2009 due to cardiopulmonary arrest. Flor G. Dayo (Flor), Eduardo’s
wife, requested for death benefits to no avail. Thus, she filed a complaint.
The Labor Arbiter ruled in favor of Flor and awarded death benefits, burial expenses, and
attorney’s fees. Status Maritime Corporation appealed to the National Labor Relations
Commission., The NLRC First Division reversed the Labor Arbiter’s Decision. Flor filed a Motion
for Reconsideration, but it was denied. She then filed a Petition for Certiorari before the Court of
Appeals. The Court of Appeals denied the petition. Flor moved for the reconsideration, but it was
denied. Hence, this petition.
Issue:
Whether the Court of Appeals erred in denying Flor’s petition, considering that Eduardo’s
death was brought about by a work-related illness.
Ruling:
In this case, petitioner does not dispute the fact that her husband died after the term of
his contract. Instead, she emphasizes that her husband died due to a work-related illness.
Petitioner cites Section 20(A), paragraphs (1) and (4) to support her claim for death
benefits. She also cites the second paragraph of Section 20(B) to support her claim for
reimbursement of medical and transportation expenses.
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.”
The facts of this case indicate that the physician in Barbados diagnosed Eduardo with
hypertension. He underwent 2D echocardiogram at the Lucena United Doctors Hospital, and
the results were interpreted by Dr. Olitoquit as normal. When Eduardo was examined by the
company-designated physician, he admitted that he had been suffering from diabetes mellitus
and hypertension since the 1990s. This shows that his illness was pre-existing. His cause of death
was cardiopulmonary arrest.
The 2000 POEA SEC recognizes that the list of illnesses under Section 32 is not exhaustive.
In Magsaysay Maritime Services v. Laurel, the nature of employment can possibly aggravate a
pre-existing illness. However, the causation between the nature of employment and the
aggravation of the illness must still be proven before compensation may be granted.
Settled is the rule that for illness to be compensable, it is not necessary that the nature of
the employment be the sole and only reason for the illness suffered by the seafarer. It is sufficient
that there is a reasonable linkage between the disease suffered by the employee and his work to
lead a rational mind to conclude that his work may have contributed to the establishment or, at
the very least, aggravation of any pre-existing condition he might have had.
Petitioner was unable to fulfill these requirements. She did not allege how the nature of
Eduardo’s work as a bosun contributed to the development or the aggravation of his illness.
Further, he himself admitted that he had diabetes and hypertension prior to his embarkation.
Considering that diabetes mellitus is not listed as an occupational disease under the 2000 POEA
SEC and considering that petitioner did not prove how Eduardo’s occupation contributed to the
development of his illness, no error can be attributed to the Court of Appeals when it affirmed
the National Labor Relations Commission’s Decision and Resolution.
VERITAS MARITIME CORPORATION AND/OR ERICKSON MARQUEZ vs. RAMON A.

GEPANAGA JR.
G.R. No. 206285, February 04, 2015, J. Mendoza
As in Dumadag, Gepanaga failed to observe the prescribed procedure of having the

conflicting assessments on his disability referred to a third doctor for a binding opinion.
Consequently, the Court applies the following pronouncements laid down in Vergara: The POEA
Standard Employment Contract and the CBA clearly provide that when a seafarer sustains a work-
related illness or injury while on board the vessel, his fitness or unfitness for work shall be
determined by the company-designated physician. If the physician appointed by the
seafarer disagrees with the company-designated physician’s assessment, the opinion of a third
doctor may be agreed jointly between the employer and the seafarer to be the decision final and
binding on them. Thus, while petitioner had the right to seek a second and even a third opinion, the
final determination of whose decision must prevail must be done in accordance with an agreed
procedure. Unfortunately, the petitioner did not avail of this procedure; hence, we have no option
but to declare that the company-designated doctor’s certification is the final determination that
must prevail.
Facts:
Ramon Gepanaga Jr. (Gepanaga) entered into a contract of employment with petitioners
Veritas, for and in behalf of St. Paul Maritime Corporation, to work on board the vessel M.V.
Melbourne Highway as Wiper Maintenance for six (6) months. By executing the contract of
employment, the parties agreed to be bound by the provisions of Philippine Overseas
Employment Administration Standard Employment Contract (POEA-SEC), as well as the
collective bargaining agreement (CBA).
As Gepanaga was able to complete his contract with no incident, the parties mutually
agreed to extend his tenure as Wiper Maintenance. What happened shortly thereafter was what
sparked the current controversy.
Later, while Gepanaga was doing maintenance work, his middle finger got caught
between the cast metal piston liners of the diesel generator. He was then given first aid on board
the vessel and was later brought to a hospital in Omaezaki, Japan. In the hospital, Gepanaga was
diagnosed with “open fracture of the distal phalanx, left middle finger. He was then repatriated.
Gepanaga reported right away to the clinic of Dr. Nicomedez G. Cruz (Dr. Cruz), the
company-designated physician. After Gepanaga was referred to the orthopedic surgeon of his
clinic, Dr. Cruz concurred in the initial findings of doctors in Japan that Gepanaga was suffering
from a crushing injuring with fracture distal phalanx left middle finger. After a series of medical
treatments, Dr. Cruz noted that Gepanaga no longer suffered the pain in the affected area and
that his “grip is good and functional. Dr. Cruz thus issued his medical reportdeclaring that
Gepanaga was “cleared fit to go back to work.
Unconvinced that he had fully recovered from his injury, Gepanaga filed a
complaint against Veritas, Marquez and “K” Line Ship Management, Inc., claiming that the latter
is the foreign principal of Veritas and owner of the M.V. Melbourne Highway.
Several days after filing his complaint, Gepanaga sought the opinion of Dr. Edmundo A.
Villa (Dr. Villa) in Leyte. That same day, Dr. Villa gave his medical report finding that Gepanaga
suffered from permanent disability due to old compound fracture of the 3rd left phalanx/middle
finger-left. Thus, when Gepanaga filed his position paper, he included Dr. Villa’s report to support
his contention that the injuries he had sustained while on board the M.V. Melbourne rendered
him permanently unfit to work.
Thus Gepanaga filed a claim for permanent disability benefits, sickness allowance,
damages, and attorney’s fees, against petitioners Veritas Maritime Corporation (Veritas), and its
president, petitioner Erickson Marquez (Marquez), before the National Labor Relations
Commission (NLRC).
The Labor Arbiter dismissed the complaint filed by Gepanaga for lack merit. On appeal,
the NLRC reversed the ruling of the LA and declared Gepanaga to be suffering from permanent
total disability. The NLRC, thus, ordered Veritas and Marquez to compensate him. CA affirmed
the decision of the NLRC.
Issues:
1. Whether or not the injury suffered by Gepanaga is permanent total disability.
Ruling:
No. The evidentiary records favor the petitioners. Actually, Gepanaga’s filing of his claim
was premature.
In order to provide a clear-cut set of rules in resolving the ubiquitous conflict between
the seafarer and his employer for claims of permanent disability benefits, the Court in Vergara,
stated that the Department of Labor and Employment (DOLE), through the POEA, had
simplified the determination of liability for work-related death, illness or injury in the case of
Filipino seamen working in foreign ocean-going vessels. Every seaman and vessel owner (directly
or represented by a local manning agency) are required to execute the POEA-SEC as a
condition sine qua non prior to the deployment of the seaman for overseas work. The POEA-SEC
is supplemented by the CBA between the owner of the vessel and the covered seaman.
In this case, the parties entered into a contract of employment in accordance with the
POEA-SEC. They also agreed to be bound by the CBA. Thus, in resolving whether Gepanaga is
entitled to disability compensation, the Court will be guided by the procedures laid down in the
POEA-SEC and the CBA.
Interpreting an almost identical provision of the CBA, the Court ruled, in the recent case
of Philippine Hammonia Ship Agency, Inc. v. Dumadag (Dumadag) that a seafarer’s non-
compliance with the mandated procedure under the POEA-SEC and the CBA militates against
his claims. In Dumadag, the Court explained: 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
the 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 physician’s opinions, without referring the
conflicting opinions to a third doctor for final determination.
of Philippine Hammonia Ship Agency, Inc. v. Dumadag (Dumadag) that a seafarer’s non-
his claims. In Dumadag, the Court explained:The POEA-SEC and the CBA govern the
signatories, is the law between them and as such, its provisions bind both of them." Dumadag,

Standard Employment Contract and the CBA clearly provide that when a seafarer sustains a
work-related illness or injury while on board the vessel, his fitness or unfitness for work shall be
binding on them. Thus, while petitioner had the right to seek a second and even a third opinion,
the final determination of whose decision must prevail must be done in accordance with an
agreed procedure. Unfortunately, the petitioner did not avail of this procedure; hence, we have
no option but to declare that the company-designated doctor’s certification is the final
determination that must prevail.
Indeed, for failure of Gepanaga to observe the procedures laid down in the POEA-SEC
and the CBA, the Court is left without a choice but to uphold the certification issued by the
company-designated physician that the respondent was “fit to go back to work.”
Gepanaga’s filing of his claim was premature.
In this case, when Gepanaga filed his complaint with the arbitration office on March 25,
2009, he had yet to consult his own physician, Dr. Villa. Indeed, the Court has observed that
when Gepanaga filed his complaint, he was armed only with the belief that he had yet to fully
recover from his injured finger because of the incident that occurred on board the M.V.
Melbourne Highway. It was only on June 9, 2009, a few days before he filed his position paper on
June 15, 2009, that Gepanaga sought the services of Dr. Villa. It bears pointing out that even worse
than the case in Dumadag, Gepanaga’s personal physician examined him for only one (1) day,
that is, on June 9, 2009, two and a half months (2 ½) after he had filed his claim for permanent
disability benefits. Furthermore, the medical certificate issued by Dr. Villa after examining the
respondent failed to state the basis of his assessment and conclusion of permanent disability,
more than three (3) months after the respondent was declared fit to work by Dr. Cruz, the
company-designated physician. Let it be stressed that the seafarer’s inability to resume his work
after the lapse of more than 120 days from the time he suffered an injury and/or illness is not a
magic wand that automatically warrants the grant of total and permanent disability benefits in
his favor. Both law and evidence must be on his side. For these reasons, and without sufficient
evidence to support the respondent’s ancillary claims for sick wages, damages and attorney’s fees,
the same are denied.
MAUNLAD TRANS., INC./CARNIV AL CRUISE LINES, INC., and MR. AMADO L. CASTRO,
JR. vs. RODOLFO CAMORAL
G.R. No. 211454, February 11, 2015, J. Reyes
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.
Facts:
Camoral was continuously deployed overseas by Carnival Cruise Lines, Inc., a foreign
shipping company, through its local agent, Maunlad Trans., Inc. In April 2009, they took him on
board M/S Carnival Sensation as ice carver for a period of eight months, the company doctors
having declared him “Fit for Sea Duty”.
As ice carver, Camoral’s job required lifting and carrying heavy blocks of ice and using
heavy equipment and tools, working for hours inside the freezer in sub-zero temperature. One day
in September 2009 while at work, he suddenly felt excruciating pain in his neck. The pain quickly
radiated to his shoulder, chest and hands. It became so intense that he dropped to the floor. Pain
relievers could not relieve the pain, and the ship’s doctor advised the Chief Chef that Camoral was
unfit for further duty on board.
On advice of the company doctor in Florida, United States of America, Dr. James E. Carter
(Dr. Carter), a Magnetic Resonance Imaging scan was performed on Camoral’s cervical spine. In
his medical report, Dr. Carter found Camoral with “Cervical Disc Herniation and Radiculopathy”
and declared him “unfit for duty”.
He underwent rigorous physical therapy, but after more than five months his condition
barely improved, and the pain in his neck, chest and shoulder persisted. He then consulted Dr.
Rogelio P. Catapang, Jr. (Dr. Catapang), a renowned Orthopaedic and Traumatology Surgeon. The
clinical and physical examination of Camoral issued a report stating he has lost his preinjury
capacity and is unfit to work back at his previous occupation as a seafarer.
Camoral failed to get further financial assistance from Maunlad Trans., Inc. for his
subsequent treatment and medications, as well as total disability benefits. He was instead offered
$10,075.00 corresponding to Grade 10 disability the company gave him.
With no income for more than 120 days and having been declared unfit to return to his
previous job due to loss of his pre-injury capacity, he sued Maunlad Trans., Inc. before the LA for
total disability benefits of US$60,000.00, citing Philippine Overseas Employment Administration
Standard Terms and Conditions Governing the Employment
of Filipino Seafarers on board Ocean-going Vessels (POEA SEC for brevity).
In their answer, the Maunlad Trans., Inc. argued that Camoral was not entitled to total and
permanent disability benefits since he was not assessed by the company doctors with a Grade 1
disability. Furthermore, it insisted that regardless of whether the disability is total or partial, any
compensation should be based on the grading provided in the POEA SEC, which in this case is
Grade 10 disability as assessed by the company doctors.
Issue:
Whether the disability grading provided by Maunlad Trans., Inc. for Camoral’s
impediment must control
Ruling:
No.
In Vergara v. Hammonia Maritime Services, Inc., et al., the Court harmonized the POEA
SEC with the Labor Code and the Amended Rules on Employee Compensation (AREC) in holding
that: (a) the 120 days provided in Section 20-B(3) of the POEA SEC is the period given to the
employer to determine the fitness of the seafarer to work, during which 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 by a maximum of 120 days, or up to 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 days or 240 days, as the case may be, or upon the
expiration of the said periods without a declaration of either fitness to work or permanent
disability and the seafarer is still unable to resume his regular seafaring duties.
Furthermore, while the seafarer is partially injured or disabled, he must not be 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 days or 240 days, as is the case here, then he shall be deemed totally
and permanently disabled.
Significantly, the NLRC noted that the medical report and disability assessment submitted
by Maunlad Trans., Inc. after more than 120 days of treatment and rehabilitation did not show how
the partial permanent disability assessment of Camoral was arrived at. It simply stated that he was
suffering from impediment Grade 10 disability, but without any evidence that in fact only one-
third limitation of motion of the neck or moderate stiffness had affected Camoral. But even
without this observation, it is not, disputed that Camoral has been declared unfit by both the
petitioners' and Camoral 's doctors to return to his previous occupation. This is akin to a
declaration of permanent and total disability.
WALLEM MARITIME SERVICES, INC., REGINALDO A. OBEN AND WALLEM

SHIPMANAGEMENT, LTD. v. EDWINITO V. QUILLAO
G.R. No. 202885, January 20, 2016
FACTS
WMS is a local manning agency, with Reginaldo A. Oben (Oben) as its President and Manager.On
September 30, 2008, WMS, for and in behalf of its foreign principal, WSL, hired respondent as
fitter aboard the vessel Crown Garnet for a period of nine months with a monthly salary of
US$698.00.
Respondent alleged that his employment was covered by a collective bargaining agreement
(CBA) between the Associated Marine, Officers' and Seamen's Union of the Philippines
(AMOSUP) and WSL - Hong Kong, represented by WMS. He stated that after undergoing pre-
employment medical examination, he was declared fit to work. He joined the vessel on October
4, 2008.
Respondent averred that in January 2009, he started experiencing neck and lower back pain. In
April 2009, he purportedly noticed numbness and weakness of his left hand. Respondent stated
that towards the end of his contract, the Chief Engineer tried to convince him to extend his
contract but he declined. The Chief Engineer then told him that he would report to their
Superintendent respondent's ailment.
Respondent further stated that he signed off from the vessel on July 13, 2009. Upon arrival in the
Philippines on July 15, 2009, he was referred to the company-designated physician Dr. Ramon S.
Estrada (Dr. Estrada) and was diagnosed of cervical radiculopathy, thoracic and lumbar
spondylosis, as well as carpal tunnel syndrome of the left, and trigger finger, third digit of his
right hand. He was also referred to Dr. Arnel V. Malaya (Dr. Malaya) for back rehabilation and to
Dr. Ida Tacata, a specialist for hand surgery orthopedics. He underwent carpal tunnel surgery on
his left hand, and physical therapy (PT) sessions for his cervical and lumbar condition.
On September 9, 2009, Dr. Estrada reported that respondent's carpal tunnel surgery was healing
well. Respondent followed up with Dr. Malaya, his physiatrist, for his shoulder pain. As of
November 12, 2009, respondent had completed 24 PT sessions for his shoulder, upper back and
cervical pain. However, the company-designated doctor declared that respondent was
complaining of pain in these areas with poor response to therapy and medications. And because
of complaint for low back pain, he advised respondent to defer PT sessions and seek the opinion
of an orthopedic specialist.
However, on November 23, 2009, the Legal Affairs Department of AMOSUP informed WMS of
respondent's claim for disability benefits and the clarificatory conference scheduled on
November 27, 2009.
On November 24, 2009, respondent requested from the company-designated doctor the final
assessment of his health condition but to no avail.
Thereafter, grievance proceedings were held at the AMOSUP office regarding respondent's claim.
Respondent admitted that after several meetings, he was advised to continue his PT sessions until
March 15, 2010.
On January 9, 2010, the company-designated doctor opined that respondent's chance of being
declared fit to work was "quite good" provided he completes his remaining physical therapy
sessions for about 4-6 weeks for his left hand pain and back pain. He also reported that
respondent failed to return for his consultation since November 12,2009.
On February 5, 2010, upon referral of Dr. Malaya, respondent underwent EMG-NCV test which
revealed that: "1.) A severe chronic distal focal neuropathy of the left median nerve as in carpal
tunnel syndrome. A moderately severe CTS is also seen on the left[; and,] 2.) Findings compatible
with a chronic lumbar radiculopathy involving the right L4-5 spinal roots."
On March 12, 2010, the company-designated doctor gave respondent a final disability rating of
Grade 10, and made the following pronouncements:
x x x [Respondent] was seen and re-evaluated by the physiatrist Dr. Malaya and with
findings of no apparent improvement in his pain symptoms which is not compatible with
all the tests and clinical evaluation/findings. He still complains of pain [on] the upper
back and both hands, apparently with no significant improvement after several sessions
of intensive physical therapy. Discontinuation of his rehabilitation program was advised
by the specialist. With those developments, [I would declare that respondent's] condition
is already at the stage of maximum medical wellness and no further treatment will
improve his pain perception. Disability Grade 10 will be applicable to his present physical
status under the POEA guidelines, x x x.
On August 2, 2011, respondent consulted Dr. Renato P. Runas (Dr. Runas), an independent
orthopedic surgeon. Dr. Runas diagnosed him of being afflicted with cervical and lumbar
spondylosis with nerve root compression. On August 15, 2011, Dr. Runas opined that respondent
"is not fit for further sea duty permanently in whatever capacity with a status equivalent to Grade
8" Impediment - moderate rigidity or 2/3 loss of trunk motion or lifting power.
Respondent posited that he was entitled to permanent and total disability benefits because: he
was declared fit to work prior to his last contract with petitioners; he sustained his illness in the
course of and by reason of his work; despite surgery and PT, his condition did not improve; the
company-designated physician did not assess the degree of his disability; his chosen physician
declared him permanently unfit for sea duty; and, since repatriation, he had never been employed
and his earning capacity had since then been impaired.
For their part, WMS, WSL and Oben (petitioners) confirmed that respondent's employment with
them was covered by a CBA; and that while he was aboard the vessel he complained of pain and
finger numbness on his left hand. They affirmed that upon repatriation, they referred him to the
company-designated physician, Dr. Estrada, as well as to Dr. Malaya for back rehabilitation, and
to Dr. Ida Tacata for hand surgery.
Petitioners stressed that when respondent filed a complaint before the AMOSUP on November
23, 2009, he was still undergoing treatment; and during which the company-designated physician
had not yet given him a final disability assessment. They insisted that the company-designated
doctor failed to give an assessment within 120 days because respondent failed to appear for his
consultations with the company-designated doctors. They explained that although no
assessment was issued within the 120-day period, respondent was given a final assessment on
March 12, 2010, or within the 240-day maximum period for treatment.
ISSUE
Whether or not respondent is entitled to permanent and total disability benefits.
RULING
We agree with petitioners' contention that at the time of filing of the Complaint, respondent has
no cause of action because the company-designated physician has not yet issued an assessment
on respondent's medical condition; moreover the 240-day maximum period for treatment has
not yet lapsed. As reiterated by the Court in the recent case of C.F. Sharp Crew Management, Inc.
v. Obligado, the 120-day rule applies only when the complaint was filed prior to October 6, 2008;
however, if the complaint was filed from October 6, 2008 onwards, the 240-day rule applies. Here,
it is beyond dispute that the complaint for disability benefits was filed after October 6, 2008.
Hence, the 240-day rule should apply. It was thus error on the part of the PVA to reckon
respondent's entitlement to permanent and total disability benefits based on the 120-day rule.
The records clearly show that respondent was still undergoing treatment when he filed the
complaint. On November 12, 2009, the physiatrist even advised respondent to seek the opinion
of an orthopedic specialist Respondent, however, did not heed the advice, instead, he proceeded
to file a Complaint on November 23, 2009 for disability benefits. And, it was only a day after its
filing (or on November 24, 2009) that respondent requested from the company-designated
doctor the latter's assessment on his medical condition.
Stated differently, respondent filed the Complaint within the 240-day period while he was still
under the care of the company-designated doctor. Significantly, we note that respondent has not
even consulted his doctor-of-choice before instituting his Complaint for disability benefits.
Clearly, the Complaint was premature. Respondent has no cause of action yet at the time of its
filing as the company-designated doctor has no opportunity to definitely assess his condition
because he was still undergoing treatment; and the 240-day period had not lapsed. Moreover, he
has no basis for claiming permanent and total disability benefits because he has not yet consulted
his doctor-of-choice.
In addition, it is unclear if respondent was in fact medically repatriated or that he returned home
under a finished contract. Respondent commenced his work aboard the vessel on October 4,
2008. He signed off from the vessel on July 12, 2009 (or July 13, 2009, as claimed by respondent)
and arrived in the country on July 15, 2009. At any rate, considering that petitioners
acknowledged that while still on the vessel, respondent complained of pain and numbness of
hand, and upon his return, they referred him to the company-designated doctor for treatment,
then we hold that petitioners considered respondent as a medically repatriated seafarer. Under
these circumstances, the pertinent provisions of the Labor Code on disability benefits, including
its Implementing Rules and Regulations, as well as those of the POEA-SEC apply here.
Accordingly, citing Vergara v, Hammonia Maritime Services, Inc., the Court in Magsaysay
Maritime Corporation v. National Labor Relations Commission harmonized the application of the
Labor Code, its Rules and Regulations and the POEA-SEC in the determination of permanent
and total disability in this manner:
[T]he 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 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.
Further, in Ace Navigation Co. v. Garcia and Carcedo v. Maine Marine Phils., Inc., the Court
pointed out that the 120 or 240-day period to determine the seafarer's disability or fitness to work
is reckoned from his repatriation.
Here, respondent reported to the company-designated physician within three days from his
arrival and was given medical attention. He was also referred to a physiatrist and to a surgeon for
his hand operation. The company-designated physiatrist later advised him to consult an
orthopedic specialist. Respondent, nonetheless, failed to abide by the rule that the company-
designated physician is to determine his fitness to return to work or the degree of his disability
within 240 days from his repatriation. As already discussed, respondent prematurely filed his
Complaint for disability benefits prior to the lapse of the 240-day period.
Not only did respondent prematurely file his Complaint, he reneged on his duties to continue his
treatment as necessary to improve his condition.
As we ruled in Magsaysay, the Court cannot blame petitioners for holding that respondent
abandoned his treatment. Respondent failed to reasonably explain his failure to report to the
company-designated physician after November 12, 2009 until January 9, 2010. The only clear
circumstance that transpired between these periods is that he already filed his Complaint on
November 23, 2009.
Under Section 20(D) of the POEA-SEC "[n]o compensation and benefits shall be payable in
respect of any injury, incapacity, disability or death of the seafarer resulting from his willful or
criminal act or intentional breach of his duties, provided however, that the employer can
prove that such injury, incapacity, disability or death is directly attributable to the seafarer."
Respondent was duty-bound to comply with his medical treatment, PT sessions, including the
recommended consultation to an orthopedic specialist in order to give the company-designated
doctor the opportunity to determine his fitness to work or to assess the degree of his disability.
His inability to continue his treatment after November 12, 2009 until January 9, 2010, without any
valid explanation proves that he neglected his corresponding duty to continue his medical
treatment. Consequently, respondent's inability to regularly return for his treatment caused the
regress of his condition, as shown by the statement of the company-designated doctor on January
9, 2010.
Moreover, on April 20, 2010, the company-designated physician reported that had respondent
"been cooperative with his treatment and shown interest in improving his medical condition, it
is possible to declare him fit to work on board as a fitter and in any capacity. For this reason, [he
advised] that the permanent unfitness clause does not apply in his case."
Furthermore, in his Affidavit dated September 10, 2011, the company-designated physiatrist, Dr.
Malaya, averred that respondent failed to report to him and to the company-designated doctor
for the completion of his PT sessions. He added that respondent was referred to him for re-
evaluation and resumption of therapy until March 8, 2010 but respondent did not report to him.
He also shared the view of the company-designated doctor that had respondent been cooperative
with his treatment and shown interest in improving his condition,, it was possible to declare him
fit to work as a fitter.
Respondent was well aware of the need for him to undergo and continue his PT sessions. He even
admitted during the grievance proceedings on his disability claim that he was advised to continue
his PT until March 15, 2010.
Indeed, respondent did not comply with the terms of the POEA-SEC. The failure of the company-
designated doctor to issue an assessment was not of his doing but resulted from respondent's
refusal to cooperate and undergo further treatment. Such failure to abide with the procedure
under the POEA-SEC results in his non-entitlement to disability benefits.
Given these, the Court finds that the CA erred in affirming the PVA Decision that respondent is
entitled to permanent and total disability benefits.
ALBERT C. AUSTRIA v. CRYSTAL SHIPPING, INC., AND/OR LARVIK SHIPPING A/S, AND
EMILY MYLA A. CRISOSTOMO
G.R. No. 206256, February 24, 2016
FACTS
Respondent Crystal Shipping, Inc., is a foreign juridical entity engaged in maritime business. It
is represented in the Philippines by its manning agent, and co-respondent herein, Larvik
Shipping A/S, a corporation organized and existing under Philippine laws.
Petitioner was hired by Crystal Shipping thru its manning agent, Larvik Shipping as Chief Cook.
His employment was to run for a period of eight months and he was to receive, inter alia, a basic
monthly salary of US$758.00 with an overtime pay of US$422.00 each month as evidenced by his
Contract of Employment. Under his contract, petitioner was covered by the Norwegian
International Ship Register (NIS) - CBA.
Prior to the execution of the contract, petitioner underwent a thorough Pre-Employment Medical
Examination (PEME) and after compliance therewith, he was certified as "fit to work" by the
company designated physician.
On 27 August 2008, petitioner commenced his work as Chief Cook on board M/V Yara Gas.
Sometime in the last week of September 2008, petitioner, while on board the vessel, started
suffering from chronic cough with excessive phlegm and experienced difficulty breathing. He
immediately reported his condition to the medical officer on board. Upon the arrival of the vessel
in Hamburg, Germany, petitioner was referred for medical examination and it was found that he
was suffering from "Bronchial Catarrh/Bronchitis; Pharnx Irritation. "4 After giving him proper
medication, the examining physician declared him "fit for duty" and so he resumed his work in
the vessel.
In January 2009, petitioner again complained of similar symptoms, excessive cough with phlegm
and difficulty breathing, and, was again referred for further medical examination in the
Netherlands. This time he was confined at ZorgSaam Hospital from 20 January 2009 to 12
February 2009 where he was diagnosed with "Dilated Cardiomyopathy secondary to Viral
Myocarditis," a condition which would require further medical treatment and management.
Considering the seriousness of his ailment, petitioner's repatriation back to the Philippines was
recommended by doctors.
Escorted by a physician, petitioner arrived in the Philippines on 14 February 2009 and was
immediately confined at the Metropolitan Medical Center. After a series of tests, it was found
that petitioner was suffering from "Dilated Cardiomyopathy, Bicuspid Aortic Stenosis, " rendering
him unfit for any sea duty.
Claiming that his illness that rendered him totally unfit for any sea duty is work-related,
petitioner sought for the payment of permanent disability benefits but respondents failed or
refused to acknowledge that they are liable under the CBA. This prompted petitioner to initiate
an action for recovery of permanent disability benefits in accordance with the NIS CBA, moral
and exemplary damages, attorney's fees and other benefits. Petitioner asserted that he was in
good health when he joined the vessel and assumed his duties as chief cook as shown by his
PEME. There is a high probability, however, that the extreme working conditions in the vessel,
the lifestyle on board, constant exposure to chemicals, intensive heat and extreme weather
changes caused to or aggravated his illness. He asserted that he is entitled to the amount of
US$110,000.00 as disability compensation under Article 12 of the NIS CBA.
For their part, respondents disavowed liability for the illness of petitioner citing the medical
report of the company designated physician that "Dilated Cardiomyopathy, Bicuspid Aortic
Stenosis" is a condition that is congenital in nature and is not caused or aggravated by his work
as a Chief Cook. They posited that due to non-exploratory nature of PEME, serious diseases that
require intensive test could not be discovered before the seafarer's employ. There is a high
probability therefore that petitioner could be suffering from the said ailment prior to his
engagement
ISSUE
Whether or not the illness which caused the repatriation of petitioner is an occupational disease
and thus compensable as permanent total disability under the circumstances.
RULING
Entitlement of seamen on overseas work to disability benefits is a matter governed, not only by
medical findings, but by law and by contract. The material statutory provisions are Articles 191 to
193 under Chapter VI (Disability Benefits) of the Labor Code, in relation with Rule X of the Rules
and Regulations Implementing Book IV of the Labor Code. By contract, the POEA-SEC, as
provided under Department Order No. 4, series of 2000 of the Department of Labor and
Employment, and the parties' CBA bind the seaman and his employer to each other.
For disability to be compensable under Section 20 (B) of the 2000 POEA-SEC, two elements must
concur: (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. In other words, to be
entitled to compensation and benefits under this 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.
The 2000 POEA-SEC defines "work-related injury" as "injury(ies) resulting in disability or death
arising out of and in the course of employment" and "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."
For an occupational disease and the resulting disability or death to be compensable, all of the
following conditions must be satisfied:
1. The seafarer's work must involve the risks described herein;

2. The disease was contracted as a result of the seafarer's exposure to the describe[d] risks;
3. The disease was contracted within a period of exposure and under such other factors
necessary to contract it; [and]
4. There was no notorious negligence on the part of the seafarer.
The ultimate question that needs to be addressed in the case at bar is whether or not the illness
which caused the repatriation of petitioner is an occupational disease and thus compensable as
permanent total disability under the circumstances.
We rule in the affirmative.
In dismissing the claim of petitioner that his ailment is compensable, the appellate court
disregarded the rulings of both the Labor Arbiter and the NLRC and tilted the scale in favor of
the employers who in turn, harped on the findings of the company-designated physician that the
condition of the petitioner is congenital in nature, and, that there is no way that it could be
contracted while he was under their employ.
We do not agree.
To justify the grant of extraordinary remedy of certiorari, the petitioner must satisfactorily show
that the court or quasi-judicial authority gravely abused the discretion conferred upon it. Grave
abuse of discretion connotes a capricious and whimsical exercise of judgment, done in a despotic
manner by reason of passion or hostility, the character of which being so patent and gross as to
amount to an evasion of positive duty or to a virtual refusal to perform the duty enjoined by or
to act all in contemplation of law.
In labor disputes, grave abuse of discretion may be ascribed to the NLRC when, inter alia, its
findings and conclusions are not supported by substantial evidence, or that amount of relevant
evidence which a reasonable mind might accept as adequate to justify a conclusion.
Gauged by the foregoing yardstick, the Court finds that the Court of Appeals committed a
reversible error in attributing grave abuse to the NLRC for awarding compensation to the
petitioner for his illness after the latter established his claim by substantial evidence. We find
that there is a cogent legal basis to conclude that petitioner has successfully discharged the
burden of proving that his condition was aggravated by his working condition.
For one, petitioner was employed by respondent as Chief Cook which constantly exposes him to
heat while preparing the food for the entire crew all throughout the day while he was under
employ. The steady and prolonged exposure to heat naturally causes exhaustion which could
unduly burden his heart and interfere with the normal functioning of his cardiovascular system.
In simple terms, petitioner's ailment called dilated cardiomyopathy is a condition in which the
heart's ability to pump blood is decreased because the heart's main pumping chamber, the left
ventricle, is enlarged and weakened. In petitioner's case, his dilated cardiomyopathy is caused by
a bicuspid aortic valve. Bicuspid aortic valve is an aortic valve that only has two leaflets, instead
of three. The aortic valve regulates blood flow from the heart into the aorta, the major blood
vessel that brings blood to the body.19 Bicuspid aortic valve is present at birth (congenital). An
abnormal aortic valve develops during the early weeks of pregnancy, when the baby's heart
develops. The cause of this problem is unclear, but it is the most common congenital heart
disease. It often runs in families.
Even if it were shown that petitioner's condition is congenital in nature, it does automatically
take his ailment away from purview of compensability. Pre-existence of an illness does not
irrevocably bar compensability because disability laws still grant the same provided seafarer's
working conditions bear causal connection with his illness. As succinctly pointed above,
petitioner's working environment as chef constantly exposed him to factors that could aggravate
his heart condition.
Compensability of an ailment does not depend on whether the injury or disease was pre-existing
at the time of the employment but rather if the disease or injury is work-related or aggravated
his condition. It is not necessary, in order for an employee to recover compensation, that he must
have been in perfect condition or health at the time he received the injury, or that he be free from
-disease. Every workman 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 the weakened condition aggravated by some injury which might not
hurt or bother a perfectly normal, healthy person. The degree of contribution of the employment
to the worsening of the seafarer's condition is not significant to the compensability of the illness,
thus:
"[W]e awarded benefits to the heirs of the seafarer therein who worked as radioman on board a
vessel; and who, after ten months from his latest deployment, suffered from bouts of coughing
and shortness of breath, necessitating open heart surgery. We found in said case that the
seafarer's work exposed him to different climates and unpredictable weather, which could trigger
a heart attack or heart failure. We likewise ruled in said case that the seafarer had served
the contract for a significantly long amount of time, and that his employment had
contributed, even to a small degree, to the development and exacerbation of the disease."
[Emphasis supplied]
Although the employer is not the insurer of the health of his employees, he takes them as he
finds them and assumes the risk of liability. The quantum of evidence required in labor cases to
determine the liability of an employer for the illness suffered by the employee under the POEA-
SEC is not proof beyond reasonable doubt but mere substantial evidence, xxx.
All told, petitioner having established through substantial evidence that his illness was
aggravated by his work condition, and hence, compensable, no grave abuse of discretion can be
imputed against the NLRC in upholding the Labor Arbiter's grant of disability benefits. For
reasons herein detailed, the Court finds that the decision of the NLRC is devoid of capriciousness
or whimsicality.
C.F. SHARP CREW MANAGEMENT,INC., RONALD AUSTRIA, and ABU DHABI

NATIONAL TANKER CO. vs. LEGAL HEIRS OF THE LATE GODOFREDO REPISO,
represented by his wife LUZVIMINDA REPISO
G.R. No. 190534, February 10, 2016
FACTS
On April 24, 2002, Godofredo Repiso (Godofredo) was hired as a Messman on board M/T Umm
Al Lulu by petitioner C.F. Sharp, a local manning agency, on behalf of its principal, petitioner
ADNATCO, a marine transportation company based in the United Arab Emirates. Godofredo and
petitioner Austria, as representative of petitioners C.F. Sharp and ADNATCO, signed a Contract
of Employment, which was approved by the Philippine Overseas Employment Administration
(POEA) on May 9, 2002.
Prior to embarkation, Godofredo underwent a pre-employment medical examination (PEME)

and was declared physically fit to work. Godofredo boarded M/T Umm Al Lulu on May 20, 2002.
Godofredo was repatriated in Manila on March 16, 2003. The next day, March 17, 2003, Godofredo
went to a medical clinic in Kawit, Cavite where he was examined by Doctor Cayetano G. Reyes,
Jr. (Dr. Reyes). Dr. Reyes diagnosed Godofredo with "Essential Hypertension" and advised
Godofredo to take the prescribed medication and rest for a week.
At about 10:00 in the morning on March 19, 2003, Godofredo was waiting for a ride when he
suddenly lost consciousness and fell to the ground. Good samaritans brought Godofredo to Del
Pilar Hospital where he was pronounced dead on arrival. Based on Godofredo’s Certificate of
Death, the causes for his death were as follows:
Immediate cause : Irreversible Shock

Antecedent cause : Acute Myocardial Infarction
Underlying cause : Hypertensive Heart Disease
Godofredo died leaving behind respondents as his legal heirs, namely, his wife, Luzviminda, and
three children, Marie Grace (20 years old), Gerald (17 years old), and Gretchen (13 years old).
On September 17, 2003, respondent Luzviminda, through her lawyer, sent a letter notifying
petitioner C.F. Sharp of Godofredo’s death and demanding the payment of death compensation,
children’s allowance and burial allowance in the total amount of US$106,000.00
Respondent Luzviminda sent another letter dated February 3, 2004 to petitioner C.F. Sharp
conveying her willingness to accept the amount of US$65,000.00 as compromise settlement.
However, respondent Luzviminda’s demand remained unheeded.
Thus, respondents filed with the NLRC a Complaint against petitioners for recovery of death
compensation benefits, burial and children’s allowances, moral and exemplary damages, and
attorney’s fees. The Complaint was docketed as NLRC-NCR Case No. (M)04-04-00916-00.
ISSUE
Whether or not Godofredo’s death is compensable.
RULING
Whether or not Godofredo’s death is compensable depends on the terms and conditions of his
Contract of Employment. The employment of seafarers, including claims for death benefits, is
governed by the contracts they sign at the time of their engagement. As long as the stipulations
in said contracts are not contrary to law, morals, public order, or public policy, they have the
force of law between the parties. Nonetheless, while the seafarer and his employer are governed
by their mutual agreement, the POEA Rules and Regulations require that the POEA-SEC be
integrated in every seafarer’s contract.
For a seafarer’s death to be compensable under the 1996 POEA-SEC, the Court explicitly ruled in
Inter-Orient Maritime, Inc. v. Candava that:
The prevailing rule under the 1996 POEA-SEC was that the illness leading to the
eventual death of seafarer need not be shown to be work-related in order to
be compensable, but must be proven to have been contracted during the term
of the contract. Neither is it required that there be proof that the working
conditions increased the risk of contracting the disease or illness. An injury or
accident is said to arise "in the course of employment" when it takes place
within the period of employment, at a place where the employee reasonably may
be, and while he is fulfilling his duties or is engaged in doing something incidental
thereto. (Emphases supplied, citations omitted.)
Herein respondents are entitled to the benefits they are claiming as it can be logically and
reasonably concluded from the particular circumstances in the case at bar that Godofredo
contracted the illness which eventually caused his death during the term of his contract or in the
course of his employment.
Respondents alleged, and petitioners did not refute, that Godofredo’s employment with
petitioner C.F. Sharp started way back in 1990. From then until his last employment with
petitioner C.F. Sharp in 2002-2003, there was no record of him suffering from hypertension
and/or heart disease. Before Godofredo boarded M/T Umm Al Lulu on May 20, 2002, he
underwent PEME and was declared fit to work. This negates petitioners’ claim that Godofredo
concealed a pre-existing illness. It is true that the Court had previously declared that the PEME
could not be relied upon to inform the employer/s of a seafarer’s true state of health, and there
were instances when the PEME could not have divulged the seafarer’s illness considering that the
examinations were not exploratory. Even so, as Labor Arbiter Anni and the Court of Appeals
observed in the instant case, Godofredo’s hypertension and/or heart disease could have been
easily detected by standard/routine tests included in the PEME, i.e., blood pressure test,
electrocardiogram, chest x-ray, and/or blood chemistry.
Godofredo had no previous record of hypertension and/or heart disease before he boarded M/T
Umm Al Lulu on May 20, 2002; but when he was repatriated at a port in Manila on March 16, 2003
and examined by Dr. Reyes on March 17, 2003, he was already diagnosed to be suffering from
"Essential Hypertension." On March 19, 2003, just three days after his repatriation, Godofredo
died and the underlying cause for his death was identified as "Hypertensive Heart Disease."
Taking into account these circumstances, the Court is convinced that Godofredo contracted
hypertension and/or heart disease during his term of employment with petitioners beginning
May 20, 2002 until his repatriation on March 16, 2003. In contrast, the Court is not swayed by
petitioners’ contention that the 10-month period was too short for Godofredo to have developed
his illness, which was totally unsubstantiated.
Besides, it bears to point out that the implementation of Section 20(E) of the 2000 POEA-SEC,
disqualifying a seafarer from any compensation and benefits because of concealment of a pre-
existing condition. was explicitly suspended by Memorandum Circular No. 11, series of 2000, and
the 1996 POEA-SEC contained no such provision.
Godofredo’s 10-month Contract of Employment was to end on March 20, 2003. Yet, Godofredo
was already repatriated on March 16, 2003 in Manila. Respondents allege that Godofredo was
repatriated for medical reasons because he was already experiencing continuous headaches and
body pains on board M/T Umm Al Lulu. Petitioners aver that Godofredo was merely repatriated
at a convenient port, allowed under Section 19(B) of the 2000 POEA-SEC.
Between the two claims as to the reason for Godofredo’s repatriation, that of the respondents is
more persuasive, especially considering that Godofredo, the very next day following his
repatriation, did not rest or spend time with his family, but immediately went to a medical clinic
to see a doctor. This could only mean that Godofredo was already not feeling well. In fact, Dr.
Reyes, who examined Godofredo on March 17, 2003, diagnosed him with "Essential Hypertension"
and advised him to take the prescribed medication and rest for a week; but only two days after,
on March 19, 2003, Godofredo already collapsed and died from his heart ailment. This sequence
of events establishes Godofredo’s ill state of health upon his repatriation in Manila on March 16,
2003.
The burden was thus shifted to petitioners to prove that Godofredo was only repatriated at a
convenient port. However, aside from their bare allegations, petitioners did not present any other
proof of their purported reason for Godofredo’s repatriation. Petitioners explain that they no
longer presented in evidence the ship’s logbook or master’s report since Godofredo did not
complain of or suffer any illness on board M/T Umm Al Lulu, hence, there was no such entry in
the ship’s logbook or any master’s report of such incident. The Court notes though that
petitioners had possession of and access to all logbooks and records of M/T Umm Al Lulu, and
presentation of the said logbooks and records would have been material to prove the actual
absence of any entry or report regarding Godofredo’s health while he was on board. Moreover,
it is difficult to believe that petitioners had absolutely no log entry or record regarding
Godofredo’s repatriation, whether for medical or any other reason. Godofredo could not have
disembarked from M/T Umm Al Lulu without express authority or consent from the master of
the ship or petitioners as Godofredo’s employers, and such authority or consent would have most
likely stated the justifying cause for the same. That petitioners did not present such logbooks and
records even gives rise to the presumption that something in said logbooks and records is actually
adverse to petitioners’ case.
It is important to determine definitively that Godofredo was repatriated for medical reasons
because Section 20(A)(1) of the 1996 POEASEC covered cases wherein the seafarer’s death
occurred "during the term of his contract." The same phrase could be found in Section 20(A)(1)
of the 2000 POEA-SEC, only this more recent version of the provision additionally required that
the death be "work-related." Strictly, medical repatriation of the seafarer at the point of hire
meant the termination of his employment. Nevertheless, in Canuel v. Magsaysay Maritime
Corporation, the Court adjudged that the heirs of a seafarer who died after his medical
repatriation could still recover the compensation and benefits provided in Section 20(A) of the
2000 POEA-SEC, reasoning as follows:
Applying the rule on liberal construction, the Court is thus brought to the
recognition that medical repatriation cases should be considered as an
exception to Section 20 of the 2000 POEA-SEC. Accordingly, the phrase "work-
related death of the seafarer, during the term of his employment contract"
under Part A (1) of the said provision should not be strictly and literally
construed to mean that the seafarer’s work-related death should have
precisely occurred during the term of his employment. Rather, it is enough
that the seafarer’s work-related injury or illness which eventually causes
his death should have occurred during the term of his employment. Taking
all things into account, the Court reckons that it is by this method of construction
that undue prejudice to the laborer and his heirs may be obviated and the State
policy on labor protection be championed. For if the laborer’s death was brought
about (whether fully or partially) by the work he had harbored for his master’s
profit, then it is but proper that his demise be compensated.
The Court herein considers medical repatriation an exceptional circumstance and allows the
heirs of the seafarer who died after he had been medically repatriated to recover the
compensation and benefits provided in Section 20(A) of the 1996 POEA-SEC. The phrase "death
of the seafarer during the term of his contract" in Section 20(A)(1) of the 1996 POEA-SEC should
not be strictly and literally construed to mean that the seafarer’s death should have occurred
during the term of his employment; it is enough that the seafarer’s work-related injury or illness
which eventually caused his death occurred during the term of his employment.
The insistence of petitioners on the post-employment medical examination of the seafarer by a

company-designated physician within three days from arrival at the point of hire is misplaced.
Said post-employment medical examination was required under Section 20(B)(3) of the 1996
POEA-SEC for compensation and benefits for a seafarer’s injury or illness; it was not a requisite
under Section 20(A) of the 1996 POEA-SEC for compensation and benefits for a seafarer’s death.
In addition, Section 20(B)(3) of the 1996 POEA-SEC itself allowed as an exception from said
requirement a seafarer who is physically incapacitated from complying with same. Apparently,
in the case at bar, Godofredo was already of poor health and weak physical condition upon his
repatriation on March 16, 2003, which necessitated his immediate visit to a nearby clinic the very
next day, on March 17, 2003. In any case, Godofredo still had until March 19, 2003 to see a
company-designated physician but he died on the same day of a cause ("Hypertensive Heart
Disease") directly linked to the illness ("Essential Hypertension") he developed during his term
of employment on M/T Umm Al Lulu and for which he was medically repatriated.
Equally unavailing in this case are the references made by the NLRC to the requirements for
compensable death from occupational diseases, listed under Section 32-A of the 2000 POEA-SEC.
However, Section 32 (Schedule of Disability or Impediment for Injuries Suffered and Diseases
Including Occupational Diseases or Illness Contracted) and Section 32-A (Occupational
Diseases) of the 2000 POEA-SEC could only be applied in relation to Section 20 (Compensation
and Benefits) of the same POEA-SEC, and as the Court previously declared herein, the use or
implementation of Section 20 of the 2000 POEA-SEC was suspended by POEA Memorandum
Circular No. 11, series of 2000. In the meantime, Section 20 of the 1996 POEA-SEC applied to
Godofredo’s case; and the 1996 POEA-SEC did not contain a provision corresponding to Section
32-A of the 2000 POEA-SEC. To apply Section 32-A of the 2000 POEA-SEC to Godofredo’s case
would be to impose additional conditions on the claim for compensation and benefits for his
death based on Section 20(A) of the 1996 POEA-SEC, which would be contrary to the rule on
liberal construction of the laws and contracts in favor of labor.
MARLOW NAVIGATION PHILS., INC., MARLOW NAVIGATION CO., LTD., W.

BOCKSTLEGEL REEDEREI (GERMANY), ORLANDO D. ALIDIO AND ANTONIO GALVEZ,
JR. v. WILFREDO L. CABATAY
G.R. No. 212878, February 01, 2016
FACTS
The respondent Wilfredo Cabatay (Cabatay) entered into a ten-month contract of employment
as able seaman with the petitioners Marlow Navigation, Philippines, Inc., (agency) and its
principal Marlow Navigation Co., Ltd., (Marlow Navigation), for the vessel M/V BBC OHIO. The
contract was supplemented by a collective bargaining agreement or the Total Crew Cost Fleet
Agreement (TCC-FA) between the International Workers Federation (ITF) and Marlow
Navigation. He boarded the vessel on November 23, 2009.
While on duty on December 30, 2009, Cabatay fell from a height of four meters in his work area;
his side, shoulder, and head were most affected by his fall. He was brought to a hospital in
Huangpu, China, where he was diagnosed with "Left l-4 Verterbra Transverse Bone broken
(accident)." He was declared unfit to work for 25 days. On January 7, 2010, he was medically
repatriated.
Cabatay arrived in Manila on January 8, 2010, and was immediately referred to the company
doctor, Dr. Dolores Tay (Dr. Tay), of the International Health Aide Diagnostic Services, Inc., for
examination and treatment. He underwent several tests, including a CT scan and a repeat
audiometry and MRI.
On March 19, 2010, Cabatay complained of right shoulder pain. On April 13, 2010, he underwent
surgery on the rotator cuff on his shoulder. After surgery, he missed several appointments with
Dr. Tay and failed to undergo his physiotherapy on time, starting it only on May 25, 2010. Earlier,
or on May 7, 2010, Dr. Tay gave Cabatay an interim disability assessment of Grade 10 for his
shoulder injury and Grade 3 for impaired hearing. She expected Cabatay's hearing and shoulder
problems to be resolved within three to six months, although he was still under treatment as of
June 3, 2010.
On June 9, 2010, Dr. Tay issued a combined 36% disability assessment for Cabatay based on the
compensation scale under the TCC-FA, thus: (1) 5% for communication handicap of severe to
total; (2) 2% for hearing handicap of mild to medium; (3) 3% compensation for each ear—
hampering tinnitus and distortion of hearing; (4) 8% for his spine injury with medium severe
fracture without reduction of mobility; and (5) 15% for his shoulder injury, with right shoulder
elevation up to a 90-degree angle.
Meantime, or on May 11, 2010, Cabatay filed a complaint against the petitioners for permanent
total disability compensation, sickness wages, damages, and attorney's fees. While he did not
dispute the company doctor's findings, he argued that he was entitled to permanent total
disability benefits since he had lost his employment (profession) due to his injury which, he
claimed, is compensated under the TCC-FA at US$125,000.00.
On record, upon his arrival in Manila on January 8, 2010, following his medical repatriation,
Cabatay was immediately referred to Dr. Tay, the company-designated physician, for
examination and treatment. He was under Dr. Tay's medical care and management for six
months or until June 9, 2010, when she gave him a combined 36% disability assessment. All this
time, he underwent several tests, a CT scan, audiometry and MRI, as well as therapy sessions, at
the petitioners' expense.
Cabatay did not object to Dr. Tay's assessment, yet he filed a claim for permanent total disability
compensation, which the labor arbiter granted declaring that he was entitled to full disability
benefits because he had lost opportunities for his employment/profession. On appeal, the NLRC
set aside the arbiter's decision and relied on Dr. Tay's disability assessment "in the absence of any
substantial proof in support of complainant's bare allegation of loss of profession." The CA, in
turn, upheld the arbiter's award, holding that since Cabatay was "disabled continuously for more
than 120 days, he is considered permanently disabled," and the "CBA provides that the seafarer is
entitled to full benefits even if he suffered less than 50% of the total disability under the schedule
so long as he is no longer fit for sea duty."
ISSUE
Whether or not Catabay is entitled to permanent total disability compensation.
RULING
The POEA-SEC and the TCC-FA govern Cabatay's employment with the petitioners. These two
instruments are the law between the parties as the Court emphasized in Philippine Hammonia
Ship Agency, Inc., v. Eulogio Dumadag.
Under the 2002 POEA-SEC, it is the company-designated physician who declares/establishes the
fitness to work or the degree of disability of a seafarer who is repatriated for medical reasons and
needs further medical attention. Thus, under Section 20 (B) 3, the seafarer is required to submit
to a post-employment medical examination by the company-designated physician.
On the other hand, under the TCC-FA, "The disability suffered by the Seafarer shall be determined
by a doctor appointed mutually by the Owners/Managers and the ITF, and the Owners/Managers
shall provide disability compensation to the Seafarer in accordance with the percentage specified in
the table below xxx" The TCC-FA also provides for a Compensation Scale under its Annex 3 upon
which Dr. Tay, the company-designated physician, based her assessment of Cabatay's disability.
There is no question that there had been compliance with Section 20 (B) of the POEA-SEC in
regard to Cabatay's post-employment medical examination. It is also established that he went
through an intensive treatment, including special medical procedures and therapy sessions,
under the care and management of Dr. Tay for six months or for 180 days within the 240-day
extended period allowed under the rules implementing the employees compensation law. At the
conclusion of his treatment and therapy program, Dr. Tay gave him a 36% disability assessment
pursuant to the compensation schedule under the TCC-FA.
As Cabatay himself admitted, he did not dispute Dr. Tay's findings and neither did he offer a
contrary finding. The NLRC therefore committed no grave abuse of discretion when it awarded
Cabatay disability compensation in accordance with Dr.Tay's assessment, there being no
disagreement on the assessment. Be this as it may, we are not unmindful of the fact that under
the TCC-FA, the seafarer's disability shall be determined by a doctor mutually appointed by the
employer (owner/manager) and the union (ITF). There was no such determination in this case,
either under Section 19.2 as cited above, or Section 19.3 under the TCC-FA as invoked by the
petitioners.
The absence of a disability assessment by a doctor chosen by the parties, however, will not
invalidate Dr. Tay's assessment, not only because Cabatay accepted Dr. Tay's findings, but also
because he refused the petitioners' proposal that his medical condition be referred to a mutually
appointed doctor for determination. Cabatay never denied this particular submission of the
petitioners.
The 120-day rule; loss of employment/profession
In reversing the NLRC decision, the CA declared that while Cabatay's treatment was extended
(up to a maximum of 240 days), it did not negate the fact that he was disabled continuously for
more than 120 days and therefore permanently disabled, especially when Dr. Tay had not declared
Cabatay fit to work within the extended period. This is a misappreciation of the significance of
the 120-day rule and the 240-day extended period as clarified in applicable rulings of the Court.
In Vergara v. Hammonia, the Court explained what to expect within this period in terms of the
seafarer's medical condition, thus:
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 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 medical condition.
(underscoring and emphasis ours)
The question of why no fit-to-work declaration was issued by Dr. Tay is answered by her
combined 36% disability assessment for Cabatay. The CA thus erred in holding that since his
disability went beyond 120 days, he had become permanently and totally disabled. Again, in
Vergara, the Court stressed: "This declaration of a permanent total disability after the initial 120
days of temporary disability cannot, however, be simply lifted and applied as a general rule for all
cases in all contexts. The specific context of the application should be considered, as we must do in
the application of all rulings and even of the law and of the implementing regulations."
Also, in Splash Philippines, Inc. v. Ruizo, the Court said that the 120-day rule "cannot be used as a
cure-all formula for all maritime compensation cases. Its application must depend on the
circumstances of the case, including especially compliance with the parties' contractual duties and
obligations as laid down in the POEA-SEC and/or their CBA, if one exists."
Since Dr. Tay had timely and duly made a disability assessment for Cabatay, the CA likewise erred
in affirming LA Cueto's opinion that he is entitled to permanent total disability benefits because
he had lost his employment/profession. Neither can Cabatay's submission that he had lost his
profession in contemplation of the TCC-FA prevail over Dr. Tay's assessment, not only because
he did not dispute the assessment, but also because he did not go through the procedure under
the agreement on how a disability is determined, permanent total or otherwise.
Needless to say, a seafarer cannot claim full disability benefits on his mere say-so in complete
disregard of the POEA-SEC and the CBA, which are, to reiterate, the law between the parties and
which they are duty bound to observe. And so it must be in Cabatay's case, especially when he
refused the petitioners' offer that his medical condition be referred to a mutually appointed
doctor under Section 19.3 of the TCC-FA, to determine whether, despite Dr. Tay's combined 36%
disability assessment under Annex 3 of the agreement, he is permanently unfit for further sea
service. Absent such a determination (certification) by a mutually appointed doctor, we hold that
Dr. Tay's assessment should stand.
VIOLETA BALBA vs.TIWALA HUMAN RESOURCES, INC.,

AND/OR TOGO MARITIME CORP.,
G.R. No. 184933, April 13, 2016
FACTS
Sometime in 1998, Rogelio entered into a 10-month contract of employment with Tiwala Human
Resources, Inc. for its foreign principal, Togo Maritime Corporation (respondents), wherein he
was employed as chief cook on board the vessel M/V Giga Trans. He was declared fit for work in
his pre-employment medical examination and boarded the vessel M/V Giga Trans on November
13, 1998.
Upon the expiration of his contract, Rogelio was repatriated to the Philippines in October 1999.
From October to November 1999, Rogelio was treated by Dr. Benito Dungo (Dr. Dungo) for
weakness and numbness of his left half body and lower extremities and was diagnosed to be
suffering from moderately severe diabetes.
In 2000, Rogelio was confined at the Seamen's Hospital and was found to have metastatic cancer.
As such, he sought disability compensation and benefits from the respondents but these were
denied.
Consequently, Rogelio filed on April 6, 2000 a complaint against the respondents for disability
benefits with damages and attorney's fees.
On April 28, 2000, however, Rogelio was admitted at the Philippine General Hospital for lung
cancer. He succumbed to his illness in July 2000. As a result of Rogelio's death, his complaint was
subsequently amended and his wife, Violeta Balba, and two children, Roy and Vienna Gracia,
were substituted as complaints.
ISSUE
Whether or not the petitioners are entitled to death and burial benefits on account of Rogelio's
death.
RULING
Taking into consideration that Rogelio was employed on November 13, 1998, it is the 1996 Revised
POEA-SEC that is considered incorporated in his contract of employment and is controlling for
purposes of resolving the issue at hand.
Section 20(A) of the 1996 Revised POEA-SEC provides that in order to avail of death benefits, the
death of the seafarer must be work-related and should occur during the effectivity of the
employment contract. The provision reads:
SECTION 20. COMPENSATION AND BENEFITS
A. COMPENSATION AND BENEFITS FOR DEATH

1. In case of death of the seafarer during the term of his contract, the employer shall
pay his beneficiaries the Philippine Currency equivalent to the amount of Fifty Thousand
US dollars (US$50,000) and an additional amount of Seven Thousand US dollars
(US$7,000) to each child under the age of twenty-one (21) but not exceeding four (4)
children, at the exchange rate prevailing during the time of payment.
xxxx
4. The other liabilities of the employer when the seafarer dies as a result of injury or illness
during the term of employment are as follows:
a. The employer shall pay the deceased's beneficiary all outstanding obligations due the
seafarer under this Contract.
b. The employer shall transport the remains and personal effects of the seafarer to the
Philippines at employer's expense except if the death occurred in a port where local
government laws or regulations do not permit the transport of such remains. In case
death occurs at sea, the disposition of the remains shall be handled or dealt with in
accordance with the master's best judgment. In all cases, the employer/master shall
communicate with the manning agency to advise for disposition of seafarer's remains.
c. The employer shall pay the beneficiaries of the seafarer the Philippine currency
equivalent to the amount of One Thousand US dollars (US$1,000) for burial expenses at
the exchange rate prevailing during the time of payment. (Emphases supplied)
Also, in Southeastern Shipping, et al. v. Navarra, Jr., the Court declared that in order to avail of
death benefits, the death of the employee should occur during the effectivity of the employment
contract. The death of a seaman during the term of employment makes the employer liable to
his heirs for death compensation benefits. Once it is established that the seaman died during the
effectivity of his employment contract, the employer is liable.
In the more recent case of Talosig v. United Philippine Lines, Inc., the Court again reiterated that
the death of a seafarer must have occurred during the term of his contract of employment for it
to be compensable.
In the present case, it is undisputed that Rogelio succumbed to cancer on July 4, 2000 or almost
ten (10) months after the expiration of his contract and almost nine (9) months after his
repatriation. Thus, on the basis of Section 20(A) and the above-cited jurisprudence explaining
the provision, Rogelio's beneficiaries, the petitioners, are precluded from receiving death
benefits.
Moreover, even if the Court considers the possibility of compensation for the death of a seafarer
occurring after the termination of the employment contract on account of a work-related illness
under Section 32(A) of the POEA-SEC, the claimant must still fulfill all the requisites for
compensability, to wit:

2. The disease was contracted as a result of the seafarer's exposure to the described risks;
3. The disease was contracted within a period of exposure and under such other factors necessary
to contract it;
In the present case, the petitioners failed to adduce sufficient evidence to show that Rogelio's
illness was acquired during the term of his employment with the respondents. Instead, what the
petitioners presented were medical certificate issued by Dr. Dungo dated November 12, 1999
attesting that Rogelio consulted him due to weakness and numbness of Rogelio's left half body
and lower extremities and medical examination results in March and April 2000 showing that he
had cancer. The Court, however, finds it not sufficient proof to show a causal connection or at
least a work relation between the employment of Rogelio and his cancer. In the absence of
substantial evidence, Rogelio's working conditions cannot be assumed to have increased the risk
of contracting cancer.
In Medline Management, Inc., et al. v. Roslinda, et al., the Court held:

Indeed, the death of a seaman several months after his repatriation for illness does
not necessarily mean that: a) the seaman died of the same illness; b) his working
conditions increased . the risk of contracting the illness which caused his death;
and c) the death is compensable, unless there is some reasonable basis to support
otherwise. x x x.
In the instant case, Rogelio was repatriated not because of any illness but because his contract of
employment expired. There is likewise no proof that he contracted his illness during the term of
his employment or that his working conditions increased the risk of contracting the illness which
caused his death.
SCANMAR MARITIME SERVICES, INCORPORATED, CROWN SHIPMANAGEMENT INC.,

LOUIS DREYFUS ARMATEURS AND M/T ILE DE BREHAT AND/OR MR. EDGARDO
CANOZA vs. EMILIO CONAG
G.R. No. 212382, April 6, 2016
FACTS
Since 2002, respondent Emilio A. Conag (Conag) had been deployed annually by petitioner
Scanmar Maritime Services, Inc. (Scanmar) as a bosun's mate aboard foreign vessels owned or
operated by its principal, Crown Ship Management, Inc./Louis Dreyfus Armateurs SAS (Crown
Ship). On March 27, 2009, he was again deployed as a bosun's mate aboard the vessel MIT Ile de
Brehdt. According to him, his job entailed lifting heavy loads and occasionally, he would skid and
fall while at work on deck. On June 19, 2009, as he was going about his deck duties, he felt
numbness in his hip and back. He was given pain relievers but the relief was temporary. Two
months later, the pain recurred with more intensity, and on August 18, 2009 he was brought to a
hospital in Tunisia.
On August 25, 2009, Conag was medically repatriated. Upon arrival in Manila on August 27, 2009,
he was referred to the company-designated physicians at the Metropolitan Medical Center
(MMC), Marine Medical Services, where he was examined and subjected to laboratory
examinations.
The laboratory tests showed that Conag had "Mild Lumbar Levoconvex Scoliosis and Spondylosis;
Right SJ Nerve Root Compression," with an incidental finding of "Gall Bladder Polyposis v.
Cholesterolosis." For over a period of 95 days, he was treated by the company-designated
physicians, Drs. Robert Lim (Dr. Lim) and Esther G. Go (Dr. Go), and in their final medical report
dated December 1, 2009, they declared Conag fit to resume sea duties. Later that day, Conag
signed a Certificate of Fitness for Work, written in English and Filipino. Conag claimed that he
was required to sign the certificate as a condition sine qua non for the release of his accumulated
sick pay. According to him, however, his condition deteriorated while he was undergoing
treatment. On February 18, 2010, he filed a complaint against Scarunar, Crown Ship and Edgardo
Canoza (collectively, petitioners) seeking full and permanent disability benefits, among others.
He also consulted another doctor, Dr. Manuel C. Jacinto, Jr. (Dr. Jacinto), at Sta. Teresita General
Hospital in Quezon City, who on March 20, 2010 issued a certificate stating that his "condition
did not improve despite medicine and that his symptoms aggravated due to his work which
entails carrying of heavy loads." Dr. Jacinto then assessed Conag as unfit to go back to work as a
seafarer.
ISSUES
Whether or not Conag is entitled to his claims for permanent and total disability benefits.
RULING
Seafarer's right to disability benefits
The relevant legal provisions governing a seafarer's right to disability benefits, in addition to the
parties' contract and medical findings, are Articles 191 to 193 of the Labor Code and Section 2,
Rule X of the Amended Rules on Employee Compensation. The pertinent contracts are the
POEA-SEC, the CBA, if any, and the employment agreement between the seafarer and his
employer. To summarize and harmonize the pertinent provisions on the establishment of a
seafarer's claim to disability benefits, the Court held in Vergara v. Hammonia Maritime Services,
Inc., et al. that:
[T]he seafarer, upon sign-off from his vessel, must report to the company-designated physician
within three (3) days from arrival for diagnosis and treatment.1âwphi1 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 [-SEC] 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.
(Citations omitted and italics in the original)
In C.F Sharp Crew Management, Inc., et al. v. Taok, the Court enumerated the conditions which
may be the basis for a seafarer's action for total and permanent disability benefits, as follows:
(a) [T]he company-designated physician failed to issue a declaration as to his fitness to engage
in sea duty or disability even after the lapse of the 120-day period and there is no indication that
further medical treatment would address his temporary total disability, hence, justify an
extension of the period to 240 days; (b) 240 days had lapsed without any certification being issued
by the company-designated physician; (c) the company-designated physician declared that he is
fit for sea duty within the 120-day or 240-day period, as the case may be, but his physician of
choice and the doctor chosen under Section 20-B(3) of the POEA-SEC are of a contrary opinion;
(d) the company-designated physician acknowledged that he is partially permanently disabled
but other doctors who he consulted, on his own and jointly with his employer, believed that his
disability is not only permanent but total as well; (e) the company-designated physician
recognized that he is totally and permanently disabled but there is a dispute on the disability
grading; (f) the company-designated physician determined that his medical condition is not
compensable or work-related under the POEA-SEC but his doctor-of-choice and the third doctor
selected under Section 20-B(3) of the POEA-SEC found otherwise and declared him unfit to work;
(g) the company-designated physician declared him totally and permanently disabled but the
employer refuses to pay him the corresponding benefits; and (h) the company-designated
physician declared him partially and permanently disabled within the 120-day or 240-day period
but he remains incapacitated to perform his usual sea duties after the lapse of the said periods.
Incidentally, in the recent case of Magsaysay Maritime Corporation v. Simbajon, the Court has
mentioned that an amendment to Section 20-A(6) of the POEA-SEC, contained in POEA
Memorandum Circular No. 10, series of 2010,39 now "finally clarifies" that "[f]or work-related
illnesses acquired by seafarers from the time the 2010 amendment to the POEA-SEC took effect,
the declaration of disability should no longer be based on the number of days the seafarer was
treated or paid his sickness allowance, but rather on the disability grading he received, whether
from the company-designated physician or from the third independent physician, if the medical
findings of the physician chosen by the seafarer conflicts with that of the company-designated
doctor. "
Conag failed to comply with Section 20-B(3) of the PO EA-SEC
On December 1, 2009, after 95 days of therapy, Conag was pronounced by the company
designated doctors as fit to work. Later that day, he executed a certificate, in both English and
Filipino, acknowledging that he was now fit to work. On December 5, 2009, he left for his home
province of Negros Oriental, as he told his employers in his letter dated February 9, 2010, wherein
he expressed his desire to be redeployed. He told them that during his vacation he was able to
engage in a lot of activities such as walking around his neighborhood four times a week,
swimming two times a week, weightlifting three times a week, driving his car on Saturdays for
one hour, riding his motorbike five times a week, playing basketball every Sunday, and fishing
and doing some house repairs when he had the time.
Interestingly, however, on February 18, 2010, a mere nine days after his letter, Conag filed his
complaint with the LA for disability benefits, presumably after he was told that he would not be
rehired, although the reasons for his rejection are nowhere stated. It is not alleged that before he
filed his complaint, he first sought payment of total disability benefits from the petitioners. In
fact, it was only on March 20, 2010, three months after the petitioners declared him fit to work,
that Conag obtained an assessment of unfitness to work from a doctor of his choice, Dr. Jacinto.
Thus, when he filed his complaint for disability benefits, he clearly had as yet no medical evidence
whatsoever to support his claim of permanent and total disability.
But even granting that his afterthought consultation with Dr. Jacinto could be given due
consideration, it has been held in Philippine Hammonia Ship Agency, Inc. v. Dumadag, and
reiterated in Simbajon, that under Section 20-B(3) of the POEA-SEC, the duty to secure the
opinion of a third doctor belongs to the employee asking for disability benefits. Not only
did Conag fail to seasonably obtain an opinion from his own doctor before filing his complaint,
thereby permitting the petitioners no opportunity to evaluate his doctor's assessment, but he
also made it impossible for the parties to jointly seek the opinion of a third doctor precisely
because the petitioners had not known about Dr. Jacinto's opinion in the first place. Indeed, three
months passed before Conag sought to dispute the company-designated physicians' assessment,
and during this interval other things could have happened to cause or aggravate his injury. In
particular, the Court notes that, after he collected his sick wage, Conag spent two months in his
home province and engaged in various physical activities.
Conag has no factual medical basis for his claim of permanent disability benefits
According to the CA, there is no dispute that Conag suffered from spinal injuries designated as
"Mild Lumbar Levoconvex Scoliosis and Spondylosis; Right S1 Nerve Root Compression," with an
incidental finding of "Gall Bladder Polyposis v. Cholesterolosis, " on account of his job as a bosun's
mate, which is "associated with working with machinery, lifting heavy loads and cargo." The CA
also found that he sustained his injuries during his employment with the petitioners.
The Court disagrees.
A review of the petitioners' evidence reveals that both the CA and the LA glossed over vital facts
which would have upheld the fitness to work assessment issued by the company-designated
physicians. The petitioners cited a certification by the ship master, 4 which Conag has not denied,
that the ship's logbook carried no entry whatsoever from March 28 to August 25, 2009 of any
accident on board in which Conag could have been involved. Instead, Conag's medical
repatriation form shows that he was sent home because of a "big pain on his left kidney, kidney
stones." In their final report dated December 1, 2009, Drs. Lim and Go of the MMC certified that
he was first "cleared urologic-wise" upon his repatriation. The NLRC also noted that Conag
mentioned no particular incident at work on deck which could have caused his spinal pain.
To rule out any spinal injury, pertinent tests were nevertheless conducted, resulting in a diagnosis
of "Mild Lumbar Levoconvex Scoliosis and Spondylosis; Right S1 Nerve Root Compression," with an
incidental finding of "Gall Bladder Polyposis v. Cholesterolosis." Attached to the report of Drs. Lim
and Go is a certificate, also dated December 1, 2009, issued by Dr. William Chuasuan, Jr. (Dr.
Chuasuan), Orthopedic and Adult Joint Replacement Surgeon also at MMC, who attended to
Conag, that he had "Low Back Pain; Herniated Nucleus Pulposus, L5-SJ, Right. " In declaring Conag
fit to return to work, Dr. Chuasuan noted that he was now free from pain and he had regained
full range of trunk movement. He noted "Negative Straight Leg Raising Test. Full trunk range
of motion, (-) pain. Fit to return to work.’’
Even considering the inherent merits of the medical certificate issued by Dr. Jacinto on March
20, 2010, the NLRC did not hide its suspicion that his certification was not the result of an honest,
bona fide treatment of Conag, but rather one issued out of a short one-time visit. It noted that
Dr. Jacinto issued a pro-forma medical certificate, with the blanks filled in his own hand. Dr.
Jacinto certified that Conag's condition "did not improve despite medicine," yet nowhere did he
specify what medications, therapy or treatments he had prescribed in arriving at his unfit-to-
work assessment, nor when and how many times he had treated Conag, except to say, vaguely,
"from March 2010 to present," "present" being March 20, 2010, the date of his certificate. No
laboratory and diagnostic tests and procedures, if any, were presented which could have enabled
him to diagnose him as suffering from lumbar hernia or "Herniated Nucleus Pulposus, L5-Sl,
Right" as the cause of his permanent disability. There is no proof of hospital confinement,
laboratory or diagnostic results, treatments and medical prescriptions shown which could have
helped the company-designated physicians in re-evaluating their assessment of Conag 's fitness.
When Dr. Jacinto said that "[Conag's] symptoms [were] aggravated due to his work which entails
carrying heavy loads," he obviously relied merely on Conag's account about what allegedly
happened to him aboard ship nine months earlier. This Court is thus inclined to concur with the
NLRC that on the basis solely of Conag's story, Dr. Jacinto made his assessment that he was
"physically unfit to work as a seafarer."
In Coastal Safeway Marine Services, Inc. v. Esguerra, this Court rejected the medical certifications
upon which the claimant-seaman anchored his claim for disability benefits, for being
unsupported by diagnostic tests and procedures which would have effectively disputed the
results of the medical examination in a foreign clinic to which he was referred by his employer.
In Magsaysay Maritime Corporation and/or Dela Cruz, et al. v. Velasquez, et al., the Court brushed
aside the evidentiary value of a recommendation made by the doctor of the seafarer which was
"based on a single medical report which outlined the alleged findings and medical history" of the
claimant-seafarer. In Montoya v. Transmed Manila Corporation/Mr. Ellena, et al. the Court
dismissed the doctor's plain statement of the supposed work-relation/work-aggravation of a
seafarer's ailment for being "not supported by any reason or proof submitted together with the
assessment or in the course of the arbitration. "
In Dumadag, where the seafarer's doctor examined him only once, and relied on the same medical
history, diagnoses and analyses produced by the company-designated specialists, it was held that
there is no reason for the Court to simply say that the seafarer's doctor's findings are more reliable
than the conclusions of the company-designated physicians.
No showing that "Mild Lumbar Levo convex Scoliosis and Spondylosis" is a serious spinal
injury that may result in permanent disability
The Court finds it significant that both the LA and the CA concluded, on the basis alone of a
diagnosis of "Mild Lumbar Levoconvex Scoliosis [left curvature of the spinal column in the lower
back, Ll to LS] and Spondylosis; Right SJ Nerve Root Compression," that Conag suffered serious
spinal injuries which caused his total disability. Nowhere is the nature of this injury or condition
described or explained, or that it could have been the result of strain or an accident while Conag
was aboard ship, not to mention that it was only a "mild" case. Dr. Chuasuan noted in his
December 1, 2009 report that Conag was now free from pain and had regained full range of trunk
movement: "Negative Straight Leg Raising Test. Full trunk range of motion, (-) pain. Fit to return
to work." For 95 days, Conag underwent therapy and medication, and Dr. Chuasuan's final
Lasegue 's sign test to see if his low back pain had an underlying herniated disk (slipped disc) was
negative.
Apparently, then, Conag's back pain had been duly addressed. He himself was able to attest that
back home from December 2009 to February 2010 he was able to engage in various normal
physical routines. Concerning the LA's observation ,of his alleged deteriorated physical and
medical condition, and therefore his unfitness to return to work, let it suffice that the LA's own
opinion as to the physical appearance of Conag is of no relevance in this case, as it must be stated
that he is not trained or authorized to make a determination of unfitness to work from the mere
appearance of Conag at the arbitral proceedings.
ANDRES L. DIZON v. NAESS SHIPPING PHILIPPINES, INC. AND DOLE UK (LTD.)

G.R. No. 201834, June 01, 2016
FACTS
Since 1976, respondents Naess Shipping Phils. Inc. and DOLE UK (Ltd.) hired petitioner Andres
L. Dizon as cook for its various vessels until the termination of his contract in 2007.
On March 6, 2006, Dizon was hired as Chief Cook and boarded DOLE COLOMBIA.
Dizon disembarked after completing his contract on February 14, 2007. He then went on a
vacation, and was called for another employment contract after a month.
When he underwent pre-employment medical examination in March 2007, he was declared unfit
for sea duties due to uncontrolled hypertension and coronary artery disease as certified by the
doctors of the Marine Medical and Laboratory Clinic (MMLC). He was referred to undergo stress
test and electrocardiogram (ECG). He then went to PMP Diagnostic Center Inc. for diagnostic
tests. It was also recommended that he undergo Angioplasty. His treadmill stress test showed
that he had Abnormal Stress Echocardiography.
Unconvinced with the doctor's declaration of unfitness, Dizon went to the Seamen's Hospital
and submitted himself for another examination.
The result indicated that he was fit for sea duty. He returned to MMLC and requested for a re-
examination, but the same was denied.
In November 2008, Dizon filed a complaint before the Department of Labor and Employment,
but subsequently withdrew the same.
On January 6, 2009, Dizon filed a complaint against respondents for payment of total and
permanent disability benefits, sickness allowance, reimbursement of medical, hospital and
transportation expenses, moral damages, attorney's fees and interest before the Labor Arbiter
(LA).
Claiming that he is entitled to permanent total disability benefit, Dizon alleged that he incurred
his illness while on board the respondents' vessel. He claimed that his working conditions on
board were characterized by stress, heavy work load, and over fatigue. He averred that Dr. Marie
T. Magno re-evaluated his actual medical condition on February 16, 2009 and declared him unfit
to resume his work as seafarer since his heart condition is unable to tolerate moderate to severe
exertions.
Dizon asserted that he disclosed his hypertension prior to his last contract in 2006, but was
certified fit for duty for the nine-month employment contract.
For their part, respondents disavowed liability for Dizon's illness maintaining that he finished
and completed his contract on board their vessel Dole Colombia without any incident, and that
his sickness was not work-related. They rejected the redeployment of Dizon since he was declared
unfit for sea duty in his pre-employment medical examination. Respondents claimed that they
were only exercising their freedom to choose which employees to hire.
ISSUE
Whether the petitioner is entitled to disability benefits.
RULING
We answer in the negative and deny the instant petition.

Dizon asseverates that his right to claim total and permanent disability benefits is not forfeited
when he failed to submit himself to a post-employment medical examination before the
company-designated doctor within three working days upon his arrival because such failure to
comply would only forfeit his claims for the 120 days sickness allowance.
The law specifically declares that failure to comply with the mandatory reporting requirement
shall result in the seafarer's forfeiture of his right to claim benefits thereunder. In Coastal Safeway
Marine Services, Inc. v. Esguerra, this Court expounded on the mandatory reporting requirement
provided under the POEA-SEC and the consequence for failure of the seaman to comply with the
requirement, viz.:
The foregoing provision has been interpreted to mean that it is the company-designated
physician who is entrusted with the task of assessing the seaman's disability, whether
total or partial, due to either injury or illness, during the term of the hitter's employment.
Conccdedly, this does not mean that the assessment of said physician is final, binding or
conclusive on the claimant, the labor tribunal or the courts. Should he be so minded, the seafarer
has the prerogative to request a second opinion and to consult a physician of his choice regarding
his ailment or injury, in which case the medical report issued by the latter shall be evaluated by
the labor tribunal and the court, based on its inherent merit. For the seaman's claim to
prosper, however, it is mandatory that he should be examined by a company-designated
physician within three days from his repatriation. Failure to comply with this mandatory
reporting requirement without justifiable cause shall result in forfeiture of the right to
claim the compensation and disability benefits provided under the POEA-SEC.
Moreover, that the three-day post employment medical examination is mandatory brooks no
argument, as held in Interorient Maritime Enterprises, Inc. v. Creer:
The rationale for the rule [on mandatory post-employment medical examination within three
days from repatriation by a company-designated physician] is that reporting the illness or
injury within three days from repatriation fairly makes it easier for a physician to
determine the cause of the illness or injury. Ascertaining the real cause of the illness or
injury beyond the period may prove difficult. To ignore the rule might set a precedent with
negative repercussions, like opening floodgates to a limitless number of seafarers claiming
disability benefits, or causing unfairness to the employer who would have difficulty determining
the cause of a claimant's illness because of the passage of time. The employer would then have
no protection against unrelated disability claims.
In the past, this Court repeatedly denied the payment of disability benefits to seamen who failed
to comply with the mandatory reporting and examination requirement. Thus, the three-day
period from return of the seafarer or sign-off from the vessel, whether to undergo a post-
employment medical examination or report the seafarer's physical incapacity, should always be
complied with to determine whether the injury or illness is work-related.
To the mind of this Court, Dizon failed to substantiate his entitlement to disability benefits for a
work-related illness under the POEA-SEC. It appears from the records that Dizon did not submit
himself to a post employment medical examination within three days from his arrival after
completing his last contract with the respondents. Dizon does not proffer an explanation or
reason for his failure to comply with the said mandatory requirement given that he claims that
his illness purportedly occurred during the term of his contract.
Instead, Dizon alleges that the failure to comply with the mandatory reporting and examination
requirement merely forfeits his claim for sickness allowance. To substantiate his claim, he
invokes the following rules in statutory construction: (a) Courts should not incorporate matters
not provided in law by judicial ruling; (b) The court must look into the spirit of the law or the
reason for it in construing a statute; (c) When the language admits of more than one
interpretation that which tends to give effect to the manifest object of the law should be adopted;
and (d) Statutes must be construed to avoid injustice.
We find Dizon's allegation that the terms "above benefits" in Section 20(B), paragraph 3 of POEA-
SEC refer only to sickness compensation, thus, the mandatory reporting requirement is
applicable only to claim for sickness allowance specious
In fine, this Court finds Dizon's failure to comply with the three-day post-employment medical
examination fatal to his cause. We cannot overemphasize that failure to comply with the
mandatory reporting requirement without justifiable cause shall result in forfeiture of the right
to claim the compensation and disability benefits provided under the POEA-SEC, thus, not
confined to claim for sickness compensation mentioned in Section 20(B), paragraph 3 of the 2000
POEA-SEC.
Dizon asserts that his coronary artery disease is work-related given that his pre-employment
medical examination was less than a month since his repatriation. He alleges that the medical
records that respondents presented did not indicate that his illness has been declared by the
company-designated doctor as not work-related. Dizon insists that the working conditions
prevailing during his employment on board the vessel are characterized, among others, by stress,
heavy workload, over-fatigue.
It is stressed that Dizon's repatriation was due to expiration of his employment contract and not
because of medical reasons. His coronary artery disease which rendered him unfit for sea duty
was diagnosed during a pre-employment medical examination and not in a post-employment
medical examination as provided by law.
It is crucial that Dizon present concrete proof showing that he indeed acquired or contracted the
illness which resulted in his disability during the term of his employment contract. Other than
his uncorroborated and self-serving allegation that his ailment was work-related because his pre-
employment medical examination was only less than a month from his last contract, Dizon failed
to demonstrate that his illness developed under any of the conditions set forth in the POEA-SEC
for the said to be considered as a compensable occupational disease.
Records are bereft of evidence to establish that Dizon, being subjected to strain at work as a Chief
Cook, manifested any symptoms or signs of heart illness in the performance of his work during
the term of his contract, and that such symptoms persisted. Although his hypertension was
known to the respondents, there was no evidence to prove that the strain caused by Dizon's work
aggravated his heart condition. There was no proof that he reported his illness while on board
and after his repatriation. He did not present any written note, request, or record about any
medical check-up, consultation or treatment during the term of his contract.
While this Court sympathizes with Dizon's predicament, we are, however, constrained to deny
the instant petition for failing to establish by substantial evidence his entitlement to disability
benefits, having failed to undergo a post-employment medical examination as required under
the law without valid or justifiable reason, and to establish that his illness was contracted during
the term of his contract and that the same was work-related. Since it is established that Dizon is
not entitled to disability benefits, it follows that he is also not entitled to any claim for moral and
exemplary damages.
CARLO F. SUNGAvs.VIRJEN SHIPPING CORPORATION, NISSHO ODYSSEY SHIP

MANAGEMENT PTE. LTD., and/or CAPT. ANGEL ZAMBRANO
When an employee’s injury was the result of the accidental slippage in handling of the 200-
kilogram globe valve, such employee is eligible for disability benefits under the Collective Bargaining
Agreement executed between his employer and its union.
Facts:
Virjen Shipping Corporation (Virjen), acting in behalf of its foreign principal, Nissho
Odyssey Ship Management Pte. Ltd., entered into a contract of employment with Sunga. Under
the contract, Sunga would be working as a fitter on board the ocean-going vessel MT Sunway.
As a registered member of the Associated Marine Officers’ and Seamen’s union of the
Philippines (AMOSUP), Sunga’s employment was covered by the IBF JUS/AMOSUP-IMMAJ
Collective Bargaining Agreement (CBA) executed between Virjen and Nissho Odyssey, All Japan
Seamen’s Union and AMOSUP.
While MT Sunway was docked at Singapore, Sunga, together with two other oilers, was
assigned to change MT Sunway’s globe valves. Aside from lifting the 200-kilogram globe valve from
the lower floor of the engine room to its installing position, Sunga also has to bear its entire weight
while it was being positioned by the other oilers. Unfortunately, one of the oilers lost his grip,
causing the whole weight of the globe valve to crash on Sunga. At that instant, he felt his back
snap, causing intense pain at his lower back which persisted for several days. Unable to even stand
up just to go to the bathroom, Sunga was forced to request for repatriation.
The doctor who examined Sunga, issued a medical certificate recommending a Grade 8
disability (Moderate rigidity or 2/3 loss of motion or lifting power of the trunk) based on the
Philippine Overseas Employment Administration (POEA) Standard Employment Contract for
Seafarers. Dr. Cruz also issued another medical certificate recommending a disability grading of
25% (Back pains with considerable reduction of mobility) in accordance with the parties’ CBA.
On the strength of these two certificates, Virjen immediately offered Sunga the amount of
in accordance with the POEA Standard Employment Contract for Seafarers, as full settlement for
the latter’s disability benefits. However, Sunga rejected the offer; he demanded instead that his
disability benefits be based on the disability grading of 25%, pursuant to the provisions of the
parties’ CBA.
Virjen denied Sunga’s demand stating that it had no liability to pay Sunga any disability
benefits under the CBA. Virjen claimed that the CBA requires that for permanent disability to be
compensable, the disability should be the result of an accident incurred during the course of the
seafarer’s employment. Virjen argued that Sunga failed to present any proof that his disability
was indeed the result of an accident. It was simply an illness or an anatomical defect.
Hence, Sunga filed a complaint before the NLRC against Virjen for disability benefits as
stated in the parties’ CBA (not under the POEA Standard Employment Contract for Seafarers).
Issue:
Whether Sunga is eligible for disability benefits under the parties’ CBA since he had
incurred injury, by accident, in the performance of his duties
Ruling:
Yes.
The Court ruled that an accident pertains to an unforeseen event in which no fault or
negligence attaches to the defendant. It is "a fortuitous circumstance, event or happening; an
event happening without any human agency, or if happening wholly or partly through human
agency, an event which under the circumstances is unusual or unexpected by the person to whom
it happens.
In the present case, Sunga did not incur the injury while solely performing his regular
duties; an intervening event transpired which brought upon the injury. The two other oilers who
were supposed to help carry the weight of the 200-kilogram globe valve lost their grasp of the
globe valve. As a result, Sunga’s back snapped when the entire weight of the item fell upon him.
The sheer weight of the item is designed not to be carried by just one person, but as was observed,
meant to be undertaken by several men and expectedly greatly overwhelmed the physical limits
of an average person. Notably, this incident cannot be considered as foreseeable, nor can it be
reasonably anticipated. Sunga’s duty as a fitter involved changing the valve, not to routinely carry
a 200-kilogram globe valve singlehandedly. The loss of his fellow workers’ group was also
unforeseen in so far as Sunga was concerned.
Since Sunga encountered an accident on board MT Sunway, Sunga's disability benefits

should fall within the coverage of the parties' CBA, which provides:
Article 28: Disability

28.1 A seafarer who sutlers permanent disabilitv as a result of an accident whilst in the
employment of the Company regardless of fault, including accidents occurring while traveling to
or from the ship, and whose ability to work as a seafarer is reduced as a result thereof, but
excluding permanent disability due to willful acts, shall in addition to sick pay, be entitled to
compensation according to the provisions of this Agreement.
REMEDIOS O. YAP vs. ROVER MARITIME SERVICES CORPORATION, MR. RUEL

BENISANO and/or UCO MARINE CONTRACTING W.L.L.
The records would reveal that Remedios Yap failed to prove by substantial evidence that the
death of her husband occurred during the term of his employment contract and that the cause of
death was work-related. There is no established link connecting Dovee Yap’s accidental slip to the
lung cancer and pneumonia that killed him. Neither can it be said that Dovee Yap’s working
conditions increased the risk of contracting the disease for which he died. In order for the
beneficiaries of a seafarer to be entitled to death compensation from the employer, it must be proven
that the death of the seafarer (1) is work-related; and (2) occurred during the term of his contract.
Facts:
The deceased, Dovee M. Yap, was a seafarer who had been employed by Rover Maritime
Services Corporation, its foreign principal, UCO-Marine Contracting W. L. L., and RuelBenisano,
in various capacities under different contracts of employment continuously for a period of ten
years. In his last contract with Rover, he was hired as Third Mate on board vessel UCO XX for a
period of one year with a basic monthly salary of Six Hundred Dollars. He boarded the vessel on
July 23, 2005. On July 23, 2006, the last day of Dovee Yap’s contract, he met an accident. While
inspecting a lifeboat, he slipped and hit his back on the steel lifeboat ladder. He was brought to
a hospital in Bahrain and was confined thereat for two weeks. Dovee Yap was repatriated to the
Philippines. He was admitted at the Doctors Medical Center in Iloilo City for three weeks for
further treatment. Dovee Yap was again confined at the Western Visayas Medical Center, with
the diagnosis of "squamous cell carcinoma of the lungs with metastasis to the spine and probably
the brain."
Dovee Yap filed against Rover a complaint for permanent disability benefits, sick wages,
reimbursement of hospital, medical, and doctor’s expenses, actual, moral and exemplary
damages, and attorney’s fees. During the pendency of the case, Dovee Yap died of "Multiple
Organ Failure Secondary To Pulmonary Squamous Cell CA With Distant Metastasis And
Obstructive Pneumonia Secondary To Electrolyte Imbalance Secondary To Gastric Ulcer
Secondary To S/P Radio Therapy." His widow, Remedios O. Yap, substituted him as party-
complainant and the claim for disability benefits was then converted into a claim for death
benefits. On February 28, 2008, the Labor Arbiter dismissed the Complaint for lack of merit. The
NLRC reversed the Labor Arbiter’s Decision and ordered Rover to pay Yap. The CA reversed the
ruling of the NLRC in its Decision. Hence, the present petition.
Issue:
Whether or not the Remedios is entitled to compensation for the death of her husband,
Dovee Yap.
Ruling:
No, Dovee Yap is not entitled for compensation.
The terms and conditions of a seafarer’s employment, including claims for death and
disability benefits, is a matter governed, not only by medical findings, but by the contract he
entered into with his employer and the law which is deemed integrated therein. For as long as
the stipulations in the contract are not contrary to law, morals, public order, or public policy,
they have the force of law between the parties.
Section 20 (A) of the POEA Standard Employment Contract, pursuant to the provision,
and a long line of Jurisprudence explaining the same, in order for the beneficiaries of a seafarer
to be entitled to death compensation from the employer, it must be proven that the death of the
seafarer (1) is work-related; and (2) occurred during the term of his contract. It is an oft-repeated
rule that whoever claims entitlement to the benefits provided by law should establish his right
thereto by no less than substantial evidence. The evidence must be real and substantial, and not
merely apparent; for the duty to prove work-causation or work-aggravation imposed by law is
real and not merely apparent. As such, the burden to prove entitlement to death benefits lies on
the Yaps.
A perusal of the records would reveal that Remedios failed to prove by substantial
evidence that the death of her husband occurred during the term of his employment contract
and that the cause of death was work-related. It is clear from the evidence presented that
Remedios’ husband did not pass away during the term of his employment. Second, petitioner
failed to adduce proof that the death of Dovee Yap was work-related. While the evidence
presented bear results of his "slightly enhancing hypointense lesions, with vertebral body
compression," "multiple mass lesions in the brain," and "squamous cell carcinoma of the lungs
with metastasis to the spine and probably to the brain," there is no established link connecting
Dovee Yap’s accidental slip to the lung cancer and pneumonia that killed him. Without
competent evaluation and interpretation by medical experts on how the findings actually relate
to the facts surrounding the case, we cannot just automatically conclude that his death was a
product of his accident on board the ship.
Neither can it be said that Dovee Yap’s working conditions increased the risk of
contracting the disease for which he died. In addition, while Dovee Yap’s pneumonia may be
listed as an occupational disease under Section 32-A of the POEA Standard Employment
Contract, Remedios Yap’s failure to comply with its conditions bars the award of death
compensation benefits. The mere fact that Dovee Yap was declared fit to work in his pre-medical
examinations for the past ten years of his employment does not necessarily follow that his
pulmonary illness and cancer of the lungs was brought about by the accident he encountered.
We are neither convinced by Remedios Yap’s argument that by virtue of Article 26.3 in relation
to Articles 22 and 23 of the CBA, her husband may still be considered as "in the employment of
the company." There is doubt as to whether the parties are actually covered under the CBA since
not only is the same unsigned by the parties concerned, but Remedios did not present any proof
to indicate Dovee Yap’s membership in the particular union covered therein.
FLOR G. DAYO vs. STATUS MARITIME CORPORATION, ET AL.

The nature of employment can possibly aggravate a pre-existing illness. However, the
causation between the nature of employment and the aggravation of the illness must still be proven
before compensation may be granted. For illness to be compensable, it is not necessary that the
nature of the employment be the sole and only reason for the illness suffered by the seafarer. It is
sufficient that there is a reasonable linkage between the disease suffered by the employee and his
work to lead a rational mind to conclude that his work may have contributed to the establishment
or, at the very least, aggravation of any pre-existing condition he might have had.
Facts:
P. Dayo (Eduardo) was hired by Status Maritime Corporation for and on.behalf of Nafto
Trade Shipping Commercial S.A. He was hired as a bosun on board the "MV Naftocement l" for
a period of 10 months, designated with a monthly salary of US$500.00. Prior to embarkation, he
underwent a pre-employment medical examination and was declared fit to work.
Eduardo embarked on June 8, 2008. On September 5, 2008, he “experienced severe pain

on his hips and both knees, and total body weakness.” He was given medical attention in
Bridgetown, Barbados, where he was diagnosed with hypertension. He was repatriated on
September 7, 2008.
The next day, Eduardo went to Status Maritime Corporation’s office, but he was informed
that it was waiting for Nafto Trade Shipping Commercial S.A.’s notification. He was also told
that he could seek medical attention and that his expenses would be reimbursed. On September
9, 2008, he went to the Lucena United Doctors Hospital. Dr. Olitoquit, Eduardo’s private
physician, found the results of his 2D echocardiogram as normal.
Eduardo repeatedly requested for medical assistance, but it was only in November 2008
when he was referred to a company-designated physician. Dr. Bolanos of the Metropolitan
Hospital diagnosed him with diabetes mellitus.
Status Maritime Corporation stopped giving Eduardo medical assistance in February

2009. He died on June 11, 2009 due to cardiopulmonary arrest. Flor G. Dayo (Flor), Eduardo’s
wife, requested for death benefits to no avail. Thus, she filed a complaint.
The Labor Arbiter ruled in favor of Flor and awarded death benefits, burial expenses, and
attorney’s fees. Status Maritime Corporation appealed to the National Labor Relations
Commission., The NLRC First Division reversed the Labor Arbiter’s Decision. Flor filed a Motion
for Reconsideration, but it was denied. She then filed a Petition for Certiorari before the Court of
Appeals. The Court of Appeals denied the petition. Flor moved for the reconsideration, but it was
denied. Hence, this petition.
Issue:
Whether the Court of Appeals erred in denying Flor’s petition, considering that Eduardo’s
death was brought about by a work-related illness.
Ruling:
In this case, petitioner does not dispute the fact that her husband died after the term of
his contract. Instead, she emphasizes that her husband died due to a work-related illness.
Petitioner cites Section 20(A), paragraphs (1) and (4) to support her claim for death
benefits. She also cites the second paragraph of Section 20(B) to support her claim for
reimbursement of medical and transportation expenses.
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.”
The facts of this case indicate that the physician in Barbados diagnosed Eduardo with
hypertension. He underwent 2D echocardiogram at the Lucena United Doctors Hospital, and
the results were interpreted by Dr. Olitoquit as normal. When Eduardo was examined by the
company-designated physician, he admitted that he had been suffering from diabetes mellitus
and hypertension since the 1990s. This shows that his illness was pre-existing. His cause of death
was cardiopulmonary arrest.
The 2000 POEA SEC recognizes that the list of illnesses under Section 32 is not exhaustive.
In Magsaysay Maritime Services v. Laurel, the nature of employment can possibly aggravate a
pre-existing illness. However, the causation between the nature of employment and the
aggravation of the illness must still be proven before compensation may be granted.
Settled is the rule that for illness to be compensable, it is not necessary that the nature of
the employment be the sole and only reason for the illness suffered by the seafarer. It is sufficient
that there is a reasonable linkage between the disease suffered by the employee and his work to
lead a rational mind to conclude that his work may have contributed to the establishment or, at
the very least, aggravation of any pre-existing condition he might have had.
Petitioner was unable to fulfill these requirements. She did not allege how the nature of
Eduardo’s work as a bosun contributed to the development or the aggravation of his illness.
Further, he himself admitted that he had diabetes and hypertension prior to his embarkation.
Considering that diabetes mellitus is not listed as an occupational disease under the 2000 POEA
SEC and considering that petitioner did not prove how Eduardo’s occupation contributed to the
development of his illness, no error can be attributed to the Court of Appeals when it affirmed
the National Labor Relations Commission’s Decision and Resolution.
VERITAS MARITIME CORPORATION AND/OR ERICKSON MARQUEZ vs. RAMON A.
GEPANAGA JR.
G.R. No. 206285, February 04, 2015, J. Mendoza

Standard Employment Contract and the CBA clearly provide that when a seafarer sustains a work-
related illness or injury while on board the vessel, his fitness or unfitness for work shall be
binding on them. Thus, while petitioner had the right to seek a second and even a third opinion, the
final determination of whose decision must prevail must be done in accordance with an agreed
procedure. Unfortunately, the petitioner did not avail of this procedure; hence, we have no option
but to declare that the company-designated doctor’s certification is the final determination that
must prevail.
Facts:
Ramon Gepanaga Jr. (Gepanaga) entered into a contract of employment with petitioners
Veritas, for and in behalf of St. Paul Maritime Corporation, to work on board the vessel M.V.
Melbourne Highway as Wiper Maintenance for six (6) months.By executing the contract of
employment, the parties agreed to be bound by the provisions of Philippine Overseas
Employment Administration Standard Employment Contract (POEA-SEC), as well as the
collective bargaining agreement (CBA).
As Gepanaga was able to complete his contract with no incident, the parties mutually
agreed to extend his tenure as Wiper Maintenance. What happened shortly thereafter was what
sparked the current controversy.
Later, while Gepanaga was doing maintenance work, his middle finger got caught
between the cast metal piston liners of the diesel generator. He was then given first aid on board
the vessel and was later brought to a hospital in Omaezaki, Japan. In the hospital, Gepanaga was
diagnosed with “open fracture of the distal phalanx, left middle finger. He was then repatriated.
Gepanaga reported right away to the clinic of Dr. Nicomedez G. Cruz (Dr. Cruz), the
company-designated physician. After Gepanaga was referred to the orthopedic surgeon of his
clinic, Dr. Cruz concurred in the initial findings of doctors in Japan that Gepanaga was suffering
from a crushing injuring with fracture distal phalanx left middle finger. After a series of medical
treatments, Dr. Cruz noted that Gepanaga no longer suffered the pain in the affected area and
that his “grip is good and functional. Dr. Cruz thus issued his medical reportdeclaring that
Gepanaga was “cleared fit to go back to work.
Unconvinced that he had fully recovered from his injury, Gepanaga filed a
complaint against Veritas, Marquez and “K” Line Ship Management, Inc., claiming that the latter
is the foreign principal of Veritas and owner of the M.V. Melbourne Highway.
Several days after filing his complaint, Gepanaga sought the opinion of Dr. Edmundo A.
Villa (Dr. Villa) in Leyte. That same day, Dr. Villa gave his medical report finding that Gepanaga
suffered from permanent disability due to old compound fracture of the 3rd left phalanx/middle
finger-left. Thus, when Gepanaga filed his position paper,he included Dr. Villa’s report to support
his contention that the injuries he had sustained while on board the M.V. Melbourne rendered
him permanently unfit to work.
Thus Gepanaga filed a claim for permanent disability benefits, sickness allowance,
damages, and attorney’s fees,against petitioners Veritas Maritime Corporation (Veritas), and its
president, petitioner Erickson Marquez (Marquez), before the National Labor Relations
Commission (NLRC).
The Labor Arbiter dismissed the complaint filed by Gepanaga for lack merit. On appeal,
the NLRC reversed the ruling of the LA and declared Gepanaga to be suffering from permanent
total disability. The NLRC, thus, ordered Veritas and Marquez to compensate him. CA affirmed
the decision of the NLRC.
Issues:
2. Whether or not the injury suffered by Gepanaga is permanent total disability.
Ruling:
No. The evidentiary records favor the petitioners. Actually, Gepanaga’s filing of his claim
was premature.
In order to provide a clear-cut set of rules in resolving the ubiquitous conflict between
the seafarer and his employer for claims of permanent disability benefits, the Court in Vergara,
stated that the Department of Labor and Employment (DOLE), through the POEA, had
simplified the determination of liability for work-related death, illness or injury in the case of
Filipino seamen working in foreign ocean-going vessels. Every seaman and vessel owner (directly
or represented by a local manning agency) are required to execute the POEA-SEC as a
condition sine qua non prior to the deployment of the seaman for overseas work. The POEA-SEC
is supplemented by the CBA between the owner of the vessel and the covered seaman.
In this case, the parties entered into a contract of employment in accordance with the
POEA-SEC. They also agreed to be bound by the CBA. Thus, in resolving whether Gepanaga is
entitled to disability compensation, the Court will be guided by the procedures laid down in the
POEA-SEC and the CBA.
of Philippine Hammonia Ship Agency, Inc. v. Dumadag(Dumadag) that a seafarer’s non-
his claims. In Dumadag, the Court explained: The POEA-SEC and the CBA govern the
signatories, is the law between them and as such, its provisions bind both of them. Dumadag,
of Philippine Hammonia Ship Agency, Inc. v. Dumadag(Dumadag) that a seafarer’s non-
his claims. In Dumadag, the Court explained:The POEA-SEC and the CBA govern the
signatories, is the law between them and as such, its provisions bind both of them." Dumadag,

Standard Employment Contract and the CBA clearly provide that when a seafarer sustains a
work-related illness or injury while on board the vessel, his fitness or unfitness for work shall be
binding on them. Thus, while petitioner had the right to seek a second and even a third opinion,
the final determination of whose decision must prevail must be done in accordance with an
agreed procedure. Unfortunately, the petitioner did not avail of this procedure; hence, we have
no option but to declare that the company-designated doctor’s certification is the final
determination that must prevail.
Indeed, for failure of Gepanaga to observe the procedures laid down in the POEA-SEC
and the CBA, the Court is left without a choice but to uphold the certification issued by the
company-designated physician that the respondent was “fit to go back to work.”
Gepanaga’s filing of his claim was premature.
In this case, when Gepanaga filed his complaint with the arbitration office on March 25,
2009, he had yet to consult his own physician, Dr. Villa. Indeed, the Court has observed that
when Gepanaga filed his complaint, he was armed only with the belief that he had yet to fully
recover from his injured finger because of the incident that occurred on board the M.V.
Melbourne Highway. It was only on June 9, 2009, a few days before he filed his position paper on
June 15, 2009, that Gepanaga sought the services of Dr. Villa.It bears pointing out that even worse
than the case in Dumadag, Gepanaga’s personal physician examined him for only one (1) day,
that is, on June 9, 2009, two and a half months (2 ½) after he had filed his claim for permanent
disability benefits. Furthermore, the medical certificate issued by Dr. Villa after examining the
respondent failed to state the basis of his assessment and conclusion of permanent disability,
more than three (3) months after the respondent was declared fit to work by Dr. Cruz, the
company-designated physician.Let it be stressed that the seafarer’s inability to resume his work
after the lapse of more than 120 days from the time he suffered an injury and/or illness is not a
magic wand that automatically warrants the grant of total and permanent disability benefits in
his favor. Both law and evidence must be on his side.For these reasons, and without sufficient
evidence to support the respondent’s ancillary claims for sick wages, damages and attorney’s fees,
the same are denied.
MAUNLAD TRANS.,INC./CARNIV AL CRUISELINES, INC., and MR.AMADOL. CASTRO,

JR.vs. RODOLFO CAMORAL
The law does not require that the illness should be incurable. Whatis important is that he was
unable to perform his customary work for morethan 120 days which constitutes permanent total
disability. An award of atotal and permanent disability benefit would begermane to the purpose
ofthe benefit, which is to help the employee in making ends meet at the timewhen he is unable to
work.
Facts:
Camoral was continuously deployedoverseas by Carnival Cruise Lines, Inc., a foreign

shipping company,through its local agent, Maunlad Trans., Inc. In April 2009,they took him on
board M/S Carnival Sensation as ice carver for a period ofeight months, the company doctors
having declared him “Fit for Sea Duty”.
As icecarver,Camoral’s job required lifting and carrying heavy blocks of ice andusing heavy
equipment and tools, working for hours inside the freezer insub-zero temperature. One day in
September 2009 while at work, hesuddenly felt excruciating pain in his neck. The pain quickly
radiated to hisshoulder, chest and hands. It became so intense that he dropped to the floor.Pain
relievers could not relieve the pain, and the ship’s doctor advised theChief Chef that Camoral was
unfit for further duty on board.
On advice ofthe company doctor in Florida, United States of America, Dr. James E.Carter
(Dr. Carter), a Magnetic Resonance Imaging scan was performed onCamoral’s cervical spine. In
his medical report, Dr. Carter foundCamoral with “Cervical DiscHerniation andRadiculopathy”
and declaredhim “unfit for duty”.
Heunderwent rigorous physical therapy, but after more than five months hiscondition
barely improved, and the pain in his neck, chest and shoulderpersisted. He then consulted Dr.
Rogelio P. Catapang, Jr. (Dr. Catapang), arenowned Orthopaedic and Traumatology Surgeon. The
clinical and physical examination of Camoral issued a report stating he has lost his
preinjurycapacity and is unfit to work back at his previous occupation as aseafarer.
Camoral failed to get further financial assistance from Maunlad Trans., Inc. for his
subsequent treatment and medications, as well as total disabilitybenefits. He was instead offered
$10,075.00 corresponding to Grade 10disability the company gave him.
With no income for more than 120 daysand having been declared unfit to return to his
previous job due to loss of hispre-injury capacity, he sued Maunlad Trans., Inc. before the LA for
total disabilitybenefits of US$60,000.00, citing Philippine Overseas EmploymentAdministration
Standard Terms and Conditions Governing the Employment of Filipino Seafarers on board Ocean-
going Vessels (POEA SEC for brevity).
In their answer, the Maunlad Trans., Inc. argued that Camoral was not entitled tototal and
permanent disability benefits since he was not assessed by thecompany doctors with a Grade 1
disability. Furthermore, it insisted that regardless of whether the disabilityis total or partial, any
compensation should be based on the grading providedin the POEA SEC, which in this case is
Grade 10 disability as assessed bythe company doctors.
Issue:
Whether the disability gradingprovided by Maunlad Trans., Inc. for Camoral’s impediment
must control
Ruling:
No.
In Vergara v. Hammonia Maritime Services, Inc., et al.,the Courtharmonized the POEA

SEC with the Labor Code and the Amended Rules on Employee Compensation (AREC) in
holdingthat: (a) the 120 days provided in Section 20-B(3) of the POEA SEC is theperiod given to
the employer to determine the fitness of the seafarer to work,duringwhich the seafarer is deemed
to be in a state of total and temporarydisability; (b) the 120days of total and temporary disability
may beextended by a maximum of 120 days, or up to 240 days, should the seafarerrequire further
medical treatment; and (c) a total and temporary disabilitybecomes permanent when so declared
by the company-designated physicianwithin 120 days or 240 days, as the case may be, or upon the
expiration ofthe said periods without a declaration of either fitness to work or permanentdisability
and the seafarer is still unable to resume his regular seafaringduties.
Furthermore, while the seafarer is partially injured ordisabled, he must not be precluded
from earning doing the same work he hadbefore his injury or disability or that he is accustomed
or trained to do.Otherwise, if his illness or injury prevents him from engaging in
gainfulemployment for more than120 days or 240 days, as is the case here, then heshall be deemed
totally and permanently disabled.
Significantly, the NLRC noted that the medical report and disabilityassessment submitted
by Maunlad Trans., Inc. after more than 120 days oftreatment and rehabilitation did not show how
the partial permanentdisability assessment of Camoral was arrived at. It simply stated that he
wassuffering from impediment Grade 10 disability, but without any evidencethat in fact only one-
third limitation of motion of the neck or moderatestiffness had affected Camoral. But even
without this observation, it is not,disputed that Camoral has been declared unfit by both the
petitioners' andCamoral 's doctors to return to his previous occupation. This isakin to a declaration
of permanent and total disability.
ALBERT C. AUSTRIAv.CRYSTAL SHIPPING, INC., AND/OR LARVIK SHIPPING A/S, AND
EMILY MYLA A. CRISOSTOMO
G.R. No. 206256, February 24, 2016
Facts
Respondent Crystal Shipping, Inc., is a foreign juridical entity engaged in maritime business. It
is represented in the Philippines by its manning agent, and co-respondent herein, Larvik
Shipping A/S, a corporation organized and existing under Philippine laws.
Petitioner was hired by Crystal Shipping thru its manning agent, Larvik Shipping as Chief Cook.
His employment was to run for a period of eight months and he was to receive, inter alia, a basic
monthly salary of US$758.00 with an overtime pay of US$422.00 each month as evidenced by his
Contract of Employment. Under his contract, petitioner was covered by the Norwegian
International Ship Register (NIS) - CBA.
Prior to the execution of the contract, petitioner underwent a thorough Pre-Employment Medical
Examination (PEME) and after compliance therewith, he was certified as "fit to work" by the
company designated physician.
On 27 August 2008, petitioner commenced his work as Chief Cook on board M/V Yara Gas.
Sometime in the last week of September 2008, petitioner, while on board the vessel, started
suffering from chronic cough with excessive phlegm and experienced difficulty breathing. He
immediately reported his condition to the medical officer on board. Upon the arrival of the vessel
in Hamburg, Germany, petitioner was referred for medical examination and it was found that he
was suffering from "Bronchial Catarrh/Bronchitis; Pharnx Irritation. "4 After giving him proper
medication, the examining physician declared him "fit for duty" and so he resumed his work in
the vessel.
In January 2009, petitioner again complained of similar symptoms, excessive cough with phlegm
and difficulty breathing, and, was again referred for further medical examination in the
Netherlands. This time he was confined at ZorgSaam Hospital from 20 January 2009 to 12
February 2009 where he was diagnosed with "Dilated Cardiomyopathy secondary to Viral
Myocarditis," a condition which would require further medical treatment and management.
Considering the seriousness of his ailment, petitioner's repatriation back to the Philippines was
recommended by doctors.
Escorted by a physician, petitioner arrived in the Philippines on 14 February 2009 and was
immediately confined at the Metropolitan Medical Center. After a series of tests, it was found
that petitioner was suffering from "Dilated Cardiomyopathy, Bicuspid Aortic Stenosis, " rendering
him unfit for any sea duty.
Claiming that his illness that rendered him totally unfit for any sea duty is work-related,
petitioner sought for the payment of permanent disability benefits but respondents failed or
refused to acknowledge that they are liable under the CBA. This prompted petitioner to initiate
an action for recovery of permanent disability benefits in accordance with the NIS CBA, moral
and exemplary damages, attorney's fees and other benefits. Petitioner asserted that he was in
good health when he joined the vessel and assumed his duties as chief cook as shown by his
PEME. There is a high probability, however, that the extreme working conditions in the vessel,
the lifestyle on board, constant exposure to chemicals, intensive heat and extreme weather
changes caused to or aggravated his illness. He asserted that he is entitled to the amount of
US$110,000.00 as disability compensation under Article 12 of the NIS CBA.
For their part, respondents disavowed liability for the illness of petitioner citing the medical
report of the company designated physician that "Dilated Cardiomyopathy, Bicuspid Aortic
Stenosis" is a condition that is congenital in nature and is not caused or aggravated by his work
as a Chief Cook. They posited that due to non-exploratory nature of PEME, serious diseases that
require intensive test could not be discovered before the seafarer's employ. There is a high
probability therefore that petitioner could be suffering from the said ailment prior to his
engagement
Issue
Whether or not the illness which caused the repatriation of petitioner is an occupational disease
and thus compensable as permanent total disability under the circumstances.
Ruling
Entitlement of seamen on overseas work to disability benefits is a matter governed, not only by
medical findings, but by law and by contract. The material statutory provisions are Articles 191 to
193 under Chapter VI (Disability Benefits) of the Labor Code, in relation with Rule X of the Rules
and Regulations Implementing Book IV of the Labor Code. By contract, the POEA-SEC, as
provided under Department Order No. 4, series of 2000 of the Department of Labor and
Employment, and the parties' CBA bind the seaman and his employer to each other.
For disability to be compensable under Section 20 (B) of the 2000 POEA-SEC, two elements must
concur: (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. In other words, to be
entitled to compensation and benefits under this 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.
The 2000 POEA-SEC defines "work-related injury" as "injury(ies) resulting in disability or death
arising out of and in the course of employment" and "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."
For an occupational disease and the resulting disability or death to be compensable, all of the
following conditions must be satisfied:
 The seafarer's work must involve the risks described herein;

 The disease was contracted as a result of the seafarer's exposure to the describe[d] risks;
 The disease was contracted within a period of exposure and under such other factors
necessary to contract it; [and]
 There was no notorious negligence on the part of the seafarer.
The ultimate question that needs to be addressed in the case at bar is whether or not the illness
which caused the repatriation of petitioner is an occupational disease and thus compensable as
permanent total disability under the circumstances.
We rule in the affirmative.
In dismissing the claim of petitioner that his ailment is compensable, the appellate court
disregarded the rulings of both the Labor Arbiter and the NLRC and tilted the scale in favor of
the employers who in turn, harped on the findings of the company-designated physician that the
condition of the petitioner is congenital in nature, and, that there is no way that it could be
contracted while he was under their employ.
We do not agree.
To justify the grant of extraordinary remedy of certiorari, the petitioner must satisfactorily show
that the court or quasi-judicial authority gravely abused the discretion conferred upon it. Grave
abuse of discretion connotes a capricious and whimsical exercise of judgment, done in a despotic
manner by reason of passion or hostility, the character of which being so patent and gross as to
amount to an evasion of positive duty or to a virtual refusal to perform the duty enjoined by or
to act all in contemplation of law.
findings and conclusions are not supported by substantial evidence, or that amount of relevant
evidence which a reasonable mind might accept as adequate to justify a conclusion.
Gauged by the foregoing yardstick, the Court finds that the Court of Appeals committed a
reversible error in attributing grave abuse to the NLRC for awarding compensation to the
petitioner for his illness after the latter established his claim by substantial evidence. We find
that there is a cogent legal basis to conclude that petitioner has successfully discharged the
burden of proving that his condition was aggravated by his working condition.
For one, petitioner was employed by respondent as Chief Cook which constantly exposes him to
heat while preparing the food for the entire crew all throughout the day while he was under
employ. The steady and prolonged exposure to heat naturally causes exhaustion which could
unduly burden his heart and interfere with the normal functioning of his cardiovascular system.
In simple terms, petitioner's ailment called dilated cardiomyopathy is a condition in which the
heart's ability to pump blood is decreased because the heart's main pumping chamber, the left
ventricle, is enlarged and weakened. In petitioner's case, his dilated cardiomyopathy is caused by
a bicuspid aortic valve. Bicuspid aortic valve is an aortic valve that only has two leaflets, instead
of three. The aortic valve regulates blood flow from the heart into the aorta, the major blood
vessel that brings blood to the body.19 Bicuspid aortic valve is present at birth (congenital). An
abnormal aortic valve develops during the early weeks of pregnancy, when the baby's heart
develops. The cause of this problem is unclear, but it is the most common congenital heart
disease. It often runs in families.
Even if it were shown that petitioner's condition is congenital in nature, it does automatically
take his ailment away from purview of compensability. Pre-existence of an illness does not
irrevocably bar compensability because disability laws still grant the same provided seafarer's
working conditions bear causal connection with his illness. As succinctly pointed above,
petitioner's working environment as chef constantly exposed him to factors that could aggravate
his heart condition.
Compensability of an ailment does not depend on whether the injury or disease was pre-existing
at the time of the employment but rather if the disease or injury is work-related or aggravated
his condition. It is not necessary, in order for an employee to recover compensation, that he must
have been in perfect condition or health at the time he received the injury, or that he be free from
-disease. Every workman 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 the weakened condition aggravated by some injury which might not
hurt or bother a perfectly normal, healthy person. The degree of contribution of the employment
to the worsening of the seafarer's condition is not significant to the compensability of the illness,
thus:
"[W]e awarded benefits to the heirs of the seafarer therein who worked as radioman on board a
vessel; and who, after ten months from his latest deployment, suffered from bouts of coughing
and shortness of breath, necessitating open heart surgery. We found in said case that the
seafarer's work exposed him to different climates and unpredictable weather, which could trigger
a heart attack or heart failure. We likewise ruled in said case that the seafarer had served
the contract for a significantly long amount of time, and that his employment had
contributed, even to a small degree, to the development and exacerbation of the disease."
[Emphasis supplied]
Although the employer is not the insurer of the health of his employees, he takes them as he
finds them and assumes the risk of liability. The quantum of evidence required in labor cases to
determine the liability of an employer for the illness suffered by the employee under the POEA-
SEC is not proof beyond reasonable doubt but mere substantial evidence, xxx.
All told, petitioner having established through substantial evidence that his illness was
aggravated by his work condition, and hence, compensable, no grave abuse of discretion can be
imputed against the NLRC in upholding the Labor Arbiter's grant of disability benefits. For
reasons herein detailed, the Court finds that the decision of the NLRC is devoid of capriciousness
or whimsicality.chanrobleslaw
C.F. SHARP CREW MANAGEMENT,INC., RONALD AUSTRIA, and ABU DHABI

NATIONAL TANKER CO.vs.LEGAL HEIRS OF THE LATE GODOFREDO REPISO,
represented by his wife LUZVIMINDA REPISO
G.R. No. 190534, February 10, 2016
Facts
On April 24, 2002, Godofredo Repiso (Godofredo) was hired as a Messman on board M/T Umm
Al Lulu by petitioner C.F. Sharp, a local manning agency, on behalf of its principal, petitioner
ADNATCO, a marine transportation company based in the United Arab Emirates. Godofredo and
petitioner Austria, as representative of petitioners C.F. Sharp and ADNATCO, signed a Contract
of Employment,which was approved by the Philippine Overseas Employment Administration
(POEA) on May 9, 2002.
Prior to embarkation, Godofredo underwent a pre-employment medical examination (PEME)

and was declared physically fit to work. Godofredo boarded M/T Umm Al Lulu on May 20, 2002.
Godofredo was repatriated in Manila on March 16, 2003. The next day, March 17, 2003, Godofredo
went to a medical clinic in Kawit, Cavite where he was examined by Doctor Cayetano G. Reyes,
Jr. (Dr. Reyes). Dr. Reyes diagnosed Godofredo with "Essential Hypertension" and advised
Godofredo to take the prescribed medication and rest for a week.
At about 10:00 in the morning on March 19, 2003, Godofredo was waiting for a ride when he
suddenly lost consciousness and fell to the ground. Good samaritans brought Godofredo to Del
Pilar Hospital where he was pronounced dead on arrival. Based on Godofredo’s Certificate of
Death, the causes for his death were as follows:
Immediate cause : Irreversible Shock
Antecedent cause : Acute Myocardial Infarction

Underlying cause : Hypertensive Heart Disease
Godofredo died leaving behind respondents as his legal heirs, namely, his wife, Luzviminda, and
three children, Marie Grace (20 years old), Gerald (17 years old), and Gretchen (13 years old).
On September 17, 2003, respondent Luzviminda, through her lawyer, sent a letter notifying
petitioner C.F. Sharp of Godofredo’s death and demanding the payment of death compensation,
children’s allowance and burial allowance in the total amount of US$106,000.00
Respondent Luzviminda sent another letter dated February 3, 2004 to petitioner C.F. Sharp
conveying her willingness to accept the amount of US$65,000.00 as compromise settlement.
However, respondent Luzviminda’s demand remained unheeded.
Thus, respondents filed with the NLRC a Complaint against petitioners for recovery of death
compensation benefits, burial and children’s allowances, moral and exemplary damages, and
attorney’s fees. The Complaint was docketed as NLRC-NCR Case No. (M)04-04-00916-00.
Issue
Whether or not Godofredo’s death is compensable.
Ruling
Whether or not Godofredo’s death is compensable depends on the terms and conditions of his
Contract of Employment. The employment of seafarers, including claims for death benefits, is
governed by the contracts they sign at the time of their engagement. As long as the stipulations
in said contracts are not contrary to law, morals, public order, or public policy, they have the
force of law between the parties. Nonetheless, while the seafarer and his employer are governed
by their mutual agreement, the POEA Rules and Regulations require that the POEA-SEC be
integrated in every seafarer’s contract.
For a seafarer’s death to be compensable under the 1996 POEA-SEC, the Court explicitly ruled in
Inter-Orient Maritime, Inc. v. Candava that:
The prevailing rule under the 1996 POEA-SEC was that the illness leading to the eventual death
of seafarer need not be shown to be work-related in order to be compensable, but must be
proven to have been contracted during the term of the contract. Neither is it required that
there be proof that the working conditions increased the risk of contracting the disease or illness.
An injury or accident is said to arise "in the course of employment" when it takes place within
the period of employment, at a place where the employee reasonably may be, and while he is
fulfilling his duties or is engaged in doing something incidental thereto. (Emphases supplied,
citations omitted.)
Herein respondents are entitled to the benefits they are claiming as it can be logically and
reasonably concluded from the particular circumstances in the case at bar that Godofredo
contracted the illness which eventually caused his death during the term of his contract or in the
course of his employment.
Respondents alleged, and petitioners did not refute, that Godofredo’s employment with
petitioner C.F. Sharp started way back in 1990. From then until his last employment with
petitioner C.F. Sharp in 2002-2003, there was no record of him suffering from hypertension
and/or heart disease. Before Godofredo boarded M/T Umm Al Lulu on May 20, 2002, he
underwent PEME and was declared fit to work. This negates petitioners’ claim that Godofredo
concealed a pre-existing illness. It is true that the Court had previously declared that the PEME
could not be relied upon to inform the employer/s of a seafarer’s true state of health, and there
were instances when the PEME could not have divulged the seafarer’s illness considering that the
examinations were not exploratory. Even so, as Labor Arbiter Anni and the Court of Appeals
observed in the instant case, Godofredo’s hypertension and/or heart disease could have been
easily detected by standard/routine tests included in the PEME, i.e., blood pressure test,
electrocardiogram, chest x-ray, and/or blood chemistry.
Godofredo had no previous record of hypertension and/or heart disease before he boarded M/T
Umm Al Lulu on May 20, 2002; but when he was repatriated at a port in Manila on March 16, 2003
and examined by Dr. Reyes on March 17, 2003, he was already diagnosed to be suffering from
"Essential Hypertension." On March 19, 2003, just three days after his repatriation, Godofredo
died and the underlying cause for his death was identified as "Hypertensive Heart Disease."
Taking into account these circumstances, the Court is convinced that Godofredo contracted
hypertension and/or heart disease during his term of employment with petitioners beginning
May 20, 2002 until his repatriation on March 16, 2003. In contrast, the Court is not swayed by
petitioners’ contention that the 10-month period was too short for Godofredo to have developed
his illness, which was totally unsubstantiated.
Besides, it bears to point out that the implementation of Section 20(E) of the 2000 POEA-SEC,
disqualifying a seafarer from any compensation and benefits because of concealment of a pre-
existing condition.was explicitly suspended by Memorandum Circular No. 11, series of 2000, and
the 1996 POEA-SEC contained no such provision.
Godofredo’s 10-month Contract of Employment was to end on March 20, 2003. Yet, Godofredo
was already repatriated on March 16, 2003 in Manila. Respondents allege that Godofredo was
repatriated for medical reasons because he was already experiencing continuous headaches and
body pains on board M/T Umm Al Lulu. Petitioners aver that Godofredo was merely repatriated
at a convenient port, allowed under Section 19(B) of the 2000 POEA-SEC.
Between the two claims as to the reason for Godofredo’s repatriation, that of the respondents is
more persuasive, especially considering that Godofredo, the very next day following his
repatriation, did not rest or spend time with his family, but immediately went to a medical clinic
to see a doctor. This could only mean that Godofredo was already not feeling well. In fact, Dr.
Reyes, who examined Godofredo on March 17, 2003, diagnosed him with "Essential Hypertension"
and advised him to take the prescribed medication and rest for a week; but only two days after,
on March 19, 2003, Godofredo already collapsed and died from his heart ailment. This sequence
of events establishes Godofredo’s ill state of health upon his repatriation in Manila on March 16,
2003.
The burden was thus shifted to petitioners to prove that Godofredo was only repatriated at a
convenient port. However, aside from their bare allegations, petitioners did not present any other
proof of their purported reason for Godofredo’s repatriation. Petitioners explain that they no
longer presented in evidence the ship’s logbook or master’s report since Godofredo did not
complain of or suffer any illness on board M/T Umm Al Lulu, hence, there was no such entry in
the ship’s logbook or any master’s report of such incident. The Court notes though that
petitioners had possession of and access to all logbooks and records of M/T Umm Al Lulu, and
presentation of the said logbooks and records would have been material to prove the actual
absence of any entry or report regarding Godofredo’s health while he was on board. Moreover,
it is difficult to believe that petitioners had absolutely no log entry or record regarding
Godofredo’s repatriation, whether for medical or any other reason. Godofredo could not have
disembarked from M/T Umm Al Lulu without express authority or consent from the master of
the ship or petitioners as Godofredo’s employers, and such authority or consent would have most
likely stated the justifying cause for the same. That petitioners did not present such logbooks and
records even gives rise to the presumption that something in said logbooks and records is actually
adverse to petitioners’ case.
It is important to determine definitively that Godofredo was repatriated for medical reasons
because Section 20(A)(1) of the 1996 POEASEC covered cases wherein the seafarer’s death
occurred "during the term of his contract." The same phrase could be found in Section 20(A)(1)
of the 2000 POEA-SEC, only this more recent version of the provision additionally required that
the death be "work-related." Strictly, medical repatriation of the seafarer at the point of hire
meant the termination of his employment. Nevertheless, in Canuel v. Magsaysay Maritime
Corporation, the Court adjudged that the heirs of a seafarer who died after his medical
repatriation could still recover the compensation and benefits provided in Section 20(A) of the
2000 POEA-SEC, reasoning as follows:
Applying the rule on liberal construction, the Court is thus brought to the recognition that
medical repatriation cases should be considered as an exception to Section 20 of the 2000
POEA-SEC. Accordingly, the phrase "work-related death of the seafarer, during the term of his
employment contract" under Part A (1) of the said provision should not be strictly and
literally construed to mean that the seafarer’s work-related death should have precisely
occurred during the term of his employment. Rather, it is enough that the seafarer’s
work-related injury or illness which eventually causes his death should have occurred
during the term of his employment. Taking all things into account, the Court reckons that it
is by this method of construction that undue prejudice to the laborer and his heirs may be
obviated and the State policy on labor protection be championed. For if the laborer’s death was
brought about (whether fully or partially) by the work he had harbored for his master’s profit,
then it is but proper that his demise be compensated. (Emphases supplied.)
The Court herein considers medical repatriation an exceptional circumstance and allows the
heirs of the seafarer who died after he had been medically repatriated to recover the
compensation and benefits provided in Section 20(A) of the 1996 POEA-SEC. The phrase "death
of the seafarer during the term of his contract" in Section 20(A)(1) of the 1996 POEA-SEC should
not be strictly and literally construed to mean that the seafarer’s death should have occurred
during the term of his employment; it is enough that the seafarer’s work-related injury or illness
which eventually caused his death occurred during the term of his employment.
The insistence of petitioners on the post-employment medical examination of the seafarer by a

company-designated physician within three days from arrival at the point of hire is misplaced.
Said post-employment medical examination was required under Section 20(B)(3) of the 1996
POEA-SEC for compensation and benefits for a seafarer’s injury or illness; it was not a requisite
under Section 20(A) of the 1996 POEA-SEC for compensation and benefits for a seafarer’s death.
In addition, Section 20(B)(3) of the 1996 POEA-SEC itself allowed as an exception from said
requirement a seafarer who is physically incapacitated from complying with same. Apparently,
in the case at bar, Godofredo was already of poor health and weak physical condition upon his
repatriation on March 16, 2003, which necessitated his immediate visit to a nearby clinic the very
next day, on March 17, 2003. In any case, Godofredo still had until March 19, 2003 to see a
company-designated physician but he died on the same day of a cause ("Hypertensive Heart
Disease") directly linked to the illness ("Essential Hypertension") he developed during his term
of employment on M/T Umm Al Lulu and for which he was medically repatriated.
Equally unavailing in this case are the references made by the NLRC to the requirements for
compensable death from occupational diseases, listed under Section 32-A of the 2000 POEA-SEC.
However, Section 32 (Schedule of Disability or Impediment for Injuries Suffered and Diseases
Including Occupational Diseases or Illness Contracted) and Section 32-A (Occupational
Diseases) of the 2000 POEA-SEC could only be applied in relation to Section 20 (Compensation
and Benefits) of the same POEA-SEC, and as the Court previously declared herein, the use or
implementation of Section 20 of the 2000 POEA-SEC was suspended by POEA Memorandum
Circular No. 11, series of 2000. In the meantime, Section 20 of the 1996 POEA-SEC applied to
Godofredo’s case; and the 1996 POEA-SEC did not contain a provision corresponding to Section
32-A of the 2000 POEA-SEC. To apply Section 32-A of the 2000 POEA-SEC to Godofredo’s case
would be to impose additional conditions on the claim for compensation and benefits for his
death based on Section 20(A) of the 1996 POEA-SEC, which would be contrary to the rule on
liberal construction of the laws and contracts in favor of labor.
MARLOW NAVIGATION PHILS., INC., MARLOW NAVIGATION CO., LTD., W.

BOCKSTLEGEL REEDEREI (GERMANY), ORLANDO D. ALIDIO AND ANTONIO GALVEZ,
JR.v.WILFREDO L. CABATAY
G.R. No. 212878, February 01, 2016
Facts
The respondent Wilfredo Cabatay (Cabatay) entered into a ten-month contract of employment
as able seaman with the petitioners Marlow Navigation, Philippines, Inc., (agency) and its
principal Marlow Navigation Co., Ltd., (Marlow Navigation), for the vessel M/V BBC OHIO. The
contract was supplemented by a collective bargaining agreement or the Total Crew Cost Fleet
Agreement (TCC-FA) between the International Workers Federation (ITF) and Marlow
Navigation. He boarded the vessel on November 23, 2009.
While on duty on December 30, 2009, Cabatay fell from a height of four meters in his work area;
his side, shoulder, and head were most affected by his fall. He was brought to a hospital in
Huangpu, China, where he was diagnosed with "Left l-4 Verterbra Transverse Bone broken
(accident)." He was declared unfit to work for 25 days. On January 7, 2010, he was medically
repatriated.
Cabatay arrived in Manila on January 8, 2010, and was immediately referred to the company
doctor, Dr. Dolores Tay (Dr. Tay), of the International Health Aide Diagnostic Services, Inc., for
examination and treatment. He underwent several tests, including a CT scan and a repeat
audiometry and MRI.
On March 19, 2010, Cabatay complained of right shoulder pain. On April 13, 2010, he underwent
surgery on the rotator cuff on his shoulder. After surgery, he missed several appointments with
Dr. Tay and failed to undergo his physiotherapy on time, starting it only on May 25, 2010. Earlier,
or on May 7, 2010, Dr. Tay gave Cabatay an interim disability assessment of Grade 10 for his
shoulder injury and Grade 3 for impaired hearing. She expected Cabatay's hearing and shoulder
problems to be resolved within three to six months, although he was still under treatment as of
June 3, 2010.
On June 9, 2010, Dr. Tay issued a combined 36% disability assessment for Cabatay based on the
compensation scale under the TCC-FA, thus: (1) 5% for communication handicap of severe to
total; (2) 2% for hearing handicap of mild to medium; (3) 3% compensation for each ear—
hampering tinnitus and distortion of hearing; (4) 8% for his spine injury with medium severe
fracture without reduction of mobility; and (5) 15% for his shoulder injury, with right shoulder
elevation up to a 90-degree angle.
Meantime, or on May 11, 2010, Cabatay filed a complaint against the petitioners for permanent
total disability compensation, sickness wages, damages, and attorney's fees. While he did not
dispute the company doctor's findings, he argued that he was entitled to permanent total
disability benefits since he had lost his employment (profession) due to his injury which, he
claimed, is compensated under the TCC-FA at US$125,000.00.
On record, upon his arrival in Manila on January 8, 2010, following his medical repatriation,
Cabatay was immediately referred to Dr. Tay, the company-designated physician, for
examination and treatment. He was under Dr. Tay's medical care and management for six
months or until June 9, 2010, when she gave him a combined 36% disability assessment. All this
time, he underwent several tests, a CT scan, audiometry and MRI, as well as therapy sessions, at
the petitioners' expense.
Cabatay did not object to Dr. Tay's assessment, yet he filed a claim for permanent total disability
compensation, which the labor arbiter granted declaring that he was entitled to full disability
benefits because he had lost opportunities for his employment/profession. On appeal, the NLRC
set aside the arbiter's decision and relied on Dr. Tay's disability assessment "in the absence of any
substantial proof in support of complainant's bare allegation of loss of profession." The CA, in
turn, upheld the arbiter's award, holding that since Cabatay was "disabled continuously for more
than 120 days, he is considered permanently disabled," and the "CBA provides that the seafarer is
entitled to full benefits even if he suffered less than 50% of the total disability under the schedule
so long as he is no longer fit for sea duty."
Issue:
Whether or not Catabay is entitled to permanent total disability compensation.
Ruling:
The POEA-SEC and the TCC-FA govern Cabatay's employment with the petitioners. These two
instruments are the law between the parties as the Court emphasized in Philippine Hammonia
Ship Agency, Inc., v. Eulogio Dumadag.
Under the 2002 POEA-SEC, it is the company-designated physician who declares/establishes the
fitness to work or the degree of disability of a seafarer who is repatriated for medical reasons and
needs further medical attention. Thus, under Section 20 (B) 3, the seafarer is required to submit
to a post-employment medical examination by the company-designated physician.
On the other hand, under the TCC-FA, "The disability suffered by the Seafarer shall be determined
by a doctor appointed mutually by the Owners/Managers and the ITF, and the Owners/Managers
shall provide disability compensation to the Seafarer in accordance with the percentage specified in
the table below xxx" The TCC-FA also provides for a Compensation Scale under its Annex 3 upon
which Dr. Tay, the company-designated physician, based her assessment of Cabatay's disability.
There is no question that there had been compliance with Section 20 (B) of the POEA-SEC in
regard to Cabatay's post-employment medical examination. It is also established that he went
through an intensive treatment, including special medical procedures and therapy sessions,
under the care and management of Dr. Tay for six months or for 180 days within the 240-day
extended period allowed under the rules implementing the employees compensation law. At the
conclusion of his treatment and therapy program, Dr. Tay gave him a 36% disability assessment
pursuant to the compensation schedule under the TCC-FA.
As Cabatay himself admitted, he did not dispute Dr. Tay's findings and neither did he offer a
contrary finding. The NLRC therefore committed no grave abuse of discretion when it awarded
Cabatay disability compensation in accordance with Dr.Tay's assessment, there being no
disagreement on the assessment. Be this as it may, we are not unmindful of the fact that under
the TCC-FA, the seafarer's disability shall be determined by a doctor mutually appointed by the
employer (owner/manager) and the union (ITF). There was no such determination in this case,
either under Section 19.2 as cited above, or Section 19.3 under the TCC-FA as invoked by the
petitioners.
The absence of a disability assessment by a doctor chosen by the parties, however, will not
invalidate Dr. Tay's assessment, not only because Cabatay accepted Dr. Tay's findings, but also
because he refused the petitioners' proposal that his medical condition be referred to a mutually
appointed doctor for determination. Cabatay never denied this particular submission of the
petitioners.
The 120-day rule; loss of employment/profession
In reversing the NLRC decision, the CA declared that while Cabatay's treatment was extended
(up to a maximum of 240 days), it did not negate the fact that he was disabled continuously for
more than 120 days and therefore permanently disabled, especially when Dr. Tay had not declared
Cabatay fit to work within the extended period. This is a misappreciation of the significance of
the 120-day rule and the 240-day extended period as clarified in applicable rulings of the Court.
In Vergara v. Hammonia, the Court explained what to expect within this period in terms of the
seafarer's medical condition, thus:
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
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 medical condition. (underscoring and emphasis ours)
The question of why no fit-to-work declaration was issued by Dr. Tay is answered by her
combined 36% disability assessment for Cabatay. The CA thus erred in holding that since his
disability went beyond 120 days, he had become permanently and totally disabled. Again, in
Vergara, the Court stressed: "This declaration of a permanent total disability after the initial 120
days of temporary disability cannot, however, be simply lifted and applied as a general rule for all
cases in all contexts. The specific context of the application should be considered, as we must do in
the application of all rulings and even of the law and of the implementing regulations."
Also, in Splash Philippines, Inc. v. Ruizo, the Court said that the 120-day rule "cannot be used as a
cure-all formula for all maritime compensation cases. Its application must depend on the
circumstances of the case, including especially compliance with the parties' contractual duties and
obligations as laid down in the POEA-SEC and/or their CBA, if one exists."
Since Dr. Tay had timely and duly made a disability assessment for Cabatay, the CA likewise erred
in affirming LA Cueto's opinion that he is entitled to permanent total disability benefits because
he had lost his employment/profession. Neither can Cabatay's submission that he had lost his
profession in contemplation of the TCC-FA prevail over Dr. Tay's assessment, not only because
he did not dispute the assessment, but also because he did not go through the procedure under
the agreement on how a disability is determined, permanent total or otherwise.
Needless to say, a seafarer cannot claim full disability benefits on his mere say-so in complete
disregard of the POEA-SEC and the CBA, which are, to reiterate, the law between the parties and
which they are duty bound to observe. And so it must be in Cabatay's case, especially when he
refused the petitioners' offerthat his medical condition be referred to a mutually appointed
doctor under Section 19.3 of the TCC-FA, to determine whether, despite Dr. Tay's combined 36%
disability assessment under Annex 3 of the agreement, he is permanently unfit for further sea
service. Absent such a determination (certification) by a mutually appointed doctor, we hold that
Dr. Tay's assessment should stand.
VIOLETA BALBA vs.TIWALA HUMAN RESOURCES, INC.,

AND/OR TOGO MARITIME CORP.,
G.R. No. 184933, April 13, 2016
Facts:
Sometime in 1998, Rogelio entered into a 10-month contract of employment with Tiwala Human
Resources, Inc. for its foreign principal, Togo Maritime Corporation (respondents), wherein he
was employed as chief cook on board the vessel M/V Giga Trans. He was declared fit for work in
his pre-employment medical examination and boarded the vessel M/V Giga Trans on November
13, 1998.
Upon the expiration of his contract, Rogelio was repatriated to the Philippines in October 1999.
From October to November 1999, Rogelio was treated by Dr. Benito Dungo (Dr. Dungo) for
weakness and numbness of his left half body and lower extremities and was diagnosed to be
suffering from moderately severe diabetes.
In 2000, Rogelio was confined at the Seamen's Hospital and was found to have metastatic cancer.
As such, he sought disability compensation and benefits from the respondents but these were
denied.
Consequently, Rogelio filed on April 6, 2000 a complaint against the respondents for disability
benefits with damages and attorney's fees.
On April 28, 2000, however, Rogelio was admitted at the Philippine General Hospital for lung
cancer. He succumbed to his illness in July 2000. As a result of Rogelio's death, his complaint was
subsequently amended and his wife, Violeta Balba, and two children, Roy and Vienna Gracia,
were substituted as complaints.
Issue:
Whether or not the petitioners are entitled to death and burial benefits on account of Rogelio's
death.
Ruling:
Taking into consideration that Rogelio was employed on November 13, 1998, it is the 1996 Revised
POEA-SEC that is considered incorporated in his contract of employment and is controlling for
purposes of resolving the issue at hand.
Section 20(A) of the 1996 Revised POEA-SEC provides that in order to avail of death benefits, the
death of the seafarer must be work-related and should occur during the effectivity of the
employment contract. The provision reads:

A. COMPENSATION AND BENEFITS FOR DEATH
1. In case of death of the seafarer during the term of his contract, the employer shall pay his
beneficiaries the Philippine Currency equivalent to the amount of Fifty Thousand US dollars
(US$50,000) and an additional amount of Seven Thousand US dollars (US$7,000) to each child
under the age of twenty-one (21) but not exceeding four (4) children, at the exchange rate
prevailing during the time of payment.
xxxx
4. The other liabilities of the employer when the seafarer dies as a result of injury or illness
during the term of employment are as follows:
a. The employer shall pay the deceased's beneficiary all outstanding obligations due the seafarer
under this Contract.
b. The employer shall transport the remains and personal effects of the seafarer to the Philippines
at employer's expense except if the death occurred in a port where local government laws or
regulations do not permit the transport of such remains. In case death occurs at sea, the
disposition of the remains shall be handled or dealt with in accordance with the master's best
judgment. In all cases, the employer/master shall communicate with the manning agency to
advise for disposition of seafarer's remains.
c. The employer shall pay the beneficiaries of the seafarer the Philippine currency equivalent to
the amount of One Thousand US dollars (US$1,000) for burial expenses at the exchange rate
prevailing during the time of payment. (Emphases supplied)
Also, in Southeastern Shipping, et al. v. Navarra, Jr., the Court declared that in order to avail of
death benefits, the death of the employee should occur during the effectivity of the employment
contract. The death of a seaman during the term of employment makes the employer liable to
his heirs for death compensation benefits. Once it is established that the seaman died during the
effectivity of his employment contract, the employer is liable.
In the more recent case of Talosig v. United Philippine Lines, Inc., the Court again reiterated that
the death of a seafarer must have occurred during the term of his contract of employment for it
to be compensable.
In the present case, it is undisputed that Rogelio succumbed to cancer on July 4, 2000 or almost
ten (10) months after the expiration of his contract and almost nine (9) months after his
repatriation. Thus, on the basis of Section 20(A) and the above-cited jurisprudence explaining
the provision, Rogelio's beneficiaries, the petitioners, are precluded from receiving death
benefits.
Moreover, even if the Court considers the possibility of compensation for the death of a seafarer
occurring after the termination of the employment contract on account of a work-related illness
under Section 32(A) of the POEA-SEC, the claimant must still fulfill all the requisites for
compensability, to wit:

2. The disease was contracted as a result of the seafarer's exposure to the described risks;
3. The disease was contracted within a period of exposure and under such other factors necessary
to contract it;
In the present case, the petitioners failed to adduce sufficient evidence to show that Rogelio's
illness was acquired during the term of his employment with the respondents. Instead, what the
petitioners presented were medical certificate issued by Dr. Dungo dated November 12, 1999
attesting that Rogelio consulted him due to weakness and numbness of Rogelio's left half body
and lower extremities and medical examination results in March and April 2000 showing that he
had cancer. The Court, however, finds it not sufficient proof to show a causal connection or at
least a work relation between the employment of Rogelio and his cancer. In the absence of
substantial evidence, Rogelio's working conditions cannot be assumed to have increased the risk
of contracting cancer.
In Medline Management, Inc., et al. v. Roslinda, et al., the Court held:
Indeed, the death of a seaman several months after his repatriation for illness does not
necessarily mean that: a) the seaman died of the same illness; b) his working conditions
increased .the risk of contracting the illness which caused his death; and c) the death is
compensable, unless there is some reasonable basis to support otherwise. x x x.
In the instant case, Rogelio was repatriated not because of any illness but because his contract of
employment expired. There is likewise no proof that he contracted his illness during the term of
his employment or that his working conditions increased the risk of contracting the illness which
caused his death.
SCANMAR MARITIME SERVICES, INCORPORATED, CROWN SHIPMANAGEMENT INC.,

LOUIS DREYFUS ARMATEURS AND M/TILE DE BREHAT AND/OR MR. EDGARDO
CANOZA vs. EMILIO CONAG
G.R. No. 212382, April 6, 2016
Facts
Since 2002, respondent Emilio A. Conag (Conag) had been deployed annually by petitioner
Scanmar Maritime Services, Inc. (Scanmar) as a bosun's mate aboard foreign vessels owned or
operated by its principal, Crown Ship Management, Inc./Louis Dreyfus Armateurs SAS (Crown
Ship). On March 27, 2009, he was again deployed as a bosun's mate aboard the vessel MIT Ile de
Brehdt. According to him, his job entailed lifting heavy loads and occasionally, he would skid and
fall while at work on deck. On June 19, 2009, as he was going about his deck duties, he felt
numbness in his hip and back. He was given pain relievers but the relief was temporary. Two
months later, the pain recurred with more intensity, and on August 18, 2009 he was brought to a
hospital in Tunisia.
On August 25, 2009, Conag was medically repatriated. Upon arrival in Manila on August 27, 2009,
he was referred to the company-designated physicians at the Metropolitan Medical Center
(MMC), Marine Medical Services, where he was examined and subjected to laboratory
examinations.
The laboratory tests showed that Conag had "Mild Lumbar Levoconvex Scoliosis and Spondylosis;
Right SJ Nerve Root Compression," with an incidental finding of "Gall Bladder Polyposis v.
Cholesterolosis." For over a period of 95 days, he was treated by the company-designated
physicians, Drs. Robert Lim (Dr. Lim) and Esther G. Go (Dr. Go), and in their final medical report
dated December 1, 2009, they declared Conag fit to resume sea duties. Later that day, Conag
signed a Certificate of Fitness for Work, written in English and Filipino. Conag claimed that he
was required to sign the certificate as a condition sine qua non for the release of his accumulated
sick pay. According to him, however, his condition deteriorated while he was undergoing
treatment. On February 18, 2010, he filed a complaint against Scarunar, Crown Ship and Edgardo
Canoza (collectively, petitioners) seeking full and permanent disability benefits, among others.
He also consulted another doctor, Dr. Manuel C. Jacinto, Jr. (Dr. Jacinto), at Sta. Teresita General
Hospital in Quezon City, who on March 20, 2010 issued a certificate stating that his "condition
did not improve despite medicine and that his symptoms aggravated due to his work which
entails carrying of heavy loads." Dr. Jacinto then assessed Conag as unfit to go back to work as a
seafarer.
Issues
Whether or not Conag is entitled to his claims for permanent and total disability benefits.
Ruling
Seafarer's right to disability benefits
The relevant legal provisions governing a seafarer's right to disability benefits, in addition to the
parties' contract and medical findings, are Articles 191 to 193 of the Labor Code and Section 2,
Rule X of the Amended Rules on Employee Compensation. The pertinent contracts are the
POEA-SEC, the CBA, if any, and the employment agreement between the seafarer and his
employer. To summarize and harmonize the pertinent provisions on the establishment of a
seafarer's claim to disability benefits, the Court held in Vergara v. Hammonia Maritime Services,
Inc., et al. that:
[T]he seafarer, upon sign-off from his vessel, must report to the company-designated physician
within three (3) days from arrival for diagnosis and treatment.1âwphi1 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 [-SEC] 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
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.
(Citations omitted and italics in the original)
In C.F Sharp Crew Management, Inc., et al. v. Taok, the Court enumerated the conditions which
may be the basis for a seafarer's action for total and permanent disability benefits, as follows:
(a) [T]he company-designated physician failed to issue a declaration as to his fitness to engage
in sea duty or disability even after the lapse of the 120-day period and there is no indication that
further medical treatment would address his temporary total disability, hence, justify an
extension of the period to 240 days; (b) 240 days had lapsed without any certification being issued
by the company-designated physician; (c) the company-designated physician declared that he is
fit for sea duty within the 120-day or 240-day period, as the case may be, but his physician of
choice and the doctor chosen under Section 20-B(3) of the POEA-SEC are of a contrary opinion;
(d) the company-designated physician acknowledged that he is partially permanently disabled
but other doctors who he consulted, on his own and jointly with his employer, believed that his
disability is not only permanent but total as well; (e) the company-designated physician
recognized that he is totally and permanently disabled but there is a dispute on the disability
grading; (f) the company-designated physician determined that his medical condition is not
compensable or work-related under the POEA-SEC but his doctor-of-choice and the third doctor
(g) the company-designated physician declared him totally and permanently disabled but the
employer refuses to pay him the corresponding benefits; and (h) the company-designated
physician declared him partially and permanently disabled within the 120-day or 240-day period
but he remains incapacitated to perform his usual sea duties after the lapse of the said periods.
Incidentally, in the recent case of Magsaysay Maritime Corporation v. Simbajon, the Court has
mentioned that an amendment to Section 20-A(6) of the POEA-SEC, contained in POEA
Memorandum Circular No. 10, series of 2010,39 now "finally clarifies" that "[f]or work-related
illnesses acquired by seafarers from the time the 2010 amendment to the POEA-SEC took effect,
the declaration of disability should no longer be based on the number of days the seafarer was
treated or paid his sickness allowance, but rather on the disability grading he received, whether
from the company-designated physician or from the third independent physician, if the medical
findings of the physician chosen by the seafarer conflicts with that of the company-designated
doctor. "
Conag failed to comply with Section

20-B(3) of the PO EA-SEC
On December 1, 2009, after 95 days of therapy, Conag was pronounced by the company
designated doctors as fit to work. Later that day, he executed a certificate, in both English and
Filipino, acknowledging that he was now fit to work. On December 5, 2009, he left for his home
province of Negros Oriental, as he told his employers in his letter dated February 9, 2010, wherein
he expressed his desire to be redeployed. He told them that during his vacation he was able to
engage in a lot of activities such as walking around his neighborhood four times a week,
swimming two times a week, weightlifting three times a week, driving his car on Saturdays for
one hour, riding his motorbike five times a week, playing basketball every Sunday, and fishing
and doing some house repairs when he had the time.
Interestingly, however, on February 18, 2010, a mere nine days after his letter, Conag filed his
complaint with the LA for disability benefits, presumably after he was told that he would not be
rehired, although the reasons for his rejection are nowhere stated. It is not alleged that before he
filed his complaint, he first sought payment of total disability benefits from the petitioners. In
fact, it was only on March 20, 2010, three months after the petitioners declared him fit to work,
that Conag obtained an assessment of unfitness to work from a doctor of his choice, Dr. Jacinto.
Thus, when he filed his complaint for disability benefits, he clearly had as yet no medical evidence
whatsoever to support his claim of permanent and total disability.
But even granting that his afterthought consultation with Dr. Jacinto could be given due
consideration, it has been held in Philippine Hammonia Ship Agency, Inc. v. Dumadag, and
reiterated in Simbajon, that under Section 20-B(3) of the POEA-SEC, the duty to secure the
opinion of a third doctor belongs to the employee asking for disability benefits. Not only
did Conag fail to seasonably obtain an opinion from his own doctor before filing his complaint,
thereby permitting the petitioners no opportunity to evaluate his doctor's assessment, but he
also made it impossible for the parties to jointly seek the opinion of a third doctor precisely
because the petitioners had not known about Dr. Jacinto's opinion in the first place. Indeed, three
months passed before Conag sought to dispute the company-designated physicians' assessment,
and during this interval other things could have happened to cause or aggravate his injury. In
particular, the Court notes that, after he collected his sick wage, Conag spent two months in his
home province and engaged in various physical activities.
Conag has no factual medical basis

for his claim of permanent disability
benefits
According to the CA, there is no dispute that Conag suffered from spinal injuries designated as
"Mild Lumbar Levoconvex Scoliosis and Spondylosis; Right S1 Nerve Root Compression," with an
incidental finding of "Gall Bladder Polyposis v. Cholesterolosis, " on account of his job as a bosun's
mate, which is "associated with working with machinery, lifting heavy loads and cargo." The CA
also found that he sustained his injuries during his employment with the petitioners.
A review of the petitioners' evidence reveals that both the CA and the LA glossed over vital facts
which would have upheld the fitness to work assessment issued by the company-designated
physicians. The petitioners cited a certification by the ship master, 4 which Conag has not denied,
that the ship's logbook carried no entry whatsoever from March 28 to August 25, 2009 of any
accident on board in which Conag could have been involved. Instead, Conag's medical
repatriation form shows that he was sent home because of a "big pain on his left kidney, kidney
stones." In their final report dated December 1, 2009, Drs. Lim and Go of the MMC certified that
he was first "cleared urologic-wise" upon his repatriation. The NLRC also noted that Conag
mentioned no particular incident at work on deck which could have caused his spinal pain.
To rule out any spinal injury, pertinent tests were nevertheless conducted, resulting in a diagnosis
of "Mild Lumbar Levoconvex Scoliosis and Spondylosis; Right S1 Nerve Root Compression," with an
incidental finding of "Gall Bladder Polyposis v. Cholesterolosis." Attached to the report of Drs. Lim
and Go is a certificate, also dated December 1, 2009, issued by Dr. William Chuasuan, Jr. (Dr.
Chuasuan), Orthopedic and Adult Joint Replacement Surgeon also at MMC, who attended to
Conag, that he had "Low Back Pain; Herniated Nucleus Pulposus, L5-SJ, Right. " In declaring Conag
fit to return to work, Dr. Chuasuan noted that he was now free from pain and he had regained
full range of trunk movement. He noted "Negative Straight Leg Raising Test. Full trunk range
of motion, (-) pain. Fit to return to work.’’
Even considering the inherent merits of the medical certificate issued by Dr. Jacinto on March
20, 2010, the NLRC did not hide its suspicion that his certification was not the result of an honest,
bona fide treatment of Conag, but rather one issued out of a short one-time visit. It noted that
Dr. Jacinto issued a pro-forma medical certificate, with the blanks filled in his own hand. Dr.
Jacinto certified that Conag's condition "did not improve despite medicine," yet nowhere did he
specify what medications, therapy or treatments he had prescribed in arriving at his unfit-to-
work assessment, nor when and how many times he had treated Conag, except to say, vaguely,
"from March 2010 to present," "present" being March 20, 2010, the date of his certificate. No
laboratory and diagnostic tests and procedures, if any, were presented which could have enabled
him to diagnose him as suffering from lumbar hernia or "Herniated Nucleus Pulposus, L5-Sl,
Right" as the cause of his permanent disability. There is no proof of hospital confinement,
laboratory or diagnostic results, treatments and medical prescriptions shown which could have
helped the company-designated physicians in re-evaluating their assessment of Conag 's fitness.
When Dr. Jacinto said that "[Conag's] symptoms [were] aggravated due to his work which entails
carrying heavy loads," he obviously relied merely on Conag's account about what allegedly
happened to him aboard ship nine months earlier. This Court is thus inclined to concur with the
NLRC that on the basis solely of Conag's story, Dr. Jacinto made his assessment that he was
"physically unfit to work as a seafarer."
In Coastal Safeway Marine Services, Inc. v. Esguerra, this Court rejected the medical certifications
upon which the claimant-seaman anchored his claim for disability benefits, for being
unsupported by diagnostic tests and procedures which would have effectively disputed the
results of the medical examination in a foreign clinic to which he was referred by his employer.
In Magsaysay Maritime Corporation and/or Dela Cruz, et al. v. Velasquez, et al., the Court brushed
aside the evidentiary value of a recommendation made by the doctor of the seafarer which was
"based on a single medical report which outlined the alleged findings and medical history" of the
claimant-seafarer. In Montoya v. Transmed Manila Corporation/Mr. Ellena, et al. the Court
dismissed the doctor's plain statement of the supposed work-relation/work-aggravation of a
seafarer's ailment for being "not supported by any reason or proof submitted together with the
assessment or in the course of the arbitration. "
In Dumadag, where the seafarer's doctor examined him only once, and relied on the same medical
history, diagnoses and analyses produced by the company-designated specialists, it was held that
there is no reason for the Court to simply say that the seafarer's doctor's findings are more reliable
than the conclusions of the company-designated physicians.
No showing that "Mild Lumbar

Levo convex Scoliosis and
Spondylosis" is a serious spinal
injury that may result in permanent
disability
The Court finds it significant that both the LA and the CA concluded, on the basis alone of a
diagnosis of "Mild Lumbar Levoconvex Scoliosis [left curvature of the spinal column in the lower
back, Ll to LS] and Spondylosis; Right SJ Nerve Root Compression," that Conag suffered serious
spinal injuries which caused his total disability. Nowhere is the nature of this injury or condition
described or explained, or that it could have been the result of strain or an accident while Conag
was aboard ship, not to mention that it was only a "mild" case. Dr. Chuasuan noted in his
December 1, 2009 report that Conag was now free from pain and had regained full range of trunk
movement: "Negative Straight Leg Raising Test. Full trunk range of motion, (-) pain. Fit to return
to work." For 95 days, Conag underwent therapy and medication, and Dr. Chuasuan's final
Lasegue 'ssign test to see if his low back pain had an underlying herniated disk (slipped disc) was
negative.
Apparently, then, Conag's back pain had been duly addressed. He himself was able to attest that
back home from December 2009 to February 2010 he was able to engage in various normal
physical routines. Concerning the LA's observation ,of his alleged deteriorated physical and
medical condition, and therefore his unfitness to return to work, let it suffice that the LA's own
opinion as to the physical appearance of Conag is of no relevance in this case, as it must be stated
that he is not trained or authorized to make a determination of unfitness to work from the mere
appearance of Conag at the arbitral proceedings.
ANDRES L. DIZONv.NAESS SHIPPING PHILIPPINES, INC.

AND DOLE UK (LTD.)
G.R. No. 201834, June 01, 2016
Facts
Since 1976, respondents Naess Shipping Phils. Inc. and DOLE UK (Ltd.) hired petitioner Andres
L. Dizon as cook for its various vessels until the termination of his contract in 2007.
On March 6, 2006, Dizon was hired as Chief Cook and boarded DOLE COLOMBIA.
Dizon disembarked after completing his contract on February 14, 2007. He then went on a
vacation, and was called for another employment contract after a month.
When he underwent pre-employment medical examination in March 2007, he was declared unfit
for sea duties due to uncontrolled hypertension and coronary artery disease as certified by the
doctors of the Marine Medical and Laboratory Clinic (MMLC). He was referred to undergo stress
test and electrocardiogram (ECG). He then went to PMP Diagnostic Center Inc. for diagnostic
tests. It was also recommended that he undergo Angioplasty. His treadmill stress test showed
that he had Abnormal Stress Echocardiography.
Unconvinced with the doctor's declaration of unfitness, Dizon went to the Seamen's Hospital
and submitted himself for another examination.
The result indicated that he was fit for sea duty. He returned to MMLC and requested for a re-
examination, but the same was denied.
In November 2008, Dizon filed a complaint before the Department of Labor and Employment,
but subsequently withdrew the same.
On January 6, 2009, Dizon filed a complaint against respondents for payment of total and
permanent disability benefits, sickness allowance, reimbursement of medical, hospital and
transportation expenses, moral damages, attorney's fees and interest before the Labor Arbiter
(LA).
Claiming that he is entitled to permanent total disability benefit, Dizon alleged that he incurred
his illness while on board the respondents' vessel. He claimed that his working conditions on
board were characterized by stress, heavy work load, and over fatigue. He averred that Dr. Marie
T. Magno re-evaluated his actual medical condition on February 16, 2009 and declared him unfit
to resume his work as seafarer since his heart condition is unable to tolerate moderate to severe
exertions.
Dizon asserted that he disclosed his hypertension prior to his last contract in 2006, but was
certified fit for duty for the nine-month employment contract.
For their part, respondents disavowed liability for Dizon's illness maintaining that he finished
and completed his contract on board their vessel Dole Colombia without any incident, and that
his sickness was not work-related. They rejected the redeployment of Dizon since he was declared
unfit for sea duty in his pre-employment medical examination. Respondents claimed that they
were only exercising their freedom to choose which employees to hire.
Issue
Whether the petitioner is entitled to disability benefits.
Ruling
We answer in the negative and deny the instant petition.

Dizon asseverates that his right to claim total and permanent disability benefits is not forfeited
when he failed to submit himself to a post-employment medical examination before the
company-designated doctor within three working days upon his arrival because such failure to
comply would only forfeit his claims for the 120 days sickness allowance.
The law specifically declares that failure to comply with the mandatory reporting requirement
shall result in the seafarer's forfeiture of his right to claim benefits thereunder. In Coastal Safeway
Marine Services, Inc. v. Esguerra,this Court expounded on the mandatory reporting requirement
provided under the POEA-SEC and the consequence for failure of the seaman to comply with the
requirement, viz.:
The foregoing provision has been interpreted to mean that it is the company-designated
physician who is entrusted with the task of assessing the seaman's disability, whether
total or partial, due to either injury or illness, during the term of the hitter's
employment. Conccdedly, this does not mean that the assessment of said physician is final,
binding or conclusive on the claimant, the labor tribunal or the courts. Should he be so minded,
the seafarer has the prerogative to request a second opinion and to consult a physician of his
choice regarding his ailment or injury, in which case the medical report issued by the latter shall
be evaluated by the labor tribunal and the court, based on its inherent merit. For the seaman's
claim to prosper, however, it is mandatory that he should be examined by a company-
designated physician within three days from his repatriation. Failure to comply with this
mandatory reporting requirement without justifiable cause shall result in forfeiture of
the right to claim the compensation and disability benefits provided under the POEA-
SEC.
Moreover, that the three-day post employment medical examination is mandatory brooks no
argument, as held in Interorient Maritime Enterprises, Inc. v. Creer:
The rationale for the rule [on mandatory post-employment medical examination within three
days from repatriation by a company-designated physician] is that reporting the illness or
injury within three days from repatriation fairly makes it easier for a physician to
determine the cause of the illness or injury. Ascertaining the real cause of the illness or
injury beyond the period may prove difficult. To ignore the rule might set a precedent with
negative repercussions, like opening floodgates to a limitless number of seafarers claiming
disability benefits, or causing unfairness to the employer who would have difficulty determining
the cause of a claimant's illness because of the passage of time. The employer would then have
no protection against unrelated disability claims.
In the past, this Court repeatedly denied the payment of disability benefits to seamen who failed
to comply with the mandatory reporting and examination requirement. Thus, the three-day
period from return of the seafarer or sign-off from the vessel, whether to undergo a post-
employment medical examination or report the seafarer's physical incapacity, should always be
complied with to determine whether the injury or illness is work-related.
To the mind of this Court, Dizon failed to substantiate his entitlement to disability benefits for a
work-related illness under the POEA-SEC. It appears from the records that Dizon did not submit
himself to a post employment medical examination within three days from his arrival after
completing his last contract with the respondents. Dizon does not proffer an explanation or
reason for his failure to comply with the said mandatory requirement given that he claims that
his illness purportedly occurred during the term of his contract.
Instead, Dizon alleges that the failure to comply with the mandatory reporting and examination
requirement merely forfeits his claim for sickness allowance. To substantiate his claim, he
invokes the following rules in statutory construction: (a) Courts should not incorporate matters
not provided in law by judicial ruling; (b) The court must look into the spirit of the law or the
reason for it in construing a statute; (c) When the language admits of more than one
interpretation that which tends to give effect to the manifest object of the law should be adopted;
and (d) Statutes must be construed to avoid injustice.
We find Dizon's allegation that the terms "above benefits" in Section 20(B), paragraph 3 of POEA-
SEC refer only to sickness compensation, thus, the mandatory reporting requirement is
applicable only to claim for sickness allowance specious
In fine, this Court finds Dizon's failure to comply with the three-day post-employment medical
examination fatal to his cause. We cannot overemphasize that failure to comply with the
mandatory reporting requirement without justifiable cause shall result in forfeiture of the right
to claim the compensation and disability benefits provided under the POEA-SEC, thus, not
confined to claim for sickness compensation mentioned in Section 20(B), paragraph 3 of the 2000
POEA-SEC.
Dizon asserts that his coronary artery disease is work-related given that his pre-employment
medical examination was less than a month since his repatriation. He alleges that the medical
records that respondents presented did not indicate that his illness has been declared by the
company-designated doctor as not work-related. Dizon insists that the working conditions
prevailing during his employment on board the vessel are characterized, among others, by stress,
heavy workload, over-fatigue.
It is stressed that Dizon's repatriation was due to expiration of his employment contract and not
because of medical reasons. His coronary artery disease which rendered him unfit for sea duty
was diagnosed during a pre-employment medical examination and not in a post-employment
medical examination as provided by law.
It is crucial that Dizon present concrete proof showing that he indeed acquired or contracted the
illness which resulted in his disability during the term of his employment contract. Other than
his uncorroborated and self-serving allegation that his ailment was work-related because his pre-
employment medical examination was only less than a month from his last contract, Dizon failed
to demonstrate that his illness developed under any of the conditions set forth in the POEA-SEC
for the said to be considered as a compensable occupational disease.
Records are bereft of evidence to establish that Dizon, being subjected to strain at work as a Chief
Cook, manifested any symptoms or signs of heart illness in the performance of his work during
the term of his contract, and that such symptoms persisted. Although his hypertension was
known to the respondents, there was no evidence to prove that the strain caused by Dizon's work
aggravated his heart condition. There was no proof that he reported his illness while on board
and after his repatriation. He did not present any written note, request, or record about any
medical check-up, consultation or treatment during the term of his contract.
While this Court sympathizes with Dizon's predicament, we are, however, constrained to deny
the instant petition for failing to establish by substantial evidence his entitlement to disability
benefits, having failed to undergo a post-employment medical examination as required under
the law without valid or justifiable reason, and to establish that his illness was contracted during
the term of his contract and that the same was work-related. Since it is established that Dizon is
not entitled to disability benefits, it follows that he is also not entitled to any claim for moral and
exemplary damages.
LABOR STANDARDS
HILARIO DASCO, ET AL. v PHILTRANCO SERVICE ENTERPRISES INC/CENTURION

SOLANO, MANAGER
G.R. No. 211141, June 29, 2016
Facts:
This case stemmed from a complaint for regularization, underpayment of wages, non-payment
of service incentive leave (SIL) pay, and attorney's fees, filed by the petitioners against Philtranco
Service Enterprises Inc., (PSEI), a domestic corporation engaged in providing public utility
transportation, and its Manager, Centurion Solano (respondents).
On various dates from 2006 to 2010, the petitioners were employed by the respondents as bus
drivers and/or conductors with travel routes of Manila (Pasay) to Bicol, Visayas and Mindanao,
and vice versa.
On July 4, 2011, the petitioners filed a case against the respondents alleging that: (1) they were
already qualified for regular employment status since they have been working with the
respondents for several years; (2) they were paid only P404.00 per round trip, which lasts from
two to five days, without overtime pay and below the minimum wage rate; (3) they cannot be
considered as field personnel because their working hours are controlled by the respondents from
dispatching to end point and their travel time is monitored and measured by the distance because
they are in the business of servicing passengers where time is of the essence; and (4) they had not
been given their yearly five-day SIL since the time they were hired by the respondents.
In response, the respondents asserted that: (1) the petitioners were paid on a fixed salary rate of
P0.49 centavos per kilometer run, or minimum wage, whichever is higher; (2) the petitioners are
seasonal employees since their contracts are for a fixed period and their employment was
dependent on the exigency of the extraordinary public demand for more buses during peak
months of the year; and (3) the petitioners are not entitled to overtime pay and SIL pay because
they are field personnel whose time outside the company premises cannot be determined with
reasonable certainty since they ply provincial routes and are left alone in the field unsupervised.
Issue:
Whether the petitioners as bus drivers and/or conductors are field personnel, and thus entitled
to overtime pay and SIL pay.
Ruling:
As a general rule, [field personnel] are those whose performance of their job/service is not
supervised by the employer or his representative, the workplace being away from the principal
office and whose hours and days of work cannot be determined with reasonable certainty; hence,
they are paid specific amount for rendering specific service or performing specific work. If
required to be at specific places at specific times, employees including drivers cannot be said to be
field personnel despite the fact that they are performing work away from the principal office of the
employee.
It is necessary to stress that the definition of a "field personnel" is not merely concerned with the
location where the employee regularly performs his duties but also with the fact that the
employee's performance is unsupervised by the employer. As discussed above, field personnel are
those who regularly perform their duties away from the principal place of business of the
employer and whose actual hours of work in the field cannot be determined with reasonable
certainty. Thus, in order to conclude whether an employee is a field employee, it is also necessary
to ascertain if actual hours of work in the field can be determined with reasonable certainty by
the employer. In so doing, an inquiry must be made as to whether or not the employee's time
and performance are constantly supervised by the employer.
Guided by the foregoing norms, the NLRC properly concluded that the petitioners are not field
personnel but regular employees who perform tasks usually necessary and desirable to the
respondents' business. Evidently, the petitioners are not field personnel as defined above and the
NLRC's finding in this regard is supported by the established facts of this case: (1) the petitioners,
as bus drivers and/or conductors, are directed to transport their passengers at a specified time
and place; (2) they are not given the discretion to select and contract with prospective passengers;
(3) their actual work hours could be determined with reasonable certainty, as well as their average
trips per month; and (4) the respondents supervised their time and performance of duties.
In order to monitor their drivers and/or conductors, as well as the passengers and the bus itself,
the bus companies put checkers, who are assigned at tactical places along the travel routes that
are plied by their buses. The drivers and/or conductors are required to be at the specific bus
terminals at a specified time. In addition, there are always dispatchers in each and every bus
terminal, who supervise and ensure prompt departure at specified times and arrival at the
estimated proper time. Obviously, these drivers and/or conductors cannot be considered as field
personnel because they are under the control and constant supervision of the bus companies
while in the performance of their work.
The Court agrees with the above-quoted findings of the NLRC. Clearly, the petitioners, as bus
drivers and/or conductors, are left alone in the field with the duty to comply with the conditions
of the respondents' franchise, as well as to take proper care and custody of the bus they are using.
Since the respondents are engaged in the public utility business, the petitioners, as bus drivers
and/or conductors, should be considered as regular employees of the respondents because they
perform tasks which are directly and necessarily connected with the respondents' business. Thus,
they are consequently entitled to the benefits accorded to regular employees of the respondents,
including overtime pay and SIL pay.
STRIKES
PMI-FACULTY AND EMPLOYEES UNIONv.PMI COLLEGES BOHOL

G.R. No. 211526, June 29, 2016
Facts:
Respondent PMI Colleges Bohol (respondent) is an educational institution that offers maritime
and customs administration courses to the public. Petitioner PMI-Faculty and Employees Union
(Union) is the collective bargaining representative of the respondent's rank-and-file faculty
members and administrative staff.
On October 2, 2009, the Union filed a notice of strike with the National Conciliation and
Mediation Board (NCMB) in Cebu City, against the respondent, on grounds of gross violation of
Sections 3 and 3(a) of their collective bargaining agreement (CBA). The Union threatened to go
on strike on the first working day of the year 2010 following the failure of the conciliation and
mediation proceedings to settle the dispute. In an order dated December 29, 2009, Secretary
Marianito D. Roque of the Department of Labor and Employment (DOLE) certified the dispute
to the National Labor Relations Commission (NLRC) for compulsory arbitration.
On July 19, 2010, the Union filed a second notice of strike allegedly over the same CBA violation.
On July 28, 2010, the respondent filed a Motion to Strike Out Notice of Strike and to Refer the
Dispute to Voluntary Arbitration, claiming that the Union failed to exhaust administrative
remedies before resorting to a 2nd notice of strike. On August 5, 2010, the respondent filed a
Motion for Joinder of Issues under the 2nd notice of strike with those of the 1st notice.
On August 2, 2010, the Union submitted its strike vote. It alleged that while waiting for the
expiration of the 15-day cooling-off period and/or the completion of the 7-day strike vote period,
its members religiously reported for duty. On August 9, 2010, the last day of the cooling-off and
strike vote periods, the Union officers and members reported for work (except for Union
President Alberto Porlacin who was attending to his sick wife at the time), but they were
allegedly not allowed entry to the school premises. This incident, according to the Union, was
confirmed under oath by its officers/members.
In protest of what it considered a lock-out by the respondent, the Union staged a strike on the
same day. The respondent reacted with a Petition to Declare the Strike Illegal, also filed on the
same day. DOLE Secretary Rosalinda D. Baidoz assumed jurisdiction over the dispute through
an order dated August 10, 2010. She directed the strikers to return rework, and the school to
resume operations.
Issue
Whether or not the NLRC correctly found illegal the strike declared by the Union on August 9,
2010.
Ruling
The declaration of the strike a day before the completion of the cooling-off and strike vote periods
was but a reaction to the respondent's locking out the officers and members of the Union. The
Union does not deny that it staged the strike on August 9, 2010, or on the 21st day after the filing
of the strike notice on July 19, 2010, and the submission of the strike vote on August 2, 2010, a day
earlier than the 22 days required by law (15 days strike notice, plus 7 days strike vote period). It,
however, maintained that it was left with no choice but to go on strike a day earlier because the
respondent had barred its officers and members from entering the school premises.
The NLRC had been too quick in rejecting the sworn statements of the Union officers and
members that they had been locked out by the respondent when they reported for duty in the
morning of August 9, 2010, branding their affidavits as self-serving, without providing any basis
for such a conclusion other than who submitted the statements in evidence, which it implied to
be the Union.
On the contrary, we find the statements credible, particularly those of Engr. Teodomila
Mascardo, Engr. Conchita Bagaslao, Ms. Mary Jean Enriquez, and Mr. Cirilo Fallar that they
had classes at 7:30 a.m. to 8:30 a.m. on Monday, August 9, 2010, and that, in compliance with
their teaching load, they had to be in the school premises at 7:00 a.m. but were surprised when
they were not allowed to enter on that day by the guards on duty. They protested, they added,
and insisted on entering the school premises, but they were pushed out of the school grounds by
the guards who said that they were just following orders from the PMI management.
Under the circumstances, we find no reason for Mascardo, Bagaslao, Enriquez, and Fallar to make
self-serving and therefore false statements on their failure to hold their classes in the morning of
August 9, 2010 because they were refused entry by the security guards. While they are Union
members, they are first and foremost teachers who were reporting for duty on that day. The same
thing can be said of the Union officers who were also refused entry by the guards. We likewise
find no reason for the officers to throw away all their preparations for a lawful strike on the very
last day, had they not been pushed to act by the respondent's closing of the gates on August 9,
2010.
It was thus grave abuse of discretion for the NLRC to completely ignore the affidavits of the
officers and members of the Union directly saying that they were refused entry into the school
premises on August 9, 2010, especially when LA Montenegro intimated that the respondent could
have presented the testimonies of the guards on duty at the time to belie .the statements of the
Union officers and members.
In sharp contrast, the NLRC readily admitted the video footage of the strike area on August 9,
2010, which the respondent offered in evidence only on appeal or more than a year (15 months)
after it was supposed to have been taken. The much belated submission of the video footage puts
in question, as the Union argued in its certwrari petition, the authenticity and. therefore, the
credibility of the footage. Why was the footage not presented to the labor arbiter, considering
that the respondent reserved the right to adduce additional evidence, documentary and
testimonial, in the resolution of the case? Why did it take more than a year to present it when
the footage was taken on the first day of the strike?
The respondent's explanation for the 15-month delay in the presentation of the compact disc
contents to prove that the school did not lock out the Union members and officers deserves scant
consideration. We are not convinced that the respondent spent more than a year to secure the
affidavits of the personnel of Ramasola Superstudio, based in Tagbilaran City, that purportedly
took the footage. As the Union pointed out,-a member of the school's management, lawyer
Evaneliza Cloma-Lucero, who resides in Tagbilaran City could have been asked to depose the
studio's personnel. Neither are we persuaded by the excuse that the respondent's counsel is
residing in Pasig City. Again, as observed by the Union, air travel can bring the lawyer to
Tagbilaran City in just a little over an hour to take the deposition.
The inordinate delay in the submission of the compact disc cannot but generate negative
speculations on why it took so long for the respondent to introduce it in evidence. We thus find
the Union's apprehension about the authenticity and credibility of the compact disc not
surprising; 15 months are too long a period to wait for the submission of a piece of evidence which
existed on the first day of the strike way back on August 9, 2010.
Like its immediate rejection of the affidavits of the Union members and officers for being "self-
serving," without giving any credible basis for its sweeping declaration, we find the NLRC to have
overstepped the bounds of its discretionary authority in "swallowing hook, line, and sinker," as
the Union put it, the compact disc submitted by the school, as it is obvious that it was suffering
from a serious doubt in credibility because of its much belated submission. The doubt should
have been resolved in favor of the Union.
At this point, it is well to stress that under Article 4 of the Labor Code, "all doubts in the
implementation and interpretation of the provisions of this Code, including its implementing rules
and regulations, shall be resolved in favor of labor." In Peñaflor v. Outdoor Clothing Manufacturing
Corporation,37 the Court reiterated that the principle laid down in the law has been extended by
jurisprudence to cover doubts in the evidence presented by the employer and the employee.38 As
discussed earlier, the Union has raised serious doubt on the evidence relied on by the NLRC.
Consistent with Article 4 of the Labor Code, we resolve the doubt in the Union's favor.
In sum, we find merit in the petition. The CA reversibly erred when (1) it decided the present
labor dispute and dismissed the Union's certiorari petition purely on technical grounds, and (2)
in blindly ignoring the blatant grave abuse of discretion on the part of the NLRC that completely
disregarded the affidavits of the officers and members of the Union and readily admitted the
respondent's belatedly submitted video footage.
SERVICE CHARGE
NATIONAL UNION OF WORKERS IN HOTEL RESTAURANT AND ALLIED INDUSTRIES,

PHILIPPINE PLAZA CHAPTER vs. PHILIPPINES PLAZA INC.
G.R. No. 177524, July 23, 2014, J. BRION
The PPHI did not violate Article 96 of the Labor Code when they refused the Union’s claim
for service charges on the specified entries/transactions. Article 96 of the Labor Code provides for
the minimumpercentage distribution between the employer and the employees ofthe collected
service charges, and its integration in the coveredemployees’ wages in the event the employer
terminates its policy ofproviding for its collection.This last paragraph of Article 96 of the Labor
Code presumes the practice of collecting service charges and the employer’s termination of this
practice. When this happens, Article 96 requires the employer to incorporate the amount that the
employees had been receiving as share of the collected service charges into their wages. In cases
where no service charges had previously been collected (as where the employer never had any policy
providing for collection of service charges or had never imposed the collection of service charges on
certain specified transactions), Article 96 will not operate.
Facts:
The union is the collective bargaining agent of the rank-and-fileemployees of respondent

Philippine Plaza Holdings, Inc. (PPHI). In 1998, the PPHI and the Union executed another CBA.
The CBA provided, among others, for the collection by the PPHI, of a ten percent (10%) service
charge on the sale of food, beverage, transportation, laundry and rooms. Thepertinent CBA
provisionlikewise providesthat the hotel shall continue to collect ten percent (10%) service charge
on the sale of food, beverage, transportation, laundry and rooms except on negotiated contracts
and special rates.These provisions merely reiterated similar provisions found inthe
PPHIUnion’searlier collective bargaining agreement executed in 1995.
Subsequently, the Union’s Service Charge Committee informed the Union President of
uncollected service charges for the last quarter of 1998 amounting to P2, 952,467.61. Specifically,
the audit report referred to the service charges from the following items: (1) Journal Vouchers;
(2) Banquet Other Revenue ;and (3) Staff and Promo. The Union presented this audit report to
the PPHI’s management during Labor Management Cooperation Meeting (LMCM).
Through a letter, PPHI admittedliability for P80, 063.88 out of the P2, 952,467.61 that the
union claimed as uncollected service charges. The PPHI denied the rest of the Union’s claims
because: (1) they were exempted from the service charge being revenues from special promotions
(revenue from the Westin Gold Card sales) or negotiated contracts (alleged revenue from the
Maxi Media contract); (2) the revenues did not belong to the PPHI but to third-party suppliers;
and (3) no revenue
was realized from these transactions as they were actually expenses incurred for the benefit of
executives or by way of goodwill to clients and government officials.
During the LMCM, the Union maintained itsposition on uncollected service charges so
that a deadlock on the issue ensued. Subsequently, Union’s Service Charge Committee made
another service charge audit report for the years 1997, 1998 and 1999 (3rd audit report).This 3rd
audit report reflected total uncollected service charges of P5,566,007.62 from the following
entries: (1) Journal Vouchers; (2) Guaranteed No Show; (3) Promotions; and (4) F & B Revenue.
The Union President presented the 3rd audit report to the PPHI.
When the parties failed to reach an agreement, the Union, on filed before the LA
complaintfornon-payment of specified service charges. The Union additionally charged the PPHI
with unfair laborpractice (ULP) under Article 248 of the Labor Code.
The labor arbiter dismissed the complaint of the union. NLRC reverses. On Appeal, the
CA granted the PPHI’s petition. CA affirmed the LA’s decision but ordered the PPHI to pay the
Union the amount of P80, 063.88 as service charges that it found was due under the
circumstances. The CA declared that no service charges were due from the specified
entries/transactions; either these constituted “negotiated contracts” and “special rates” that
Section 68 of the CBA explicitly excludes from the coverage of service charges, or they were cited
bases that the Union failed to sufficiently prove.
The Union maintains that the specified entries/transactions are revenue based
transactions which, per Section 68 and 69 of the CBA, clearly called for the collection and
distribution of a 10% service charge in favor of the covered employees.
Issues:
1. Whether or notthe Labor Arbiter, affirmed by the CA is correct in finding that PPCI
is not liable for payment to the Union for service charges it claimed under the CBA.
Ruling:
Yes. The Labor Arbiter, affirmed by the CA is correct in finding that PPCI is not liable for
payment to the Union for service charges it claimed under the CBA.
No service charges were due from the specified entries or transactions, they either fall
within the CBAexcepted negotiated contracts and special rates or did not involve a sale of food,
beverage, etc.
The jurisdictional limitations of our Rule 45 review of the CA’sRule 65 decision in labor
cases constrain us to deny the present petition for clear lack of legal error in the CA’s decision.Our
consideration of the facts taken within this limited scope of our factual review power, convinces
us that grave abuse of discretion attended the NLRC’s decision. At what point and to what extent
the NLRC gravely abused its discretion is the matter we shall discuss below.
A collective bargaining agreement, as used in Article 252 (nowArticle 262)27 of the Labor
Code, is a contract executed at the request of either the employer or the employees’ exclusive
bargaining representative with respect to wages, hours of work and all other terms and conditions
of employment, including proposals for adjusting any grievances or questions under such
agreement.Jurisprudence settles that a CBA is the law between the contracting parties who are
obliged under the law to comply with its provisions.
As a contract and the governing law between the parties, thegeneral rules of statutory
construction apply in the interpretation of its provisions. Thus, if the terms of the CBA are plain,
clear and leave no doubt on the intention of the contracting parties, the literal meaning of its
stipulations, as they appear on the face of the contract, shall prevail. Only when the words used
are ambiguous and doubtful or leading to several interpretations of the parties’ agreement that a
resort to interpretation and construction is called for.
The Union anchors its claim for services charges on Sections 68and 69 of the CBA, in
relation with Article 96 of the Labor Code. Section 68 states that the sale of food, beverage,
transportation, laundry and rooms are subject to service charge at the rate of ten percent (10%).
Excepted from the coverage of the 10% service charge are the so- called negotiated contracts and
special rates. Following the wordings of Section 68 of the CBA, three requisites must be present
for the provisions on service charges to operate: (1) the transaction from which service charge is
sought to be collected is a sale; (2) the sale transaction covers food, beverage, transportation,
laundry and rooms; and (3) the sale does not result from negotiated contracts and/or at special
rates. Notably, the CBA does not specifically define the terms negotiated contracts and special
rates. Nonetheless, the CBA likewise does not explicitly limit the use of these terms to specified
transactions. With particular reference to negotiated contracts, the CBA does not confine its
application to “airline contracts” as argued by the Union. Thus, as correctly declared by the CA,
the term negotiated contracts should be read as applying to all types ofnegotiated contracts and
not to “airlines contracts” only. This is inline with the basic rule of construction that when the
terms are clear and leave no doubt upon the intention of the contracting parties, the literal
meaning of its stipulations shall prevail. A constricted interpretation of this term, i.e., as
applicable to “airlines contracts” only, must be positively shown either by the wordings of the
CBA or by sufficient evidence of the parties’ intention to limit its application. The Union
completely failed to provide support for its constricted reading of the term “negotiated
contracts,” either from the wordings of the CBA or from the evidence.
The PPHI did not violate Article 96 of the Labor Code when they refused the Union’s
claim for service charges on the specified entries/transactions. Article 96 of the Labor Code
provides for the minimumpercentage distribution between the employer and the employees
ofthe collected service charges, and its integration in the coveredemployees’ wages in the event
the employer terminates its policy ofproviding for its collection.
This last paragraph of Article 96 of the Labor Code presumes thepractice of collecting
service charges and the employer’s termination of this practice. When this happens, Article 96
requires the employer to incorporate the amount that the employees had been receiving as share
of the collected service charges into their wages. In cases where no service charges had previously
been collected (as where the employer never had any policy providing for collection of service
charges or had never imposed the collection of service charges on certain specified transactions),
Article 96 will not operate.
SEPARATION PAY
SOLIDBANK CORPORATION v. COURT OF APPEALS, NATIONAL LABOR

RELATIONS COMMISSION AND DANILO H. LAZARO
G.R. No. 166581, December 7, 2015, SERENO, C.J.
If reinstatement is not possible, an illegally dismissed employee is entitled to
separation pay and backwages, computed using his gross monthly pay, inclusive of
allowances and other benefits or their monetary equivalent. Such amounts however must
be duly proved before they may be granted by the Court.
Facts:
Lazaro was the Vice President, Head of the Branch Banking Group, Region 6
of Solid Bank Corporation. The Imus branch, one of the branches under Lazaro,
underwent audit which uncovered anomalies involving the branch manager and
the accountant who released loans without proper documentation and approval.
Lazaro tendered his resignation when his name was dragged in the audit report.
His resignation was not accepted by the bank president so he continued his
employment. Eventually, Lazaro’s Christmas bonus was ordered reversed. He was
asked to surrender her service car. Lazaro’s payroll for December 1-15, 1996 was not
credited to his account. Lazaro wrote to the bank president but received no answer.
Lazaro was eventually dismissed. The dismissal was made retroactive, up to a
month before he was informed of his dismissal. Lazaro filed a complaint for
illegal dismissal. He alleged that since it is not possible for him to be reinstated, the
basis of the award should include benefits and allowances.
Issue:
Whether the basis for the award for dismissal includes benefits and allowances
Ruling:
Yes. Separation pay and backwages must include the gross monthly salary of
the dismissed employee, inclusive of all the allowances and benefit or their
monetary equivalent, subject to evidentiary proof. The SC however, is compelled
to deny Lazaro’s prayer to include in his gross monthly salary the allowances and
benefits outlined in his petition. The records are bereft of evidence to serve as a
backbone for the allowances and benefits he desires.
ZENAIDA PAZ v. NORTHERN TOBACCO REDRYING CO., INC. (NTRCI) AND/OR
ANGELO ANG
G.R. No. 199554, February 18, 2015, LEONEN, J.
Financial assistance may be allowed as a measure of social justice and exceptional

circumstances, and as an equitable concession.
Facts:
NTRCI hired Paz as a seasonal sorter. NTRCI regularly re-hired her every
tobacco season since then. Paz was 63 years old when NTRCI informed her that she
was considered retired under company policy. A year later, NTRCI told her she
would receive her retirement pay. Paz filed a complaint for illegal dismissal. NTRCI
computed the retirement pay of its seasonal workers based on Article 287 of the Labor
Code and raised the requirement of at least 6 months of service a year for that year
to be considered in the retirement pay computation. Thus, Paz’s retirement pay
amounted to P12,487.50. LA confirmed this amount. NLRC modified. CA modified and
found that this amount was so meager that it could hardly support Paz, now that
she is weak and old, unable to find employment. It granted financial assistance.
Issue:
Whether the CA was correct in granting Paz financial assistance
Ruling:
Yes. The amount of P12,487.50 is indeed too meager to support Paz. Her
circumstances indubitably merit equitable concessions, via the principle of
compassionate justice for the working class. Paz worked for NTRCI for close to 3
decades. She had no record of any malfeasance or violation of company rules in her
long years of service. Her advanced age has rendered her weak and lessened her
employment opportunities. Paz was a seasonal employee who worked for periods
ranging from three to seven months a year. This court thus finds the following CA
formula for financial assistance as equitable: 1/2-month pay multiplied by 29 years in
service and then divided by 2.
BANCO DE ORO UNIBANK, INC. v. GUILLERMO C. SAGAYSAY

G.R. No. 214961, September 16, 2015, MENDOZA, J.
The retirement age is primarily determined by the existing agreement or employment

contract. Only in the absence of such an agreement shall the retirement age be fixed by law.
Facts:
Guillermo Sagaysay is a senior accounting assistant of Banco De Oro Unibank, Inc.
(BDO). BDO informed Guillermo that pursuant to the retirement policy of the bank,
he will be terminated from service days after his 60th birthday. Guillermo appealed
to BDO to extend his services beyond the compulsory retirement age of the bank
since he had an outstanding loan and his children are still in college. BDO denied the
request. Again, he appealed that his services be extended for 8 months so he could
render at least five years of employment which would entitle him to 50% of his basic
pay for every year of service upon his retirement, but BDO again denied the request.
Subsequently, he was retired from his services. Guillermo filed a complaint for illegal
dismissal against BDO alleging that despite his appeal, BDO retired him from service
pursuant to its retirement plan. He questions the validity of BDO’s retirement plan.
Issue:
Whether BDO’s retirement plan is valid
Ruling:
Yes. Article 287 of the Labor Code provides: In the absence of a retirement plan
or agreement providing for retirement benefits of employees in the establishment,
an employee upon reaching the age of sixty (60) years or more, but not beyond
sixty-five (65) years which is hereby declared the compulsory retirement age, who
has served at least five (5) years in the said establishment, may retire and shall be
entitled to retirement pay. Acceptance by the employees of an early retirement age
option must be explicit, voluntary, free, and uncompelled. While an employer may
unilaterally retire an employee earlier than the legally permissible ages under the
Labor Code, this prerogative must be exercised pursuant to a mutually instituted
early retirement plan. The retirement plan must be voluntarily assented to by the
employees. The Court is convinced that Guillermo was undeniably informed and
had consented to the retirement plan of BDO before his compulsory retirement.
By accepting the employment offer of BDO, Sagaysay was deemed to have assented to
all existing rules, regulations and policy of the bank, including the retirement plan.
CONCEPCION A. VILLENA v. BATANGAS II ELECTRIC COOPERATIVE, INC. and GEORGE A. DIN

G.R. No. 205735, February 4, 2015, PERLAS-BERNABE, J.
In order to claim retirement pay, the complaint should contain substantial

allegations which show that the complainant had applied for the same, and that the
application squares with the requirements of entitlement under the terms of the
company’s retirement plan.
Facts:
Concepcion Villena filed a complaint for constructive dismissal against
Batangas II Electric Cooperative (BATELEC II) before the LA. The LA dismissed Villena’s
complaint. The ruling of the LA was reversed by the NLRC declaring Villena to have
been illegally dismissed, and thus, ordered BATELEC II to reinstate her to her former
position as Finance Manager, or its equivalent, and to pay her salary differentials.
Villena moved for reconsideration but was denied. The CA declared Villena "entitled
to the difference between the salary of the Finance Manager and that of the auditor,
plus allowances and any other benefits pertaining to the position of Finance Manager
at the time she was removed therefrom up to the date of her actual reinstatement.”
When it was remanded to the LA, the latter excluded from the computation claims
for bonus, representation allowance, transportation benefits, and attorney’s fees
denying also her claim for separation pay in lieu of reinstatement. The NLRC held
that separation pay was justified. She moved for its execution when the NLRC
Resolution attained finality. When the LA found that she was entitled to such
benefits, BATELEC II appealed to the NLRC. However, the NLRC excluded from
the computation the sums for representation, transportation, and cellular phone
allowances, as well as retirement pay. Her motion for reconsideration was
partially granted. The CA held that she is entitled to separation pay but
disallowed the inclusion of allowances for representation, transportation, and cellular
phone usage.
Issue:
Whether retirement pay should be awarded in favor of Villena
Ruling:
No. The "other benefits" mentioned in these rulings cannot be construed to

include retirement pay for the primary reason that they adjudged awards relative to
Villena’s illegal dismissal complaint, which remains barren of a specific cause of action
for retirement pay.
However, representation, transportation, and cellular phone usage

allowances are given to the Finance Manager/Department Manager as part of their
benefits, unlike the separate entitlement to retirement pay which may be recovered
only upon a meritorious subsequent application when the employee decides to
retire. Consequently, these allowances ought to be included in the "other benefits
pertaining to the position of Finance Manager" to which Villena is entitled to and
which were awarded to her under the final and executory CA Decision and NLRC
Resolution.
With the award of the "other benefits pertaining to the position of Finance
Manager" made by the CA in its August 31, 2001 Decision lapsing into finality, the
same had already become immutable and unalterable; this means that they may no
longer be modified in any respect, even if the modification is meant to correct what is
perceived to be an erroneous conclusion of fact or law.
RADAR SECURITY & WATCHMAN AGENCY, INC. v. JOSE D. CASTRO

G.R. No. 211210, December 02, 2015, PEREZ, J.
An employee who has been validly dismissed is not entitled to separation pay,
backwages, 13th month pay, holiday pay, and service incentive leave pay.
Facts:
Jose Castro was an employee of Radar Security & Watchmen Agency Inc.
(RSWAI). He filed a complaint for illegal dismissal and money claims against RSWAI.
Castro alleged that he was constructively dismissed after being displaced from his
post at a bank. RSWAI averred that Castro was not dismissed since it directed Castro
twice to report to its office for his new assignment.
Issue:
Whether the award of separation pay, backwages, 13th month pay, holiday pay,
and service incentive leave pay is proper despite the validity of the dismissal
Ruling:
No. Article 279 of the Labor Code provides that "[i]n 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."
There being no dismissal of respondent in the present case, the appellate

court has no legal basis to award respondent separation pay and backwages. Neither
is respondent entitled to the award of money claims for underpayment, absent
evidence to substantiate the same.
G.J.T. REBUILDERS MACHINE SHOP, GODOFREDO TRILLANA, AND JULIANA

TRILLANA, v. RICARDO AMBOS, BENJAMIN PUTIAN, AND RUSSELL AMBOS
Employers are not obliged to pay separation pay when they closed their
establishments due to serious business losses or financial reverses.
Facts:
G.J.T. Rebuilders rented space in the Far East Asia Building which served as
the site of its machine shop. On September 8, 1996, a fire partially destroyed the
building. Due to the damage sustained by the building, its owner notified its tenants
to vacate their rented units by the end of September 1996 to avoid any unforeseen
accidents which may arise due to the damage. G.J.T. Rebuilders left its rented space
and closed the machine shop. It then filed an Affidavit of Closure before the DOLE.
Respondents who were the dismissed employees of GJT, filed a Complaint for illegal
dismissal. With no credible proof of G.J.T. Rebuilders’ supposed serious business losses,
respondents argue that petitioners must pay them separation pay.
Issue:
Whether respondents are entitled to separation pay
Ruling:
Yes. Article 283 of the Labor Code allows an employer to dismiss an employee
due to the cessation of operation or closure of its establishment or undertaking.
However, despite this
management prerogative, employers closing their businesses must pay the
affected workers separation pay equivalent to one-month pay or to at least one-half-
month pay. The reason is that an employee dismissed, even for an authorized cause,
loses his or her means of livelihood. The only time employers are not compelled to
pay separation pay is when they closed their establishments or undertaking due
to serious business losses or financial reverses. To prove the loss, financial
statements may be presented.
G.J.T. Rebuilders failed to sufficiently prove its alleged serious business losses.
The two-year period covered by the financial statement, is insufficient for G.J.T.
Rebuilders to have objectively perceived that the business would not recover from
the loss. In addition to separation pay, G.J.T. Rebuilders must pay each of the
respondents nominal damages for failure to comply with the notice requirement under
Article 283 of the Labor Code. Notice of the eventual closure of establishment is a
personal right of the employee.
MANILA WATER COMPANY vs. CARLITO DEL ROSARIO

G.R. No. 188747, January 29, 2014
J. PEREZ
The attendant circumstances in the present case considered, we are constrained to deny Del
Rosario separation pay since the admitted cause of his dismissal amounts to serious misconduct.
He is not only responsible for the loss of the water meters in flagrant violation of the company’s
policy but his act is in utter disregard of his partnership with his employer in the pursuit of mutual
benefits.
Facts:
Carlito Del Rosario was employed as Instrument Technician by Metropolitan Waterworks and
Sewerage System (MWSS). In May 2000, Manila Water discovered that 24 water meters were
missing in its stockroom. Upon initial investigation, it appeared that Del Rosario and his co-
employee, a certain Danilo Manguera, were involved in the pilferage and the sale of water meters
to the company’s contractor. Manila Water issued a Memorandum directing Del Rosario to
explain why he should not be dealt with administratively for the loss of the said water meters.
Del Rosario confessed his involvement in the act charged and pleaded for forgiveness, promising
not to commit similar acts in the future. During the formal investigation Del Rosario was found
responsible for the loss of the water meters and therefore liable for violating the Company’s Code
of Conduct. Manila Water proceeded to dismiss Del Rosario from employment.
Del Rosario filed an action for illegal dismissal claiming that his severance from employment is
without just cause. Del Rosario averred that his admission to the misconduct charged was not
voluntary but was coerced by the company. On the other hand, Manila Water pointed out that
he was indeed involved in the taking of the water meters from the company’s stock room and of
selling these to a private contractor for personal gain.
Labor Arbiter issued a Decision dismissing for lack of merit the complaint filed by Del Rosario
who was, however, awarded separation pay. NLRC dismissed the appeal interposed by Manila
Water for its failure to append a certification against forum shopping in its Memorandum of
Appeal. Court of Appeals reversed NLRC’s Resolution and held that it committed a grave abuse
of discretion when it dismissed Manila Water’s appeal on mere technicality. The appellate court,
however, proceeded to affirm the decision of the Labor Arbiter awarding separation pay to Del
Rosario.
Issue:
Whether Del Rosario is entitled to the separation pay.
Ruling:
In Tirazona v. Phillippine EDS Techno-Service, Inc. (PET, Inc.), we denied the award of
separation pay to an employee who was dismissed from employment due to loss of trust and
confidence.
While [this] Court commiserates with the plight of Tirazona, who has recently manifested
that she has since been suffering from her poor health condition, the Court cannot grant
her plea for the award of financial benefits based solely on this unfortunate circumstance.
For all its conceded merit, equity is available only in the absence of law and not as its
replacement. Equity as an exceptional extenuating circumstance does not favor, nor may
it be used to reward, the indolent or the wrongdoer for that matter. This Court will not
allow a party, in guise of equity, to benefit from its own fault.
The attendant circumstances in the present case considered, we are constrained to deny Del
Rosario separation pay since the admitted cause of his dismissal amounts to serious misconduct.
He is not only responsible for the loss of the water meters in flagrant violation of the company’s
policy but his act is in utter disregard of his partnership with his employer in the pursuit of
mutual benefits.
In the recent case of Daabay v. Coca-Cola Bottlers, this Court reiterated our ruling in Toyota and
disallowed the payment of separation pay to an employee who was found guilty of stealing the
company’s property. We repeated that an award of separation pay in such an instance is
misplaced compassion for the undeserving who may find their way back and weaken the fiber of
labor.
That Del Rosario rendered 21 years of service to the company will not save the day for him. To
this case, Central Pangasinan Electric Cooperative, Inc. v. National Labor Relations Commission
is on all fours, thus:
Although long years of service might generally be considered for the award of separation
benefits or some form of financial assistance to mitigate the effects of termination, this
case is not the appropriate instance for generosity under the Labor Code nor under our
prior decisions. The fact that private respondent served petitioner for more than twenty
years with no negative record prior to his dismissal, in our view of this case, does not call
for such award of benefits, since his violation reflects a regrettable lack of loyalty and
worse, betrayal of the company. If an employee's length of service is to be regarded as a
justification for moderating the penalty of dismissal, such gesture will actually become a
prize for disloyalty, distorting the meaning of social justice and undermining the efforts
of labor to cleanse its ranks of undesirables.
Indubitably, the appellate court erred in awarding separation pay to Del Rosario without taking
into consideration that the transgression he committed constitutes a serious offense. The grant
of separation pay to a dismissed employee is determined by the cause of the dismissal. The years
of service may determine how much separation pay may be awarded. It is, however, not the
reason why such pay should be granted at all.
In sum, we hold that the award of separation pay or any other kind of financial assistance to Del
Rosario, under the nomenclature of compassionate justice, is not warranted in the instant case.
A contrary rule would have the effect of rewarding rather than punishing an erring employee,
disturbing the noble concept of social justice.
IMMACULATE CONCEPCION ACADEMY/DR. JOSE PAULO E. CAMPOS vs. EVELYN E.

CAMILON
G.R. No. 188035, July 2, 2014, J. Villarama, Jr.
Pursuant to the aforementioned rulings, Camilon is clearly not entitled to separation pay.
[Camilon] was holding a position which involves a high degree of responsibility requiring trust and
confidence as it involves financial interests of the school. She was guilty of gross and habitual
negligence in failing to regularly pre-audit the report of the school cashier, check the entries therein
and keep custody of the petty cash fund. Had she been assiduously doing her job, the unaccounted
school funds would have been discovered right away. Hence, she should not be granted separation
pay. To rule otherwise would be to reward Camilon for her negligent acts instead of punishing her
for her offense. This is in line with the Court’s ruling in Reno Foods, Inc. vs. NagkakaisangLakas ng
Manggagawa-Katipunan that separation pay is only warranted when the cause for termination is
not attributable to the employee’s fault, such as those provided in Articles 283 and 284 of the Labor
Code, as well as in cases of illegal dismissal in which reinstatement is no longer feasible. It is not
allowed when an employee is dismissed for just cause.
Facts:
Prompted by a complaint of a parent, Ms. Javier, Internal Auditor of Petitioner

Immaculate Concepcion Academy (ICA), conducted an audit which mainly showed that there
were more or less 186 students whose unaccounted payments in the tune of PhP1,167,181.45 and
that the cashier, Ms. Loba, committed breaches in procedure and manipulated entries or records
in order to hide these accounts. Resultantly, ICA President Dr. Jose Paulo Campos placed under
suspension pending further investigation herein Respondent Ms. Camilon, ICA Chief Accountant
and Administrator, who was responsible for pre-auditing the school cashier’s report and
exercising supervision over the cashier, Ms. Loba.
Camilon denied any involvement in the illicit activities of Ms. Loba. Nevertheless, ICA
Management terminated her services in view of her direct supervisory role over the erring
cashier. Camilon then filed a complaint for illegal dismissal with money claims against ICA. The
Labor Arbiter granted the reliefs sought by Camilon while the NLRC found that ICA presented
justifiable reasons and sufficient evidence to cause the dismissal of Camilon but sustained the
award of unpaid half-month salary, 13th month pay and service incentive leave.
Camilon appealed this decision to the CA which affirmed the same with modification as
to the award of separation pay. The appellate court ruled that Camilon did not commit serious
misconduct or the imputed acts do not reflect moral obliquity and so considering her long
employment of 12 years with ICA the payment of separation pay is but proper.
ICA filed the instant petition, arguing that Camilon is not entitled to separation pay since
the evidence proffered shows that she exhibited gross and habitual negligence at work.
Issues:
1. Is an employee found to have committed gross and habitual neglect of duty entitled
to separation pay?
2. Can substantial length of service justify the award of separation pay in the instant
case?
Ruling:
1. NO, Camilon is not entitled to separation pay.
The issue of whether a validly dismissed employee is entitled to separation pay has been
settled in the 2007 case of Toyota Motor Philippines Corporation Workers Association vs. NLRC,
“where it was further clarified that in addition to serious misconduct, in dismissals based on other
grounds under Art. 282 like willful disobedience, gross and habitual neglect of duty, fraud or
willful breach of trust, and commission of a crime against the employer or his family, separation
pay should not be conceded to the dismissed employee.”
In Central Philippines Bandag Retreaders, Inc. vs. Diasnes, this Court said that labor
adjudicatory officials and the CA “must be judicious and circumspect in awarding separation pay
or financial assistance as the constitutional policy to provide full protection to labor is not meant
to be an instrument to oppress the employers.” Likewise, in Moya vs. First Solid Rubber
Industries, Inc., the act of concealment of the employee against the employer was deemed to be
outside the protective mantle of the principle of social justice.
Pursuant to the aforementioned rulings, Camilon is clearly not entitled to separation pay.
Camilon was holding a position which involves a high degree of responsibility requiring trust and
confidence as it involves financial interests of the school. She was guilty of gross and habitual
negligence in failing to regularly pre-audit the report of the school cashier, check the entries
therein and keep custody of the petty cash fund. Had she been assiduously doing her job, the
unaccounted school funds would have been discovered right away. Hence, she should not be
granted separation pay. To rule otherwise would be to reward Camilon for her negligent acts
instead of punishing her for her offense. This is in line with the Court’s ruling in Reno Foods, Inc.
vs. NagkakaisangLakas ng Manggagawa-Katipunan that separation pay is only warranted when
the cause for termination is not attributable to the employee’s fault, such as those provided in
Articles 283 and 284 of the Labor Code, as well as in cases of illegal dismissal in which
reinstatement is no longer feasible. It is not allowed when an employee is dismissed for just cause.
2. NO, length of service is not availing in this case.
Camilon’s 12 years of service and clean employment record cannot simply erase her gross
and habitual negligence in her duties. Length of service is not a bargaining chip that can simply
be stacked against the employer. In Central Pangasinan Electric Cooperative, Inc. vs. NLRC, this
Court pronounced that if an employee’s length of service is to be regarded as a justification for
moderating the penalty of dismissal, such gesture will actually become a prize for disloyalty,
distorting the meaning of social justice and undermining the efforts of labor to cleanse its ranks
of undesirables.
GOODYEAR PHILIPPINES, INC. AND REMEGIO M. RAMOS vs. MARINA L. ANGUS

G.R. No. 185449, November 12, 2014, J. Del Castillo
In the absence of a specific provision in the CBA prohibiting recovery of separation pay on
top of the retirement pay, the employee is entitled to both. Retirement benefits and separation pay
are not mutually exclusive. Retirement benefits are a form of reward for an employee's loyalty and
service to an employer and are earned under existing laws, CBAs, employment contracts and
company policies. On the other hand, separation pay is that amount which an employee receives at
the time of his severance from employment.
Moreover, the release and quitclaim signed by the employee cannot be used by the employer
to legalize the denial of the former's rightful claims. Under prevailing jurisprudence, a quitclaim
cannot bar an employee from demanding benefits to which he is legally entitled.
Facts:
Angus was employed by Goodyear on November 16, 1966 and occupied the position of
Secretary to the Manager of Quality and Technology. In order to maintain the viability of its
operations in the midst of economic reversals, Goodyear implemented cost-saving measures
which included the streamlining of its workforce. Consequently, Angus’ position was abolished.
The company stated that it will pay Agus termination benefits: 47 days' pay per year of service
(which will come from the Pension Fund), fractions of 13thand 14th months pay, longevity pay,
emergency leave and any earned and unused vacation and/or sick leave.
Angus wrote back saying that she does not agree on the terms stated therein. Meanwhile
and in connection with the retrenchment of Angus, an Establishment Termination Report was
filed by Goodyear with the Department of Labor and Employment (DOLE). On November 20,
2001, Angus accepted the checks which covered payment of her retirement benefits computed at
47 days' pay per year of service and other company benefits. However, she put the following
annotation in the acknowledgement receipt thereof:
“Received under protest - amount is not acceptable. Acceptance is on condition that I will
be given a premium of additional 3 days for every year of service. Since my service was terminated
due to redundancy, I now claim my separation pay as mandated by law. This is a separate claim
from my early retirement benefit.”
Allegedly because of the above-quoted annotation, and also of Angus' refusal to sign a
Release and Quitclaim, petitioners took back the checks. On January 17, 2002, Angus finally
accepted a check in the amount of P1,958,927.89 purportedly inclusive of all termination benefits
computed at 47 days' pay per year of sendee. She likewise executed a Release and Quitclaim in
favor of Goodyear.
On February 5, 2002, Angus filed with the Labor Arbiter a complaint for illegal dismissal
with claims for separation pay, damages and attorney's fees against petitioners. Angus claimed
that her termination by reason of redundancy was effected in violation of the Labor Code for it
was not timely reported to the DOLE and no separation pay was given to her; that the separation
pay to which she is entitled by law is entirely different from the retirement benefits that she
received; that nothing in the company's Retirement Plan under the CBA, the CBA itself or the
Employment Contract prohibits the grant of more than one land of separation pay; and, that she
was only forced to sign a quitclaim after accepting her retirement benefits.
The Labor Arbiter upheld the validity of Angus' termination from employment. On
appeal, the CA rendered a Decisionpartially granting Angus' Petition. While it found her
dismissal valid in both substance and procedural aspects, it declared Angus entitled to separation
pay in addition to the retirement pay she already received. Petitioners now argue that the CA
erred in ordering them to still pay Angus separation pay as she was already paid the same at the
rate used for computing early retirement benefits. They insist that Angus is entitled to only one
kind of pay as the recovery of both retirement benefits and separation pay is proscribed by the
company's CBA. Petitioners further contend that the CA has no basis in disregarding the
quitclaim since it was knowingly and voluntarily executed by Angus. And such voluntary
execution, coupled with her acceptance of separation pay computed at early retirement rate, had
effectively barred Angus from demanding for more.
Issues:
1. Whether or not Angus is entitled to the payment of separation pay on top of the
retirement pay despite the fact that it is very clear in the CBA that she is entitled to
only one type of benefit, either separation pay or retirement benefit, whichever is
higher.
2. Whether or not Goodyear should pay Angus separation pay despite the fact that she
executed a valid and binding quitclaim.
Ruling:
1. Yes, she is entitled.
Angus is entitled to both separation pay and early retirement benefit due to the absence
of a specific provision in the CBA prohibiting recovery of both.
Retirement benefits and separation pay are not mutually exclusive. Retirement benefits
are a form of reward for an employee's loyalty and service to an employer and are earned under
existing laws, CBAs, employment contracts and company policies. On the other hand, separation
pay is that amount which an employee receives at the time of his severance from employment,
designed to provide the employee with the wherewithal during the period that he is looking for
another employment and is recoverable only in instances enumerated under Articles 283 and 284
of the Labor Code or in illegal dismissal cases when reinstatement is not feasible. In the case at
bar, Article 283clearly entitles Angus to separation pay apart from the retirement benefits she
received from petitioners.
First, petitioners submitted a copy of what appears to be a portion of the company CBA
entitled "Retirement Plan, Life Insurance, Physical Disability Pay and Resignation Pay." Section
1, Article XI thereof provides that the availment of retirement benefits precludes entitlement to
any separation pay.
The same, however, can hardly be considered as substantial evidence because it does not
appear to be an integral part of Goodyear's CBA. Even assuming that it is, it would still not suffice
as there is no showing if the CBA under which the said provision is found was the one in force at
the time material to this case. It is also worthy to mention that the CBA does not contain any
restriction on the availment of benefits under the company's Retirement Plan and of separation
pay.
Moreover, based on the facts of the case, the amount Angus received from petitioners
represented only her retirement pay and not separation pay. A cursory reading of petitioners'
September 18, 2001 letter notifying Angus of her termination from employment shows that they
granted her early retirement benefits pegged at 47 days' pay per year of service. This rate was
arrived at after petitioners considered respondent's length of service with the company, as well
as her age which qualified her for early retirement. In fact, petitioners were even explicit in stating
in the said letter that the amount she was to receive would come from the company's Pension
Fund, which, as correctly asserted by Angus, was created to cover retirement benefit payment of
employees. In view therefore of the clear showing that what petitioners decided to grant Angus
was her early retirement benefits, they cannot now be permitted to deny having paid such
benefit.
Furthermore, while it is obvious that Angus is not entitled to compulsory retirement as

she has not yet reached the age of 60 which is one of the requirements enumerated in the
Retirement Plan provision of the CBA, there is no denying, however, that she is qualified for early
retirement. Under the provision of the Retirement Plan of the CBA as earlier quoted, a worker
who is at least 50 years old and with at least 15 years of service, and who has been recommended
by the President of the Union for early retirement and duly approved by the Human Resources
Director, shall be entitled to lump sum retirement benefits. At the time of her termination, Angus
was already 57 years of age and had been in the service for more than 34 years.
2. Yes, the Release and Quitclaim signed by Angus is invalid.
The release and quitclaim signed by Angus cannot be used by petitioners to legalize the
denial of Angus' rightful claims. As aptly observed by the CA, the terms of the quitclaim
authorizes Angus to receive less than what she is legally entitled to. Under prevailing
jurisprudence, a quitclaim cannot bar an employee from demanding benefits to which he is
legally entitled." It was held to be "ineffective in barring claims for the full measure of the worker's
rights and the acceptance of benefits therefrom does not amount to estoppel.
Moreover, release and quitclaims are often looked upon with disfavor when the waiver
was not done voluntarily by employees who were pressured into signing them by unscrupulous
employers seeking to evade their obligations.
CONCEPCION A. VILLENA vs. BATANGAS II ELECTRIC COOPERATIVE, INC. AND

GEORGE A. DIN
G.R. No. 205735, February 04, 2015, J. Perlas- Bernabe
The Court is not unaware of its rulings wherein it pronounced that retirement pay and
separation pay are not mutually exclusive (unless there is a specific prohibition in the collective
bargaining agreement or retirement plan against the payment of both benefits); however, with
Villena’s entitlement to retirement pay not included as an issue in an illegal dismissal case which
had already been finally decided, it is quite absurd for Villena to submit a “contemporaneous”claim
for retirement pay on the execution phase of these proceedings.On the other hand, with the award
of the “other benefits pertaining to the position of Finance Manager” made by the CA in its August
31, 2001 Decision lapsing into finality, the same had already become immutable and unalterable;this
means that they may no longer be modified in any respect, even if the modification is meant to
correct what is perceived to be an erroneous conclusion of fact or law. Thus, it was an error on the
part of the CA to still consider, rule upon, and vary the previous CA Ruling, i.e., August 31, 2001 CA
Decision, on the entitlement of Villena to the benefits of representation, transportation, and
cellular phone usage allowances.
Facts:
Villena was hired by respondent Batangas II Electric Cooperative, Inc. (BATELEC II) as
bookkeeper in 1978. She rose from the ranks and was promoted as Finance Manager in 1985. In
1994, she was demoted to the position of Auditor, which caused her to file a complaint for
constructive dismissal before the Labor Arbiter. The LA dismissed Villena’s complaint,
prompting her to seek recourse before NLRC.The ruling of the LA was reversed whereby the
NLRC declared Villena to have been illegally dismissed, and thus, ordered BATELEC II to
reinstate her to her former position as Finance Manager, or its equivalent, and to pay her salary
differentials. However, the NLRC’s judgment was silent on the payment of allowances, benefits,
and attorney’s fees.At odds with the verdict, she elevated the matter to the CA.
In a Decisiondated August 31, 2001, the CA modified the NLRC Resolution and declared
Villena to be “entitled to the difference between the salary of the Finance Manager and that of
the auditor, plus allowances and any “other benefits” pertaining to the position of Finance
Manager at the time she was removed therefrom up to the date of her actual reinstatement.” The
case was then remanded to the NLRC for the computation of the total amount due to Villena. In
the course thereof, the LA declared that Villena was entitled only to “salary differentials,
13thmonth pay, unused sick leave, leave of absence” amounting to P1,078,890.14, excluding from
the computation claims for bonus, representation allowance, transportation benefits, and
attorney’s fees. Moreover, her claim for separation pay in lieu of reinstatement was denied.
While Villena received the amount of P1,078,890.14, she appealed to the NLRC the
exclusion of her other benefits as well as her claim for separation pay.Meanwhile, on September
20, 2003, BATELEC II issued a policy which provided for retirement benefits to its regular
employees.
In a Resolutiondated March 22, 2007, the NLRC granted the appeal of Villena, holding
that since reinstatement was no longer possible, separation pay in lieu of reinstatement was
justified. It then directed BATELEC II “to pay Villena her claim for separation pay in lieu of
reinstatement, salary differentials and other benefits, from the date of her dismissal up to the
date of the payment of her separation pay. This NLRC Resolution subsequently attained finality.
Issue:
Whether or not (a) retirement pay, and (b) representation, transportation, and cellular
phone usage allowances should be awarded in favor of Villena.
Ruling:
Villena is not entitled to retirement pay but nevertheless entitled to representation,

transportation, and cellular phone usage allowances.
A. On Retirement Pay
As the Court sees it, the “other benefits” mentioned in August 31, 2001 CA Decision and March
22, 2007 NLRC Resolutioncannot be construed to include retirement pay for the primary reason
that they adjudged awards relative to Villena’s illegal dismissal complaint, which remains barren
of a specific cause of action for retirement pay. In order for her retirement pay claim to be
considered, Villena’s complaint should have contained substantial allegations which would show
that she (a) had applied for the same, and (b) her application squares with the requirements of
entitlement under the terms of the company’s retirement plan, i.e., Policy No. 03-003, which, in
fact, was issued on September 20, 2003, or after the August 31, 2001 CA Decision had already
attained finality. However, based on the records, what she sought for in her illegal dismissal
complaint were the reliefs of reinstatement, payment of salary differentials, all benefits and
allowances that she may have received as Finance Manager, attorney’s fees, and damages.Verily,
the Court is not unaware of its rulings wherein it pronounced that retirement pay and separation
pay are not mutually exclusive (unless there is a specific prohibition in the collective bargaining
agreement or retirement plan against the payment of both benefits); however, with Villena’s
entitlement to retirement pay not included as an issue in an illegal dismissal case which had
already been finally decided, it is quite absurd for Villena to submit a “contemporaneous”claim
for retirement pay on the execution phase of these proceedings.
B. On Transportation, Representation, and Cellular Phone Usage Allowances
Meanwhile, on the matter of the claimed allowances, it is clear from BATELEC II’s pleadings
and submissions that representation allowance, transportation allowance, and cellular phone
usage allowance re given to the Finance Manager/Department Manager as part of their
benefits, unlike the separate entitlement to retirement pay which may be recovered only upon a
meritorious subsequent application when the employee decides to retire. Consequently, these
allowances ought to be included in the “other benefits pertaining to the position of Finance
Manager” to which Villena is entitled to and which were awarded to her under the final and
executory CA Decision and NLRC Resolution.
With the award of the “other benefits pertaining to the position of Finance Manager” made
by the CA in its August 31, 2001 Decision lapsing into finality, the same had already become
immutable and unalterable;this means that they may no longer be modified in any respect, even
if the modification is meant to correct what is perceived to be an erroneous conclusion of fact or
law. Thus, it was an error on the part of the CA to still consider, rule upon, and vary the previous
CA Ruling, i.e., August 31, 2001 CA Decision, on the entitlement of Villena to the benefits of
representation, transportation, and cellular phone usage allowances. On this score, therefore, the
claim of Villena is granted.
TERMINATION OF EMPLOYMENT
EMPLOYER-EMPLOYEE RELATIONSHIP
MELVIN MALLO v. SOUTHEAST ASIAN COLLEGE, INC. and EDITA ENATSU

G.R. No. 212861, October 14, 2015, PERLAS-BERNABE, J.
To constitute abandonment, there must be a clear and deliberate intent to

discontinue one's employment without any intention of returning. Two elements must
concur: (1) failure to report for work or absence without valid or justifiable reason; and
(2) a clear intention to sever the employer- employee relationship, with the second
element as the more determinative factor and being manifested by some overt acts.
Facts:
Melvin Mallo alleged that Southeast Asian College, Inc. (SACI) and its
Executive President Edita Enatsu first hired him as a probationary full-time faculty
member of the college of nursing and midwifery for the second semester of SY 2007-
2008, and thereafter, his employment was renewed for the succeeding semesters until
SY 2010-2011. At the start of SY 2011-2012, he learned that the faculty meetings were
conducted without him. In confronting the dean of the college, he claimed that he was
already a permanent employee of SACI, having been a professor thereat for almost four
years. Even though Mallo demanded that he be given his corresponding teaching
load, the dean simply retorted that the school was under no obligation to do so.
Mallo filed a complaint against the respondents for unfair labor practice, illegal
dismissal, underpayment of salary/wages and attorney’s fees.
Issue:
Whether there was illegal dismissal and abandonment on Mallo’s part
Ruling:
No. As early as April 2011, respondents already assigned Mallo a teaching load
for the First Semester of SY 2011-2012 as a Clinical Instructor for SACI students to be
assigned at NCMH, which the latter accepted. Unfortunately, Mallo failed the
qualifying tests at NCMG twice, thus, virtually disqualifying him from performing
his work as SACI’s Clinical Instructor. Despite these developments, respondents were
able to remedy the situation by assigning Mallo as a Clinical Instructor at UDMC
instead.
While the Court concurs with the CA that Mallo was not illegally dismissed,
the Court does not agree that he had abandoned his work. Tan Brothers Corporation of
Basilan City vs. Escudero (G.R. No. 188711, July 08, 2013) provides that abandonment is
the deliberate and unjustified refusal of an employee to resume his employment. It
constitutes neglect of duty and is a just cause for termination of employment under
paragraph (b) of Article 282 [now Article 296] of the Labor Code.
To constitute abandonment, there must be overt acts showing that the

employee does not want to work anymore. The employer has the burden of proof
to show an unjustified refusal of the employee to resume his employment without
any intention of returning. Records are bereft of any indication that Mallo's absence
from work was deliberate, unjustified, and with a clear intent to sever his
employment relationship with SACI. While respondents claim to have assigned
Mallo as Clinical Instructor at UDMC after failing the qualifying tests at NCMH,
which assignment the latter initially accepted, but eventually declined, there is no
proof that Mallo was informed of such assignment. A party alleging a critical fact
must support his allegation with substantial evidence. Mallo's filing of a complaint
for illegal dismissal, coupled with his prior acts of actively inquiring about his
teaching load, negate any intention on his part to sever his employment. It is
absurd for Mallo to provide continuous service to SACI for more than three years in
order to attain a regular status, only to leave his job without any justifiable reason
and thereafter, file a case in an attempt to recover the same. Abandonment of
position is a matter of intention and cannot be lightly inferred, much less legally
presumed, from certain equivocal acts.
RICHARD N. RIVERA v. GENESIS TRANSPORT SERVICE, INC. AND RIZA A. MOISES

G.R. No. 215568, August 03, 2015, LEONEN, J.
Misconduct can only be a basis for terminating employment if the breach of trust
is attended with a degree of severity.
Facts:
Richard Rivera was employed as a bus conductor by Genesis Transport
Service, Inc. He received a Memorandum giving him 24 hours to explain why he
should not be sanctioned for remitting the amount of P198.00 instead of the correct
amount of P394.00 worth of bus ticket receipts. After a valid notice and hearing
and despite Rivera’s explanations that it was an honest mistake and that he was
unable to correct it because the bus encountered mechanical problems, a notice was
given informing him of his termination. He filed a complaint for illegal dismissal.
Issue:
Whether Rivera was illegally dismissed
Ruling:
Yes. Two classes of employees are considered to hold positions of trust:
Managerial Employees and fiduciary rank-and-file employees, such as cashiers,
auditors, property custodians, or those who, in the normal exercise of their
functions, regularly handle significant amounts of money or property. The work of
bus conductors may be analogous to that of the fiduciary rank-and-file employees.
However, while they do handle money, their circumstances are not at all the same
as those of regular cashiers. They have to think quickly, literally on their feet. Regular
cashiers, on the other hand, have the time and comfort to deliberately and carefully
examine the transactions of their employer. Moreover, handling passengers' fare
payments is not their sole function since they also assist drivers as they maneuver
buses through tight spaces while they are in transit, depart, or park and also the
passengers as they embark and alight.
Furthermore, no proof has been adduced of ill-motive or even of gross

negligence. From all indications, petitioner stood charged with a lone, isolated
instance of apparent wrongdoing. Absent any other supporting evidence, the error
in a single ticket issued by petitioner can hardly be used to justify the inference that
he has committed serious misconduct or has acted in a manner that runs afoul of
his employer's trust. As with misconduct as basis for terminating employment,
breach of trust demands that a degree of severity attends the employee's breach of
trust.
HOCHENG PHILIPPINES CORPORATION v. ANTONIO M. FARRALES

G.R. No. 211497, March 18, 2015, REYES, J.
The cause for termination must be a serious and grave malfeasance to justify the
deprivation of a means of livelihood.
Facts:
Antonio Farrales filed a complaint for illegal dismissal against the petitioner.
Prior to his dismissal, a report reached HPC management that a motorcycle helmet of
an employee was stolen at the parking lot within its premises. The CCTV revealed that
Farrales took the missing helmet from a parked motorcycle. Consequently, after due
notice and hearing, the HPC issued a Notice of Termination to Farrales dismissing him
for violation of the HPC Code of Discipline.
Issue:
Whether Farrales was illegally dismissed
Ruling:
Yes. The spirit of our Constitution and laws lean over backwards in favor of the
working class, and mandate that every doubt must be resolved in their favor. Where
there is no showing of a clear, valid and legal cause for termination of employment,
the law considers the case a matter of illegal dismissal. If doubts exist between the
evidence presented by the employer and that of the employee, the scales of justice
must be tilted in favor of the latter. The employer must affirmatively show
rationally adequate evidence that the dismissal was for a justifiable cause.
Respondent is not guilty of theft on the ground that the circumstances presented
showed that the he only mistook the helmet as the one belonging to his neighbor
Eric, the same helmet he only intended to borrow.
ESSENCIA Q. MANARPIIS v. TEXAN PHILIPPINES, INC., RICHARD TAN AND CATHERINE

P. RIALUBIN-TAN
Mere absence or failure to work, even after notice to return, is not tantamount
to abandonment. The filing by an employee of a complaint for illegal dismissal with
a prayer for reinstatement is proof enough of his desire to return to work, thus, negating
the employer’s charge of abandonment.
Facts:
Texan Philippines, Inc. (TPI) hired Essencia Manarpiis as Sales and
Marketing Manager. Spouses Tan, owners of TPI, claiming insurmountable losses,
served a written notice addressed to all their employees that TPI will cease operations.
Manarpiis then filed a complaint for illegal dismissal. Manarpiis received a
memorandum as notice of investigation and grounding for her alleged violation of
company rules and regulations, which constitute gross misconduct, gross
insubordination and dishonesty. Manarpiis averred that TPI should have
investigated the supposed violations of company rules and fraudulent acts earlier
and not when Manarpiis had filed an illegal dismissal complaint. Subsequently,
another memorandum was issued, as notice of termination of employment of
Manarpiis due to dishonesty, loss of confidence and abandonment of work.
Issue:
Whether Manarpiis’ acts constitute abandonment
Ruling:
No. Two elements must concur for a valid abandonment: (1) the failure to
report to work or absence without valid or justifiable reason, and (2) a clear intention
to sever the employer-employee relationship, with the second element as the more
determinative factor being manifested by some overt acts. Abandonment as a just
ground for dismissal requires the deliberate, unjustified refusal of the employee to
perform his employment responsibilities. Also, an employee who takes steps to
protest his dismissal cannot logically be said to have abandoned his work.
Abandonment in this case was a trumped up charge, apparently to make it appear
that Manarpiis was not yet terminated when she filed the illegal dismissal complaint
and to give a semblance of truth to the belated investigation against the Manarpiis.
She did not abandon her work but was told not to report for work anymore after
being served a written notice of termination of company closure and turning over
company properties to Rialubin-Tan.
ASHMOR M. TESORO, PEDRO ANG AND GREGORIO SHARP vs. METRO MANILA
RETREADERS, INC. (BANDAG) AND/OR NORTHERN LUZON RETREADERS, INC
(BANDAG) AND/OR POWER TIRE AND RUBBER CORP. (BANDAG)
G.R. No. 171482. March 12, 2014, J. Abad
Franchising involves the use of an established business expertise, trademark, knowledge,

and training. As such, the franchisee is required to follow a certain established system. Accordingly,
the franchisors may impose guidelines that somehow restrict the franchisees’ conduct which do not
necessarily indicate “control” The important factor to consider is still the element of control over
how the work itself is done, not just its end result.
Facts:
Petitioners Ashmor M. Tesoro, Pedro Ang, and Gregorio Sharp used to work as salesmen
for respondents Metro Manila Retreaders, Inc., Northern Luzon Retreaders, Inc., or Power Tire
and Rubber Corporation, apparently sister companies, collectively called "Bandag." Bandag
offered repair and retread services for used tires. In 1998, however, Bandag developed a
franchising scheme that would enable others to operate tire and retreading businesses using its
trade name and service system.
Petitioners quit their jobs as salesmen and entered into separate Service Franchise Agreements
(SFAs) with Bandag for the operation of their respective franchises. Under the SFAs, Bandag
would provide funding support to the petitioners subject to a regular or periodic liquidation of
their revolving funds. The expenses out of these funds would be deducted from petitioners’ sales
to determine their incomes.
At first, petitioners managed and operated their respective franchises without any problem. After
a length of time, however, they began to default on their obligations to submit periodic
liquidations of their operational expenses in relation to the revolving funds Bandag provided
them. Consequently, Bandag terminated their respective SFA. Aggrieved, petitioners filed a
complaint for constructive dismissal, non-payment of wages, incentive pay, 13th month pay and
damages against Bandag with the National Labor Relations Commission (NLRC).
The Labor Arbiter rendered a Decision, dismissing the complaint on the ground that no
employer-employee relationship existed between Bandag and petitioners. Upon petitioners’
appeal to the NLRC the latter affirmed the Labor Arbiter’s Decision. It also denied petitioners’
motion for reconsideration. Undaunted, petitioners filed a petition for certiorari under Rule 65
with the Court of Appeals (CA) ascribing grave abuse of discretion. The CA rendered a Decision,
dismissing the petition for lack of merit. Hence, this petition.
Issue:
Whether or not petitioners remained to be Bandag’s salesmen under the franchise scheme it
entered into with them
Ruling:
Franchising is a business method of expansion that allows an individual or group of individuals

to market a product or a service and to use of the patent, trademark, trade name and the systems
prescribed by the owner.
In this case, Bandag’s SFAs created on their faces an arrangement that gave petitioners the
privilege to operate and maintain Bandag branches in the way of franchises, providing tire repair
and retreading services, with petitioners earning profits based on the performance of their
branches.
The question is: did petitioners remain to be Bandag’s employees after they began operating
those branches? The tests for determining employer-employee relationship are: (a) the selection
and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d)
the employer’s power to control the employee with respect to the means and methods by which
the work is to be accomplished. The last is called the “control test,” the most important element.
When petitioners agreed to operate Bandag’s franchise branches in different parts of the country,
they knew that this substantially changed their former relationships. They were to cease working
as Bandag’s salesmen, the positions they occupied before they ventured into running separate
Bandag branches. They were to cease receiving salaries or commissions. Their incomes were to
depend on the profits they made. Yet, petitioners did not then complain of constructive
dismissal. They took their chances, ran their branches, Gregorio Sharp in La Union for several
months and Ashmor Tesoro in Baguio and Pedro Ang in Pangasinan for over a year. Clearly, their
belated claim of constructive dismissal is quite hollow.
Control in employer-employee relationships addresses the details of day to day work like
assigning the particular task that has to be done, monitoring the way tasks are done and their
results, and determining the time during which the employee must report for work or accomplish
his assigned task.
Franchising involves the use of an established business expertise, trademark, knowledge, and
training. As such, the franchisee is required to follow a certain established system. Accordingly,
the franchisors may impose guidelines that somehow restrict the petitioners’ conduct which do
not necessarily indicate “control.” The important factor to consider is still the element of control
over how the work itself is done, not just its end result.
SOUTH EAST INTERNATIONAL RATTAN, INC. and/or ESTANISLAO AGBAY

vs. JESUS J. COMING
G.R. No. 186621, March 12, 2014, J. VILLARAMA, JR.
Petitioners’ admission that the five affiants were their former employees is binding upon
them. While they claim that respondent was the employee of their suppliers Mayol and Apondar,
they did not submit proof that the latter were indeed independent contractors; clearly, petitioners
failed to discharge their burden of proving their own affirmative allegation. There is thus no
showing that the five former employees of SEIRI were motivated by malice, bad faith or any ill-
motive in executing their affidavit supporting the claims of respondent.
In any controversy between a laborer and his master, doubts reasonably arising from the
evidence are resolved in favor of the laborer.
Facts:
Jesus J. Coming (Coming) was hired by South East International Rattan, Inc. (SEIRI) initially in
“pakiao” basis compensation but it was later on fixed at Php 150.00 per day. In 1990, without any
apparent reason, his employment was interrupted as he was told by petitioners to resume work
in two months time. Being an uneducated person, respondent was persuaded by the management
as well as his brother not to complain, as otherwise petitioners might decide not to call him back
for work. Fearing such consequence, respondent accepted his fate. Nonetheless, after two months
he reported back to work upon order of management.
On January, 2002, Coming was dismissed without lawful cause by SEIRI. SEIRI denies hiring
Coming and contending that the latter actually worked for SEIRI’s furniture suppliers.
Labor Arbiter (LA) ruled that respondent is a regular employee of SEIRI and that the termination
of his employment was illegal. On appeal to the National Labor Relations Commission (NLRC)-
Cebu City, the decision of the LA was set aside. Respondent elevated the case to the CA finding
that there exist employer-employee relationship between SEIRI and Coming, reversing NLRC’s
decision.
Issues:
Whether there exists an employer-employee relationship between SEIRI and Coming.
Ruling:
In their comment to the petition filed by respondent in the CA, petitioners emphasized that in
the certifications issued by Mayol and Apondar, it was shown that respondent was employed and
working for them in those years he claimed to be working for SEIRI. However, a reading of the
certification by Mayol would show that while the latter claims to have respondent under his
employ in 1997, 1998 and 1999, respondent’s services were not regular and that he works only if
he wants to. Apondar’s certification likewise stated that respondent worked for him since 1999
through his brother Vicente as "sideline" but only after regular working hours and "off and on"
basis. Even assuming the truth of the foregoing statements, these do not foreclose respondent’s
regular or full-time employment with SEIRI. In effect, petitioners suggest that respondent was
employed by SEIRI’s suppliers, Mayol and Apondar but no competent proof was presented as to
the latter’s status as independent contractors.
In the same comment, petitioners further admitted that the five affiants who attested to
respondent’s employment with SEIRI are its former workers whom they describe as "disgruntled
workers of SEIRI" with an axe to grind against petitioners, and that their execution of affidavit in
support of respondent’s claim is "their very way of hitting back the management of SEIRI after
disciplinary measures were meted against them." This allegation though was not substantiated
by petitioners. Instead, after the CA rendered its decision reversing the NLRC’s ruling, petitioners
subsequently changed their theory by denying the employment relationship with the five affiants
in their motion for reconsideration, thus:
x x x Since the five workers were occupying and working on a leased premises of the
private respondent, they were called workers of SEIRI (private respondent). Such
admission however, does not connote employment. For the truth of the matter, all of the
five employees of the supplier assigned at the leased premises of the private respondent.
Because of the recommendation of the private respondent with regards to the disciplinary
measures meted on the five workers, they wanted to hit back against the private
respondent. Their motive to implicate private respondent was to vindicate. Definitely,
they have an axe to grind against the private respondent. Mention has to be made that
despite the dismissal of these five (5) witnesses from their service, none of them ever went
to the National Labor [Relations] Commission and invoked their rights, if any, against
their employer or at the very least against the respondent. The reason is obvious, since
they knew pretty well that they were not employees of SEIRI but rather under the employ
of Allan Mayol and Faustino Apondar, working on a leased premise of respondent. x x x
Petitioners’ admission that the five affiants were their former employees is binding upon them.
While they claim that respondent was the employee of their suppliers Mayol and Apondar, they
did not submit proof that the latter were indeed independent contractors; clearly, petitioners
failed to discharge their burden of proving their own affirmative allegation. There is thus no
showing that the five former employees of SEIRI were motivated by malice, bad faith or any ill-
motive in executing their affidavit supporting the claims of respondent.
In any controversy between a laborer and his master, doubts reasonably arising from the evidence
are resolved in favor of the laborer.
As a regular employee, respondent enjoys the right to security of tenure under Article 279 of the
Labor Code and may only be dismissed for a just or authorized cause, otherwise the dismissal
becomes illegal.
Respondent, whose employment was terminated without valid cause by petitioners, is entitled
to reinstatement without loss of seniority rights and other privileges and to his full back wages,
inclusive of allowances and other benefits or their monetary equivalent, computed from the time
his compensation was withheld from him up to the time of his actual reinstatement. Where
reinstatement is no longer viable as an option, back wages shall be computed from the time of
the illegal termination up to the finality of the decision. Separation pay equivalent to one month
salary for every year of service should likewise be awarded as an alternative in case reinstatement
in not possible.
BERNARD A. TENAZAS, JAIME M. FRANCISCO and ISIDRO G. ENDRACA vs. R.
VILLEGAS TAXI TRANSPORT and ROMUALDO VILLEGAS
G.R. No. 192998, April 2, 2014, J. Reyes
Tenazas, Endraca and Francisco filed an illegal dismissal complaint against the
respondents R. Villegas Taxi Transport and Romualdo Villegas. In their answer, the respondents
claims that Francisco is not their employee and denied having illegally dismissed Tenazas and
Endraca. When the case reached the Supreme Court, it was held that the employer-employee
relationship between respondents and Francisco was not proven because upon the respondents’
denial of employer employee relationship, it behooved Francisco to present substantial evidence to
prove that he is an employee before any question on the legality of his supposed dismissal becomes
appropriate for discussion. Francisco, however, did not offer evidence to substantiate his claim of
employment with the respondents. Also, the court ruled that the complainants should be reinstated
instead of being awarded of separation pay because it is only where reinstatement is no longer viable
as an option that separation pay equivalent to one (1) month salary for every year of service should
be awarded as an alternative.
Facts:
On July 4, 2007, Bernard A. Tenazas and Jaime M. Francisco filed a complaint for illegal
dismissal against R. Villegas Taxi Transport and/or Romualdo Villegas and Andy Villegas
(respondents). At that time, a similar case had already been filed by Isidro G. Endraca against the
same respondents. The two (2) cases were subsequently consolidated. In their answer the
respondents declares that Francisco is not their employee and denied having illegally dismissed
Tenazas and Endraca.
On May 30, 2008, the Labor Arbiter (LA) rendered a Decision which declares that
Francisco failed to establish the employer-employee relationship between him and the
respondents. In case of Bernard Tenazas, LA ruled that there is no proof of overt act of dismissal
committed by herein respondents, therefore, there can be no illegal dismissal. Subsequently, the
NLRC rendered a Decision, reversing the appealed decision of the LA. Unperturbed, the
respondents filed a petition for certiorari with the CA. CA affirmed the ruling of the NLRC but
ordered that complainant Tenazas and Endraca be reinstated instead. Hence, this petition
Issues:
1. Whether there exist employer-employee relationship between Francisco and the

respondent
2. Whether the CA erred in ordering that the complainants be reinstated instead of

awarding separation fee
Ruling:
1. There is no substantial evidence was presented to support the conclusion that Francisco
was an employee of the respondents and accordingly modified the NLRC decision. Upon the
respondents’ denial of employer employee relationship, it behooved Francisco to present
substantial evidence to prove that he is an employee before any question on the legality of his
supposed dismissal becomes appropriate for discussion. Francisco, however, did not offer
evidence to substantiate his claim of employment with the respondents.
In determining the presence or absence of an employeremployee relationship, the Court

has consistently looked for the following incidents, to wit: (a) the selection and engagement of
the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employer’s power
to control the employee on the means and methods by which the work is accomplished. The last
element, the socalled control test, is the most important element. There is no hard and fast rule
designed to establish the aforesaid elements. Any competent and relevant evidence to prove the
relationship may be admitted. Identification cards, cash vouchers, social security registration,
appointment letters or employment contracts, payrolls, organization charts, and personnel lists,
serve as evidence of employee status.
In this case, however, Francisco failed to present any proof substantial enough to establish
his relationship with the respondents. The utter lack of evidence is fatal to Francisco’s case
especially in cases like his present predicament when the law has been very lenient in not
requiring any particular form of evidence or manner of proving the presence of
employeremployee relationship.
2. The CA’s order of reinstatement of Tenazas and Endraca, instead of the payment of
separation pay, is also well in accordance with prevailing jurisprudence. In Macasero v. Southern
Industrial Gases Philippines, the Court reiterated, thus: [A]n 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. For instance, if reinstatement would only
exacerbate the tension and strained relations between the parties, or where the relationship
between the employer and the employee has been unduly strained by reason of their
irreconcilable differences, it would be more prudent to order payment of separation pay instead
of reinstatement.
This doctrine of strained relations, however, should not be used recklessly or applied
loosely nor be based on impression alone. “It bears to stress that reinstatement is the rule and,
for the exception of strained relations to apply, it should be proved that it is likely that if
reinstated, an atmosphere of antipathy and antagonism would be generated as to adversely affect
the efficiency and productivity of the employee concerned.” Moreover, the existence of strained
relations, it must be emphasized, is a question of fact.
The Court failed to find the factual basis of the award of separation pay to the petitioners.
The NLRC decision did not state the facts which demonstrate that reinstatement is no longer a
feasible option that could have justified the alternative relief of granting separation pay instead.
A bare claim of strained relations by reason of termination is insufficient to warrant the granting
of separation pay. Likewise, the filing of the complaint by the petitioners does not necessarily
translate to strained relations between the parties. Although litigation may also engender a
certain degree of hostility, the understandable strain in the parties’ relation would not necessarily
rule out reinstatement which would, otherwise, become the rule rather the exception in illegal
dismissal cases. Thus, it was a prudent call for the CA to delete the award of separation pay and
order for reinstatement instead, in accordance with the general rule stated in Article 279 of the
Labor Code.
ARIEL L. DAVID, DOING BUSINESS UNDER THE NAME AND STYLE “YIELS HOG
DEALER” vs. JOHN G. MACASIO
G.R. No. 195466, July 02, 2014, J. Brion
Under Article 82 “Field personnel” shall refer to non-agricultural employees who regularly
perform their duties away from the principal place of business or branch office of the employer and
whose actual hours of work in the field cannot be determined with reasonable certainty. Based on
the definition of field personnel under Article 82, Macasio does not fall under the definition of “field
personnel.” First, Macasio regularly performed his duties at David’s principal place of business;
second, his actual hours of work could be determined with reasonable certainty; and, third, David
supervised his time and performance of duties. Since Macasio cannot be considered a “field
personnel,” then he is not exempted from the grant of holiday, SIL pay even as he was engaged on
“pakyaw” or task basis. Not being a “field personnel,” The SC found the CA to be legally correct when
it reversed the NLRC’s ruling dismissing Macasio’s complaint for holiday and SIL pay for having
been rendered with grave abuse of discretion. With respect to the payment of 13th month pay
however, the SC found that the CA legally erred in finding that the NLRC gravely abused its
discretion in denying this benefit to Macasio.
The totality of the surrounding circumstances of the present case sufficiently points to an employer-
employee relationship existing between David and Macasio. First, David engaged the services of
Macasio. Second, David paid Macasio’s wages. Third, David had been setting the day and time
when Macasio should report for work. And fourth, David had the right and power to control and
supervise Macasio’s work as to the means and methods of performing it.
Facts:
In January 2009, Macasio filed before the LA a complaint against Ariel L. David, doing
business under the name and style “Yiels Hog Dealer,” for non-payment of overtime pay, holiday
pay and 13th month pay. He also claimed payment for moral and exemplary damages and
attorney’s fees. Macasio also claimed payment for service incentive leave (SIL).
Macasio alleged before the LA that he had been working as a butcher for David since
January 6, 1995. Macasio claimed that David exercised effective control and supervision over his
work, pointing out that David: (1) set the work day, reporting time and hogs to be chopped, as
well as the manner by which he was to perform his work; (2) daily paid his salary of P700.00,
which was increased from P600.00 in 2007, P500.00 in 2006 and P400.00 in 2005; and (3)
approved and disapproved his leaves. Macasio added that David owned the hogs delivered for
chopping, as well as the work tools and implements; the latter also rented the workplace.
Macasio further claimed that David employs about twenty-five (25) butchers and delivery drivers.
David claims that Macasio was not his employee as he hired the latter on “pakyaw” or
task basis. He also claimed that he issued the Certificate of Employment, upon Macasio’s request,
only for overseas employment purposes. He pointed to the “Pinagsamang Sinumpaang Salaysay,”
executed by Presbitero Solano and Christopher (Antonio Macasio’s co-butchers), to corroborate
his claims. The LA dismissed Macasio’s complaint for lack of merit. The NLRC affirmed the LA
ruling. While the CA agreed with the LA and the NLRC that Macasio was a task basis employee,
it nevertheless found Macasio entitled to his monetary claims. The CA explained that as a task
basis employee, Macasio is excluded from the coverage of holiday, SIL and 13th month pay only
if he is likewise a “field personnel.”
Issues:
1. Whether or not Macasio is entitled to holiday, SIL and 13th month pay
2. Whether or not an employer-employee relationship exists between David and
Macasio.
Ruling:
1. Yes, Macasio is entitled to holiday, SIL and 13th month pay.
Under the IRR, exemption from the coverage of holiday and SIL pay refer to “field
personnel and other employees whose time and performance is unsupervised by the employer
including those who are engaged on task or contract basis.” The payment of an employee on task
or pakyaw basis alone is insufficient to exclude one from the coverage of SIL and holiday pay.
They are exempted from the coverage of Title I (including the holiday and SIL pay) only if they
qualify as “field personnel.”
If the worker is simply engaged on pakyaw or task basis, then the general rule is that he
is entitled to a holiday pay and SIL pay unless exempted from the exceptions specifically provided
under Article 94 (holiday pay) and Article 95 (SIL pay) of the Labor Code. However, if the worker
engaged on pakyaw or task basis also falls within the meaning of “field personnel” under the law,
then he is not entitled to these monetary benefits.
Under Article 82 “Field personnel” shall refer to non-agricultural employees who regularly
perform their duties away from the principal place of business or branch office of the employer
and whose actual hours of work in the field cannot be determined with reasonable certainty.
Based on the definition of field personnel under Article 82, the Court agree with the CA that
Macasio does not fall under the definition of “field personnel.” The CA’s finding in this regard is
supported by the established facts of this case: first, Macasio regularly performed his duties at
David’s principal place of business; second, his actual hours of work could be determined with
reasonable certainty; and, third, David supervised his time and performance of duties. Since
Macasio cannot be considered a “field personnel,” then he is not exempted from the grant of
holiday, SIL pay even as he was engaged on “pakyaw” or task basis. Not being a “field personnel,”
The SC found the CA to be legally correct when it reversed the NLRC’s ruling dismissing
Macasio’s complaint for holiday and SIL pay for having been rendered with grave abuse of
discretion. With respect to the payment of 13th month pay however, the SC found that the CA
legally erred in finding that the NLRC gravely abused its discretion in denying this benefit to
Macasio.
Section 3 of the Rules and Regulations Implementing P.D. No. 851 enumerates the
exemptions from the coverage of 13th month pay benefits. Under Section 3(e), “employers of
those who are paid on task basis, and those who are paid a fixed amount for performing a specific
work, irrespective of the time consumed in the performance thereof” are exempted.
Insofar as payment of the 13th month pay is concerned, the IRR of the Labor Code Section
3(e) of the Rules and Regulations Implementing PD No. 851 did not intend to qualify the
exemption from its coverage with the requirement that the task worker be a “field personnel” at
the same time.
2. Yes, Macasio is David’s employee.
To determine the existence of an employer-employee relationship, four elements

generally need to be considered, namely: (1) the selection and engagement of the employee; (2)
the payment of wages; (3) the power of dismissal; and (4) the power to control the employee’s
conduct. These elements or indicators comprise the so-called “four-fold” test of employment
relationship. Macasio’s relationship with David satisfies this test.
First, David engaged the services of Macasio, thus satisfying the element of “selection and
engagement of the employee.” David categorically confirmed this fact when, in his “Sinumpaang
Salaysay,” he stated that “nag apply posiyasa akin at kinuha ko siya na chopper” Also, Solano and
Antonio stated in their “Pinagsamang Sinumpaang Salaysay” that “kami po ay nagtratrabaho sa
Yielsnapag-aar ini Ariel David bilang butcher” and “kilala naming si Macasio na isa ring butcher
ni David at kasama naming siya sa aming trabaho.”
Second, David paid Macasio’s wages. Both David and Macasio categorically stated in their
respective pleadings before the lower tribunals and even before this Court that the former had
been paying the latter P700.00 each day after the latter had finished the day’s task. Solano and
Antonio also confirmed this fact of wage payment in their “Pinagsamang Sinumpaang Salaysay.”
This satisfies the element of “payment of wages.”
Third, David had been setting the day and time when Macasio should report for work.
This power to determine the work schedule obviously implies power of control. By having the
power to control Macasio’s work schedule, David could regulate Macasio’s work and could even
refuse to give him any assignment, thereby effectively dismissing him.
And fourth, David had the right and power to control and supervise Macasio’s work as to
the means and methods of performing it. In addition to setting the day and time when Macasio
should report for work, the established facts show that David rents the place where Macasio had
been performing his tasks. Moreover, Macasio would leave the workplace only after he had
finished chopping all of the hog meats given to him for the day’s task. Also, David would still
engage Macasio’s services and have him report for work even during the days when only few hogs
were delivered for butchering.
Under this overall setup, all those working for David, including Macasio, could naturally
be expected to observe certain rules and requirements and David would necessarily exercise some
degree of control as the chopping of the hog meats would be subject to his specifications. Also,
since Macasio performed his tasks at David’s workplace, David could easily exercise control and
supervision over the former. Accordingly, whether or not David actually exercised this right or
power to control is beside the point as the law simply requires the existence of this power to
control or, as in this case, the existence of the right and opportunity to control and supervise
Macasio.
ROYAL HOMES MARKETING CORPORATION vs. FIDEL ALCANTARA

G.R. No. 195190, July 28, 2014, J. Del Castillo
In concluding that Alcantara is an employee of Royale Homes, the CA ratiocinated that

since the performance of his tasks is subject to company rules, regulations, code of ethics, and
periodic evaluation, the element of control is present. The Court disagrees. Not every form of control
is indicative of employer-employee relationship. A person who performs work for another and is
subjected to its rules, regulations, and code of ethics does not necessarily become an employee. As
long as the level of control does not interfere with the means and methods of accomplishing the
assigned tasks, the rules imposed by the hiring party on the hired party do not amount to the labor
law concept of control that is indicative of employer-employee relationship. In Insular Life
Assurance Co., Ltd. v. National Labor Relations Commission it was pronounced that the line should
be drawn between rules that merely serve as guidelines towards the achievement of the mutually
desired result without dictating the means or methods to be employed in attaining it, and those
that control or fix the methodology and bind or restrict the party hired to the use of such means.
The first, which aim only to promote the result, create no employer-employee relationship unlike
the second, which address both the result and the means used to achieve it.
Facts:
In 1994, Royale Homes, a corporation engaged in marketing real estates, appointed

Alcantara as its marketing director for a fixed period of one year. His work consisted mainly of
marketing Royale Homes’ real estate inventories on an exclusive basis. Royale Homes re-
appointed him for several consecutive years, the last of which covered the period January 1 to
December 31, 2003 where he held the position of Division Vice President Sales.
Later, Alcantara filed a Complaint for Illegal Dismissal against Royale Homes. Alcantara
alleged that he is a regular employee of Royale Homes since he is performing tasks that are
necessary and desirable to its business; that in 2003 the company gave him P1.2million for the
services he rendered to it; that in the first week of November 2003, however, the executive officers
of Royale Homes told him that they were wondering why he still had the gall to come to office
and sit at his table and that the acts of the executive officers of Royale Homes amounted to his
dismissal from work without any valid or just cause and in gross disregard of the proper
procedure for dismissing employees.
Alcantara prayed to be reinstated to his former position without loss of seniority rights
and other privileges, as well as to be paid backwages, moral and exemplary damages, and
attorney’s fees
Issue:
Whether or not employer-employee exists between Alcantara and Royal Homes.
Ruling:
No. There is no employer-employee exists between Alcantara and Royal Homes.
The Petition is impressed with merit. The primary evidence of the nature of the parties’
relationship in this case is the written contract that they signed and executed in pursuance of
their mutual agreement. While the existence of employer-employee relationship is a matter of
law, the characterization made by the parties in their contract as to the nature of their juridical
relationship cannot be simply ignored, particularly in this case where the parties’ written contract
unequivocally states their intention at the time they entered into it.
In Tongko v. The Manufacturers Life Insurance Co. (Phils.), Inc., it was held that: To be
sure, the Agreement’s legal characterization of the nature of the relationship cannot be
conclusive and binding on the courts; x xx the characterization of the juridical relationship and
the Agreement embodied is a matter of law that is for the courts to determine. At the same time,
though, the characterization the parties gave to their relationship in the Agreement cannot
simply be brushed aside because it embodies their intent at the time they entered the Agreement,
and they were governed by this understanding throughout their relationship. At the very least,
the provision on the absence of employer- employee relationship between the parties can be an
aid in considering the Agreement and its implementation, and in appreciating the other evidence
on record. In this case, the contract, duly signed and not disputed by the parties, conspicuously
provides that “no employer- employee relationship exists between” Royale Homes and Alcantara,
as well as his sales agents. It is clear that they did not want to be bound by employer-employee
relationship at the time of the signing of the contract.
Since “the terms of the contract are clear and leave no doubt upon the intention of the
contracting parties, the literal meaning of its stipulations should control. No construction is even
needed as they already expressly state their intention. Also, this Court adopts the observation of
the NLRC that it is rather strange on the part of Alcantara, an educated man and a veteran sales
broker who claimed to be receiving P1.2 million as his annual salary, not to have contested the
portion of the contract expressly indicating that he is not an employee of Royale Homes if their
true intention were otherwise.
In determining the existence of an employer-employee relationship, this Court has

generally relied on the four-fold test, to wit: (1) the selection and engagement of the employee;
(2) the payment of wages; (3) the power of dismissal; and (4) the employer’s power to control the
employee with respect to the means and methods by which the work is to be accomplished.
Among the four, the most determinative factor in ascertaining the existence of employer-
employee relationship is the “right of control test. It is deemed to be such an important factor
that the other requisites may even be disregarded. This holds true where the issues to be resolved
is whether a person who performs work for another is the latter’s employee or is an independent
contractor, as in this case. For where the person for whom the services are performed reserves
the right to control not only the end to be achieved, but also the means by which such end is
reached, employer-employee relationship is deemed to exist.
In concluding that Alcantara is an employee of Royale Homes,the CA ratiocinated that

since the performance of his tasks is subject to company rules, regulations, code of ethics, and
periodic evaluation, the element of control is present. The Court disagrees. Not every form of
control is indicative of employer-employee relationship. A person who performs work for another
and is subjected to its rules, regulations, and code of ethics does not necessarily become an
employee. As long as the level of control does not interfere with the means and methods of
accomplishing the assigned tasks, the rules imposed by the hiring party on the hired party do not
amount to the labor law concept of control that is indicative of employer-employee relationship.
In Insular Life Assurance Co., Ltd. v. National Labor Relations Commission it was
pronounced that the line should be drawn between rules that merely serve as guidelines towards
the achievement of the mutually desired result without dictating the means or methods to be
employed in attaining it, and those that control or fix the methodology and bind or restrict the
party hired to the use of such means. The first, which aim only to promote the result, create no
employer-employee relationship unlike the second, which address both the result and the means
used to achieve it.
CEBU PEOPLE'S MULTI-PURPOSE COOPERATIVE and MACARIO G. QUEVEDO,

vs. NICERATO E. CARBONILLA, JR.
G.R. No. 212070, January 27, 2016
Facts:
On November 14, 2005, CPMPC hired Carbonilla, Jr. as a Credit and Collection Manager
and, as such, was tasked with the handling of the credit and collection activities of the
cooperative, which included recommending loan approvals, formulating and implementing
credit and collection policies, and conducting trainings. Sometime in 2007, CPMPC underwent a
reorganization whereby Carbonilla, Jr. was also assigned to perform the duties of Human
Resources Department (HRD) Manager, i.e., assisting in the personnel hiring, firing, and
handling of labor disputes. In 2008, he was appointed as Legal Officer and subsequently, held the
position of Legal and Collection Manager.
However, beginning February 2008, CPMPC, through its HRD Manager, Ma. Theresa R.
Marquez (HRD Manager Marquez), sent various memoranda to Carbonilla, Jr. seeking
explanation on the various infractions he allegedly committed.
Unconvinced by Carbonilla, Jr.'s explanations, CPMPC scheduled several clarificatory
hearings, but the former failed to attend despite due notice. Later, CPMPC conducted a formal
investigation where it ultimately found Carbonilla, Jr. to have committed acts prejudicial to
CPMPC's interests.As such, CPMPC, CEO Quevedo, sent Carbonilla, Jr. a Notice of Dismissal
dated August 5, 2008 informing the latter of his termination on the grounds of: (a) loss of trust
and confidence; (b) gross disrespect; (c) serious misconduct; (d) gross negligence; (e) commission
of a crime of falsification/inducing Aguipo to violate the law or the Land Transportation and
Traffic Code; and (e) committing acts highly prejudicial to the interest of the cooperative.
Consequently, Carbonilla, Jr. filed the instant case for illegal dismissal, non-payment of
salaries, 13th month pay, as well as damages and backawages, against CPMPC, before the NLRC,
docketed as NLRC RAB VII-08-1856-2008.In support of his claims, Carbonilla, Jr. denied the
administrative charges against him, asserting that the Management and Board of Directors of
CPMPC merely orchestrated means to unjustly dismiss him from employment.
In defense, CPMPC maintained that the totality of Carbonilla, Jr.'s infractions was
sufficient to warrant his dismissal, and that it had complied with the procedural due process in
terminating him. Further, CPMPC pointed out that Carbonilla, Jr. had been fully paid of all his
benefits, notwithstanding his unsettled obligations to it in the form of loans, insurance policy
premiums, and cash advances, among others, amounting to a total of P129,455.00.
Issue
Whether or not Carbonilla, Jr. 's dismissal was valid.
Ruling
The Court finds that the CA committed reversible error in granting Carbonilla, Jr. 's
certiorari petition since the NLRC did not gravely abuse its discretion in ruling that he was validly
dismissed from employment as CPMPC was able to prove, through substantial evidence, the
existence of just causes warranting the same.
As may be gathered from the tenor of CPMPC's Notice of Dismissal, it is apparent that
Carbonilla, Jr.'s employment was terminated on the grounds of, among others, serious
misconduct and loss of trust and confidence.
On the first ground, case law characterizes misconduct as a transgression of some

established and definite rule of action, a forbidden act, a dereliction of duty, willful in character
and implies wrongful intent and not mere error injudgment. For misconduct to be considered as
a just cause for termination, the following requisites must concur: (a) the misconduct must be
serious; (b) it must relate to the performance of the employee's duties showing that the employee
has become unfit to continue working for the employer; and (c) it must have been performed
with wrongful intent.
All of the foregoing requisites have been duly established in this case. Records reveal that
Carbonilla, Jr.'s serious misconduct consisted of him frequently exhibiting disrespectful and
belligerent behavior, not only to his colleagues, but also to his superiors. He even used his stature
as a law graduate to insist that he is "above" them, often using misguided legalese to weasel his
way out of the charges against him, as well as to strong-arm his colleagues and superiors into
succumbing to his arrogance. Carbonilla Jr.'s obnoxious attitude is highlighted by the following
documents on record: (a) his reply to HRD 202 File 2008.02.26.036 dated February 26, 2008
wherein he threatened HRD Manager Marquez with a lawsuit, stating that if the memorandum
is "proven malicious, [she] might be answerable to a certain degree of civil liability which the
1987 Constitution has given to individuals"; (b) HRD 202 File 2008.06.26.086 dated June 26, 2008
wherein he berated COO Bentillo in front of her subordinates with the statement: "[i]kaw ra may
di mosalig ba, ka kwalipikado adto niya, maski mag contest pa mo, lupigon gani ka"or "[y ]ou're
the only one who doesn't trust her, she is very qualified, you even lose in comparison to her[,]"and
his reply thereto wherein he dismissed the charge as made with malicious intent and aimed to
discredit his person; (c) HRD 202 File 2008.06.26.088 dated June 26, 2008wherein he argued with
the CEO Quevedo, insisting that he had the authority to hire a new staff, and his reply thereto
where he cited the Philippine Law Dictionary to maintain that his act did not amount to
insubordination;(d) HRD 202 File 2008.06.26.087 dated June 26, 2008 wherein he openly
questioned the authority of HRD Manager Marquez in refusing to hire a new staff and his reply
thereto where he again cited the Philippine Law Dictionary to insist that he did not commit acts
of insubordination; and (e) HRD 202 File 2008.07.04.095 dated July 4, 2008 wherein he openly
and improperly confronted the CPMPC CEO during a Board of Directors' inquiry hearing, to
which he again maintained that his acts did not constitute misconduct, gross disrespect, and loss
of trust and confidence as he was only looking after the welfare of the cooperative.
Indisputably, Carbonilla, Jr. 's demeanor towards his colleagues and superiors is serious
in nature as it is not only reflective of defiance but also breeds of antagonism in the work
environment. Surely, within the bounds of law, management has the rightful prerogative to take
away dissidents and undesirables from the workplace. It should not be forced to deal with
difficult personnel, especially one who occupies a position of trust and confidence, as will be later
discussed, else it be compelled to act against the best interest of its business. Carbonilla, Jr.'s
conduct is also clearly work-related as all were incidents which sprung from the performance of
his duties. Lastly, the misconduct was performed with wrongful intent as no justifiable reason
was presented to excuse the same. On the contrary, Carbonilla, Jr. comes off as a smart aleck who
would even go to the extent of dangling whatever knowledge he had of the law against his
employer in a combative manner. As succinctly put by CPMPC, "[e]very time [Carbonilla, Jr.'s]
attention was called for some inappropriate actions, he would always show his Book, Philippine
Law Dictionary and would ask the CEO or HRD Manager under what provision of the law he
would be liable for the complained action or omission." Irrefragably, CPMPC is justified in no
longer tolerating the grossly discourteous attitude of Carbonilla, Jr. as it constitutes conduct
unbecoming of his managerial position and a serious breach of order and discipline in the
workplace.
With all these factored in, CPMPC's dismissal of Carbonilla, Jr. on the ground of serious
misconduct was amply warranted.
For another, Carbonilla, Jr.'s dismissal was also justified on the ground of loss of trust and
confidence. According to jurisprudence, loss of trust and confidence will validate an
employee's dismissal when it is shown that: (a) the employee concerned holds a position of trust
and confidence; and ( b) he performs an act that would justify such loss of trust and confidence.
There are two (2) classes of positions of trust: first, managerial employees whose primary duty
consists of the management of the establishment in which they are employed or of a department
or a subdivision thereof, and to other officers or members of the managerial staff; and second,
fiduciary rank-and-file employees, such as cashiers, auditors, property custodians, or those who,
in the normal exercise of their functions, regularly handle significant amounts of money or
property. These employees, though rank-and-file, are routinely charged with the care and
custody of the employer's money or property, and are thus classified as occupying positions of
trust and confidence.
Records reveal that Carbonilla, Jr. occupied a position of trust and confidence as he was
employed as Credit and Collection Manager, and later on, as Legal and Collection Manager,
tasked with the duties of, among others, handling the credit and collection activities of the
cooperative, which included recommending loan approvals, formulating and implementing
credit and collection policies, and conducting trainings. With such responsibilities, it is fairly
evident that Carbonilla, Jr. is a managerial employee within the ambit of the first classification of
employees afore-discussed. The loss of CPMPC's trust and confidence in Carbonilla, Jr., as
imbued in that position, was later justified in light of the latter's commission of the following
acts: (a) the forwarding of the mediation settlements for notarization to a lawyer who was not
the authorized legal retainer of CPMPC (HRD 202 File 2008.07.09.103 dated July 9, 2008); (b) the
pull-out of important records and vital documents from the office premises, which were either
lost or returned already tampered and altered (HRD 202 File 2008.07.15.106 dated July 15, 2008and
HRD 202 File 2008.07.19.111 dated July 19, 2008); and (c) the incurring of unliquidated cash
advances related to the notarial transactions of the mediation agreements (HRD 202 File
2008.07.16.107 dated July 16, 2008). While Carbonilla, Jr. posited that these actuations were
resorted with good intentions as he was only finding ways for CPMPC to save up on legal fees,
this defense can hardly hold, considering that all of these transactions were not only highly
irregular, but also done without the prior knowledge and consent of CPMPC's management. Cast
against this light, Carbonilla, Jr.'s performance of the said acts therefore gives CPMPC more than
enough reason to lose trust and confidence in him. To this, it must be emphasized that
"employers are allowed a wider latitude of discretion in terminating the services of employees
who perform functions by which their nature require the employer's full trust and confidence.
Mere existence of basis for believing that the employee has breached the trust and confidence of
the employer is sufficient and does not require proof beyond reasonable doubt. Thus, when an
employee has been guilty of breach of trust or his employer has ample reason to distrust him, a
labor tribunal cannot deny the employer the authority to dismiss him," as in this case.
Perforce, having established the actual breaches of duty committed by Carbonilla, Jr. and
CPMPC's observance of due process, the Court no longer needs to further examine the other
charges against Carbonilla, Jr., as it is already clear that the CA erred in ascribing grave abuse of
discretion on the part of the NLRC when the latter declared that CPMPC validly dismissed
Carbonilla, Jr. from his job. The totality and gravity of Carbonilla, Jr. 's infractions throughout the
course of his employment completely justified CPMPC's decision to finally terminate his
employment. The Court's pronouncement in Realda v. New Age Graphics, Inc. is instructive on
this matter, to wit:
The totality of infractions or the number of violations committed during the
period of employment shall be considered in determining the penalty to be imposed
upon an erring employee. The offenses committed by petitioner should not be taken
singly and separately. Fitness for continued employment cannot be compartmentalized
into tight little cubicles of aspects of character, conduct and ability separate and
independent of each other. While it may be true that petitioner was penalized for his previous
infractions, this does not and should not mean that his employment record would be wiped clean
of his infractions. After all, the record of an employee is a relevant consideration in determining
the penalty that should be meted out since an employee's past misconduct and present behavior
must be taken together in determining the proper imposable penalty[.] Despite the sanctions
imposed upon petitioner, he continued to commit misconduct and exhibit undesirable behavior
on board. Indeed, the employer cannot be compelled to retain a misbehaving employee,
or one who is guilty of acts inimical to its interests. (Emphases and underscoring supplied)
On a final point, the Court notes that Carbonilla, Jr.'s award of unpaid salaries and 13th
month pay were validly offset by his accountabilities to CPMPC in the amount of P129,455.00.
Pursuant to Article 1278 in relation to Article 1706 of the Civil Code and Article 113 (c) of the Labor
Code, compensation can take place between two persons who are creditors and debtors of each
other. Considering that Carbonilla, Jr. had existing debts to CPMPC which were incurred during
the existence of the employer-employee relationship, the amount which may be due him in wages
was correctly deducted therefrom.
ECHO 2000 COMMERCIAL CORPORATION, EDWARD N. ENRIQUEZ, LEONORA K.

BENEDICTO and ATTY. GINA WENCESLAO vs. OBRERO FILIPINO-ECHO 2000
CHAPTER-CLO, ARLO C. CORTES and DAVE SOMIDO
G.R. No. 214092, January 11, 2016
Facts
Echo is a provider of warehousing management and delivery services.
King 8 Commercial Corporation (King 8), Echo's predecessor, initially employed Cortes
on September 17, 2002, and Somido, on October 12, 2004. Echo thereafter absorbed the
respondents as employees on April 1, 2005. In 2008, Somido was made a Warehouse Checker,
while Cortes, a Forklift Operator.
In January of 2009, the respondents and their co-workers formed Obrero Pilipino-Echo
2000 Commercial Chapter (Union). Cortes was elected as Vice-President while Somido became
an active member. The respondents claimed that the Union's President, Secretary and one of the
board members were subsequently harassed, discriminated and eventually terminated from
employment by Echo.
In May of 2009, Echo received information about shortages in peso value arising from the
movement of products to and from its warehouse. After an immediate audit, Echo suspected that
there was a conspiracy among the employees in the warehouse. Since an uninterrupted
investigation was necessary, Echo, in the exercise of its management prerogative, decided to re-
assign the staff. The respondents were among those affected.
On July 7, 2009, Enriquez issued a memorandum informing the respondents of their

transfer to the Delivery Section, which was within the premises of Echo's warehouse. The transfer
would entail no change in ranks, status and salaries.
On July 14, 2009, Somido wrote Echo a letter indicating his refusal to be promoted as a
"Delivery Supervisor." He explained that he was already happy as a Warehouse Checker. Further,
he was not ready to be a Delivery Supervisor since the position was sensitive and required more
expertise and training, which he did not have.
Cortes similarly declined Echo's offer of promotion claiming that he was contented in his
post then as a Forklift Operator. He also alleged that he would be more productive as an employee
if he remained in his post. He also lacked prior supervisory experience.
On July 16, 2009, Enriquez, sans consent of the respondents, informed the latter of their
assignments/designations, effective July 17, 2009, as Delivery Supervisors with the following
duties: (a) act as delivery dispatchers of booked and planned deliveries for the day; (b) ensure the
early loading of goods to the delivery trucks to avoid late take-offs; (c) man delivery teams for
the trucks; (d) check the operational and cleanliness conditions of the trucks; (e) attend to
delivery concerns of account specialists of their outlets; and (f) call the attention of other
warehouse personnel and report the same to the Human Resources Department regarding
absences/tardiness, incomplete uniforms, appearances, refusal to accept delivery trips and other
matters affecting warehouse productivity.
Echo alleged that the respondents did not perform the new duties assigned to them.
Hence, they were each issued a memorandum, dated July 16, 2009, requiring them to explain in
writing their failure to abide with the new assignments.
On July 18, 2009, Echo clarified through a memo that the respondents were designated as
"Delivery Coordinators" and not "Supervisors."
Thereafter, successive memoranda were issued by Echo to the respondents, who refused
to acknowledge receipt and comply with the directives therein. The Memoranda dated July 20,
2009 suspended them without pay for five days for their alleged insubordination. The
Memoranda dated August 8, 2009 informed them of their termination from employment,
effective August 15, 2009, by reason of their repeated refusal to acknowledge receipt of Echo's
memoranda and flagrant defiance to assume the duties of Delivery Coordinators.
Issues
Whether or not the respondents were illegally suspended and terminated, hence, entitled
to payment of their money claims, damages and attorney's fees.
Whether or not Echo and its officers are guilty of unfair labor practice.
Ruling
The offer of transfer is, in legal contemplation, a promotion, which the

respondents validly refused. Such refusal cannot be the basis for the respondents'
dismissal from service. The finding of unfair labor practice and the award of moral and
exemplary damages do not however follow solely by reason of the dismissal.
Article 212(13) of the Labor Code distinguishes from each other as follows the concepts of
managerial, supervisory and rank-and-file employees:
"Managerial employee" is one who is vested with the powers or prerogatives to lay down
and execute management policies and/or to hire, transfer, suspend, lay-off, recall, discharge,
assign or discipline employees. Supervisory employees are those who, in the interest of the
employer, effectively recommend such managerial actions if the exercise of such authority is not
merely routinary or clerical in nature but requires the use of independent judgment. All
employees not falling within any of the above definitions are considered rank-and-file employees
for purposes of this Book. (Italics ours)
As to the extent of management prerogative to transfer/promote employees, and the

differences between transfer on one hand, and promotion, on the other, Coca-Cola Bottlers
Philippines, Inc. v. Del Villar34 is instructive, viz:
[L]abor laws discourage interference in employers' judgment concerning the conduct of

their business.
In the pursuit of its legitimate business interest, management has the prerogative to
transfer or assign employees from one office or area of operation to another - provided there is
no demotion in rank or diminution of salary, benefits, and other privileges; and the action is not
motivated by discrimination, made in bad faith, or effected as a form of punishment or demotion
without sufficient cause. xx x.
x x x In the case of Blue Dairy Corporation v. National Labor Relations Commission, we

described in more detail the limitations on the right of management to transfer employees:
x x x [I]t 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. xxx.
xxxx
A transfer is a movement from one position to another which is of equivalent rank, level
or salary, without break in service. Promotion, on the other hand, is the advancement from one
position to another with an increase in duties and responsibilities as authorized by law, and
usually accompanied by an increase in salary. Conversely, demotion involves a situation
where an employee is relegated to a subordinate or less important position constituting a
reduction to a lower grade or rank, with a corresponding decrease in duties and responsibilities,
and usually accompanied by a decrease in salary. (Citations omitted and emphasis and
underscoring ours)
For promotion to occur, there must be an advancement from one position to another or
an upward vertical movement of the employee's rank or position. Any increase in salary should
only be considered incidental but never determinative of whether or not a promotion is bestowed
upon an employee.
An employee is not bound to accept a promotion, which is in the nature of a gift or

reward. Refusal to be promoted is a valid exercise of a right. Such exercise cannot be considered
in law as insubordination, or willful disobedience of a lawful order of the employer, hence, it
cannot be the basis of an employee's dismissal from service.
In the case at bench, a Warehouse Checker and a Forklift Operator are rank-and-file
employees. On the other hand, the job of a Delivery Supervisor/Coordinator requires the exercise
of discretion and judgment from time to time. Specifically, a Delivery Supervisor/Coordinator
assigns teams to man the trucks, oversees the loading of goods, checks the conditions of the
trucks, coordinates with account specialists in the outlets regarding their delivery concerns, and
supervises other personnel about their performance in the warehouse. A Delivery
Supervisor/Coordinator's duties and responsibilities are apparently not of the same weight as
those of a Warehouse Checker or Forklift Operator. Hence, despite the fact that no salary
increases were effected, the assumption of the post of a Delivery Supervisor/Coordinator should
be considered a promotion. The respondents' refusal to accept the same was therefore valid.
Notwithstanding the illegality of the respondents' dismissal, the Court finds no sufficient
basis to award moral and exemplary damages.
A dismissal may be contrary to law but by itself alone, it does not establish bad faith to
entitle the dismissed employee to moral damages. The award of moral and exemplary damages
cannot be justified solely upon the premise that the employer dismissed his employee without
just or authorized cause.
In the instant case, the right not to accept an offered promotion pertained to each of the
respondents. However, they exhibited disrespectful behavior by their repeated refusal to receive
the memoranda issued by Echo and by their continued presence in their respective areas without
any work output. The Court thus finds that although the respondents' dismissal from service for
just cause was unwarranted, there is likewise no basis for the award of moral and exemplary
damages in their favor. Echo expectedly imposed disciplinary penalties upon the respondents for
the latter's intransigence. Albeit the Court is not convinced of the character and extent of the
measures taken by Echo, bad faith cannot be inferred solely from the said impositions.
Anent the NLRC and CA's conclusion that Echo committed unfair labor practice, the
Court disagrees.
Unfair labor practices violate the constitutional right of workers and employees to self-
organization, are inimical to the legitimate interests of both labor and management, including
their right to bargain collectively and otherwise deal with each other in an atmosphere of freedom
and mutual respect, disrupt industrial peace and hinder the promotion of healthy and stable
labor-management relations.
The respondents allege that their transfer/promotion was intended to deprive the Union of
leadership and membership. They claim that other officers were already dismissed. The
foregoing, however, lacks substantiation. Unfair labor practice is a serious charge, and the
respondents failed to show that the petitioners conclusively interfered with, restrained, or
coerced employees in the exercise of their right to self-organization.
LORELEI O. ILADAN, Petitioner, v.LA SUERTE INTERNATIONAL MANPOWER AGENCY,

INC., AND DEBBIE LAO, Respondents.
G.R. No. 203882, January 11, 2016
Facts
La Suerte is a recruitment agency duly authorized by the Philippine Overseas Employment

Administration (POEA) to deploy workers for overseas employment. On March 20, 2009, La
Suerte hired Iladan to work as a domestic helper in Hongkong for a period of two years with a
monthly salary of HK$3,580.00. On July 20, 2009, Iladan was deployed to her principal employer
in Hongkong, Domestic Services International (Domestic Services), to work as domestic helper
for Ms. Muk Sun Fan.
On July 28, 2009 or barely eight days into her job, Iladan executed a handwritten
resignation letter. On August 6, 2009, in consideration of P35,000.00 financial assistance given
by Domestic Services, Iladan signed an Affidavit of Release, Waiver and Quitclaim duly
subscribed before Labor Attache Leonida V. Romulo (Labor Attache Romulo) of the Philippine
Consulate General in Hongkong. On the same date, an Agreement, was signed by Iladan,
Conciliator-Mediator Maria Larisa Q. Diaz (Conciliator-Mediator Diaz) and a representative of
Domestic Services, whereby Iladan acknowledged that her acceptance of the financial assistance
would constitute as final settlement of her contractual claims and waiver of any cause of action
against respondents and Domestic Services. The Agreement was also subscribed before Labor
Attache Romulo. On August 10, 2009, Iladan returned to the Philippines.
Thereafter, or on November 23, 2009, Iladan filed a Complaint for illegal dismissal, refund
of placement fee, payment of salaries corresponding to the unexpired portion of the contract, as
well as moral and exemplary damages, against respondents. Iladan alleged that she was forced to
resign by her principal employer, threatened with incarceration; and that she was constrained to
accept the amount of P35,000.00 as financial assistance as she needed the money to defray her
expenses in going back to the Philippines. She averred that the statements in the Affidavit of
Release, Waiver and Quitclaim and the Agreement were not fully explained in the language
known to her; that they were considered contracts of adhesion contrary to public policy; and
were issued for an unreasonable consideration. Iladan claimed to have been illegally dismissed
and entitled to backwages corresponding to the unexpired portion of the contract,
reimbursement of the placement fee in the amount of P90,000.00, as well as payment of damages
and attorney's fee for the litigation of her cause.
To prove that she incurred debts for the placement fee, Iladan presented a) a mortgage
deed and a deed of transfer of rights over her family's properties in favor of other persons, b) a
sworn statement of her mother, Rebecca U. Ondoy (Ondoy), stating that Iladan paid P30,000.00
in cash to respondents for the placement fee, and borrowed P60,000.00 from Nippon Credit
Corp., Inc. (Nippon), a lending company referred by respondents, and c) a demand letter14 from
Nippon demanding payment of her loan.
Respondents, on the hand, averred that Iladan was not illegally dismissed but voluntarily
resigned as shown by: (1) her handwritten resignation letter and (2) the Affidavit of Release,
Waiver and Quitclaim and the Agreement, both voluntarily executed by her before Philippine
Consulate officials in Hongkong. Respondents also denied collecting a placement fee considering
the prohibition in the POEA rules against the charging of placement fee for domestic helpers
deployed to Hongkong.
Issues
Whether or not Iladan's resignation and her execution of the Affidavit of Release, Waiver and
Quitclaim and the Agreement were all voluntarily made.
Whether or not Iladan was illegally dismissed.
Ruling
Iladan's resignation was voluntary;

there was no illegal dismissal
In illegal dismissal cases, the employer has the burden of proving that the employee's
dismissal was legal. However, to discharge this burden, the employee must first prove, by
substantial evidence, that he had been dismissed from employment.
Iladan maintains that she was threatened and coerced by respondents to write the
resignation letter, to accept the financial assistance and to sign the waiver and settlement.
Consequently, she insists that her act of resigning was involuntary.
The Court is not convinced as we find no proof of Iladan's allegations. It is a settled

jurisprudence that it is incumbent upon an employee to prove that his resignation is not
voluntary. However, Iladan did not adduce any competent evidence to prove that respondents
used force and threat.
For intimidation to vitiate consent, the following requisites must be present; (1) that the
intimidation paused the consent to be given; (2) that the threatened act be unjust or unlawful;
(3) that the threat be real or serious, there being evident disproportion between the evil and the
resistance which all men can offer, leading to the choice of doing the act which is forced on the
person to do as the lesser evil; and (4) that it produces a well-grounded fear from the fact that
the person from whom it comes has the necessary means or ability to inflict the threatened injury
to his person or property. In the instant case, not one of these essential elements was amply
proven by [Iladan]. Bare allegations of threat or 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 dissociate oneself from employment. It is a formal pronouncement or
relinquishment of an office, with the intention of relinquishing the office accompanied by the act
of relinquishment. As the intent to relinquish must concur with the overt act of relinquishment,
the acts of the employee before and after the alleged resignation must be considered in
determining whether in fact, he or she intended to sever from his or her employment.
In the instant case, Iladan executed a resignation letter in her own handwriting. She also
accepted the amount of P35,000.00 as financial assistance and executed an Affidavit of Release,
Waiver and Quitclaim and an Agreement, as settlement and waiver of any cause of action against
respondents. The affidavit of waiver and the settlement were acknowledged/subscribed before
Labor Attache Romulo on August 6, 2009, and duly authenticated by the Philippine Consulate.
An affidavit of waiver duly acknowledged before a notary public is a public document which
cannot be impugned by mere self-serving allegations. Proof of an irregularity in its execution is
absolutely essential. The Agreement likewise bears the signature of Conciliator-Mediator Diaz.
Thus, the signatures of these officials sufficiently prove that Iladan was duly assisted when she
signed the waiver and settlement. Concededly, the presumption of regularity of official acts may
be rebutted by affirmative evidence of irregularity or failure to perform a duty. In this case, no
such evidence was presented. Besides, "[t]he Court has ruled that a waiver or quitclaim is a valid
and binding agreement between the parties, provided that it constitutes a credible and
reasonable settlement, and that the one accomplishing it has done so voluntarily and with a full
understanding of its import." Absent any extant and clear proof of the alleged coercion and
threats Iladan allegedly received from respondents that led her to terminate her employment
relations with respondents, it can be concluded that Iladan resigned voluntarily.
All told, the Labor Arbiter and the NLRC erred in finding that petitioner was illegally
dismissed as no substantial evidence was adduced to sustain this finding. As shown above, Iladan
failed to substantiate her claim of illegal dismissal for there was no proof that her resignation was
tainted with coercion and threats, as she strongly claims.
"Although the Supreme Court has, more often than not, been inclined towards the
workers and has upheld their cause in their conflicts with the employers, such inclination has
not blinded it to the rule that justice is in every case for the deserving, to be dispensed in the
light of the established facts and applicable law and doctrine."
OLYMPIA HOUSING, INC., vs. ALLAN LAPASTORA and IRENE UBALUBAO

G.R. No.187691, January 13, 2016
Facts
The instant case stemmed from a complaint for illegal dismissal, payment of backwages
and other benefits, and regularization of employment filed by Allan Lapastora (Lapastora) and
Irene Ubalubao (Ubalubao) against Olympic Housing, Inc. (OHI), the entity engaged in the
management of the Olympia Executive Residences (OER), a condominium hotel building
situated in Makati City, owned by a Philippine-registered corporation known as the Olympia
Condominium Corporation (OCC). The complaint, which was docketed as NLRC NCR Case No.
30-03-00976-00 (NLRC NCR CA No. 032043-02), likewise impleaded as defendants the part
owner of OHI, Felix Limcaoco (Limcaoco), and Fast Manpower and Allied Services Company,
Inc. (Fast Manpower). Lapastora and Ubalubao alleged that they worked as room attendants of
OHI from March 1995 and June 1997, respectively, until they were placed on floating status on
February 24, 2000, through a memorandum sent by Fast Manpower.
To establish employer-employee relationship with OHI, Lapastora and Ubalubao alleged

that they were directly hired by the company and received salaries directly from its operations
clerk, Myrna Jaylo (Jaylo). They also claimed that OHI exercised control over them as they were
issued time cards, disciplinary action reports and checklists of room assignments. It was also OHI
which terminated their employment after they petitioned for regularization. Prior to their
dismissal, they were subjected to investigations for their alleged involvement in the theft of
personal items and cash belonging to hotel guests and were summarily dismissed by OHI despite
lack of evidence.
For their part, OHI and Limcaoco alleged that Lapastora and Ubalubao were not
employees of the company but of Fast Manpower, with which it had a contract of services,
particularly, for the provision of room attendants. They claimed that Fast Manpower is an
independent contractor as it (1) renders janitorial services to various establishments in Metro
Manila, with 500 janitors under its employ; (2) maintains an office where janitors assemble before
they are dispatched to their assignments; (3) exercises the right to select, refuse or change
personnel assigned to OHI; and (4) supervises and pays the wages of its employees.
Reinforcing OHI’s claims, Fast Manpower reiterated that it is a legitimate manpower

agency and that it had a valid contract of services with OHI, pursuant to which Lapastora and
Ubalubao were deployed as room attendants. Lapastora and Ubalubao were, however, found to
have violated house rules and regulations and were reprimanded accordingly. It denied the
employees’ claim that they were dismissed and maintained they were only placed on floating
status for lack of available work assignments.
Subsequently, on August 22, 2000, a memorandum of agreement was executed,

stipulating the transfer of management of the OER from OHI to HSAI-Raintree, Inc. (HSAI-
Raintree). Thereafter, OHI informed the Department of Labor and Employment (DOLE) of its
cessation of operations due to the said change of management and issued notices of termination
to all its employees. This occurrence prompted some union officers and members to file a
separate complaint for illegal dismissal and unfair labor practice against OHI, OCC and HSAI-
Raintree, docketed as NLRC NCR CN 30-11-04400-00 (CA No. 032193-02), entitled Malonie D.
Ocampo, et al. v. Olympia Housing, Inc., et al. (Ocampo v. OHI). This complaint was, however,
dismissed for lack of merit. The complainants therein appealed the said ruling to the NLRC.
Meanwhile, on May 10, 2002, the Labor Arbiter (LA) rendered a Decision in the instant
case, holding that Lapastora and Ubalubao were regular employees of OHI and that they were
illegally dismissed.
In ruling for the existence of employer-employee relationship, the LA held that OHI
exercised control and supervision over Lapastora and Ubalubao through its supervisor, Anamie
Lat. The LA likewise noted that documentary evidence consisting of time cards, medical cards
and medical examination reports all indicated OHI as employer of the said employees.
Moreover, the affidavit of OHI’s housekeeping coordinator, Jaylo, attested to the fact that
OHI is the one responsible for the selection of employees for its housekeeping department. OHI
also paid the salaries of the housekeeping staff by depositing them to their respective ATM
accounts. That there is a contract of services between OHI and Fast Manpower did not rule out
the existence of employer-employee relationship between the former and Lapastora and
Ubalubao as it appears that the said contract was a mere ploy to circumvent the application of
pertinent labor laws particularly those relating to security of tenure. The LA pointed out that the
business of OHI necessarily requires the services of housekeeping aides, room boys,
chambermaids, janitors and gardeners in its daily operations, which is precisely the line of work
being rendered by Lapastora and Ubalubao.
Both parties appealed to the NLRC. OHI asseverated that the reinstatement of Lapastora
and Ubalubao was no longer possible in view of the transfer of the management of the OER to
HSAI-Raintree.
On December 28, 2007, the NLRC rendered a decision, dismissing the appeal for lack of
merit.
The NLRC held that OHI is the employer of Lapastora and Ubalubao since Fast Manpower
failed to establish the fact that it is an independent contractor. Further, it ruled that the
memorandum of agreement between OCC and HSAI-Raintree did not render the reinstatement
of Lapastora and Ubalubao impossible since a change in the management does not automatically
result in a change of personnel especially when the memorandum itself did not include a
provision on that matter.
In the meantime, in Ocampo v. OHI, the NLRC rendered a Decision dated November 22,
2002, upholding the validity of the cessation of OHI’s operations and the consequent termination
of all its employees. It stressed that the cessation of business springs from the management’s
prerogative to do what is necessary for the protection of its investment, notwithstanding adverse
effect on the employees. The discharge of employees for economic reasons does not amount to
unfair labor practice. The said ruling of the NLRC was elevated on petition for certiorari to the
CA, which dismissed the same in Resolutions dated November 28, 2003and June 23, 2004. The
mentioned resolutions were appealed to this Court and were docketed as G.R. No. 164160, which
was, however, denied in the Resolution dated July 26, 2004 for failure to comply with procedural
rules and lack of reversible error on the part of the CA.
Issue
Whether or not Lapastora was illegally dismissed.
Whether or not the principle of stare decisis is applicable.
Ruling
Lapastora was illegally dismissed
Indisputably, Lapastora was a regular employee of OHI. As found by the LA, he has been
under the continuous employ of OHI since March 3, 1995 until he was placed on floating status
in February 2000. His uninterrupted employment by OHI, lasting for more than a year, manifests
the continuing need and desirability of his services, which characterize regular employment.
Article 280 of the Labor Code provides as follows:
Art. 280. Regular and casual employment. The provisions of written agreement to the
contrary notwithstanding and regardless of the oral agreement of the parties, an employment
shall be deemed to be regular where the employee has been engaged to perform activities which
are usually necessary or desirable in the usual business or trade of the employer, except where
the employment has been fixed for a specific project or undertaking, the completion or
termination of which has been determined at the time of the engagement of the employee or
where the work or services to be performed is seasonal in nature and the employment is for the
duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding

paragraph: Provided, That, any employee who has rendered at least one year of service, whether
such service is continuous or broken, shall be considered a regular employee with respect to the
activity in which he is employed and his employment shall continue while such activity exists.
Based on records, OHI is engaged in the business of managing residential and commercial
condominium units at the OER. By the nature of its business, it is imperative that it maintains a
pool of housekeeping staff to ensure that the premises remain an uncluttered place of comfort
for the occupants. It is no wonder why Lapastora, among several others, was continuously
employed by OHI precisely because of the indispensability of their services to its business. The
fact alone that Lapastora was allowed to work for an unbroken period of almost five years is all
the same a reason to consider him a regular employee.
The attainment of a regular status of employment guarantees the employee’s security of

tenure that he cannot be unceremoniously terminated from employment. "To justify fully the
dismissal of an employee, the employer must, as a rule, prove that the dismissal was for a just
cause and that the employee was afforded due process prior to dismissal. As a complementary
principle, the employer has the onus of proving with clear, accurate, consistent, and convincing
evidence the validity of the dismissal."
OHI miserably failed to discharge its burdens thus making Lapastora’s termination
illegal.
On the substantive aspect, it appears that OHI failed to prove that Lapastora’s dismissal
was grounded on a just or authorized cause. While it claims that it had called Lapastora’s
attention several times for tardiness, unexplained absences and loitering, it does not appear from
the records that the latter had been notified of the company’s dissatisfaction over his
performance and that he was made to explain his supposed infractions. It does not even show
from the records that Lapastora was ever disciplined because of his alleged tardiness. In the same
manner, allegations regarding Lapastora’s involvement in the theft of personal items and cash
belonging to hotel guests remained unfounded suspicions as they were not proven despite OHI’s
probe into the incidents.
On the procedural aspect, OHI admittedly failed to observe the twin notice rule in
termination cases. As a rule, the employer is required to furnish the concerned employee two
written notices: (1) a written notice served on the employee specifying the ground or grounds for
termination, and giving to said employee reasonable opportunity within which to explain his
side; and (2) a written notice of termination served on the employee indicating that upon due
consideration of all the circumstances, grounds have been established to justify his termination.
In the present case, Lapastora was not informed of the charges against him and was denied the
opportunity to disprove the same. He was summarily terminated from employment.
OHI argues that no formal notices of investigation, notice of charges or termination was
issued to Lapastora since he was not an employee of the company but of Fast Manpower.
The issue of employer-employee relationship between OHI and Lapastora had been
deliberated and ruled upon by the LA and the NLRC in the affirmative on the basis of the evidence
presented by the parties. The LA ruled that Lapastora was under the effective control and
supervision of OHI through the company supervisor. She gave credence to the pertinent records
of Lapastora’s employment, i.e., timecards, medical records and medical examinations, which all
indicated OHI as his employer. She likewise noted Fast Manpower’s failure to establish its
capacity as independent contractor based on the standards provided by law.
That there is an existing contract of services between OHI and Fast Manpower where
both parties acknowledged the latter as the employer of the housekeeping staff, including
Lapastora, did not alter established facts proving the contrary. The parties cannot evade the
application of labor laws by mere expedient of a contract considering that labor and employment
are matters imbued with public interest. It cannot be subjected to the agreement of the parties
but rather on existing laws designed specifically for the protection of labor. Thus, it had been
repeatedly stressed in a number of jurisprudence that "[a] party cannot dictate, by the mere
expedient of a unilateral declaration in a contract, the character of its business, i.e., whether as
labor-only contractor or as job contractor, it being crucial that its character be measured in terms
of and determined by the criteria set by statute."
The Court finds no compelling reason to deviate from the findings of the LA and NLRC,
especially in this case when the same was affirmed by the CA. It is settled that findings of fact
made by LAs, when affirmed by the NLRC, are entitled not only to great respect but even finality
and are binding on this Court especially when they are supported by substantial evidence.
The principle of stare decisis is not applicable
Still, OHI argues that the legality of the closure of its business had been the subject of the
separate case of Ocampo v. OHI, where the NLRC upheld the validity of the termination of all the
employees of OHI due to cessation of operations. It asserts that since the ruling was affirmed by
the CA and, eventually by this Court, the principle of stare decisis becomes applicable.
Considering the closure of its business, Lapastora can no longer be reinstated and should instead
be awarded backwages up to the last day of operations of the company only, specifically on
October 1, 2000.
The CA correctly ruled that the principle of stare decisis finds no relevance in the present
case. To begin with, there is no doctrine of law that is similarly applicable in both the present
case and in Ocampo v. OHI. While both are illegal dismissal cases, they are based on completely
different sets of facts and involved distinct issues. In the instant case, Lapastora cries illegal
dismissal after he was arbitrarily placed on a floating status on mere suspicion that he was
involved in theft incidents within the company premises without being given the opportunity to
explain his side or any formal investigation of his participation. On the other hand, in Ocampo v.
OHI, the petitioners therein questioned the validity of OHI’s closure of business and the eventual
termination of all the employees. Thus, the NLRC ruled upon both cases differently.
Nonetheless, the Court finds the recognition of the validity of OHI’s cessation of business
in the Decision dated November 22, 2002 of the NLRC, which was affirmed by the CA and this
Court, a supervening event which inevitably alters the judgment award in favor of Lapastora. The
NLRC noted that OHI complied with all the statutory requirements, including the filing of a
notice of closure with the DOLE and furnishing written notices of termination to all employees
effective 30 days from receipt. OHI likewise presented financial statements substantiating its
claim that it is operating at a loss and that the closure of business is necessary to avert further
losses. The action of the OHI, the NLRC held, is a valid exercise of management prerogative.
Thus, while the finding of illegal dismissal in favor of Lapastora subsists, his
reinstatement was rendered a legal impossibility with OHI’s closure of business.In Galindez v.
Rural Bank of Llanera, Inc., the Court noted:
Reinstatement presupposes that the previous position from which one had been removed
still exists or there is an unfilled position more or less of similar nature as the one previously
occupied by the employee. Admittedly, no such position is available. Reinstatement therefore
becomes a legal impossibility. The law cannot exact compliance with what is impossible.
Considering the impossibility of Lapastora’s reinstatement, the payment of separation

pay, in lieu thereof, is proper. The amount of separation pay to be given to Lapastora must be
computed from March 1995, the time he commenced employment with OHI, until the time when
the company ceased operations in October 2000. As a twin relief, Lapastora is likewise entitled
to the payment of backwages, computed from the time he was unjustly dismissed, or from
February 24, 2000 until October 1, 2000 when his reinstatement was rendered impossible without
fault on his part.
JENNIFER C. LAGAHITvs.PACIFIC CONCORD CONTAINER LINES/MONETTE
CUENCA (BRANCH MANAGER)
G.R. No. 177680, January 13, 2016
Facts
In February 2000, respondent Pacific Concord Container Lines (Pacific Concord), a
domestic corporation engaged in cargo forwarding, hired the petitioner as an Account
Executive/Marketing Assistant. In January 2002, Pacific Concord promoted her as a sales
manager with the monthly salary rate of P25,000.00, and provided her with a brand new Toyota
Altis plus gasoline allowance. On November 8, 2002, she reported for work at 9:00 a.m. and left
the company premises at around 10:30 a.m. to make client calls. At 1:14 p.m. of that day, she
received the following text message from respondent Monette Cuenca advising her that she was
no longer connected with Pacific Concord.
The petitioner immediately tried to contact Cuenca, but the latter refused to take her
calls. On the same day, the petitioner learned from clients and friends that the respondents had
disseminated notices, flyers and memos informing all clients of Pacific Concord that she was no
longer connected with the company as of November 8, 2002. Pacific Concord also caused the
publication of the notice to the public in the Sunstar Daily issue of December 15, 2002.
On November 13, 2002, the petitioner sent a letter to Pacific Concord with the following
contents:
In connection with your text message and flyers advising me that you have terminated
my employment, please arrange and expedite settlement of all benefits due to me under the law.
In as much as the facts of my termination has not been formally detailed to me, I believe
I was deprived of the due process that would have given me the chance to formally present my
side. It startled me at first but I have accepted my fate. However, we both have names and
reputations to protect. Factual incidents made as basis of my termination can help us mutually
clear our names.
On November 26, 2002, the petitioner filed her complaint for constructive dismissal in
the Regional Arbitration Branch of the National Labor Relations Commission (NLRC) in Cebu
City.
In their position paper, the respondents denied having terminated the petitioner despite
the fact that there were valid grounds to do so. They insisted that the petitioner had betrayed the
trust and confidence reposed in her when she: (a) used the company-issued vehicle for her own
personal interest; (b) failed to achieve her sales quota, and to enhance and develop the Sales
Department; (c) enticed her marketing assistant, Jo Ann Otrera, to resign and join her in
transferring to another forwarding company; (d) applied for other employment during office
hours and using company resources; (e) solicited and offered the services of Seajet International,
Inc. during her employment with Pacific Concord; (f) received a personal commission from
Wesport Line, Inc. for container shipments; and (g) illegally manipulated and diverted several
containers to Seajet International.
The respondents claimed that Pacific Concord even issued at one time a memorandum
to the petitionerto cite her insubordination in refusing to participate in the company’s
teambuilding activity; that in the two meetings held on September 27, 2002 and October 9, 2002,
she was afforded the chance to explain her side on the reports that she was looking for other
employment, but she dismissed the reports as mere speculations and assured them of her loyalty;
that although valid grounds to terminate the petitioner already existed, they did not dismiss her;
and that she voluntarily resigned on November 13, 2002 after probably sensing that the
management had gotten wind of her anomalous transactions. They submitted affidavits to
support their allegations.
Issues
Whether or not the petitioner resigned as sales manager of Pacific Concord?
Whether or not Pacific Concord had sufficient grounds to terminate her for breach of
trust and confidence under Article 282 of the Labor Code?
Ruling
Lagahit did not resign from her employment
As a rule, the employer who interposes the resignation of the employee as a defense
should prove that the employee voluntarily resigned. A valid resignation is the voluntary act of
an employee who finds herself in a situation where she believes that personal reasons cannot be
sacrificed in favor of the exigency of the service and that she has no other choice but to
disassociate herself from employment. The resignation must be unconditional and with a clear
intention to relinquish the position. Consequently, the circumstances surrounding the alleged
resignation must be consistent with the employee’s intent to give up the employment. In this
connection, the acts of the employee before and after the resignation are considered to determine
whether or not she intended, in fact, to relinquish the employment.
The facts and circumstances before and after the petitioner’s severance from her
employment on November 8, 2002 did not show her resolute intention to relinquish her job.
Indeed, it would be unfounded to infer the intention to relinquish from her November 13, 2002
letter, which, to us, was not a resignation letter due to the absence therefrom of anything evincing
her desire to sever the employer-employee relationship. The letter instead presented her as a
defenseless employee unjustly terminated for unknown reasons who had been made the subject
of notices and flyers informing the public of her unexpected termination. It also depicted her as
an employee meekly accepting her unexpected fate and requesting the payment of her backwages
and accrued benefits just to be done with the employer.
For sure, to conclude that the petitioner resigned because of her letter of November 13,
2002 is absurd in light of the respondents having insisted that she had been terminated from her
employment earlier on November 8, 2002. In that regard, every resignation presupposes the
existence of the employer-employee relationship; hence, there can be no valid resignation after
the fact of termination of the employment simply because the employee had no employer-
employee relationship to relinquish.
Lagahit did not breach her employer’s trust;

her dismissal was, therefore, illegal
Article 282(c) of the Labor Code authorizes an employer to dismiss an employee for
committing fraud, or for willful breach of the trust reposed by the employer. However, loss of
confidence is never intended to provide the employer with a blank check for terminating its
employee. For this to be a valid ground for the termination of the employee, the employer must
establish that: (1) the employee must be holding a position of trust and confidence; and (2) the
act complained against would justify the loss of trust and confidence.
There are two classes of employees vested with trust and confidence. To the first class
belong the managerial employees or those vested with the powers or prerogatives to lay down
management policies and to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline
employees or effectively recommend such managerial actions. The second class includes those
who in the normal and routine exercise of their functions regularly handle significant amounts
of money or property. Cashiers, auditors, and property custodians are some of the employees in
the second class.
The petitioner’s position as sales manager did not immediately make the petitioner a
managerial employee. The actual work that she performed, not her job title, determined whether
she was a managerial employee vested with trust and confidence. Her employment as sales
manager was directly related with the sales of cargo forwarding services of Pacific Concord, and
had nothing to do with the implementation of the management’s rules and policies. As such, the
position of sales manager came under the second class of employees vested with trust and
confidence. Therein was the flaw in the CA’s assailed decision. Although the mere existence of
the basis for believing that the managerial employee breached the trust reposed by the employer
would normally suffice to justify a dismissal, we should desist from applying this norm against
the petitioner who was not a managerial employee.
At any rate, the employer must present clear and convincing proof of an actual breach of
duty committed by the employee by establishing the facts and incidents upon which the loss of
confidence in the employee may fairly be made to rest. The required amount of evidence for
doing so is substantial proof. With these guidelines in mind, we cannot hold that the evidence
submitted by the respondents (consisting of the three affidavits) sufficiently established the
disloyalty of the petitioner. The affidavits did not show how she had betrayed her employer’s
trust. Specifically, the affidavit of Russell B. Noel only stated that she and her husband Roy had
met over lunch with Garcia Imports and a certain Wilbur of Sea-Jet International Forwarder in
the first week of November 2002. To conclude that such lunch caused Pacific Concord to lose its
trust in the petitioner would be arbitrary. Similarly, the affidavit of Mark Anthony G. Limwas
inconclusive. Therein affiant Lim deposed:
That I was present when Ms. Vivian Veloso, former Branch Manager of Westport Line Inc.,
disclosed to Ms. Monette Cuenca and Ms. Mitzie Ibona on November 11, 2002 at the office of
Admiral Overseas Shipping Corp., where she is presently employed with, that Ms. Jennifer C.
Lagahit received a personal commission or rebate for the full container shipments moved via
Westport Line Inc. in the amount of USD 50.00 per container.
The foregoing statement was bereft of the particulars about how the petitioner had
entered into the transaction, as well as about the prejudice that Pacific Concord had suffered
from her receipt of the commission. Also, that this information was made known to Cuenca three
days after she had already terminated the petitioner belied the relevance of the information to
the termination.
In her affidavit, Jo Ann Otrera declared that the petitioner had called other forwarding
companies to inquire about any vacant positions, and that the petitioner had enticed her to
transfer to another company. However, such declarations did not provide the sufficient basis to
warrant the respondents’ loss of confidence in the petitioner. We stress that although her
supposedly frantic search for gainful employment opportunities elsewhere should be considered
as inappropriate for being made during office hours, the same did not constitute willful breach
of trust and confidence of the employer. The loss of trust and confidence contemplated under
Article 282(c) of the Labor Code is not ordinary but willful breach of trust. Verily, the breach of
trust is willful if it is intentional, knowing, deliberate and without justifiable excuse, as
distinguished from an act done carelessly, thoughtlessly, heedlessly or inadvertently. Most
importantly, the cause of the loss of trust must be work-related as to expose the employee as
unfit to continue working for the employer.
Considering that the petitioner’s duties related to the sales of forwarding services offered
by Pacific Concord, her calling other forwarding companies to inquire for vacant positions did
not breach the trust reposed in her as sales manager. Such act, being at worst a simple act of
indiscretion, did not constitute the betrayal of trust that merited the extreme penalty of dismissal
from employment. We remind that dismissal is a penalty of last resort, to be meted only after
having appreciated and evaluated all the relevant circumstances with the goal of ensuring that
the ground for dismissal was not only serious but true.
CHRISTINE JOY CAPIN-CADIZv.BRENT HOSPITAL AND COLLEGES, INC.,

G.R. No. 187417, February 24, 2016
Facts
Cadiz was the Human Resource Officer of respondent Brent Hospital and Colleges, Inc. (Brent)
at the time of her indefinite suspension from employment in 2006. The cause of suspension was
Cadiz's Unprofessionalism and Unethical Behavior Resulting to Unwed Pregnancy. It appears
that Cadiz became pregnant out of wedlock, and Brent imposed the suspension until such time
that she marries her boyfriend in accordance with law.
Cadiz then filed with the Labor Arbiter (LA) a complaint for Unfair Labor Practice,
Constructive Dismissal, Non-Payment of Wages and Damages with prayer for Reinstatement.
Issues
Whether or not Cadiz was illegally dismissed.
Ruling
Admittedly, one of the grounds for disciplinary action under Brent's policies is
immorality, which is punishable by dismissal at first offense Brent's Policy Manual provides:
CATEGORY IV
In accordance with Republic Act No. 1052, the following are just cause for terminating an
employment of an employee without a definite period:
x x x x
2. Serious misconduct or willful disobedience by the employee of the orders of his employer or
representative in connection with his work, such as, but not limited to the following:
chanRoblesvirtualLawlibrary
x x x x
b. Commission of immoral conduct or indecency within the company premises, such as an act of
lasciviousness or any act which is sinful and vulgar in nature.
c. Immorality, concubinage, bigamy.
Its Employee's Manual of Policies, meanwhile, enumerates "[a]cts of immorality such as

scandalous behaviour, acts of lasciviousness against any person (patient, visitors, co-workers)
within hospital premises" as a ground for discipline and discharge. Brent also relied on Section
94 of the Manual of Regulations for Private Schools (MRPS), which lists "disgraceful or immoral
conduct" as a cause for terminating employment.
Thus, the question that must be resolved is whether Cadiz's premarital relations with her
boyfriend and the resulting pregnancy out of wedlock constitute immorality. To resolve this, the
Court makes reference to the recently promulgated case of Cheryll Santos Lens v. St. Scholastica
's College Westgrove and/or Sr. Edna Quiambao, OSB
Leus involved the same personal circumstances as the case at bench, albeit the employer
was a Catholic and sectarian educational institution and the petitioner, Cheryl 1 Santos Leus
(Leus), worked as an assistant to the school's Director of the Lay Apostolate and Community
Outreach Directorate. Leus was dismissed from employment by the school for having borne a
child out of wedlock. The Court ruled in Leus that the determination of whether a conduct is
disgraceful or immoral involves a two-step process: first, a consideration of the totality of the
circumstances surrounding the conduct; and second, an assessment of the said circumstances
vis-a-vis the prevailing norms of conduct, i.e., what the society generally considers moral and
respectable.
In this case, the surrounding facts leading to Cadiz's dismissal are straightforward - she
was employed as a human resources officer in an educational and medical institution of the
Episcopal Church of the Philippines; she and her boyfriend at that time were both single; they
engaged in premarital sexual relations, which resulted into pregnancy. The labor tribunals
characterized these as constituting disgraceful or immoral conduct. They also sweepingly
concluded that as Human Resource Officer, Cadiz should have been the epitome of proper
conduct and her indiscretion "surely scandalized the Brent community."
The foregoing circumstances, however, do not readily equate to disgraceful and immoral
conduct. Brent's Policy Manual and Employee's Manual of Policies do not define what constitutes
immorality; it simply stated immorality as a ground for disciplinary action. Instead, Brent
erroneously relied on the standard dictionary definition of fornication as a form of illicit relation
and proceeded to conclude that Cadiz's acts fell under such classification, thus constituting
immorality.
Jurisprudence has already set the standard of morality with which an act should be
gauged - it is public and secular, not religious. Whether a conduct is considered disgraceful or
immoral should be made in accordance with the prevailing norms of conduct, which, as stated
in Leus, refer to those conducts which are proscribed because they are detrimental to
conditions upon which depend the existence and progress of human society. The fact that
a particular act does not conform to the traditional moral views of a certain sectarian institution
is not sufficient reason to qualify such act as immoral unless it, likewise, does not conform to
public and secular standards. More importantly, there must be substantial evidence to
establish that premarital sexual relations and pregnancy out of wedlock is considered disgraceful
or immoral.
The totality of the circumstances of this case does not justify the conclusion that Cadiz
committed acts of immorality. Similar to Leus, Cadiz and her boyfriend were both single and had
no legal impediment to marry at the time she committed the alleged immoral conduct. In fact,
they eventually married on April 15, 2008. Aside from these, the labor tribunals' respective
conclusion that Cadiz's "indiscretion" "scandalized the Brent community" is speculative, at most,
and there is no proof adduced by Brent to support such sweeping conclusion. Even Brent
admitted that it came to know of Cadiz's "situation" only when her pregnancy became manifest.
Brent also conceded that "[a]t the time [Cadiz] and Carl R. Cadiz were just carrying on their
boyfriend-girlfriend relationship, there was no knowledge or evidence by [Brent] that they were
engaged also in premarital sex." This only goes to show that Cadiz did not flaunt her premarital
relations with her boyfriend and it was not carried on under scandalous or disgraceful
circumstances. As declared in Leus, "there is no law which penalizes an unmarried mother by
reason of her sexual conduct or proscribes the consensual sexual activity between two unmarried
persons; that neither does such situation contravene[s] any fundamental state policy enshrined
in the Constitution." The fact that Brent is a sectarian institution does not automatically subject
Cadiz to its religious standard of morality absent an express statement in its manual of personnel
policy and regulations, prescribing such religious standard as gauge as these regulations create
the obligation on both the employee and the employer to abide by the same.
Brent, likewise, cannot resort to the MRPS because the Court already stressed in Leus
that "premarital sexual relations between two consenting adults who have no impediment to
marry each other, and, consequently, conceiving a child out of wedlock, gauged from a purely
public and secular view of morality, does not amount to a disgraceful or immoral conduct under
Section 94(e) of the 1992 MRPS."
Marriage as a condition for reinstatement
In this case, Brent imposed on Cadiz the condition that she subsequently contract
marriage with her then boyfriend for her to be reinstated. According to Brent, this is "in
consonance with the policy against encouraging illicit or common-law relations that would
subvert the sacrament of marriage."
Statutory law is replete with legislation protecting labor and promoting equal opportunity in
employment. No less than the 1987 Constitution mandates that the "State shall afford full
protection to labor, local and overseas, organized and unorganized, and promote full
employment and equality of employment opportunities for all."The Labor Code of the
Philippines, meanwhile, provides:
Art. 136. Stipulation against marriage. It shall be unlawful for an employer to require as a
condition of employment or continuation of employment that a woman employee shall not get
married, or to stipulate expressly or tacitly that upon getting married, a woman employee shall
be deemed resigned or separated, or to actually dismiss, discharge, discriminate or otherwise
prejudice a woman employee merely by reason of her marriage.
With particular regard to women, Republic Act No. 9710 or the Magna Carta of Women protects
women against discrimination in all matters relating to marriage and family relations, including
the right to choose freely a spouse and to enter into marriage only with their free and full
consent.
Weighed against these safeguards, it becomes apparent that Brent's condition is coercive,
oppressive and discriminatory. There is no rhyme or reason for it. It forces Cadiz to marry for
economic reasons and deprives her of the freedom to choose her status, which is a privilege that
inheres in her as an intangible and inalienable right. While a marriage or no-marriage
qualification may be justified as a "bona fide occupational qualification," Brent must prove two
factors necessitating its imposition, viz: (1) that the employment qualification is reasonably
related to the essential operation of the job involved; and (2) that there is a factual basis for
believing that all or substantially all persons meeting the qualification would be unable to
properly perform the duties of the job. Brent has not shown the presence of neither of these
factors. Perforce, the Court cannot uphold the validity of said condition.
Given the foregoing, Cadiz, therefore, is entitled to 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 should be awarded as an alternative and as a form of financial assistance. In the computation
of separation pay, the Court stresses that it should not go beyond the date an employee
was deemed to have been actually separated from employment, or beyond the date when
reinstatement was rendered impossible. In this case, the records do not show whether Cadiz
already severed her employment with Brent or whether she is gainfully employed elsewhere;
thus, the computation of separation pay shall be pegged based on the findings that she was
employed on August 16, 2002, on her own admission in her complaint that she was dismissed on
November 17, 2006, and that she was earning a salary of P9,108.70 per month, which shall then
be computed at a rate of one (1) month salary for every year of service.
The Court also finds that Cadiz is only entitled to limited backwages. Generally, the
computation of backwages is reckoned from the date of illegal dismissal until actual
reinstatement. In case separation pay is ordered in lieu of reinstatement or reinstatement is
waived by the employee, backwages is computed from the time of dismissal until the finality of
the decision ordering separation pay. Jurisprudence further clarified that the period for
computing the backwages during the period of appeal should end on the date that a higher court
reversed the labor arbitration ruling of illegal dismissal. If applied in Cadiz's case, then the
computation of backwages should be from November 17, 2006, which was the time of her illegal
dismissal, until the date of promulgation of this decision. Nevertheless, the Court has also
recognized that the constitutional policy of providing full protection to labor is not intended to
oppress or destroy management. The Court notes that at the time of Cadiz's indefinite suspension
from employment, Leus was yet to be decided by the Court. Moreover, Brent was acting in good
faith and on its honest belief that Cadiz's pregnancy out of wedlock constituted immorality. Thus,
fairness and equity dictate that the award of backwages shall only be equivalent to one (1) year.
ARLENE T. SAMONTE, ET AL v.LA SALLE GREENHILLS, INC., BRO. BERNARD S. OCA

G.R. No. 199683, February 10, 2016
Facts:
From 1989, and for fifteen (15) years thereafter, LSGI contracted the services of medical
professionals, specifically pediatricians, dentists and a physician, to comprise its Health Service
Team (HST).
Petitioners, along with other members of the HST signed uniform one-page Contracts of
Retainer for the period of a specific academic calendar beginning in June of a certain year (1989
and the succeeding 15 years) and terminating in March of the following year when the school year
ends.
After fifteen consecutive years of renewal each academic year, where the last Contract of Retainer
was for the school year of 2003-2004 i.e., June 1, 2003 to March 31, 2004, LSGI Head Administrator,
Herman Rochester, on that last day of the school year, informed the Medical Service Team,
including herein petitioners, that their contracts will no longer be renewed for the following
school year by reason of LSGI's decision to hire two (2) full-time doctors and dentists. One of the
physicians from the same Health Service Team was hired by LSGI as a full-time doctor.
When petitioners', along with their medical colleagues', requests for payment of their separation
pay were denied, they filed a complaint for illegal dismissal with prayer for separation pay,
damages and attorney's fees before the NLRC.
The Labor Arbiter dismissed petitioners' (and their colleagues') complaint and ruled that
complainants, as propounded by LSGI, were independent contractors under retainership
contracts and never became regular employees of LSGI. The Labor Arbiter based its over-all
finding of the absence of control by LSGI over complainants.
The NLRC disagreed with the Labor Arbiter's ruling that complainants were independent
contractors based on the latter's opinion that the services rendered by complainants are not
considered necessary to LSGI's operation as an educational institution. The NLRC noted that
Presidential Decree No. 856, otherwise known as the Sanitation Code of the Philippines, requires
that private educational institutions comply with the sanitary laws. Nonetheless, the NLRC found
that complainants were fixed-period employees whose terms of employment were subject to
agreement for a specific duration. In all, the NLRC ruled that the Contracts of Retainer between
complainants and LSGI are valid fixed-term employment contracts where complainants as
medical professionals understood the terms thereof when they agreed to such continuously for
more than ten (10) years. Consequently, the valid termination of their retainership contracts at
the end of the period stated therein, did not entitle complainants to reinstatement, nor, to
payment of separation pay.
In dismissing the petition for certiorari, the appellate court ruled that the NLRC did not
commit an error of jurisdiction which is correctible by a writ of certiorari. The Court of Appeals
found that the NLRC's ruling was based on the Contracts of Retainer signed by petitioners who,
as professionals, supposedly ought to have known the import of the contracts they voluntarily
signed, i.e. (a) temporary in character; (b) automatically ceasing on the specified expiration date,
or (c) likewise deemed terminated if job/task shall be completed on a date prior to specified
expiration date.
Issue
Whether or not the petitioners were regular employees who may only be dismissed for
just and authorized causes.
Ruling
The NLRC correctly identified the existence of an employer-employee relationship

between petitioners and LSGI and not a bilateral independent contractor relationship. On more
than one occasion, we recognized certain workers to be independent contractors: individuals
with unique skills and talents that set them apart from ordinary employees. We found them to
be independent contractors because of these unique skills and talents and the lack of control
over the means and methods in the performance of their work. In some instances, doctors and
other medical professional may fall into this independent contractor category, legitimately
providing medical professional services. However, as has been declared by the-NLRC and the
appellate court, petitioners herein are not independent contractors.
We need to examine next the ruling of the NLRC and the Court of Appeals that petitioners
were fixed-term employees.
To factually support such conclusion, the NLRC solely relied on the case of Brent v. Zamor
and perfunctorily noted that petitioners, professional doctors and dentists, continuously signed
the contracts for more than ten (10) years. Such was heedless of our prescription that the ruling
in Brent be strictly construed, applying only to cases where it appears that the employer and
employee are on equal footing. Observably, nowhere in the two and half page ratiocination of
the NLRC was there reference to the standard that "it [should] satisfactorily appear that the
employer and employee dealt with each other on more or less equal terms with no moral
dominance whatever being exercised by the former on the latter."
From Brent, which remains as the exception rather than the rule in the determination of
the nature of employment, we are schooled that there are employment contracts where a "fixed
term is an essential and natural appurtenance" such as overseas employment contracts and
officers in educational institutions. We learned thus:
[T]he decisive determinant in the term employment contract should not be the activities
that the employee is called upon to perform, but the day certain agreed upon by the parties for
the commencement and termination of their employment relationship, a day certain being
understood to be "that which must necessarily come, although it may not be known when.
xxx
Accordingly, and since the entire purpose behind the development of legislation culminating in
the present Article 280 of the Labor Code clearly appears to have been, as already observed, to
prevent circumvention of the employee's right to be secure in his tenure, the clause in said article
indiscriminately and completely ruling out all written or oral agreements conflicting with the
concept of regular employment as defined therein should be construed to refer to the substantive
evil that the Code itself has singled out: agreements entered into precisely to circumvent security
of tenure. It should have no application to instances where a fixed period of employment was
agreed upon knowingly and voluntarily by the parties, without any force, duress or improper
pressure being brought to bear upon the employee and absent any other circumstances vitiating
his consent, or where it satisfactorily appears that the employer and employee dealt with each
other on more or less equal terms with no moral dominance whatever being exercised by the
former over the latter.
Tersely put, a fixed-term employment is allowable under the Labor Code only if the term
was voluntarily and knowingly entered into by the parties who must have dealt with each other
on equal terms not one exercising moral dominance over the other.
Indeed, Price, et. al. v. Innodata Corp., teaches us, from the wording of Article 280 of the
Labor Code, that the nomenclature of contracts, especially employment contracts, does not
define the employment status of a person: Such is defined and prescribed by law and not by what
the parties say it should be. Equally important to consider is that a contract of employment is
impressed with public interest such that labor contracts must yield to the common good. Thus,
provisions of applicable statutes are deemed written into the contract, and the parties are not at
liberty to insulate themselves and their relationships from the impact of labor laws and
regulations by simply contracting with each other.
Further, a fixed-term contract is an employment contract, the repeated renewals of which

make for a regular employment. In Fuji Network Television v. Espiritu,wenoted that Fuji's
argument that Espiritu was an independent contractor under a fixed-term contract is
contradictory where employees under fixed-term contracts cannot be independent contractors
because in fixed-term contracts, an employer-employee relationship exists. Significantly, we
ruled therein that Espiritu's contract indicating a fixed term did not automatically mean that she
could never be a regular employee which is precisely what Article 280 of the Labor Code sought
to avoid. The repeated renewal of Espiritu's contract coupled with the nature of work performed
pointed to the regular nature of her employment despite contrary claims of Fuji and the
nomenclature of the contract. Citing Dumpit-Murillo v. Court of Appeals13 and Philips
Semiconductors, Inc. v. Fadriquela, we declared in Fuji that the repeated engagement under
contract of hire is indicative of the necessity and desirability of the [employee's] work in
respondent's business and where employee's contract has been continuously extended or
renewed to the same position, with the same duties and remained in the employ without any
interruption, then such employee is a regular employee.
The uniform one-page Contracts of Retainer signed by petitioners were prepared by LSGI
alone. Petitioners, medical professionals as they were, were still not on equal footing with LSGI
as they obviously did not want to lose their jobs that they had stayed in for fifteen (15) years.
There is no specificity in the contracts regarding terms and conditions of employment that would
indicate that petitioners and LSGI were on equal footing in negotiating it. Notably, without
specifying what are the tasks assigned to petitioners, LSGI "may upon prior written notice to the
retainer, terminate [the] contract should the retainer fail in any way to perform his assigned
job/task to the satisfaction of La Salle Greenhills, Inc. or for any other just cause."
While vague in its sparseness, the Contract of Retainer very clearly spelled out that LSGI
had the power of control over petitioners.
Time and again we have held that the power of control refers to the existence of the power
and not necessarily to the actual exercise thereof, nor is it essential for the employer to actually
supervise the performance of duties of the employee. It is enough that the employer has the right
to wield that power.
In all, given the following: (1) repeated renewal of petitioners' contract for fifteen years,
interrupted only by the close of the school year; (2) the necessity of the work performed by
petitioners as school physicians and dentists; and (3) the existence of LSGI's power of control
over the means and method pursued by petitioners in the performance of their job, we rule that
petitioners attained regular employment, entitled to security of tenure who could only be
dismissed for just and authorized causes. Consequently, petitioners were illegally dismissed and
are entitled to the twin remedies of payment of separation pay and full back wages. We order
separation pay in lieu of reinstatement given the time that has lapsed, twelve years, in the
litigation of this case.
SECURITY BANK SAVINGS CORPORATION (formerly PREMIERE
DEVELOPMENT BANK)/HERMINIO M. FAMATIGAN, JR., vs. CHARLES M. SINGSON
G.R. No. 214230, February 10, 2016
Facts
On November 25, 1985, respondent was initially employed by petitioner Premiere

Development Bank (now Security Bank Savings Corporation [SBSC]) as messenger until his
promotion as loans processor at its Sangandaan Branch. Thereafter, he was appointed as Acting
Branch Accountant and, in June 2007, as Acting Branch Manager. On March 26, 2008, he was
assigned to its Quezon Avenue Branch under the supervision of Branch Manager Corazon Pinero
(Pinero) and held the position of Customer Service Operations Head (CSOH) tasked with the
safekeeping of its checkbooks and other bank forms.
On July 22, 2008, respondent received a show-cause memorandum from Ms. Ruby O. Go,
head of West Regional Operations, charging him of violating the bank's Code of Conduct when
he mishandled various checkbooks under his custody. The matter was referred to SBSC's
Investigation Committee which discovered, among others, that as of July 11, 2008, forty-one (41)
pre-encoded checkbooks of the Quezon Avenue Branch were missing.
At the scheduled conference before the Investigating Committee, respondent readily

admitted having allowed the Branch Manager (i.e., Pinero) to bring out of the bank's premises
the missing checkbooks and other bank forms on the justification that the latter was a senior
officer with lengthy tenure and good reputation. He claimed that it was part of Pinero's marketing
strategy to procure more clients for the bank and that he did not receive any consideration for
consenting to such practice. He added that the reported missing checkbooks had been returned
by Pinero to his custody after the inventory.
Pending investigation, respondent was transferred to SBSC's Pedro Gil Branch. On

September 30, 2008, he was again issued a memorandum directing him to explain his inaccurate
reporting of some Returned Checks and Other Cash Items (RCOCI) which amounted to
P46,279.33. The said uncovered amount was treated as an account receivable for his account. A
month thereafter, respondent was again transferred and reassigned to another branch in
Sampaloc, Manila. Dismayed by his frequent transfer to different branches, respondent tendered
his resignation on November 10, 2008, effective thirty (30) days from submission. However, SBSC
rejected the same in view of its decision to terminate his employment on November 11, 2008 on
the ground of habitual neglect of duties.
Consequently, respondent instituted a complaint for illegal dismissal with prayer for
backwages, damages, and attorney's fees against SBSC and its President, Herminio M. Famatigan,
Jr. (petitioners), before the NLRC, docketed as NLRC-NCR Case No. 10-14683-09.
The Labor Arbiter dismissed the complaint and accordingly, declared respondent to have
been terminated from employment for a valid cause. The LA found that respondent not only
committed a violation of SBSC's Code of Conduct but also gross and habitual neglect of duties
when he repeatedly allowed Pinero to bring outside the bank premises the checkbooks and bank
forms despite knowledge of the bank's prohibition on the matter. This notwithstanding, the LA
awarded respondent separation pay by way of financial assistance.
Issue:
Whether or not the respondent is entitled to the award of separation pay as financial
assistance to despite having been validly dismissed.
Ruling:
The grant of separation pay to a dismissed employee is primarily determined by the cause
of the dismissal. In the case at bar, respondent's established act of repeatedly allowing Branch
Manager Pinero to bring the checkbooks and bank forms outside of the bank's premises in
violation of the company's rules and regulations had already been declared by the LA to be gross
and habitual neglect of duty under Article 282 of the Labor Code, which finding was not contested
on appeal by respondent. It was petitioners who interposed an appeal solely with respect to the
award of separation pay as financial assistance. As they aptly pointed out, the infractions, while
not clearly indicative of any wrongful intent, is, nonetheless, serious in nature when one
considers the employee's functions, rendering it inequitable to award separation pay based on
social justice. As the records show, respondent was the custodian of accountable bank forms in
his assigned branch and as such, was mandated to strictly comply with the monitoring procedure
and disposition thereof as a security measure to avoid the attendant high risk to the bank. Indeed,
it is true that the failure to observe the processes and risk preventive measures and worse, to take
action and address its violation, may subject the bank to regulatory sanction. It bears stressing
that the banking industry is imbued with public interest. Banks are required to possess not only
ordinary diligence in the conduct of its business but extraordinary diligence in the care of its
accounts and the interests of its stakeholders. The banking business is highly sensitive with a
fiduciary duty towards its client and the public in general, such that central measures must be
strictly observed. It is undisputed that respondent failed to perform his duties diligently, and
therefore, not only violated established company policy but also put the bank's credibility and
business at risk. The excuse that his Branch Manager, Pinero, merely prompted him towards such
ineptitude is of no moment. He readily admitted that he violated established company policy
against bringing out checkbooks and bank forms, which means that he was well aware of the fact
that the same was prohibited. Nevertheless, he still chose to, regardless of his superior's
influence, disobey the same not only once, but on numerous occasions. All throughout, there is
no showing that he questioned the acts of Branch Manager Pinero; neither did he take it upon
himself to report said irregularities to a higher authority. Hence, under these circumstances, the
award of separation pay based on social justice would be improper.
INDUSTRIAL PERSONNEL & MANAGEMENT SERVICES, INC. (IPAMS), SNC

LAVALIN ENGINEERS & CONTRACTORS, INC. AND ANGELITO C. HERNANDEZ, v.JOSE
G. DE VERA AND ALBERTO B. ARRIOLA
G.R. No. 205703, March 07, 2016
Facts
Petitioner Industrial Personnel & Management Services, Inc. (IPAMS) is a local placement
agency duly organized and existing under Philippine laws, with petitioner Angelito C. Hernandez
as its president and managing director. Petitioner SNC Lavalin Engineers & Contractors, Inc.
(SNC-Lavalin) is the principal of IPAMS, a Canadian company with business interests in several
countries. On the other hand, respondent Alberto Arriola (Arriola) is a licensed general surgeon
in the Philippines.
Employee's Position
Arriola was offered by SNC-Lavalin, through its letter, dated May 1, 2008, the position of
Safety Officer in its Ambatovy Project site in Madagascar. The position offered had a rate of
CA$32.00 per hour for forty (40) hours a week with overtime pay in excess of forty (40) hours. It
was for a period of nineteen (19) months starting from June 9, 2008 to December 31, 2009.
Arriola was then hired by SNC-Lavalin, through its local manning agency, IPAMS, and his
overseas employment contract was processed with the Philippine Overseas Employment Agency
(POEA)6 In a letter of understanding, dated June 5, 2008, SNC-Lavalin confirmed Arriola's
assignment in the Ambatovy Project. According to Arriola, he signed the contract of employment
in the Philippines. On June 9, 2008, Arriola started working in Madagascar.
After three months, Arriola received a notice of pre-termination of employment, dated

September 9, 2009, from SNC-Lavalin. It stated that his employment would be pre-terminated
effective September 11, 2009 due to diminishing workload in the area of his expertise and the
unavailability of alternative assignments. Consequently, on September 15, 2009, Arriola was
repatriated. SNC-Lavalin deposited in Arriola's bank account his pay amounting to Two
Thousand Six Hundred Thirty Six Dollars and Eight Centavos (CA$2,636.80), based on Canadian
labor law.
Aggrieved, Arriola filed a complaint against the petitioners for illegal dismissal and non-
payment of overtime pay, vacation leave and sick leave pay before the Labor Arbiter (LA). He
claimed that SNC-Lavalin still owed him unpaid salaries equivalent to the three-month unexpired
portion of his contract, amounting to, more or less, One Million Sixty-Two Thousand Nine
Hundred Thirty-Six Pesos (P1,062,936.00). He asserted that SNC-Lavalin never offered any valid
reason for his early termination and that he was not given sufficient notice regarding the same.
Arriola also insisted that the petitioners must prove the applicability of Canadian law before the
same could be applied to his employment contract.
Employer's Position
The petitioners denied the charge of illegal dismissal against them. They claimed that
SNC-Lavalin was greatly affected by the global financial crises during the latter part of 2008. The
economy of Madagascar, where SNC-Lavalin had business sites, also slowed down. As proof of its
looming financial standing, SNC-Lavalin presented a copy of a news item in the Financial Post,
dated March 5, 2009, showing the decline of the value of its stocks. Thus, it had no choice but to
minimize its expenditures and operational expenses. It re-organized its Health and Safety
Department at the Ambatovy Project site and Arriola was one of those affected.
The petitioners also invoked EDI-Staffbuilders International, Inc. v. NLRC (EDI-

Staffbuilders), pointing out that particular labor laws of a foreign country incorporated in a
contract freely entered into between an OFW and a foreign employer through the latter's agent
was valid. In the present case, as all of Arriola's employment documents were processed in
Canada, not to mention that SNC-Lavalin's office was in Ontario, the principle of lex loci
celebrationis was applicable. Thus, the petitioners insisted that Canadian laws governed the
contract.
The petitioners continued that the pre-termination of Arriola's contract was valid for
being consistent with the provisions of both the Expatriate Policy and laws of Canada. The said
foreign law did not require any ground for early termination of employment, and the only
requirement was the written notice of termination. Even assuming that Philippine laws should
apply, Arriola would still be validly dismissed because domestic law recognized retrenchment
and redundancy as legal grounds for termination.
In their Rejoinder, the petitioners presented a copy of the Employment Standards Act
(ESA) of Ontario, which was duly authenticated by the Canadian authorities and certified by the
Philippine Embassy.
Issues
Whether or not the Philippine labor laws must govern the overseas employment contract of
Arriola.
Whether or not the authorized cause for dismissal was proven.
Ruling
Application of foreign laws with labor contracts
The general rule is that Philippine laws apply even to overseas employment contracts.
This rule is rooted in the constitutional provision of Section 3, Article XIII that the State shall
afford full protection to labor, whether local or overseas. Hence, even if the OFW has his
employment abroad, it does not strip him of his rights to security of tenure, humane conditions
of work and a living wage under our Constitution.
As an exception, the parties may agree that a foreign law shall govern the employment
contract. A synthesis of the existing laws and jurisprudence reveals that this exception is subject
to the following requisites.
1. That it is expressly stipulated in the overseas employment contract that a specific foreign
law shall govern;
2. That the foreign law invoked must be proven before the courts pursuant to the Philippine
rules on evidence;
3. That the foreign law stipulated in the overseas employment contract must not be contrary
to law, morals, good customs, public order, or public policy of the Philippines; and
4. That the overseas employment contract must be processed through the POEA.
The Court is of the view that these four (4) requisites must be complied with before the
employer could invoke the applicability of a foreign law to an overseas employment contract.
With these requisites, the State would be able to abide by its constitutional obligation to ensure
that the rights and well-being of our OFWs are fully protected. These conditions would also
invigorate the policy under R.A. No. 8042 that the State shall, at all times, uphold the dignity of
its citizens whether in country or overseas, in general, and the Filipino migrant workers, in
particular.40 Further, these strict terms are pursuant to the jurisprudential doctrine that "parties
may not contract away applicable provisions of law especially peremptory provisions dealing with
matters heavily impressed with public interest," such as laws relating to labor. At the same time,
foreign employers are not at all helpless to apply their own laws to overseas employment
contracts provided that they faithfully comply with these requisites.
If the first requisite is absent, or that no foreign law was expressly stipulated in the
employment contract which was executed in the Philippines, then the domestic labor laws shall
apply in accordance with the principle of lex loci contractus. This is based on the cases of Sameer
Overseas and PCL Shipping.
If the second requisite is lacking, or that the foreign law was not proven pursuant to
Sections 24 and 25 of Rule 132 of the Revised Rules of Court, then the international law doctrine
of processual presumption operates. The said doctrine declares that "[w]here a foreign law is not
pleaded or, even if pleaded, is not proved, the presumption is that foreign law is the same as
ours." This was observed in the cases of EDI-Staffbuilders and ATCI Overseas.
If the third requisite is not met, or that the foreign law stipulated is contrary to law,
morals, good customs, public order or public policy, then Philippine laws govern. This finds legal
bases in the Civil Code, specifically: (1) Article 17, which provides that laws which have, for their
object, public order, public policy and good customs shall not be rendered ineffective by laws of
a foreign country; and (2) Article 1306, which states that the stipulations, clauses, terms and
conditions in a contract must not be contrary to law, morals, good customs, public order, or
public policy. The said doctrine was applied in the case of Pakistan International.
Finally, if the fourth requisite is missing, or that the overseas employment contract was
not processed through the POEA, then Article 18 of the Labor Code is violated. Article 18 provides
that no employer may hire a Filipino worker for overseas employment except through the boards
and entities authorized by the Secretary of Labor. In relation thereto, Section 4 of R.A. No. 8042,
as amended, declares that the State shall only allow the deployment of overseas Filipino workers
in countries where the rights of Filipino migrant workers are protected. Thus, the POEA, through
the assistance of the Department of Foreign Affairs, reviews and checks whether the countries
have existing labor and social laws protecting the rights of workers, including migrant
workers.43Unless processed through the POEA, the State has no effective means of assessing the
suitability of the foreign laws to our migrant workers. Thus, an overseas employment contract
that was not scrutinized by the POEA definitely cannot be invoked as it is an unexamined foreign
law.
In other words, lacking any one of the four requisites would invalidate the application of
the foreign law, and the Philippine law shall govern the overseas employment contract.
As the requisites of the applicability of foreign laws in overseas labor contract have been
settled, the Court can now discuss the merits of the case at bench.
A judicious scrutiny of the records of the case demonstrates that the petitioners were able
to observe the second requisite, or that the foreign law must be proven before the court pursuant
to the Philippine rules on evidence. The petitioners were able to present the ESA, duly
authenticated by the Canadian authorities and certified by the Philippine Embassy, before the
LA. The fourth requisite was also followed because Arriola's employment contract was processed
through the POEA.
Unfortunately for the petitioners, those were the only requisites that they complied with.
As correctly held by the CA, even though an authenticated copy of the ESA was submitted, it did
not mean that said foreign law could be automatically applied to this case. The petitioners
miserably failed to adhere to the two other requisites, which shall be discussed in seratim.
The foreign law was not expressly specified in the employment contract
The petitioners failed to comply with the first requisite because no foreign law was
expressly stipulated in the overseas employment contract with Arriola. In its pleadings, the
petitioners did not directly cite any specific provision or stipulation in the said labor contract
which indicated the applicability of the Canadian labor laws or the ESA. They failed to show on
the face of the contract that a foreign law was agreed upon by the parties. Rather, they simply
asserted that the terms and conditions of Arriola's employment were embodied in the Expatriate
Policy, Ambatovy Project - Site, Long Term. Then, they emphasized provision 8.20 therein,
regarding interpretation of the contract, which provides that said policy would be governed and
construed with the laws of the country where the applicable SNC-Lavalin, Inc. office was located.
Because of this provision, the petitioners insisted that the laws of Canada, not of Madagascar or
the Philippines, should apply. Then, they finally referred to the ESA.
It is apparent that the petitioners were simply attempting to stretch the overseas
employment contract of Arriola, by implication, in order that the alleged foreign law would apply.
To sustain such argument would allow any foreign employer to improperly invoke a foreign law
even if it is not anymore reasonably contemplated by the parties to control the overseas
employment. The OFW, who is susceptible by his desire and desperation to work abroad, would
blindly sign the labor contract even though it is not clearly established on its face which state law
shall apply. Thus, a better rule would be to obligate the foreign employer to expressly declare at
the onset of the labor contract that a foreign law shall govern it. In that manner, the OFW would
be informed of the applicable law before signing the contract.
Further, it was shown that the overseas labor contract was executed by Arriola at his
residence in Batangas and it was processed at the POEA on May 26, 2008. Considering that no
foreign law was specified in the contract and the same was executed in the Philippines, the
doctrine of lex loci celebrationis applies and the Philippine laws shall govern the overseas
employment of Arriola.
The foreign law invoked is contrary to the Constitution and the Labor Code
Granting arguendo that the labor contract expressly stipulated the applicability of
Canadian law, still, Arriola's employment cannot be governed by such foreign law because the
third requisite is not satisfied. A perusal of the ESA will show that some of its provisions are
contrary to the Constitution and the labor laws of the Philippines.
First, the ESA does not require any ground for the early termination of employment.
Article 54 thereof only provides that no employer should terminate the employment of an
employee unless a written notice had been given in advance. Necessarily, the employer can
dismiss any employee for any ground it so desired. At its own pleasure, the foreign employer is
endowed with the absolute power to end the employment of an employee even on the most
whimsical grounds.
Second, the ESA allows the employer to dispense with the prior notice of termination to
an employee. Article 65(4) thereof indicated that the employer could terminate the employment
without notice by simply paying the employee a severance pay computed on the basis of the
period within which the notice should have been given. The employee under the ESA could be
immediately dismissed without giving him the opportunity to explain and defend himself.
The provisions of the ESA are patently inconsistent with the right to security of tenure.
Both the Constitution and the Labor Code provide that this right is available to any employee. In
a host of cases, the Court has upheld the employee's right to security of tenure in the face of
oppressive management behavior and management prerogative. Security of tenure is a right
which cannot be denied on mere speculation of any unclear and nebulous basis.
Not only do these provisions collide with the right to security of tenure, but they also
deprive the employee of his constitutional right to due process by denying him of any notice of
termination and the opportunity to be heard. Glaringly, these disadvantageous provisions under
the ESA produce the same evils which the Court vigorously sought to prevent in the cases of
Pakistan International and Sameer Overseas. Thus, the Court concurs with the CA that the ESA
is not applicable in this case as it is against our fundamental and statutory laws.
In fine, as the petitioners failed to meet all the four (4) requisites on the applicability of a
foreign law, then the Philippine labor laws must govern the overseas employment contract of
Arriola.
No authorized cause for dismissal was proven

Here, the petitioners assert that the economy of Madagascar weakened due to the global
financial crisis. Consequently, SNC-Lavalin's business also slowed down. To prove its sagging
financial standing, SNC-Lavalin presented a copy of a news item in the Financial Post, dated
March 5, 2009. They insist that SNC-Lavalin had no choice but to minimize its expenditures and
operational expenses. In addition, the petitioners argued that the government of Madagascar
prioritized the employment of its citizens, and not foreigners. Thus, Arriola was terminated
because there was no more job available for him.
The Court finds that Arriola was not validly dismissed. The petitioners simply argued that
they were suffering from financial losses and Arriola had to be dismissed. It was not even clear
what specific authorized cause, whether retrenchment or redundancy, was used to justify
Arriola's dismissal. Worse, the petitioners did not even present a single credible evidence to
support their claim of financial loss. They simply offered an unreliable news article which
deserves scant consideration as it is undoubtedly hearsay. Time and again the Court has ruled
that in illegal dismissal cases like the present one, the onus of proving that the employee was
dismissed and that the dismissal was not illegal rests on the employer, and failure to discharge
the same would mean that the dismissal is not justified and, therefore, illegal.
As to the amount of backpay awarded, the Court finds that the computation of the CA
was valid and proper based on the employment contract of Arriola. Also, the issue of whether the
petitioners had made partial payments on the backpay is a matter best addressed during the
execution process.
SILVERTEX WEAVING CORPORATION/ARMANDO

ARCENAL/ROBERT ONG, v.TEODORA F. CAMPO
G.R. No. 211411, March 16, 2016
Facts
The case stems from a complaint for illegal dismissal and monetary claims filed by Teodora F.
Campo (respondent) against the petitioners, wherein she claimed that she worked for STWC as
a weaving machine operator beginning June 11, 1999, until she was unlawfully dismissed from
employment on November 21, 2010. Prior to her dismissal, she was suspended for one week
beginning November 14, 2010 after a stitching machine that she was operating overheated and
emitted smoke on November 13, 2010. When the respondent tried to report back to work on
November 21, 2010, she was denied entry by the STWC's security guard, reportedly upon the
instructions of Arcenal.
For their defense, the petitioners argued that the respondent, who was hired only in June
2009, voluntarily resigned from STWC after she was reprimanded for poor job performance. They
submitted a handwritten resignation letterallegedly executed by the respondent on November
13, 2010, together with the Waiver, Release and Quitclaims Statement that she supposedly signed
following her receipt of P30,000.00 from STWC. The respondent, however, denied having
executed the resignation letter, the quitclaim, and the supposed receipt of the P30,000.00.
Issue
Whether or not respondent was illegally dismissed.
Ruling
The Court underscores the petitioners' insistent claim that the respondent was not
dismissed, but had voluntarily resigned from employment with STWC. The respondent, on the
other hand, consistently and vehemently denied the genuineness of the signatures in the two
subject documents presented by the petitioners. She likewise denied any intention to sever her
employment with the company.
Anent the foregoing circumstances, it is well-settled by jurisprudence that in labor cases, "the
employer has the burden of proving that the employee was not dismissed, or, if dismissed, that
the dismissal was not illegal." The NLRC's pronouncement that it was incumbent upon the
respondent to dispute the genuineness of her signature on the resignation letter was then clearly
misplaced. As the Court emphasized in San Miguel Properties Philippines, Inc. v. Gucaban:
Resignation - the formal pronouncement or relinquishment of a position or office - is the

voluntary act of an employee who is in a situation where he believes that personal reasons cannot
be sacrificed in favor of the exigency of the service, and he has then no other choice but to
disassociate himself from employment. The intent to relinquish must concur with the overt act
of relinquishment; hence, the acts of the employee before and after the alleged resignation must
be considered in determining whether he in fact intended to terminate his employment. In
illegal dismissal cases, fundamental is the rule that when an employer interposes the
defense of resignation, on him necessarily rests the burden to prove that the employee
indeed voluntarily resigned. x x x. (Citations omitted and emphasis ours)
The petitioners attempted to discharge the burden of proving the respondent's resignation by
referring mainly to a letter allegedly executed by the respondent. The CA, however, correctly
explained that the NLRC's reliance thereon and on the QDR from the PNP Crime Laboratory to
prove the letter's authenticity was unsatisfactory. In contrast with the NLRC's conclusion in its
Resolution dated March 19, 2012 that the respondent actually executed the resignation letter, the
full report of the PNP Crime Laboratory actually indicated that the signature appearing on the
alleged resignation letter did not appear to be written by the same person who signed the several
payroll slips and Philhealth records, respectively marked as "S-l" to "S-14" and "S-15" to "S-17", that
were submitted by the petitioners as reference on the respondent's true handwriting.
Although the same report from the PNP provided that the signature on the resignation
letter matched the supposed handwriting of the respondent in her bio-data dated April 1, 2009,
the conflicting findings and the fact that only one of the 18 documents used as reference for the
examination matched the signature in the letter only supported the respondent's claim that she
did not execute the resignation letter. Furthermore, there was no showing that the sample
signature considered by the PNP Crime Laboratory was a genuine signature of the respondent,
rendering it insufficient basis for the conclusion arrived at by the document examiner and relied
upon by the NLRC.
Clearly then, given the vehement claim of the respondent that her signature on the resignation
letter was a mere forgery, the evidence presented by the petitioners to establish their defense of
voluntary resignation failed to suffice. Several other indicators cast doubt on the letter's
authenticity, as the NLRC itself cited in its Resolution dated November 29, 2011 that:
As shown on records, the [respondent's] original and genuine signature appeared for
several times in her documents, evidence and pleadings x x x. The signatures of the [respondent]
therein manifest a similar stroke with an upper loop, downslide on the letter "t", letters "c" and
"a" not distinct from each other, downslide on the letter "p" and an upward loop on the letter "o".
By a careful examination, the said signatures are far and different from the alleged [respondent's]
signatures on the "resignation letter, Waiver, Release and Quitclaims Statement and payslips" x
x x presented by the [petitioners]. In the resignation letter in particular x x x, the letter "t" does
not have an upper loop. Also in the said documents x x x the letters "c" and "a" are distinct from
each other, and the letter "p" x x x contains an outside downward loop which obviously differ
from the original signature of the [respondent]. On the same tack, the [respondent] specifically
denied under oath the genuineness of her signatures in the [petitioners'] documents as well as
[their] truthfulness x x x.
The foregoing observations of the NLRC appeared consistent with the PNP Crime
Laboratory's report that the signature on the resignation letter did not match the several other
documents supposedly executed by the respondent.
The authenticity and due execution of the undated Waiver, Release and Quitclaims
Statement purportedly signed by the respondent was also not sufficiently established. The QDR
was not conclusive on the issue of its genuineness. Even granting that such document was
actually executed by the respondent, its execution was not fatal to the respondent's case for illegal
dismissal. The finding of illegal dismissal could still stand, as jurisprudence provides that "[a]n
employee's execution of a final settlement and receipt of amounts agreed upon do not foreclose
his right to pursue a claim for illegal dismissal."
All told, the Court finds no cogent reason to reverse the CA's finding that the respondent
was illegally dismissed and thus entitled to reinstatement and monetary awards plus interest.
The reckoning date for the computation of the awarded interest, however, needs to be modified
after the CA ruled that it should be at the rate of six percent (6%) per annum, to be computed
from the date of dismissal on November 21, 2010 until full payment. To conform with prevailing
jurisprudence, interest on the monetary awards shall only be computed from the date this
Resolution becomes final and executory, until full satisfaction.
UNIVERSAL ROBINA SUGAR MILLING CORPORATIONv.ELMER ABLAY,

ILDEFONSO CLAVECILLAS, STANLEY BLAZA, VINCENT VILLAVICENCIO, ROBERTO
CACAS, AND ELSA CADAYUNA, IN BEHALF OF HER DECEASED HUSBAND, ELEAZAR
CADAYUNA
G.R. No. 218172, March 16, 2016
The Facts
The instant case arose from a complaint dated June 1, 2004 for illegal dismissal, unfair labor
practice, and recovery of damages filed by respondents, members of the Nagkahiusang
Mamumuo sa Ursumco-National Federation of Labor (the Union), against petitioner before the
Sub-Regional Arbitration Branch No. VII, Dumaguete City of the NLRC. Respondents alleged that
sometime in 1997, the Union filed a complaint against petitioner for non-compliance with Wage
Order No. 3 issued by the Regional Tripartite Wages and Productivity Board before the
Department of Labor and Employment (DOLE). After due proceedings, the DOLE found
petitioner liable to the members of the Union in the total amount of P210,217.54 and,
consequently, issued a Writ of Execution to enforce the said ruling. On September 11, 2003, DOLE
Sheriff Ignacio Calinawan (Sheriff Calinawan) went to petitioner's premises to serve the writ to
petitioner's Personnel Manager, Jocelyn Teo (Teo), but the latter refused to comply by reason of
petitioner's pending appeal before the Secretary of Labor. Two (2) months later, or on November
12, 2003, Sheriff Calinawan went back to petitioner's premises in another attempt to serve the
writ of execution, this time, seeking the help of the Union Officers, including respondents, in its
enforcement. Despite Teo's refusal to receive the writ, Sheriff Calinawan and respondents still
effected a levy on one of petitioner's forklifts, took it outside the company premises, and
deposited it at the municipal hall for safekeeping.
Due to the foregoing incidents, petitioner issued a Notice of Offense dated November 18,
2003 to each of the respondents, requiring them to explain in writing why no disciplinary action
should be taken against them. Thereafter, or on November 24, 2003, petitioner issued a Notice of
Administrative Investigation to each of the respondents, charging them of stealing company
property, fraudulent acquisition or release to other persons of company property, unauthorized
possession/use of company property, unauthorized operation of company equipment, and
serious misconduct during official working hours or within company premises. On December 1,
2003, after due investigation, petitioner furnished respondents with a Notice of Dismissalfor
being found guilty as charged. This prompted the filing of the instant complaint.
Issues
Whether or not the CA correctly ruled that: (a) respondents were illegally dismissed as the
penalty of suspension would have sufficed; and (b) Ablay is entitled to his benefits prior to his
conviction, i.e., separation pay, backwages, and other benefits.
Ruling
Article 297 (formerly Article 282) of the Labor Code, which includes the ground of serious
misconduct, provides for the just causes where the employee may be validly terminated from
employment. It reads in full:
Article 297 [282]. Termination by Employer. - An employer may terminate an employment

for any of the following causes:
(a) Serious misconduct or willful disobedience by the employee of the lawful
orders of his employer or representative in connection with his work;
(b) Gross and habitual neglect by the employee of his duties;
(c) Fraud or willful breach by the employee of the trust reposed in him by his employer
or duly authorized representative;
(d) Commission of a crime or offense by the employee against the person of his employer
or any immediate member of his family or his duly authorized representatives; and
(e) Other causes analogous to the foregoing. (Emphasis and underscoring supplied)
Misconduct is defined as an improper or wrong conduct. It is a transgression of some

established and definite rule of action, a forbidden act, a dereliction of duty, willful in character,
and implies wrongful intent and not mere error in judgment. To constitute a valid cause for the
dismissal within the text and meaning of Article 282 of the Labor Code, the employee's
misconduct must be serious, i.e., of such grave and aggravated character, and not merely trivial
or unimportant. Additionally, the misconduct must be related to the performance of the
employee's duties showing him to be unfit to continue working for the employer. Further, and
equally important and required, the act or conduct must have been performed with wrongful
intent. In other words, for serious misconduct to be a just cause for dismissal, the concurrence
of the following elements is required: (a) the misconduct must be serious; (b) it must relate to
the performance of the employee's duties showing that the employee has become unfit to
continue working for the employer; and (c) it must have been performed with wrongful intent.
In this case, the following facts are undisputed: (a) the Union, which the respondents are
members of, filed a case for violation of labor standards against petitioner before the DOLE; (b)
after due proceedings, the DOLE ruled in favor of the Union and awarded its members the
aggregate amount of P210,217.54, and accordingly, a writ of execution was issued in the Union's
favor; (c) Sheriff Calinawan failed in his first attempt to enforce the writ of execution as Teo
refused to receive a copy of the same; (d) on Sheriff Calinawan's second attempt to enforce the
writ of execution, he sought the assistance of Union members, including respondents, and
insisted that Teo comply with said writ, but the latter still refused; (e) despite Teo's refusal, Sheriff
Calinawan and the respondents effected a levy on one of petitioner's forklifts, took it outside the
company premises, and deposited it at the municipal hall for safekeeping; and (f) the taking of
the forklift was without authority from petitioner or any of its officers.
Clearly, respondents committed some form of misconduct when they assisted Sheriff
Calinawan in effecting the levy on the forklift and depositing the same to the municipal hall for
safekeeping as they operated the forklift and took it out of company premises, all without the
authority and consent from petitioner or any of its officers. However, as correctly pointed out by
the CA, respondents did not perform the said acts with intent to gain or with wrongful intent.
Rather, they were impelled by their belief - albeit misplaced - that they were merely facilitating
the enforcement of a favorable decision in a labor standards case in order to finally collect what
is due them as a matter of right, which is the balance of their unpaid benefits. In light of the
foregoing, the Court upholds the right of petitioner to take the appropriate disciplinary action
against respondents, but nevertheless, holds that respondents should not have been dismissed
from service as a less punitive sanction, i.e., suspension, would have sufficed. In Philippine Long
Distance Company v. Teves, the Court stressed that while it is the prerogative of the management
to discipline its employees, it should not be indiscriminate in imposing the ultimate penalty of
dismissal as it not only affect the employee concerned, but also those who depend on his
livelihood, viz.:
While management has the prerogative to discipline its employees and to impose
appropriate penalties on erring workers, pursuant to company rules and regulations, however,
such management prerogatives must be exercised in good faith for the advancement of the
employer's interest and not for the purpose of defeating or circumventing the rights of the
employees under special laws and valid agreements. The Court is wont to reiterate that while
an employer has its own interest to protect, and pursuant thereto, it may terminate an
employee for a just cause, such prerogative to dismiss or lay off an employee must be
exercised without abuse of discretion. Its implementation should be tempered with
compassion and understanding. The employer should bear in mind that, in the execution of said
prerogative, what is at stake is not only the employee's position, but his very livelihood, his very
breadbasket.
Dismissal is the ultimate penalty that can be meted to an employee. Even where a
worker has committed an infraction, a penalty less punitive may suffice, whatever
missteps maybe committed by labor ought not to be visited with a consequence so
severe. This is not only the laws concern for the workingman. There is, in addition, his or her
family to consider. Unemployment brings untold hardships and sorrows upon those dependent
on the wage-earner. (Emphases and underscoring supplied)
Further, considering the fact that respondents were mere equipment operators,
technicians, and electricians, and thus, not occupying managerial nor confidential positions, and
that the incident concerning the forklift was only their first offense in their 14-15 years of service,
the Court agrees with the CA that they should have only been meted a penalty that is less severe
than dismissal, i.e., suspension. Hence, respondents could not be validly dismissed by petitioner.
As a general rule, an illegally dismissed employee is entitled to reinstatement (or

separation pay, if reinstatement is not viable) and payment of full backwages. In certain cases,
however, the Court has carved out an exception to the foregoing rule and thereby ordered the
reinstatement of the employee without backwages on account of the following: (a) the fact that
the dismissal of the employee would be too harsh a penalty; and (b) that the employer was in
good faith in terminating the employee. The application of such exception was thoroughly
discussed in the case of Pepsi-Cola Products Philippines, Inc. v. Molon, to wit:
An illegally dismissed employee is entitled to either reinstatement, if viable, or separation

pay if reinstatement is no longer viable, and backwages. In certain cases, however, the Court
has ordered the reinstatement of the employee without backwages considering the fact
that (1) the dismissal of the employee would be too harsh a penalty; and (2) the employer
was in good faith in terminating the employee. For instance, in the case of Cruz v. Minister
of Labor and Employment the Court ruled as follows:
The Court is convinced that petitioner's guilt was substantially established.

Nevertheless, we agree with respondent Minister's order of reinstating petitioner
without backwages instead of dismissal which may be too drastic. Denial of backwages
would sufficiently penalize her for her infractions. The bank officials acted in good faith.
They should be exempt from the burden of paying backwages. The good faith of the
employer, when clear under the circumstances, may preclude or diminish recovery of
backwages. Only employees discriminately dismissed are entitled to backpay. x x x
Likewise, in the case of Itogon-Suyoc Mines, Inc. v. National Labor Relations Commission,
the Court pronounced that "[t]he ends of social and compassionate justice would therefore
be served if private respondent is reinstated but without backwages in view of
petitioner's good faith." (Emphasis and underscoring supplied)
To reiterate, respondents were indeed guilty of some form of misconduct and, as such,
petitioner was justified in exercising disciplinary action against them. Absent any evidence to the
contrary, petitioner's resort to disciplinary proceedings should be presumed to have been done
in good faith. Thus, perceiving that petitioner had ample ground to proceed with its disciplinary
action against respondents, and that the disciplinary proceedings appear to have been conducted
in good faith, the Court finds it proper to apply the exception to the rule on backwages, and
consequently, direct the deletion of backwages in favor of respondents.
Finally, the CA correctly observed that Ablay's conviction as an accomplice to the murder
of petitioner's former assistant manager had strained the relationship between Ablay and
petitioner. Hence, Ablay should not be reinstated in the company and, instead, be paid separation
pay, as reinstatement would only create an atmosphere of antipathy and antagonism would be
generated as to adversely affect his efficiency and productivity. In this relation, it should be
clarified that said strained relation should not affect the grant of benefits in his favor prior to his
conviction, as the latter pertains to an offense entirely separate and distinct from the acts
constituting petitioner's charges against him in the case at bar, i.e., taking of the company
equipment without authority. Petitioner's payment of separation pay to Ablay in lieu of his
reinstatement is therefore warranted.
ASIAN INTERNATIONAL MANPOWER SERVICES, INC., vs. DEPARTMENT OF

LABOR AND EMPLOYMENT.
G.R. No. 210308, April 6, 2016
Facts
On November 8, 2006, the Anti-Illegal Recruitment Branch of the POEA, pursuant to

Surveillance Order No. 033, Series of 2006, conducted a surveillance of Asian International
Manpower Services, Inc. (AIMS) with office address at 1653 Taft Avenue comer Pedro Gil Street,
Malate, Manila to determine whether it was operating as a recruitment agency despite the
cancellation of its license on August 28, 2006. The operatives reported that their surveillance did
not reveal the information needed, so another surveillance was recommended.
On February 20, 2007, another surveillance was conducted on the premises of AIMS'
office pursuant to Surveillance Order No. 011. This time the POEA operatives observed that there
were people standing outside its main entrance, and there were announcements of job vacancies
posted on the main glass door of the office. Posing as applicants, the POEA operatives, Atty.
Romelson E. Abbang and Edilberto V. Alogoc, inquired as to the requirements for the position of
executive staff: and a lady clerk of AIMS handed them a flyer. Through the flyer, they learned
that AIMS was hiring hotel workers for deployment to Macau and grape pickers for California.
They also saw applicants inside the office waiting to be attended to. The POEA operatives later
confirmed through the POEA Verification System that AIMS had regained its license and good
standing on December 6, 2006, but that it had no existing approved job orders yet at that time.
On March 26, 2007, the POEA issued a Show Cause Order directing AIMS and its covering
surety, Country Bankers Insurance Corporation, to submit their answer or explanation to the
Surveillance Report dated November 8, 2006 of the POEA operatives. However, no copy of the
Surveillance Report dated February 21, 2007 was attached.
In compliance thereto, Danilo P. Pelagio, AIMS President, wrote to the POEA on April 3,
2007 maintaining that AIMS was not liable for any recruitment misrepresentation. Invoking the
Surveillance Report dated November 8, 2006, he cited the POEA operatives' own admission that
when they first came posing as applicants, the AIMS staff advised them that it had no job
vacancies for waiters and that its license had been cancelled. He also called POEA's attention to
the notice issued to AIMS, which was received on November 27, 2006, that the cancellation of its
license had been set aside on December 6, 2006; and that the POEA Adjudication Office even
circulated an advise to all its operating units of the restoration of AIMS' license.
During the hearing on May 9, 2007, AIMS representative, Rommel Lugatiman

(Lugatiman), appeared, and averring that it had already filed its answer, he then moved for the
resolution of the complaint.
In the Order dated June 30, 2008, then POEA Administrator Rosalinda Baldoz ruled that
on the basis of the Surveillance Report dated February 21, 2007 of the POEA operatives, AIMS
was liable for misrepresentation under Section 2(e), Rule I, Part VI of the 2002 POEA Rules, since
the POEA records showed that AIMS had no job orders to hire hotel workers for Macau, nor
grape pickers for California, as its flyer allegedly advertised.
AIMS filed a motion for reconsideration before the DOLE. It alleged that its right to due
process was violated because the POEA did not furnish it with a copy of the Surveillance Report
dated February 21, 2007, which was the basis of the POEA Administrator's factual findings.
Issue
Whether AIMS’s right to due process was violated.

Ruling
In concluding that, through Lugatiman, AIMS was "obviously informed of the charges"
during the preliminary hearing, the CA overlooked the crucial fact that, as the POEA itself
admitted, it did not furnish AIMS with a copy of its Surveillance Report dated February 21, 2007,
which contains the factual allegations of misrepresentation supposedly committed by AIMS. It is
incomprehensible why the POEA would neglect to furnish AIMS with a copy of the said report,
since other than the fact that AIMS was represented at the hearing on May 9, 2007, there is no
showing that Lugatiman was apprised of the contents thereof. In fact, as AIMS now claims, the
alleged recruitment flyer distributed to its applicants was not even presented.
Since AIMS was provided with only the Surveillance Report dated November 8, 2006, it
could only have been expected to respond to the charge contained in the Show Cause Order.
Thus, in its answer, it needed only to point to the POEA operatives' own admission in their
Surveillance Report dated November 8, 2006 that when they came posing as job applicants, the
staff of AIMS advised them that it had no job vacancies for waiters and that its license had been
cancelled. As POEA now also admits, AIMS's license to recruit was restored on December 6, 2006.
The CA faulted AIMS for failing to avail itself of the opportunity to rebut the allegations
of the POEA operatives in the two Surveillance Reports, as well as "to clarify the issues or the
charges," during the May 9, 2007 preliminary hearing. Considering that AIMS was not furnished
with the Surveillance Report dated February 21, 2007, it cannot be expected to second-guess what
charges and issues it needed to clarify or rebut in order to clear itself. Needless to say, its right to
due process consisting of being informed of the charges against it has been grossly violated.
Moreover, AIMS also points out that the flyer advertising the jobs in Macau and California
was never presented or made part of the record, and neither was the AIMS lady clerk who
allegedly distributed the same even identified, as AIMS demanded. Besides, granting that AIMS
did advertise with flyers for hotel workers or grape pickers, for which it allegedly had no existing
approved job orders, it is provided in Sections I and 2 of Rule VII (Advertisement for Overseas
Jobs), Part II of the 2002 POEA Rules28 that the said activity is permitted for manpower pooling
purposes, without need of prior approval from the POEA, upon the following conditions: (1) it is
done by a licensed agency; (2) the advertisement indicates in bold letters that it is for manpower
pooling only; (3) no fees are collected from the applicants; and ( 4) the name, address and POEA
license number of the agency, name and worksite of the prospective registered/accredited
principal and the skill categories and qualification standards are indicated.
It is true that in administrative proceedings, as in the case below, only substantial

evidence is needed, or such relevant evidence as a reasonable mind may accept as adequate to
support a conclusion. Unfortunately, there is no evidence against AIMS to speak of, much less
substantial evidence. Clearly, AIMS 's right to be informed of the charges against it, and its right
to be held liable only upon substantial evidence, have both been gravely violated.
DIVINE WORD COLLEGE OF LAOAG vs. SHIRLEY B. MINA,
as heir-substitute of the late DELFIN A. MINA
G.R. No. 195155, April 13, 2016
Facts
DWCL is a non-stock educational institution offering catholic education to the public. It

is run by the Society of Divine Word (SVD), a congregation of Catholic priests that maintains
several other member educational institutions throughout the country.
On July 1, 1969, the Society of Divine Word Educational Association (DWEA) established
a Retirement Plan to provide retirement benefits for qualified employees of DWEA’s member
institutions, offices and congregations. The DWEA Retirement Plancontains a clause about the
portability of benefits, to wit:
When a member who resigns or is separated from employment from one Participating
Employer and who is employed by another Participating Employer, the member will carry the
credit he earned under his former Participating Employer to his new Employer and the length of
service in both will be taken into consideration in determining his total years of continuous
service on the following conditions:
a. The transfer is approved by both the Participating Employer whose service he is leaving
and the new Participating Employer;
b. The Retirement Board is notified of the transfer; and
c. The member is employed by another Participating Employer on the next working day
after his resignation.
Mina was first employed in 1971 as a high school teacher, and later on a high school
principal, at the Academy of St. Joseph (ASJ), a school run by the SVD. On June 1, 1979, he
transferred to DWCL and was accorded a permanent status after a year of probationary status.
He was subsequently transferred in 2002 to DWCL’s college department as an Associate Professor
III. Thereafter, on June 1, 2003, Mina was assigned as the College Laboratory Custodian of the
School of Nursing and was divested of his teaching load, effective June 1, 2003 until May 31, 2004,
subject to automatic termination and without need for any further notification. He was the only
one among several teachers transferred to the college department who was divested of teaching
load.
In early June 2004, Mina was offered early retirement by Professor Noreen dela Rosa,
Officer-in-Charge of DWCL’s School of Nursing. He initially declined the offer because of his
family’s dependence on him for support. He later received a Memorandum dated July 27, 2004
from the Office of the Dean enumerating specific acts of gross or habitual negligence,
insubordination, and reporting for work under the influence of alcohol. He answered the
allegations against him; sensing, however, that it waspointless to continue employment with
DWCL, he requested that his retirement date be adjusted to September 2004 to enable him to
avail of the 25-year benefits. He also requested for the inclusion of his eight years of service in
ASJ, to make his total years of service to 33 years pursuant to the portability clause of the
retirement plan, which was denied by DWCL. Instead, he was paid ₱275,513.10 as retirement pay.
It was made to appear that his services were terminated by reason of redundancy to avoid any
tax implications. Mina was also made to sign a deed of waiver and quitclaim stating that he no
longer has any claim against DWCL with respect to any matter arising from his employment in
the school.
On September 21, 2004, he filed a case for illegal dismissal and recovery of separation pay
and other monetary claims. Pending resolution of his case, Mina passed away on June 18, 2005.
Issues
Whether or not Mina’s transfer amounted to a constructive dismissal.
Whether or not Mina is entitled to backwages, separation pay and damages.
Whether or not the years of service rendered by Mina in ASJ shall be included in the
computation of his retirement benefits.
Ruling
Constructive dismissal is a dismissal in disguise. There is cessation of work in constructive

dismissal because ‘"continued employment is rendered impossible, unreasonable or unlikely, as
an offer involving a demotion in rank or a diminution in pay’ and other benefits." To be
considered as such, an act must be a display of utter discrimination or insensibility on the part
of the employer so intense that it becomes unbearable for the employee to continue with his
employment. The law recognizes and resolves this situation in favor of employees in order to
protect their rights and interests from the coercive acts of the employer.
In this case, Mina’s transfer clearly amounted to a constructive dismissal. For almost 22
years, he was a high school teacher enjoying a permanent status in DWCL’s high school
department. In 2002, he was appointed as an associate professor at the college department but
shortly thereafter, or on June 1, 2003, he was appointed as a college laboratory custodian, which
is a clear relegation from his previous position. Not only that. He was also divested of his teaching
load. His appointment even became contractual in nature and was subject to automatic
termination after one year "without any further notification." Aside from this, Mina was the only
one among the high school teachers transferred to the college department who was divested of
teaching load. More importantly, DWCL failed to show any reason for Mina’s transfer and that it
was not unreasonable, inconvenient, or prejudicial to him.
Also, the CA correctly ruled that Mina’s appointment as laboratory custodian was a
demotion. There is demotion when an employee occupying a highly technical position requiring
the use of one’s mental faculty is transferred to another position, where the employee performed
mere mechanical work – virtually a transfer from a position of dignity to a servile or menial job.
The assessment whether Mina’s transfer amounted to a demotion must be done in relation to his
previous position, that is, from an associate college professor, he was made a keeper and
inventory-taker of laboratory materials. Clearly, Mina’s new duties as laboratory custodian were
merely perfunctory and a far cry from his previous teaching job, which involved the use of his
mental faculties. And while there was no proof adduced showing that his salaries and benefits
were diminished, there was clearly a demotion in rank. As was stated in Blue Dairy Corporation
v. NLRC, "[i]t was virtually a transfer from a position of dignity to a servile or menial job."
Given the finding of constructive dismissal, Mina, therefore, is entitled to reinstatement

without loss of seniority rights, and payment of backwages computed from the time
compensation was withheld up to the date of actual reinstatement. The Court notes that aside
from full compulsory retirement pay, the NLRC awarded full backwages and separation pay, in
lieu of reinstatement. The CA, however, computed the amount to be awarded as backwages from
the time of Mina’s hiring on June 1, 1979 until the time of his death on June 18, 2005, apparently
interchanging backwages and separation pay. Aside from this, the CA omitted to include a
separate award of separation pay.
The Court has repeatedly stressed that the basis for the payment of backwages is different
from that of the award of separation pay. "The basis for computing separation pay is usually the
length of the employee’s past service, while that for backwages is the actual period when the
employee was unlawfully prevented from working." Thus, the Court explained in Bani Rural
Bank, Inc. v. De Guzman that:
[U]nder Article 279 of the Labor Code and as held in a catena of cases, an employee who
is dismissed without just cause and without due process is entitled to backwages and
reinstatement or payment of separation pay in lieu thereof:
xxxx
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.
(Emphasis and underscoring deleted, and italics ours)
Thus, the computation of Mina’s backwages should be from the time he was
constructively dismissed on June 1, 2003.
Aside from the foregoing, the CA should have also awarded separation pay since
reinstatement is no longer viable due to Mina’s death in 2005. As stated before, the award of
separation pay is distinct from the award of backwages. The award of separation pay is also
distinct from the grant of retirement benefits. These benefits are not mutually exclusive as
"[r]etirement benefits are a form of reward for an employee’s loyalty and service to an employer
and are earned under existing laws, [Collective Bargaining Agreements], employment contracts
and company policies." Separation pay, on the other hand, 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. In the
computation of separation pay, the Court stresses that it should not go beyond the date an
employee was deemed to have been actually separated from employment, or beyond the
date when reinstatement was rendered impossible. The period for the computation of
separation pay Mina is entitled to shall therefore begin to run from June 1, 1979, when he was
transferred to DWCL from ASJ, until his death on June 18, 2005, or for a period of 26 years.
The award of damages was also justified given the CA and NLRC’s finding that DWCL
acted in a manner wherein Mina was not treated with utmost good faith. The intention of the
school to erase him out of employment is too apparent. The Court upholds the CA’s finding that
when DWCL’s act of unceremoniously demoting and giving Mina contractual employment for
one year and citing him for numerous violations of school regulations when he rejected the
school’s offer to voluntarily retire is constitutive of bad faith.
Lastly, the Court affirms the NLRC’s findings that the eight years of service rendered by
Mina in ASJ shall not be included in the computation of his retirement benefits. No adequate
proof is shown that he has complied with the portability clause of the DWEA Retirement Plan.
The employee has the burden of proof to show compliance with the requirements set forth in
retirement plans, being in the nature of privileges granted to employees. Failure to overcome the
burden of proof would necessarily result in the employee’s disqualification to receive the benefits.
ROBINA FARMS CEBU/UNIVERSAL ROBINA CORPORATION

vs. ELIZABETH VILLA
G.R. No. 175869, April 18, 2016
Facts:
Respondent Elizabeth Villa brought against the petitioner her complaint for illegal
suspension, illegal dismissal, nonpayment of overtime pay, and nonpayment of service incentive
leave pay in the Regional Arbitration Branch No. VII of the NLRC in Cebu City.
In her verified position paper, Villa averred that she had been employed by petitioner
Robina Farms as sales clerk since August 1981; that in the later part of 2001, the petitioner had
enticed her to avail herself of the company's special retirement program; that on March 2, 2002,
she had received a memorandum from Lily Ngochua requiring her to explain her failure to issue
invoices for unhatched eggs in the months of January to February 2002; that she had explained
that the invoices were not delivered on time because the delivery receipts were delayed and
overlooked; that despite her explanation, she had been suspended for 10 days from March 8, 2012
until March 19, 2002; that upon reporting back to work, she had been advised to cease working
because her application for retirement had already been approved; that she had been
subsequently informed that her application had been disapproved, and had then been advised to
tender her resignation with a request for financial assistance; that she had manifested her
intention to return to work but the petitioner had confiscated her gate pass; and that she had
since then been prevented from entering the company premises and had been replaced by
another employee.
The petitioner admitted that Villa had been its sales clerk at Robina Farms. It stated that
on December 12, 2001, she had applied for retirement under the special privilege program offered
to its employees in Bulacan and Anti polo who had served for at least 10 years; that in February
2002, her attention had been called by Anita Gabatan of the accounting department to explain
her failure to issue invoices for the unhatched eggs for the month of February; that she had
explained that she had been busy; that Gabatan had referred the matter to Florabeth Zanoria who
had in turn relayed the matter to Ngochua; and that the latter had then given Villa the chance to
explain, which she did.
The petitioner added that after the administrative hearing Villa was found to have
violated the company rule on the timely issuance of the invoices that had resulted in delay in the
payment of buyers considering that the payment had depended upon the receipt of the invoices;
that she had been suspended from her employment as a consequence; that after serving the
suspension, she had returned to work and had followed up her application for retirement with
Lucina de Guzman, who had then informed her that the management did not approve the
benefits equivalent to 86% of her salary rate applied for, but only 1/2 month for every year of
service; and that disappointed with the outcome, she had then brought her complaint against
the petitioners.
Issues
Whether or not the NLRC correctly gave due course to Villa’s appeal despite the fact that
she had accompanied her appeal with the same verification attached to her position
paper.
Whether or not Villa had been illegally dismissed.
Whether or not Villa is entitled to overtime pay.
Whether or not Villa is entitled to service incentive leave pay.
Ruling
The petitioner prays that Villa's appeal should be treated as an unsigned pleading because
she had accompanied her appeal with the same verification attached to her position paper.
The petitioner cannot be sustained. The NLRC justifiably gave due course to Villa's
appeal.
Section 4(a), Rule VI of the Amended NLRC Rules of Procedure requires an appeal to be
verified by the appellant herself. The verification is a mere formal requirement intended to secure
and to give assurance that the matters alleged in the pleading are true and correct. The
requirement is complied with when one who has the ample knowledge to swear to the truth of
the allegations in the complaint or petition signs the verification, or when the matters contained
in the petition have been alleged in good faith or are true and correct. Being a mere formal
requirement, the courts may even simply order the correction of improperly verified pleadings,
or act on the same upon waiving the strict compliance with the rules of procedure. It is the
essence of the NLRC Rules of Procedure to extend to every party-litigant the amplest opportunity
for the proper and just determination of his cause, free from the constraints of technicalities.
Accordingly, the substantial compliance with the procedural rules is appreciated in favor of Villa.
The petitioner next submits that the CA erred in holding that Villa had been illegally
dismissed; that it had no intention to terminate her; that de Guzman had merely suggested to
her that she should be filing the letter of resignation with the request for financial assistance
because the management had disapproved her application for the 86% salary rate as basis for her
retirement benefits; that it was Villa who had the intention to sever the employer-employee
relationship because she had kept on following up her application for retirement; that she had
prematurely filed the complaint for illegal dismissal; that she had voluntarily opted not to report
to her work; and that she had not presented proof showing that it had prevented her from
working and entering its premises.
The petitioner's submissions are bereft of merit.
We note that the CA and the NLRC agreed on their finding that the petitioner did not
admit Villa back to work after the completion of her 10-day suspension. In that regard, the CA
observed:
It is undeniable that private respondent was suspended for ten (10) days beginning March
8, 2002 to March 19, 2002. Ordinarily, after an employee [has] served her suspension, she should
be admitted back to work and to continue to receive compensation for her services. In the case
at bar, it is clear that private respondent was not admitted immediately after her
suspension. Records show that when private respondent reported back after her suspension, she
was advised by Lucy de Guzman not to report back anymore as her application was approved,
which was latter [sic] on disapproved. It is at this point that, said Lucy de Guzman had advised
private respondent to tender a resignation letter with request for financial assistance. Not only
Lucy De Guzman has advised her to tender her resignation letter. The letter of petitioner Lily
Ngochua dated April 11, 2002 to private respondent which reads:
"As explained by Lucy de Guzman xxx your request for special retirement with financial
assistance of 86%/year of service has not been approved. Because this offer was for employees
working in operations department and not in Adm. & Sales.
"However, as per Manila Office, you can be given financial assistance of V2 per year of
service if you tender letter of resignation with request for financial assistance."
shows that petitioner Lily Ngochua has also advised private respondent to the same.
These acts are strong indication that petitioners wanted to severe [sic] the employer-employee
relationship between them and that of private respondent. This is buttressed by the fact that
when private respondent signified her intention to return back to work after learning of the
disapproval of her application, she was prevented to enter the petitioner's premises by
confiscating her ID and informing her that a new employee has already replaced her.
It should be noted that when private respondent averred this statement in her position
paper submitted before the Labor Arbiter petitioners did not refute the same. Neither did they
contest this allegation in their supposed Appeal Memorandum nor in their Motion for
Reconsideration of the assailed decision of public respondent. Basic is the rule that matters not
controverted are deemed admitted. To contest this allegation at this point of proceeding is not
allowed for it is a settled rule that matters, theories or arguments not brought out in the original
proceedings cannot be considered on review or appeal where they arc raised for the first time. To
consider the alleged facts and arguments raised belatedly would amount to trampling on the
basic principles of fair play, justice and due process.
Neither did Villa's application for early retirement manifest her intention to sever the
employer-employee relationship. Although she applied for early retirement, she did so upon the
belief that she would receive a higher benefit based on the petitioner's offer. As such, her consent
to be retired could not be fairly deemed to have been knowingly and freely given.
Retirement is the result of a bilateral act of both the employer and the employee based
on their voluntary agreement that upon reaching a certain age, the employee agrees to sever his
employment. The difficulty in the case of Villa arises from determining whether the retirement
was voluntary or involuntary. The line between the two is thin but it is one that the Court has
drawn. On one hand, voluntary retirement cuts the employment ties leaving no residual
employer liability; on the other, involuntary retirement amounts to a discharge, rendering the
employer liable for termination without cause. The employee's intent is decisive. In determining
such intent, the relevant parameters to consider are the fairness of the process governing the
retirement decision, the payment of stipulated benefits, and the absence of badges of
intimidation or coercion.
In case of early retirement programs, the offer of benefits must be certain while the
acceptance to be retired should be absolute. The acceptance by the employees contemplated
herein must be explicit, voluntary, free and uncompelled. In Jaculbe v. Silliman University, we
elucidated that:
[A]n employer is free to impose a retirement age less than 65 for as long as it has the
employees' consent.Stated conversely, employees are free to accept the employer's offer to
lower the retirement age if they feel they can get a better deal with the retirement plan
presented by the employer. Thus, having terminated petitioner solely on the basis of a
provision of a retirement plan which was not freely assented to by her, respondent was
guilty of illegal dismissal. (bold emphasis supplied)
Under the circumstances, the CA did not err in declaring the petitioner guilty of illegal
dismissal for violating Article 282 of the Labor Code and the twin notice rule.
The petitioner posits that the CA erroneously affirmed the giving of overtime pay and
service incentive leave pay to Villa; that she did not adduce proof of her having rendered actual
overtime work; that she had not been authorized to render overtime work; and that her availment
of vacation and sick leaves that had been paid precluded her claiming the service incentive leave
pay.
We partly agree with the petitioner's position.
Firstly, entitlement to overtime pay must first be established by proof that the overtime
work was actually performed before the employee may properly claim the benefit. The burden of
proving entitlement to overtime pay rests on the employee because the benefit is not incurred in
the normal course of business. Failure to prove such actual performance transgresses the
principles of fair play and equity.
And, secondly, the NLRC's reliance on the daily time records (DTRs) showing that Villa
had stayed in the company's premises beyond eight hours was misplaced. The DTRs did not
substantially prove the actual performance of overtime work. The petitioner correctly points out
that any employee could render overtime work only when there was a prior authorization
therefor by the management. Without the prior authorization, therefore, Villa could not validly
claim having performed work beyond the normal hours of work. Moreover, Section 4(c), Rule I,
Book III of the Omnibus Rules Implementing the Labor Code relevantly states as follows:
Section 4. Principles in determining hours worked. – The following general principles shall
govern in determining whether the time spent by an employee is considered hours worked for
purposes of this Rule:
(a) x x x.
(b) x x x.
(c) If the work performed was necessary, or it benefited the employer, or the employee
could not abandon his work at the end of his normal working hours because he had no
replacement, all time spent for such work shall be considered as hours worked, if the work
was with the knowledge of his employer or immediate supervisor. (bold emphasis supplied)
(d) x x x.
We uphold the grant of service incentive leave pay.
Although the grant of vacation or sick leave with pay of at least five days could be credited
as compliance with the duty to pay service incentive leave, the employer is still obliged to prove
that it fully paid the accrued service incentive leave pay to the employee.
The Labor Arbiter originally awarded the service incentive leave pay because the
petitioner did not present proof showing that Villa had been justly paid. The petitioner submitted
the affidavits of Zanoria explaining the payment of service incentive leave after the Labor Arbiter
had rendered her decision. But that was not enough, for evidence should be presented in the
proceedings before the Labor Arbiter, not after the rendition of the adverse decision by the Labor
Arbiter or during appeal. Such a practice of belated presentation cannot be tolerated because it
defeats the speedy administration of justice in matters concerning the poor workers.
COCOPLANS, INC. and CAESAR T. MICHELENA vs.

MA. SOCORRO R. VILLAPANDO
G.R. No. 183129, May 30, 2016
Facts:
Respondent Ma. Socorro R. Villapando, began working as a Financial Advisor for

petitioner Cocoplans, Inc., (Coco plans) in 1995. On October 11, 2000, she was eventually
promoted to Division Head/Senior Sales Manager.
On November 4, 2002, however, her employment was terminated by Cocoplans, through
its President, Caesar T. Michelena, on the alleged ground that she was deliberately influencing
people to transfer to another company thereby breaching the trust and losing the confidence
given to her by Cocoplans.
Consequently, Villapando filed an action for illegal dismissal alleging that she was
dismissed without the just cause mandated by law. In her Position Paper, Villapando essentially
alleged that she was accused by Michelana of ordering her subordinates to ''stop selling" and of
influencing them to "leave the company" by way of sympathy to Dario B. Martinez who was
compelled to resign from the company due to a personal quarrel with respondent Michelena.
Villapando claimed that she was likewise required to resign by Michelena However, respondent
Michelena surprisingly did not accept the resignation that he originally asked for and instead
convened a Committee on Employee Discipline. Complainant was also placed under preventive
suspension in said letter. Obviously, respondents realized that they erred in not investigating the
issues first before asking complainant to resign. Eventually, Villapando’s employment was
formally terminated.
Villapando maintained that she was illegally dismissed for her employment was
terminated on baseless and untruthful grounds. According to her, Michelena simply wanted to
oust her from the company because he felt that she was sympathizing with the Vice-President
for Marketing, Dario B. Martinez, an officer with whom Michelena had a personal quarrel. That
she was influencing the company's employees to transfer to another company, particularly,
Pioneer Allianz, was improbable and preposterous for she never invited nor encouraged anyone
to leave the company. In fact, up until the present time, not a single subordinate nor Villapando,
herself, has transferred to said other company.
In support of her stance, Villapando submitted a written statement signed by Ms.

Milagros Perez, Senior Area Manager, together with six (6) other officers of the company, wherein
they attested that Villapando never influenced them to resign or join another company. With
respect to a contradictory Joint Affidavit likewise executed by the same Ms. Perez, together with
Senior Area Manager David M. Sandoval, wherein they stated that Villapando, indeed, motivated
them to transfer to another company.
Villapando alleged that the written statement earlier signed by Ms. Perez belies the Joint
Affidavit she subsequently executed. Thus, the contents of the written statement should be
controlling. In view of the baseless allegations the company dismissed her on, Villapando prayed
that her termination from employment be declared illegal and that she be awarded full
backwages, separation pay, and moral damages.
Issue
Whether or not Villapando’s dismissal was valid and just.
Ruling
In the instant case, the Court does not find the evidence presented by petitioners to be
substantial enough to discharge the burden of proving that Villapando was, indeed, dismissed
for just cause. As borne by the records, petitioners submitted the following pieces of evidence in
support of their claims: (1) Affidavit of Ms. Gurango dated September 19, 2002; (2) Affidavit of
petitioner Michelena dated October 21, 2002; and (3) Joint Affidavit of Mr. Sandoval and Ms.
Perez dated October 9, 2002. Yet, as clearly discussed by the CA, the documents fail to convince.
First of all, there exist certain discrepancies surrounding the presentation of Ms.
Gurango's affidavit that warrant the Court's attention. In the words of the appellate court:
Regarding the Affidavit of Sharon H. Gurango, dated September 19, 2002, the Court notes
that this affidavit was never presented during the time that the Committee on Employee
Discipline was still investigating the charges against the petitioner as the said affidavit surfaced
only during the proceedings before the labor arbiter. The Court further notes that the said
affidavit's date (September 9, 2002) is even way before the convening of the Committee on
Employee Discipline (October 10, 2002), thus, the Court is curious as to why the said affidavit
was never presented during the committee's investigatory hearings. In fact, based on the final
report of the said committee entitled "Final Recommendation on the Case of Ma. Socorro R.
Villapando, Senior Sales Manager - South Tagalog Operations," dated November 4, 2002, the
affidavit of Ms. Gurango was never considered by the committee since all that was brought before
it was only the joint affidavit of Milagros Perez and David Sandoval and the affidavit of private
respondent Michelena. Having not been brought before the committee, therefore, the petitioner
never had the opportunity to answer the charges against her in the Gurango affidavit. As such,
the said affidavit should not be considered.
At any rate, even if the Gurango affidavit would be considered, the said affidavit docs not,
in any way, prove that the petitioner influenced people to join another company. All that the
affidavit proves is that it was the First Vice-President Dario B. Martinez who tried to influence
Sharon H. Gurango to move to another company and not the petitioner [Socorro] R. Villapando.
While the said affidavit appears to show that the petitioner knew of Mr. Martinez's plans of
moving to another company, mere knowing and deliberately influencing people to leave the
company are two very different things.
Thus, in view of the irregularities identified by the CA, the Court cannot take Ms.
Gurango's affidavit into account. In dismissing an employee for just cause, it must be shown that
the employer fairly made a determination of just cause in good faith, taking into consideration
all of the evidence available to him. But as the appellate court noted, the affidavit of Ms. Gurango
was never presented before the investigation panel, merely surfacing only during the proceedings
before the Labor Arbiter, in spite of the fact that the same was supposedly executed as early as
September 9, 2002, an entire month before the time the Committee on Employee Discipline
convened. Thus, not only is there no showing that said affidavit was considered by petitioners in
arriving at their decsiion to dismiss Villapando, Villapando never had the opportunity to address
the accusations stated therein. As such, the Court cannot consider the same.
Neither can the Court give due regard to the affidavit of petitioner Michelena for as the
CA mentioned, he did not witness first-hand Villapando's alleged disloyal acts of influencing
people to transfer to a competing company. Moreover, Michelena's allegation that Villapando
answered in the affirmative when he asked her if she told her subordinates to leave Cocoplans
for another company can hardly suffice as convincing proof in light of the obvious hostility
between him and Villapando as well as Villapando's categorical and repeated denials of the
imputations against her.
Thus, bearing in mind the fact that the Court cannot take into consideration the
foregoing documentary proof submitted by petitioners for the aforestated reasons, it appears that
the only remaining piece of evidence that petitioners could have used in arriving at their decision
to dismiss Villapando is the Joint Affidavit executed by Ms. Perez and Mr. Sandoval. Yet, as
pointed out by the appellate court, the probative value of the same is rather doubtful.
It is not disputed that apart from the Joint Affidavit, records reveal another document
likewise executed by Ms. Perez containing statements directly contradictory to those found in
the Joint Affidavit. To this Court, the same, indeed, casts doubt on the reliability of the Joint
Affidavit. The fact that the earlier written statement was not notarized nor affirmed by Ms. Perez
does not automatically make it fabricated, especially since no proof was offered to sufficiently
dispute its authenticity. In the face of two conflicting pieces of evidence, the Court is curious as
to why petitioners did not exert any effort in verifying with Ms. Perez the reliability of said
documents. Moreover, even granting the Joint Affidavit to be valid as to Mr. Sandoval, such
affidavit cannot adequately amount to instigating a "mass resignation" with the end goal of
completely abandoning petitioner Cocoplans. If there were really multiple invitations to join
"nationwide mass resignations," petitioners could have easily found many other witnesses, apart
from Mr. Sandoval, to categorically attest thereto. Also, if Villapando truly desired to boycott
Cocoplans and convince Mr. Sandoval in transferring to another company, why is that she
promoted him to Senior Area Manager in May 2002 an act that might even encourage him to
stay?
In justifying dismissals due to loss of trust and confidence, there must be an actual breach
of duty committed by the employee, established by substantial evidence. The Court is of the view,
however, that a single Joint Affidavit of doubtful probative value can hardly be considered as
substantial. Had petitioners provided the Court with other convincing proof, apart from said
Joint Affidavit, that Villapando had, indeed, wilfully influenced her subordinates to transfer to a
competing company, their claims of loss of confidence could have been sustained. As the Court
now sees it, petitioners terminated the services of Villapando on the mere basis of the Joint
Affidavit executed by Ms. Perez and Mr. Sandoval, which, as previously discussed, is put in doubt
by conflicting evidence. Hence, in the absence of sufficient proof, the Court finds that petitioners
failed to discharge the onus of proving the validity of Villapando's dismissal.
Indeed, while an employer may terminate managerial employees for just cause to protect
its own interest, such prerogative must be exercised with compassion and understanding bearing
in mind that, in the execution of said prerogative, what is at stake is not only the employee's
position, but his very livelihood, his very breadbasket. As such, when there is doubt between the
evidence submitted by the employer and that submitted by the employee, the scales of justice
must be tilted in favor of the employee. This is consistent with the rule that an employer's cause
could only succeed on the strength of its own evidence and not on the weakness of the
employee's. Thus, when the breach of trust or loss of confidence alleged is not borne by clearly
established facts, an employee's dismissal on said ground cannot be sustained.
PHILIPPINE AIRLINES, INC.v.ENRIQUE LIGAN, ET AL.
G.R. No. 203932, June 08, 2016
The Facts
PAL and Synergy Services Corporation (Synergy) entered into a station services agreement and a
janitorial services agreement whereby Synergy provided janitors and station attendants to PAL
at Mactan airport. Enrique Ligan, Eduardo Magdaraog, Jolito Oliveros, Richard Goncer, Emelito
Soco, Virgilio P. Campos, Jr., Lorenzo Butanas, Ramel Bernardes, Nelson M. Dulce, Clemente R.
Lumayno, Arthur M. Capin, Allan Bentuzal, and Jeffrey Llenes (respondents) were among the
personnel of Synergy posted at PAL to carry out the contracted tasks. Claiming to be performing
duties directly desirable and necessary to the business of PAL, the respondents, along with 12
other co-employees, filed complaints in March 1992 against PAL and Synergy in the NLRC Region
VII Office in Cebu City for regularization of their status as employees of PAL, underpayment of
salaries and non-payment of premium pay for holidays, premium pay for rest days, service
incentive leave pay, 13th month pay and allowances.
In the Decision dated August 29, 1994, the Labor Arbiter (LA) ruled that Synergy was an
independent contractor and dismissed the complaint for regularization, but granted the
complainants' money claims. On appeal, the NLRC, 4th Division, Cebu City on January 5, 1996
declared Synergy a labor-only contractor and ordered PAL to accept the complainants as regular
employees and as such, to pay their salaries, allowances and other benefits under the Collective
Bargaining Agreement subsisting during the period of their employment. PAL went to the SC on
certiorari, but pursuant to St. Martin Funeral Home v. NLRC, the case was referred to the CA. On
September 29, 2000, the CA, in CA-G.R. SP No. 52329, affirmed the NLRC in toto.
On petition for review, this Court, on February 29, 2008, affirmed but modified the NLRC
decision
On motion for reconsideration by PAL, the Court on April 30, 2009 modified the
aforementioned decision.
Meanwhile, while the above regularization cases were pending in the CA, PAL terminated
its service agreements with Synergy effective June 30, 1998, alleging serious business losses.
Consequently, Synergy also terminated its employment contracts with the respondents, who
forthwith filed individual complaints for illegal dismissal against PAL. PAL in turn filed a third-
party complaintagainst Synergy.
In his Decisiondated July 27, 1998, Executive LA Reynoso A. Belarmino declared that
Synergy was an independent contractor and the respondents were its regular employees, and
therefore Synergy was solely liable for the payment of their separation pay, wage differential, and
attorney's fees. In their appeal to the NLRC, docketed as NLRC Case No. V-000112-2000, the
respondents cited seven previous cases wherein the NLRC also declared that Synergy was a labor-
only contractor. They argued that Synergy and PAL dismissed them without just cause.
In the Decision dated August 27, 2004, the NLRC found that the functions performed by
the respondents under Synergy's service contracts with PAL indicated that they were directly
related to PAL's air transport business, that Synergy serviced PAL exclusively and had no other
clients, that its activities were carried out within PAL's premises and PAL shared supervision and
control over the respondents. After ruling that the respondents were dismissed without just cause
and without observance of procedural due process, the NLRC ordered PAL to pay them
separation pay, backwages, and wage differential.
PAL moved for reconsideration arguing that as janitors, the respondents were hired under
a permissible job-contracting arrangement. In its Resolution dated April 25, 2005 denying the
motion for reconsideration, the NLRC pointed out that in fact most of the respondents worked
as station attendants or station loaders, not janitors, and that PAL could have submitted their
contracts as janitors, but did not. The NLRC also noted that in all seven previous cases appealed
to it involving the same parties, it invariably ruled that PAL was the employer of the respondents
and Synergy was a labor-only contractor.
On petition for review on certiorari to the CA, docketed as CA-G.R. CEB SP No. 00922,
PAL's main contention was that since only this Court's decisions form part of jurisprudence, the
NLRC erred in adopting the CA decision in CA-G.R. SP No. 50138 which held that Synergy was a
labor-only contractor, although it was still on review in this Court.
On February 15, 2012, the CA dismissed PAL's petition, and on September 27, 2012, it also
denied its motion for reconsideration.
Hence, the instant petition for review on certiorariwas filed by PAL.
Issue
Whether or not the respondents were illegally dismissed.
Ruling
In the illegal dismissal cases before the LA, the issue was whether the termination of the
respondents' employment by Synergy in June 1998 was without just cause and observance of due
process. In the instant petition, PAL argues in the main that in reversing the LA, the NLRC (in
NLRC Case No. V-000112-2000) cited for its factual and legal basis an inexistent CA decision,
docketed as CA-G.R. SP No. 50138. Culling from its own "Compliance" dated April 4, 2006 in CA-
G.R. CEB SP No. 00922, PAL tells the Court that CA-G.R. SP No. 50138 is actually entitled "Anita
Danao, Owner of Wonder Baker v. NLRC and Eufemio Famis" not "Philippine Airlines, Inc. v. NLRC"
as mistakenly mentioned by the NLRC, and that it was promulgated on December 31, 1999, not
April 30, 1999; that a verification with the CA docket section showed that another PAL case, CA-
G.R. SP No. 50161, is actually dated April 30, 1999 and involved the issue of payment of 13th month
pay to PAL employees, but had nothing to do with Synergy or its status as a labor-only contractor;
and, that what was actually elevated from the NLRC, 4th Division, to this Court, and then referred
to the CA pursuant to St. Martin Funeral Home, was CA-G.R. SP No. 52329, decided on September
29, 2000, not CA-G.R. SP No. 50138.
In its assailed decision, the CA pointed out that both CA-G.R. SP No. 00922 and CA-G.R.
SP No. 52329 involve the same facts and employer, PAL, and the herein respondents were among
the complainants in the regularization cases. Noting that this Court in GR. No. 146408 has ruled
that the respondents were regular employees of PAL, the CA ruled that they cannot be
whimsically terminated by PAL but it must show that: (1) their dismissal was for any of the causes
authorized in Article 282 of the Labor Code; and (2) they were given opportunity to be heard and
to defend theirselves.
According to the CA, PAL failed to show that the respondents were guilty of any of the
causes mentioned in Article 282. Neither was due process observed by PAL in dismissing them,
who were merely notified of their termination through a notice sent to them by Synergy.
Moreover, PAL cannot deny that all along it had always known of the ruling in CA-G.R.
SP No. 52329, which as PAL itself also pointed out, was elevated for review to this Court in G.R.
No. 146408. PAL is aware that G.R. No. 146408 was decided on February 29, 2008, and its motion
for reconsideration was resolved on April 30, 2009, whereas the instant petition was filed only on
November 6, 2012. As the petitioner in CA-G.R. SP No. 52329, PAL even attached in Annex "E" of
this petition a copy of the decision in CA-G.R. SP No. 52329.35 PAL has thus always known that
the issue therein was whether Synergy was a labor-only contractor or a legitimate contractor;
that the respondents were adjudged as regular employees of PAL entitled to all the benefits of its
regular employees, that Synergy was a labor-only contractor and thus a mere agent of PAL.
As the petitioner in G.R. No. 146408, PAL certainly cannot pretend ignorance of the
Court's decision therein. Moreover, on April 28, 2008, the respondents had manifested in CA-
G.R. CEB SP No. 00922 that a decision had been rendered in G.R. No. 146408, with a copy thereof
attached; on May 26, 2008, PAL itself also manifested that it had filed a motion for
reconsideration in G.R. No. 146408, which then prompted the CA to suspend the resolution of
CA-G.R. CEB SP No. 00922, since the regularization cases are intimately connected to the illegal
dismissal cases.
In Resolution dated April 30, 2009 in G.R. No. 146408, this Court mentioned that PAL had
revealed for the first time in its Motion for Reconsideration the matter of the lay-off of the
respondents on June 30, 1998 due to financial woes; that the respondents likewise disclosed that
they were all terminated in June 1998 in the guise of retrenchment. Except for the employees who
had died, they either accepted settlement earlier, or had been declared as employee of Synergy.
The Court further noted that PAL in its motion for reconsideration from the CA's decision
in CA-G.R. SP No. 52329 also invoked its financial difficulties, not by way of defense to a charge
of illegal dismissal but to manifest that supervening events had rendered it impossible to comply
with the order to accept the respondents as regular employees.
In G.R. No. 146408, the Court noted that the termination of the respondents in June 1998 was in
disregard of a subsisting temporary restraining order which the Court issued in 1996 to preserve
the status quo, before the case was transferred to the CA in January 1999. The Court also held
that PAL failed to establish such economic losses which rendered impossible its compliance with
the order to accept the respondent as regular employees.
Other than its bare allegations, [PAL] presented nothing to substantiate its impossibility
of compliance. In fact, [PAL] waived this defense by failing to raise it in its Memorandum filed
on June 14, 1999 before the [CA]. x x x. (Citation omitted)
While retrenchment is a valid exercise of management prerogative, it is well settled that

economic losses as a ground for dismissing an employee is factual in nature, and in order for a
retrenchment scheme to be valid, all of the following elements under Article 283 of the Labor
Code must concur or be present, to wit:
(1) That retrenchment is reasonably necessary and likely to prevent business losses which, if
already incurred, are not merely de minimis, but substantial, serious, actual and real, or
if only expected, are reasonably imminent as perceived objectively and in good faith by
the employer;
(2) That the employer served written notice both to the employees and to the Department
of Labor and Employment at least one month prior to the intended date of retrenchment;
(3) That the employer pays the retrenched employees separation pay equivalent to one (1)
month pay or at least one-half QA) month pay for every year of service, whichever is
higher
(4) That the employer exercises its prerogative to retrench employees in good faith for the
advancement of its interest and not to defeat or circumvent the employees' right to
security of tenure; and,
(5) That the employer uses fair and reasonable criteria in ascertaining who would be
dismissed and who would be retained among the employees, such as status, efficiency,
seniority, physical fitness, age, and financial hardship for certain workers.
The absence of one element renders the retrenchment scheme an irregular exercise of
management prerogative. The employer's obligation to exhaust all other means to avoid further
losses without retrenching its employees is a component of the first element enumerated above.
To impart operational meaning to the constitutional policy of providing full protection to labor,
the employer's prerogative to bring down labor costs by retrenching must be exercised essentially
as a measure of last resort, after less drastic means have been tried and found wanting.
PAL has insisted that the NLRC erroneously relied on an inexistent CA decision, and
therefore its decision is void, but the CA in its resolution of September 27, 2012 has concluded
that "[a] perusal of the Decision of the NLRC shows that it is not without basis," that the NLRC
"made findings of facts, analyzed the legal aspects of the case taking into consideration the
evidence presented and formed conclusions after noting the relevant facts of the case." But more
importantly, the Court cannot lose sight of the settled rule that in illegal dismissal cases, the onus
to prove that the employee was not dismissed, or if dismissed, that his dismissal was not illegal,
rests on the employer, and that its failure to discharge this burden signifies that the dismissal is
not justified and therefore illegal. Unfortunately, in this petition, PAL has advanced no such
justification whatsoever to dismiss or retrench the respondents. The Court is left with no
conclusion: PAL's petition is misleading and clearly baseless and dilatory.
EMILIO S. AGCOLICOL, JR.v.JERWIN CASIÑO

G.R. No. 217732, June 15, 2016
The Facts
Respondent Jerwin Casiño (Casiño) was hired by petitioner in 2009 as Stock Custodian and Cook
in the latter's Kubong Sawali Restaurant. Upon discovery of theft involving company property
where respondent was allegedly a conspirator, a criminal complaint for qualified theft against
him and his co-employees was filed on November 26, 2012 before the Office of the City Prosecutor
of Baguio City. Additionally, he and his co-employees were preventively suspended indefinitely
pending investigation. He was informed of the suspension through a Memorandum Order dated
November 27, 2012, effective November 28, 2012, by the restaurant's Human Resource Manager,
Henry Revilla.
Meanwhile, the criminal complaint for qualified theft was later dismissed for lack of basis.
According to respondent, sometime thereafter, he received a letter-dated January 10, 2013

where he was made to explain why his services should not be terminated. While the letter was
addressed only to his co-employee, Rosendo Lomboy (suspected to be involved in the incident),
it appears from respondent's allegations in his complaint that he considered said letter as a
directive for him to give said explanation.
On May 17, 2013, respondent filed with the NLRC a complaint for illegal dismissal, illegal
suspension, and non-payment of monetary benefits.
For his part, petitioner denies having dismissed respondent, arguing that they were
prevented from completing the investigation because respondent stopped reporting for work
after Reynante Camba, his co-employee, was arrested. This, according to petitioner, prevented
him from complying with the twin-notice rule. Nevertheless, petitioner insists, respondent was
never dismissed from work notwithstanding the audit team's finding that his participation in the
scam was extensive. Furthermore, petitioner contends that respondent's monetary claims were
speculative.
Issue
Whether or not respondent was constructively dismissed.
Ruling
An employee is considered to be constructively dismissed from service if an act of clear
discrimination, insensibility or disdain by an employer has become so unbearable to the
employee as to leave him or her with no option but to forego with his or her continued
employment.
From said definition, it can be gathered that various situations, whereby the employee is
intentionally placed by the employer in a situation which will result in the former's being coerced
into severing his ties with the latter, can result in constructive dismissal. One such situation is
where an employee is preventively suspended pending investigation for an indefinite period of
time.
At this point it is well to note that not all preventive suspensions are tantamount to
constructive dismissal. The employer's right to place an employee under preventive suspension
is recognized in Rule XXIII, Implementing Book V of the Omnibus Rules Implementing the Labor
Code. Section 8 of said Rule provides:
SEC. 8. Preventive suspension. The employer may place the worker concerned under
preventive suspension if his continued employment poses a serious and imminent threat to the
life or property of the employer or of his co-workers.
To be valid, however, not only must the preventive suspension be imposed pursuant to Section
8, it must also follow the 30-day limit exacted under the succeeding Section 9 of the Rule. Thus:
SEC. 9. Period of suspension. No preventive suspension shall last longer than thirty (30)
days. The employer shall thereafter reinstate the worker in his former or in a substantially
equivalent position or the employer may extend the period of suspension provided that during
the period of extension, he pays the wages and other benefits due to the worker. In such case, the
worker shall not be bound to reimburse the amount paid to him during the extension if the
employer decides, alter completion of the healing, to dismiss the worker.
Here, there is no inquiry on the propriety of petitioner's resort to the imposition of a preventive
suspension. What is now in question is the fact that respondent was preventively suspended by
petitioner for an indefinite period of time and whether the imposition of indefinite
preventive suspension is tantamount to constructive dismissal.
On the 30-day limit on the duration of an employee's preventive suspension, We have

previously ruled that "when preventive suspension exceeds the maximum period allowed without
reinstating the employee either by actual or payroll reinstatement or when preventive suspension
is for [an] indefinite period, only then will constructive dismissal set in."
In Pido, upon which case the NLRC Second Division hinged its ruling in Casiño's case,
We considered the employee's "prolonged suspension, owing to [the employer's] neglect to
conclude the investigation, had ripened to constructive dismissal." There, the employee was
placed under preventive suspension for an indefinite period of time pending the investigation of
a complaint against him. After the imposition of said suspension, however, the employer "merely
chose to dawdle with the investigation in absolute disregard of [the employee's] welfare." In that
case, the employer did not inform the employee that it was extending its investigation, nor was
the latter paid his wages and other benefits after the lapse of the 30-day period of suspension.
Neither did the employer issue an order lifting the suspension or any official communication for
the employee to assume his post or another post. Having resulted in the employee's nine (9)-
month preventive suspension, this Court considered such to have ripened into constructive
dismissal.
Moreover, in C. Alcantara & Sons, Inc. v. NLRC, We considered the employer's imposition
of a preventive suspension pending final investigation of the employee's case, coupled with the
former's lack of intention to conduct said final investigation, as tantamount to constructive
dismissal.
In another case, Premiere Development Bank, et al. v. NLRC, We agreed with the NLRC that the
employee having been placed on preventive suspension in excess of the 30-day limit was a
predetermined effort of dismissing the latter from the service in the guise of preventive
suspension. There, the NLRC found that the prolonged suspension was the result of the
employer's desire to force the employee to submit to an inquiry.
Similarly, in Hyatt Taxi Services, Inc. v. Catinoy, this Court held that the employer's
actions were tantamount to constructive dismissal when it failed to recall the employee to work
after the expiration of the suspension, taken together with the former's precondition that the
employee withdraw the complaints against it. In said case, the employee involved reported for
work after the lapse of his suspension but was told that he would not be able to resume his
employment if he will not withdraw the cases that he filed against them.
In the case at hand, there is no question that what was meted was an indefinite preventive
suspension pending investigation as clearly stated in the Memorandum Order dated November
27, 2012. This, in itself, is already a clear violation of the proscription against indefinite or
prolonged preventive suspensions, making the suspension tantamount to constructive dismissal
as repeatedly held by this Court in a long line of cases.
What further strengthens Our finding against petitioner is the fact that after the
imposition of the indefinite preventive suspension on November 28, 2012 and despite the City
Prosecutor's dismissal of the case for qualified theft against respondent on December 28, 2012,
petitioner never issued a return-to-work order to respondent or any similar correspondence. The
only communication received by respondent after the November 27, 2012 Memorandum Order
is the January 10, 2013 Letter, which letter was addressed to Lomboy.
Additionally, the fact that the Letter was addressed to Lomboy is, to Us, an indication of
petitioner's lack of intention to obtain an explanation from respondent for his absences. This is
so because, obviously, said Letter was intended for Lomboy.
As in the above-cited cases, petitioner's actuations and omissions after the imposition of
the indefinite preventive suspension, coupled with the contents of the Letter and the
circumstances surrounding its issuance, are proof of petitioner's lack of desire to have respondent
continue in his employment at Kubong Sawali. It does not cure petitioner's violation of the 30-
day limit. On the contrary, it strengthens the finding that respondent was indeed constructively
dismissed. There is, therefore, no reason for Us to disturb the ruling of the CA affirming that of
the NLRC Second Division.
GREGORIO "TONGEE" BALAIS, JR.v.SE'LON BY AIMEE, AMELITA REVILLA AND
ALMA BELARMINO
G.R. No. 196557, June 15, 2016
Facts:
The instant petition stemmed from a complaint for illegal dismissal, non-payment of 13th
month pay, damages and attorney's fees filed by Gregorio "Tongee" Balais, Jr. (Balais) against
Se'lon by Aimee, Amelita Revilla and Alma Belarmino before the NLRC.
Balais narrated that he was Salon de Orient's senior hairstylist and make-up artist from
October 16, 2004 until November 26, 2007 when respondent Amelita Revilla (Revilla) took over
the business. Revilla, however, retained his services as senior hairstylist and make-up artist.
Under the new management, Salon De Orient became Se'lon by Aimee and respondent Alma
Belarmino (Belarmino) was appointed as its salon manager, who was in-charge of paying the
employees' wages, dismissing erring employees, and exercising control over them. Balais, on the
other hand, being the senior hairstylist and make-up artist, allegedly had the discretion to choose
from among the junior hairstylist who should assist him in servicing his clients, as customarily
observed in beauty salons. He worked during the 10am-7pm shift or 11am-8pm shift, six (6) days
a week with Sunday as his regular rest day for a monthly salary of Php18,500.00 paid every two
(2) weeks. In June 2008, his salary was reduced to Php15,000.00. Balais claimed that his working
relationship with respondents had been harmonious until the evening of July 1, 2008 when
Belarmino dismissed him without due process.
Balais felt humiliated as he was berated in front of his co-workers. The next day, he did
not report for work anymore and instead filed the complaint before the NLRC.
For their part, respondents alleged that it was known to all their employees that one of
the salon's policies was for junior stylists to take turns in assisting any of the senior stylists for
purposes of equalizing commissions. However, Belarmino was told that Balais failed to comply
with this policy as the latter allegedly gave preference to only two (2) junior stylists, disregarding
the other two (2) junior stylists. When Belarmino asked Balais for explanation, the latter allegedly
snapped and retorted that he would do whatever he wanted. Belarmino reminded him of the
salon's policy and his duty to comply with it but petitioner allegedly insisted he would do as he
pleased and if they can no longer take it, they would have to dismiss him. After the incident,
Balais sued them and never reported back to work.
Respondents insisted that Balais was not terminated from employment but he instead
abandoned his work. Respondents explained that even assuming that he was indeed dismissed,
there was a valid ground therefor as his acts amounted to serious misconduct against a superior
and willful disobedience to reasonable policy related to his work.
Issue
Whether there was a valid dismissal.
Ruling
Respondents averred that there was abandonment as Balais failed to report back to work
the following day after the incident.
In this regard, this Court finds that respondents failed to establish that Balais abandoned
his work. To constitute abandonment, two elements must concur: (a) the failure to report for
work or absence without valid or justifiable reason, and (b) a clear intention to sever the
employer-employee relationship, with the second element as the more determinative factor and
being manifested by some overt acts. Mere absence is not sufficient. The employer has the burden
of proof to show a deliberate and unjustified refusal of the employee to resume his employment
without any intention of returning. Respondents, other than their bare allegation of
abandonment, failed to prove that these two elements were met. It cannot be said that Balais
failed to report back to work without justifiable reason as in fact he was told that he was no longer
wanted in the salon.
Moreover, we likewise note the high improbability of petitioner intentionally abandoning

his work, taking into consideration his length of service, i.e., 18 years of service with the salon, it
does not make sense for an employee who had worked for his employer for 18 years would just
abandon his work and forego whatever benefits he may be entitled, unless he was made to believe
or was told that he was already terminated.
Respondents cannot discharge the burden of proving a valid dismissal by merely alleging
that they did not dismiss Balais; neither can they escape liability by claiming that Balais
abandoned his work. When there is no showing of a clear, valid and legal cause for the
termination of employment, the law considers it a case of illegal dismissal.
Thus, respondents, presumably thinking that their claim of abandonment holds no water,
it likewise manifested that assuming Balais was indeed terminated, there was a valid ground
therefor because of his insubordination.
We disagree.
Willful disobedience of the employer's lawful orders, as a just cause for the dismissal of
an employee, envisages the concurrence of at least two requisites: (1) the employee's assailed
conduct must have been willful or intentional, the willfulness being characterized by a "wrongful
and perverse attitude;" and (2) the order violated must have been reasonable, lawful, made
known to the employee and must pertain to the duties which he had been engaged to
discharge.15chanrobleslaw
It must be likewise stressed anew that the burden of proving the insubordination as a just and
valid cause for dismissing an employee rests on the employer and his failure to do so shall result
in a finding that the dismissal is unjustified.
In this case, the salon policy of rotating the junior stylists who will assist the senior stylist
appears to be reasonable, lawful, made known to petitioner and pertained to his duty as senior
hairstylist of respondent. However, if we will look at Balais' explanation for his alleged
disobedience thereto, it likewise appears to be reasonable and lawful, to wit:
x x x x
The duty of the Senior Stylist has the overall function in seeing to it that the service accorded to
the client is excellent, thus, he has the right to refuse service of a junior stylist whom he thinks
that such junior stylist cannot give equal or over and above the service that he can give to the
client, thus his refusal to obey the respondent does not constitute a just cause for the treatment
given by respondent to herein respondent (sic).
xxxx
The fact alone that Balais failed to comply with the salon policy does not establish that
his conduct in failing to comply with the salon's policy had been willful, or characterized by a
wrongful and perverse attitude. Balais' justification maybe adverse to that of the salon's policy
but it was neither willful nor characterized by a perverse attitude. We take note that the alleged
non-compliance with the salon policy was brought to the attention of Balais for the first time
only during the said incident. There was no showing of prior warnings as to his non-compliance.
While respondents wield a wide latitude of discretion in the promulgation of policies, rules and
regulations on work-related activities of its employees, these must, however, be fair and
reasonable at all times, and the corresponding sanctions for violations thereof, when prescribed,
must be commensurate thereto as well as to the degree of the infraction. Given that Balais'
preference on who will assist him is based on the junior stylists' competence, the same should
have been properly taken into account in the imposition of the appropriate penalty for violation
of the rotation policy. Suspension would have sufficed to caution him and other employees who
may be wont to violate the same policy.
In adjudging that the dismissal was grounded on a just and valid cause, the totality of
infractions or the number of violations committed during the period of employment shall be
considered in determining the penalty to be imposed upon an erring employee. Let it not be
forgotten that what is at stake is the means of livelihood, the name, and the reputation of the
employee. To countenance an arbitrary exercise of the management's prerogative to terminate
an employee is to negate the employee's constitutional right to security of tenure.
Whether the dismissal was effected with due process of law.
Here, a perusal of the records revealed that, indeed, Belarmino's manner of verbally
dismissing Balais on-the-spot fell short of the two-notice requirement. There was no showing of
prior warnings on Balais' alleged non-compliance with the salon policy. There was no written
notice informing him of his dismissal as in fact the dismissal was done verbally and on-the-spot.
Respondents failed to furnish Balais the written notice apprising him of the charges against him,
as prescribed by the Labor Code. There was no attempt to serve a notice of dismissal on Balais.
Consequently, he was denied due process of law accorded in dismissals.
ZAIDA R. INOCENTEv.ST. VINCENT FOUNDATION FOR CHILDREN

AND AGING, INC./VERONICA MENGUITO
G.R. No. 202621, June 22, 2016
Facts
Respondent St. Vincent Foundation for Children and Aging, Inc. (St. Vincent) is a non-stock,
non-profit foundation engaged in providing assistance to children and aging people and
conducting weekly social and educational activities among them. It is financially supported by
the Kansas based Catholic Foundation for Children and Aging (CFCA), a Catholic foundation
dedicated to promoting Christian values and uplifting the welfare of the children all over the
world. Respondent Veronica Menguito is St. Vincent's President/Directress.
In 2000, St. Vincent hired Zaida as Program Assistant; it promoted her as Program Officer
the following year. Zaida, then single, was known as Zaida Febrer Ranido. Zaida's duties as
program officer included the following: monitoring and supervising the implementation of the
programs of the foundation, providing training to the staff and sponsored members, formulating
and developing program policies for the foundation, facilitating staff meetings, coordinating and
establishing linkages with other resource agencies and persons, as well as preparing St. Vincent's
annual program plan and budget, and year-end reports.
In 2001, Zaida met Marlon D. Inocente. Marlon was then assigned at St. Vincent's Bataan
sub-project. In 2002, Marlon was transferred to St. Vincent's sub-project in Quezon City. Zaida
and Marlon became close and soon became romantically involved with each other.
In September 2006, St. Vincent adopted the CFCA's Non-Fraternization Policy; it reads
in full:
CFCA Policy 4.2.2.3. Non-Fraternization Policy
While CFCA does not wish to interfere with the off-duty and personal conduct of
its employees, to prevent unwarranted sexual harassment claims, uncomfortable working
relationships, morale problems among other employees, and even the appearance of impropriety,
employees who direct and coordinate the work of others are strongly discouraged from
engaging in consensual romantic or sexual relationships with any employee or volunteer of
CFCA.6 [Emphasis supplied]
Despite St. Vincent's adoption of the Non-Fraternization Policy, Zaida and Marlon discretely
continued their relationship; they kept their relationship private and unknown to St. Vincent
even after Marlon resigned in July 2008.
On February 19, 2009, Zaida experienced severe abdominal pain requiring her to go to the
hospital. The doctor later informed her that she had suffered a miscarriage. While confined at
the hospital, Zaida informed St. Vincent of her situation. Menguito verbally allowed Zaida to go
on maternity leave until April 21, 2009. Zaida was released from the hospital two days after her
confinement.
On March 31, 2009, Zaida was again confined at the hospital for ectopic pregnancy. Zaida,
thereafter, underwent surgery to have one of her fallopian tubes removed. She was discharged
from the hospital on April 4, 2009.
On May 18, 2009, Zaida received from St. Vincent a letter dated May 14, 2009 and signed
by Menguito requiring her to explain in writing why no administrative action should be taken
against her. St. Vincent charged her with violation of the CFCA Non-Fraternization Policy and of
the St. Vincent's Code of Conduct provisions prohibiting: (1) acts against agency interest and
policy by indulging in immoral and indecent act; (2) acts against persons by challenging
superiors' authority, threatening and intimidating co-employees, and exerting undue influence
on subordinates to gain personal benefit; and (3) violations within the terms of employment by
doing an act offensive to the moral standard of the Foundation.
In her May 19, 2009 reply-letter, Zaida defended that: (1) her relationship with Marlon
started long before St. Vincent's Non-Fraternization Policy took effect; (2) Marlon was no longer
connected with St. Vincent since 2008; (3) her relationship with Marlon is not immoral as they
were both of legal age and with no impediments to marry; (4) they kept their relationship private
and were discreet in their actions; (5) Marlon stayed at her place only to take care of her while
she was sick; and (6) they already planned to get married as soon as she recovers and their
finances improve.
Zaida's explanation failed to convince St. Vincent. In the letter dated May 30, 2009, St.
Vincent terminated Zaida's employment for immorality, gross misconduct and violation of St.
Vincent's Code of Conduct.
Zaida and Marlon were subsequently married on June 23, 2009.
On July 14, 2009, Zaida filed before the LA her complaint for illegal dismissal, with prayer
for reinstatement, backwages, moral and exemplary damages and litigation expenses.
Issues
Whether or not Zaida was illegally dismissed.
Whether or not there was compliance of procedural due process requirements.
Ruling
To place our discussions in proper perspective, the determination of whether Zaida was validly
dismissed on the ground of willful breach of trust and serious misconduct requires the prior
determination of, first, whether Zaida's intimate relationship with Marlon was, under the
circumstances, immoral; and, second, whether such relationship is absolutely prohibited by or is
strictly required to be disclosed to the management under St. Vincent's Non-Fraternization
Policy.
We shall separately address these grounds in the discussions below.
On the charge of immorality and

engaging in conduct prejudicial to the
interest of St. Vincent
We find the NLRC's findings of immorality or of committing acts prejudicial to the

interest of St. Vincent to be baseless.
The totality of the attendant circumstances

must be considered in determining whether
an employee's conduct is immoral
Immorality pertains to a course of conduct that offends the morals of the community. It
connotes conduct or acts that are willful, flagrant or shameless, and that shows indifference to
the moral standards of the upright and respectable members of the community
Conducts described as immoral or disgraceful refer to those acts that plainly contradict
accepted standards of right and wrong behavior; they are prohibited because they are detrimental
to the conditions on which depend the existence and progress of human society.
Notwithstanding this characterization, the term "immorality" still often escapes precise
definition; the determination of whether it exists or has taken place depends on the attendant
circumstances, prevailing norms of conduct, and applicable laws.
In other words, it is the totality of the circumstances surrounding the conduct per se
viewed in relation with the conduct generally accepted by society as respectable or moral, which
determines whether the conduct is disgraceful or immoral. The determination of whether a
particular conduct is immoral involves: (1) a consideration of the totality of the circumstances
surrounding the conduct; and (2) an assessment of these circumstances in the light of the
prevailing norms of conduct, i.e., what the society generally considers moral and respectable, and
of the applicable laws.
In dismissal situations, the sufficiency

of a conduct claimed to be immoral
must be judged based on secular,
not religious standards.
In general, in determining whether the acts complained of constitute "disgraceful and

immoral" behavior under our laws, the distinction between public and secular morality on the
one hand, and religious morality, on the other hand, should be kept in mind. This distinction as
expressed - albeit not exclusively - in the law, on the one hand, and religious morality, on the
other, is important because the jurisdiction of the Court extends only to public and secular
morality.
In this case, we note that both Zaida and Marlon at all times had no impediments to
marry each other. They were adults who met at work, dated, fell in love and became sweethearts.
The intimate sexual relations between them were consensual, borne by their love for one another
and which they engaged in discreetly and in strict privacy. They continued their relationship even
after Marlon left St. Vincent in 2008. They took their marriage vows soon after Zaida recovered
from her miscarriage, thus validating their union in the eyes of both men and God.
All these circumstances show the sincerity and honesty of the relationship between Zaida
and Marlon. They also show their genuine regard and love for one another - a natural human
emotion that is neither shameless, callous, nor offensive to the opinion of the upright and
respectable members of the secular community. While their actions might not have strictly
conformed with the beliefs, ways, and mores of St. Vincent - which is governed largely by
religious morality - or with the personal views of its officials, these actions are not prohibited
under any law nor are they contrary to conduct generally accepted by society as respectable or
moral.
Significantly, even the timeline of the events in this case supports our observation that
their intimate relations was founded on love, viz: Zaida and Marlon met in 2002 and soon become
sweethearts; St. Vincent adopted the Non-Fraternization policy in September 2006; Marlon
resigned from St. Vincent in July 2008; in February 2009, Zaida had the miscarriage that disclosed
to St. Vincent Zaida's relationship with Marlon; and St. Vincent terminated Zaida's employment
in May 2009.
Clearly from this timeline, Zaida and Marlon have long been in their relationship (for
about four years) by the time St. Vincent adopted the Policy; their relationship, by that time and
given the turn out of the events, would have already been very serious. To be sure, no reasonable
person could have expected them to sever the relationship simply because St. Vincent chose to
adopt the Non-Fraternization Policy in 2006. As Zaida aptly argued, love is not a mechanical
emotion that can easily be turned on and off. This is the lesson Shakespeare impressed on us in
Romeo and Juliet - a play whose setting antedated those of Marlon and Zaida by about 405
hundred years.
We thus reiterate that mere private sexual relations between two unmarried and
consenting adults, even if the relations result in pregnancy or miscarriage out of wedlock and
without more, are not enough to warrant liability for illicit behavior. The voluntary intimacy
between two unmarried adults, where both are not under any impediment to marry, where no
deceit exists, and which was done in complete privacy, is neither criminal nor so unprincipled as
to warrant disciplinary action.
To use an example more recent than Shakespeare's, if the Court did not consider the
complained acts in Escritor immoral, more so should the Court in this case not consider Zaida's
consensual intimate relationship with Marlon immoral.
Zaida's relationship with Marlon was not
an act per se prejudicial to the interest
of St. Vincent.
Since Zaida and Marlon's relationship was not per se immoral based on secular morality
standards, St. Vincent carries the burden of showing that they were engaged in an act prejudicial
to its interest and one that it has the right to protect against. We reiterate, in this respect, that
Zaida and Marlon were very discrete in their relationship and kept this relationship strictly
private. They did not flaunt their affections for each other at the workplace. No evidence to the
contrary was ever presented. Zaida and Marlon's relationship, in short, was almost completely
unknown to everyone in St. Vincent; the respondents in fact even admitted that they discovered
the relationship only in 2009.
Significantly, St. Vincent has fully failed to expound on the interest that is within its own right to
protect and uphold. The respondents did not specify in what manner and to what extent Zaida
and Marlon's relationship prejudiced or would have prejudiced St. Vincent's interest. To be sure,
the other employees and volunteers of St. Vincent know, by now, what had happened to Zaida
and the circumstances surrounding her dismissal. But, the attention which the relationship had
drawn could hardly be imputed to her; if at all, it was the respondents' actions and reactions
which should be blamed for the undesired publicity.
On the charge of violation of the Non-

Fraternization Policy
Neither can we agree with the NLRC's findings that Zaida's relationship with Marlon violated St.
Vincent's Non-Fraternization Policy.
A reading of the Policy's provisions shows that they profess to touch only on on-duty conduct of
its employees. Contrary to the respondents' arguments, too, the CFCA employees who direct or
coordinate the work of others are only "strongly discouraged from engaging in consensual
romantic or sexual relationships with any employee or volunteer of CFCA. " It does not prohibit
them, (either absolutely or with qualifications) from engaging in consensual romantic or sexual
relationships.
To discourage means "to deprive of courage or confidence: dishearten, deject; to attempt to

dissuade from action: dampen or lessen the boldness or zeal of for some action."
To prohibit, on the other hand, means "to forbid by authority or command: enjoin, interdict; to
prevent from doing or accomplishing something: effectively stop; to make impossible: disbar,
hinder, preclude."
While "to discourage" and "to prohibit" are essentially similar in that both seek to achieve similar
ends, i.e., the non-happening or non-accomplishment of an event or act, they are still
significantly different in degree and in terms of their effect and impact in the realm of labor
relations laws.
The former - "to discourage" - may lead the actor i.e., the employee, to disfavor, disapprobation,
or some other unpleasant consequences, but the actor/employee may still nonetheless do or
perform the "discouraged" act. If the actor/employee does or performs the "discouraged" act, the
employee may not be subjected to any punishment or disciplinary action as he or she does not
violate any rule, policy, or law.
In contrast, "to prohibit" will certainly subject the actor/employee to punishment or disciplinary
action if the actor/employee does or performs the prohibited act as he or she violates a rule,
policy or law.
From this perspective, a St. Vincent employee who directs or coordinates the work of other St.
Vincent employee or volunteer, and who engages in a consensual romantic or sexual relationship
with a St. Vincent employee or volunteer will not violate the Non-Fraternization Policy unless
circumstances are shown that the act goes beyond the usual norms of morality. For example, the
employees' ascendancy or supervising authority, over another employee with whom he or she
had a relationship, and the undue advantage taken because of this ascendancy or authority, if
shown, would lead to a different conclusion. At most, the employee may be considered to have
committed an act that is frowned upon; but certainly, the employee does not commit an act that
would warrant his or her dismissal.
In addition, an examination of the Policy's provisions shows that it does not require St. Vincent's
employees to disclose any such consensual romantic or sexual relationships to the management.
In fact, nowhere in the records does it show that St. Vincent employees are under any obligation
to make the disclosure, whose violation would subject the employee to disciplinary action.
Accordingly, the failure of a St. Vincent employee to disclose to the management his or her
consensual romantic or sexual relationship with another employee or volunteer does not
constitute a violation of the Non-Fraternization Policy.
On the charge of violation of the Code of Conduct

provisions prohibiting acts against agency
interest, acts against persons, and violations
of the terms of employment
We also do not find sufficient basis for Zaida's dismissal for violation of the Code of Conduct
provisions prohibiting: acts against agency interest by indulging in immoral and indecent act;
acts against persons by challenging superiors' authority, threatening and intimidating co-
employees and exerting undue influence on subordinates to gain personal benefit; and
violations of the terms of employment by doing an act offensive to the moral standards of the
foundation.
We point out in this respect that the charges of violating the Code of Conduct provisions
prohibiting acts against agency interest and violations of the terms of employment are both
premised on the alleged immoral and indecent acts committed by Zaida in engaging in
consensual romantic or sexual relationship with Marlon. Since Zaida did not violate the Non-
Fraternization Policy, these other charges were clearly unwarranted and baseless.
In the same vein, we likewise find no sufficient basis for Zaida's dismissal for allegedly violating
the Code of Conduct provisions prohibiting acts against persons. While St. Vincent claimed, in
the May 28, 2009 Notice of Termination, that Zaida "exerted undue influence on [her co-
workers and subordinates] to favor [herself] and/or Mr. Inocente", it did not specify in what
manner and to what extent she unduly influenced her co-workers and subordinates for hers
and Marlon's benefit.
To justify a dismissal based on the act of "exert[ing] undue influence," the charge must be
supported by a narration of the specific act/s she allegedly committed by which she unduly
influenced her co-worker and subordinates, of the dates when these act/s were committed, and
of the names of the co-workers and/or subordinates affected by her alleged actions. The
respondents, however, miserably failed to establish these relevant facts. In other words, the
charge of exerting undue influence is a conclusion that was not supported by any factual or
evidentiary basis.
Dismissal on the ground of serious misconduct

and willful breach of trust and confidence
Based on the above considerations, we find Zaida's dismissal illegal for lack of valid cause. St.
Vincent failed to sufficiently prove its charges against Zaida to justify her dismissal for serious
a. Serious misconduct
For an employee to be validly dismissed on the ground of serious misconduct, the employee must
first, have committed misconduct or an improper or wrong conduct. And second, the
misconduct or improper behavior is: (1) serious; (2) relate to the performance of the
employee's duties; and (3) show that the employee has become unfit to continue working
for the employer.
As we explained above, Zaida's relationship with Marlon is neither illegal nor immoral; it also did
not violate the Non-Fraternization Policy. In other words, Zaida did not commit any misconduct,
serious or otherwise, that would justify her dismissal based on serious misconduct.
Moreover, St. Vincent failed to show how Zaida's relationship with Marlon affected her
performance of her duties as a Program Officer and that she has become unfit to continue
working for it, whether for the same position or otherwise. Her dismissal based on this ground,
therefore, is without any factual or legal basis.
b. Willful breach of trust and confidence
Willful breach of trust, as just cause for the termination of employment, is founded on the fact
that the employee concerned: (1) holds a position of trust and confidence, i.e., managerial
personnel or those vested with powers and prerogatives to lay down management policies and/or
to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees; or (2) is
routinely charged with the care and custody of the employer's money or property, i.e., cashiers,
auditors, property custodians, or those who, in normal and routine exercise of their functions,
regularly handle significant amounts of money or property. In any of these situations, it is the
employee's breach of the trust that his or her position holds which results in the employer's loss
of confidence.
Significantly, loss of confidence is, by its nature, subjective and prone to abuse by the employer.
Thus, the law requires that the breach of trust -which results in the loss of confidence - must be
willful. The breach is willful if it is done intentionally, knowingly and purposely, without
justifiable excuse, as distinguished from an act done carelessly, thoughtlessly, heedlessly, or
inadvertently.leslaw
We clarify, however, that it is the breach of the employer's trust, not the specific employee act/s
which the employer claims caused the breach, which the law requires to be willful, knowingly
and purposefully done by the employee to justify the dismissal on the ground of loss of trust and
confidence.
In Vitarich Corp. v. NLRC, we laid out the guidelines for the application of the doctrine of loss of
confidence, namely: (1) the loss of confidence should not be simulated; (2) it should not be
used as a subterfuge for causes which are improper, illegal or unjustified; (3) it should
not be arbitrarily asserted in the face of overwhelming evidence to the contrary; and (4)
it must be genuine, not a mere afterthought to justify earlier action taken in bad faith. In
short, there must be an actual breach of duty which must be established by substantial
evidence.43chanrobleslaw
In the present case, we agree that Zaida indeed held a position of trust and confidence.
Nonetheless, we cannot support the NLRC's findings that she committed act/s that breached St.
Vincent's trust. Zaida's relationship with Marlon, to reiterate, was not wrong, illegal, or immoral
from the perspective of secular morality; it is also not prohibited by the Non-Fraterni2^ation
Policy nor is it required, by the Policy, to be disclosed to St. Vincent's management or officials.
In short, Zaida did not commit any act or misconduct that willfully, intentionally, or purposely
breached St. Vincent's trust.
Notably, St. Vincent did not charge Zaida with, nor terminate her employment for, willful breach
of trust. Rather, it charged her with violation of the Non-Fraternization Policy and of the Code
of Conduct, and dismissed her for immorality, gross misconduct, and violation of the Code of
Conduct - none of which implied or suggested willful breach of trust.
In this regard, we reiterate, with approval, Zaida's observations on this point: the labor tribunals'
findings of willful breach of trust and confidence shows clear bad faith as it effectively deprived
her of an opportunity to rebut any charge of willful breach of trust.
C. Compliance with the Procedural Due Process Requirements
As pointed out above, St. Vincent did not specify in what manner and to what extent
Zaida unduly influenced her co-workers and subordinates for hers and Marlon's benefit with
regard to the charge of committing acts against persons. For the charge of "exert[ing] undue
influence" to have validly supported Zaida's dismissal, it should have been supported by a
narration of the specific act/s she allegedly committed by which she unduly influenced her co-
worker and subordinates, of the dates when these act/s were committed, and of the names of the
co-workers and/or subordinates affected by her alleged actions.
The specification of these facts and matters is necessary in order to fully apprise her of
all of the charges against her and enable her to present evidence in her defense. St. Vincent's
failure to make this crucial specification in the notice to explain and in the termination letter
clearly deprived Zaida of due process.
In light of these findings, we find the NLRC in grave abuse of its discretion in affirming
the LA's ruling as it declared that St. Vincent complied with the due process requirements.
Specifically, the NLRC capriciously and whimsically exercised its judgment by using the
wrong considerations and by failing to consider all relevant facts and evidence presented by the
parties, as well as the totality of the surrounding circumstances, as it upheld Zaida's dismissal.
Consequently, we find the CA in grave error as it affirmed the NLRC's ruling; the CA reversibly
erred in failing to recognize the grave abuse of discretion which the NLRC committed in
concluding that Zaida's dismissal was valid.
NDC TAGUM FOUNDATION, INC., ET AL.v. EVELYN B. SUMAKOTE

G.R. No. 190644, June 13, 2016
Facts
Respondent was a full-time nursing instructor at the College of Nursing of the NDC
Tagum Foundation before she was appointed as its dean in 1996. Beginning 1999, she also
operated a nursing review and caregiver training center while simultaneously working at the
NDC Tagum Foundation.
While respondent was still under contract with the NDC Tagum Foundation, the University of
Mindanao (UM) engaged her services as consultant for the establishment of the UM's Nursing
Department. In February 2003, she was interviewed for deanship at the UM; and within that
month, her appointment as full-time program head was approved by the president of the
university. She was also listed as faculty member in the permit application it submitted to the
Commission on Higher Education (CHED).
In a letter dated 11 February 2003, Natavio advised respondent that her engagement with
the UM was in conflict with the interests of the NDC Tagum Foundation, and that it was an act
of disloyalty. Moreover, even her work attendance was already affected. She was then requested
to formally declare her plan to leave the NDC Tagum Foundation, so it could appoint a new dean.
Respondent did not respond to the letter. On April 2003, she declined the appointment
at the UM, as she had decided to stay with the NDC Tagum Foundation.
On 4 September 2003, respondent received another letter from Natavio requiring the
former to explain why she should not be dismissed on the ground of neglect of duty because of
her moonlighting activities. The letter also stated that respondent not only had poor work
attendance, but also neglected to update the school curriculum.
On the following day, respondent submitted a written explanation denying the charges
of neglect. She contended that she had not received any compensation from the UM; therefore,
her work there could not be considered as moonlighting. She also questioned the timing of the
management's objection to her review and training center, considering that it had been
operational since 1999.
On 15 September 2003, petitioners placed respondent on preventive suspension for five

days pending the outcome of the management's investigation of her supposed moonlighting
activities and her reported attempts to pirate some of the school's instructors for transfer to the
UM. In a letter of even date, Somoso notified respondent of the latter's preventive suspension
and directed her to explain why she should not be dismissed based on the reports.
The next day, respondent submitted a letter denying the latest allegation and seeking a
clarification of her employment status. In addition, she prayed that the management's decision
be made only after a proper investigation. In a letter dated 17 September 2003, petitioners notified
her of her dismissal from employment effective 18 September 2003.
Issue
Whether the CA erred in holding that respondent was not given the opportunity to be
heard and to present her defense prior to her dismissal.
Ruling
In this case, it is not disputed that respondent was terminated from employment for just cause
under Article 282 of the Labor Code. The only question to be determined is whether the
procedural due process requirements for a valid dismissal were complied with.
Petitioners argue that respondent was given four notices, referring to the letters dated 11
February 2003, 4 September 2003, 15 September 2003, and 17 September 2003. They claim that all
these letters afforded her the opportunity to explain her side and, therefore, she was given ample
opportunity to be heard.
The first letter sent by petitioners did not ask respondent to submit an explanation. It
appears, rather, that they had already decided to find a replacement for her and that they were
only waiting for the confirmation of her transfer to the UM.
It is settled that a full adversarial hearing or conference is not required.All that is required
is a fair and reasonable opportunity for the employee to explain the controversy at hand.red Yet,
even if we consider the letter dated 4 September 2003 as the first notice, there would still be a
breach of the procedural due process requirement. The breach occurred when petitioners did not
call a hearing or conference during which respondent could have presented her defense. Instead,
they placed her right away under preventive suspension for five (5) days. Then they dismissed
her from employment while she was still serving her preventive suspension.
Clearly, the alleged opportunities given for her to explain her side, through the letters
dated 4 and 15 September 2003, fell short of the minimum standard of what constitutes an
opportunity to be heard in administrative proceedings, i.e., a fair and reasonable chance to
defend oneself against the bases cited for one's dismissal.
PUNCIAv.TOYOTA SHAW/PASIG, INC.,

G.R. No. 214399, June 28, 2016
Facts
Puncia alleged that since 2004, he worked as a messenger/collector for Toyota and was later on
appointed on March 2, 2011 as a Marketing Professional tasked to sell seven (7) vehicles as
monthly quota. However, Puncia failed to comply and sold only one (1) vehicle for the month of
July and none for August, prompting Toyota to send him a Notice to Explain. In reply, Puncia
stated that as a trainee, he was only required to sell three (3) vehicles per month; that the month
of May has always been a lean month; and that he was able to sell four (4) vehicles in the month
of September. Thereafter, a hearing was conducted but Puncia failed to appear despite notice.
On October 18, 2011, Toyota sent Puncia a Notice of Termination, dismissing him on the
ground of insubordination for his failure to attend the scheduled hearing and justify his
absence.This prompted Puncia to file a complaint for illegal dismissal with prayer for
reinstatement and payment of backwages, unfair labor practice, damages, and attorney's fees
against Toyota and its officers, claiming, inter alia, that Toyota dismissed him after discovering
that he was a director of the Toyota-Shaw Pasig Workers Union-Automotive Industry Worker's
Alliance; and that he was terminated on the ground of insubordination and not due to his failure
to meet his quota as contained in the Notice to Explain.
In its defense, Toyota denied the harassment charges and claimed that there was a valid
cause to dismiss Puncia, considering his failure to comply with the company's strict requirements
on sales quota. It likewise stated that Puncia has consistently violated the company rules on
attendance and timekeeping as several disciplinary actions were already issued against him.
Issue:
Whether the Court of Appealserred in upholding petitioner’s dismissal, considering that

the administrative proceeding against him was due to his failure to meet his monthly sales quota,
but he was dismissed on the ground of gross insubordination.
Ruling:
In the instant case, records reveal that as a Marketing Professional for Toyota, Puncia had
a monthly sales quota of seven (7) vehicles from March 2011 to June 2011. As he was having trouble
complying with said quota, Toyota even extended him a modicum of leniency by lowering his
monthly sales quota to just three (3) vehicles for the months of July and August 2011; but even
then, he still failed to comply. In that six (6)-month span, Puncia miserably failed in satisfying
his monthly sales quota, only selling a measly five (5) vehicles out of the 34 he was required to
sell over the course of said period. Verily, Puncia's repeated failure to perform his duties - i.e.,
reaching his monthly sales quota - for such a period of time falls under the concept of gross
inefficiency. In this regard, case law instructs that "gross inefficiency" is analogous to "gross
neglect of duty," a just cause of dismissal under Article 297 of the Labor Code, for both involve
specific acts of omission on the part of the employee resulting in damage to the employer or to
his business. In Aliling v. Feliciano, the Court held that an employer is entitled to impose
productivity standards for its employees, and the latter's non-compliance therewith can lead to
his termination from work.
[T]he practice of a company in laying off workers because they failed to make the work
quota has been recognized in this jurisdiction, x x x. In the case at bar, the petitioners' failure
to meet the sales quota assigned to each of them constitute a just cause of their dismissal,
regardless of the permanent or probationary status of their employment. Failure to observe
prescribed standards of work, or to fulfill reasonable work assignments due to
inefficiency may constitute just cause for dismissal. Such inefficiency is understood to
mean failure to attain work goals or work quotas, either by failing to complete the same
within the allotted reasonable period, or by producing unsatisfactory results.70 (Emphases
and underscoring supplied)
Indisputably, Toyota complied with the substantive due process requirement as there was
indeed just cause for Puncia's termination.
Anent the issue of procedural due process, in this case, at first glance it seemed like
Toyota afforded Puncia procedural due process, considering that: (a) Puncia was given a Notice
to Explain; (b) Toyota scheduled a hearing on October 17, 2011 regarding the charge stated in the
Notice to Explain; (c) on the date of the hearing, Puncia was able to submit a letter addressed to
Toyota's vehicle sales manager explaining his side, albeit he failed to attend said hearing; and (d)
Toyota served a written Notice of Termination informing Puncia of his dismissal from work.
However, a closer look at the records reveals that in the Notice to Explain, Puncia was being
made to explain why no disciplinary action should be imposed upon him for repeatedly failing to
reach his monthly sales quota, which act, as already adverted to earlier, constitutes gross
inefficiency. On the other hand, a reading of the Notice of Termination shows that Puncia was
dismissed not for the ground stated in the Notice to Explain, but for gross insubordination on
account of his non-appearance in the scheduled October 17, 2011 hearing without justifiable
reason. In other words, while Toyota afforded Puncia the opportunity to refute the charge of
gross inefficiency against him, the latter was completely deprived of the same when he was
dismissed for gross insubordination - a completely different ground from what was stated in the
Notice to Explain. As such, Puncia's right to procedural due process was violated.
Hence, considering that Toyota had dismissed Puncia for a just cause, albeit failed to
comply with the proper procedural requirements, the former should pay the latter nominal
damages in the amount of P30,000.00 in accordance with recent jurisprudence.aw
TING TRUCKING/MARY VIOLAINE A. TINGv.JOHN C. MAKILAN

G.R. No. 216452, June 20, 2016
Facts
Petitioner Ting Trucking is a sole proprietorship owned by Mary Violaine A. Ting (petitioner),
and is engaged in hauling services to and from Negros, Cebu, and Iloilo, with nine (9) employees
in its workforce.
On February 12, 2010, respondent was hired as a driver with the following wage
conditions: standby pay of P150.00 per day, additional allowance of P300.00 for trips from
Bacolod City to Iloilo City and vice versa, and P500.00 for trips from Bacolod City to Cebu City
and vice versa, weekly food supply in the amount of P539.00, and additional out of town
allowance of P100.00 for trips from Bacolod City to Iloilo City and P150.00 for trips from Bacolod
City to Cebu City. In the course of his employment, respondent was assigned one (1) helper,
Genesis O. Chavez (Chavez).
On August 20, 2010, respondent claimed that while on his way to work, he received a call
from petitioner informing him to stop reporting for work purportedly to avoid his
regularization,prompting him to file a complaint for illegal dismissal against petitioner before
the NLRC Regional Arbitration Branch No. VI, docketed as NLRC RAB Case No. VI-09-10705-10.
He maintained that he did not receive oral or written notice of any fault or infraction and that
he was not given any notice of dismissal. Leslaw
On the other hand, petitioner denied that respondent was illegally dismissed. She stated
that the latter was never hired on a probationary basis and that he was a regular employee.
Nonetheless, respondent abused the trust and confidence reposed on him after learning from
Chavez the several anomalies he had committed while in the performance of his duties,12 namely:
(a) he would only put in P2,500.00 worth of fuel into the truck despite being given a gas allowance
of P3,500.00, and pocket the balance, (b) on June 23, 2010, he took twenty (20) kilos of corn worth
P600.00 from the cargo he was to deliver and brought it home, (c) on July 16, 2010, while the
truck was at the Roro Port of Bacolod City, he siphoned ten (10) liters of diesel fuel valued at
P470.00 and sold the same, and (d) he took the spare parts of the truck worth P15,000.00 which
he likewise sold, and when asked to return the said parts, instructed Chavez to look for scrap
spare parts to present to petitioner.13 In addition, petitioner learned from her secretary, Fely M.
Bonganciso (Bonganciso), that respondent's truck ran out of fuel on eight (8) different occasions
prompting the former to demand the turn over of the fuel receipts which was not heeded. On
August 16, 2010, respondent's truck ran out of fuel again and upon reaching its destination, the
cargo owner informed petitioner that several kilos of corn cargo - valued at P2,800.00 - were
missing, and that they would deduct the said amount from their payment. Thereafter, or from
August 17 to 20, 2010, respondent no longer reported for work and was spotted by his co-workers
driving a public utility jeepney. Thus, on August 20, 2010, petitioner called respondent and
confronted him about the discrepancy in the cargo he delivered on August 16, 2010, and reiterated
the demand to turn over the fuel receipts as well as the spare parts of the motor vehicle which he
failed to comply.As a result, a complaint for Qualified Theft was filed against him before the City
Prosecutor of Bacolod. Lastly, petitioner contended that respondent's claim of illegal dismissal
was belied by his receipt of his standby pay on August 21, 2010, and that his money claims were
without legal basis. In support thereof, petitioner submitted, among others, the affidavits of
Bonganciso, Chavez and co-employees, as well as several charge invoices that were signed by
respondent acknowledging receipt of the spare parts on behalf of Ting Trucking.
Issue: Whether or not respondent’s dismissal was valid
Ruling
Fundamental is the rule that an employee can be dismissed from employment only for a
valid cause. Serious misconduct is one of the just causes for termination under Article 297 of the
Labor Code, which reads in part:ChanRoblesVirtualawlibrary
ART. 297. Termination By Employer. - An employer may terminate an employment for

any of the following causes:
(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his
employer or representative in connection with his work;
xxxx
dismissal within the text and meaning of Article [297] of the Labor Code, the employee's
misconduct must be serious - that is, of such grave and aggravated character and not merely
trivial or unimportant. Additionally, the misconduct must be related to the performance of the
employee's duties showing him to be unfit to continue working for the employer. Further, the
act or conduct must have been performed with wrongful intent. Thus, for serious misconduct to
be a just cause for dismissal, the concurrence of the following elements is required: (a) the
misconduct must be serious; (b) it must relate to the performance of the employee's
duties showing that the employee has become unfit to continue working for the
employer; and (c) it must have been performed with wrongful intent.
In the case at bar, all of the foregoing requisites have been duly established by substantial
evidence. Records disclose that respondent was charged of misappropriating fuel allowance, theft
of fuel and corn, and sale of spare parts while in the performance of his duties. Submitted as proof
thereof was the affidavit of Chavez, among others. Contrary to the findings of the CA, the Court
finds the same to be substantial evidence. Other than respondent's claim that the charges were
fabricated and that Chavez was a biased witness, no evidence was presented that would taint the
latter's credibility. In fact, it was not shown that Chavez was impelled by dubious or ill-motive to
testify falsely against respondent; hence, his testimony should be accorded full faith and
credence.
It is worthy to note that despite the absence of fuel receipts to substantiate the charge of
misappropriation of the P3,500.00 gas/fuel allowance by filling the truck's fuel tank with P2,500
worth of fuel only and pocketing the rest, it is undisputed that respondent's truck ran out of fuel
on eight (8) separate occasions, including his last trip on August 16, 2010 with no justification
proffered for such shortages. And while the July 16, 2010 incident where Chavez claimed to have
seen respondent siphon fuel from the truck's fuel tank was not one of the eight (8) instances that
his truck ran out of fuel, the foregoing charge cannot be disregarded given the pattern of
unexplained fuel shortages incurred by respondent which naturally leads one to a fair and
reasonable conclusion that at the very least he may have either under-filled his assigned truck's
fuel tank or siphoned fuel therefrom to petitioner's prejudice.
The same holds true for the charge of theft of corn given that respondent blatantly failed
to account for the discrepancy in the weight of his cargo worth P2,800.00 that he delivered on
August 16, 2010. Likewise, while the receipts do not prove that respondent sold the replaced spare
parts, it was nonetheless established that the said spare parts were turned over to his custody and
possession. It was therefore incumbent upon respondent to show that he had turned over
possession of these spare parts to petitioner, which the former utterly failed to discharge.
Indeed, it bears stressing that while there may be no direct evidence to prove that
respondent actually committed the offenses charged, there was substantial proof of the existence
of the irregularities committed by him. It is well to point out that substantial proof, and not clear
and convincing evidence or proof beyond reasonable doubt, is sufficient as basis for the
imposition of any disciplinary action upon the employee. The standard of substantial evidence is
satisfied where the employer has reasonable ground to believe that the employee is responsible
for the misconduct and his participation therein renders him unworthy of the trust and
confidence demanded by his position, as in this case.
YELLOW BUS LINE EMPLOYEES UNION (YBLEU)v.

YELLOW BUS LINE, INC. (YBLI)
G.R. No. 190876, June 15, 2016
Facts
The primary issue for resolution pivots on the validity of the dismissal of two drivers
working for petitioner Yellow Bus Line, Inc. (YBL).
Gardonia and Querol were hired by YBL as drivers on 17 December 1993 and 14 February
1995, respectively.
In October 2002, Gardonia was driving along the National Highway in Polomolok, South
Cotabato when his bus bumped into a motorcycle while trying to overtake it. The collision
resulted in the death of the motorcycle driver and his passenger. YBL shouldered the
hospitalization bills amounting to P290,426.91 and paid P135,000.00 as settlement of the claim of
the heirs of the motorcycle riders.
Three (3) months later, the bus that Querol was driving suffered a mechanical breakdown.
A mechanic and a towing truck arrived to pick up Querol. He was ordered by the mechanic to
drive the bus while the towing truck would trail behind. Querol was apparently driving too fast
and he rammed the bus into a sugar plantation in Barangay Talus, Malungon, South Cotabato.
YBL conducted separate hearings on the two incidents. Thereafter, Gardonia and Querol
were found to be negligent. Termination letters were sent to them on 16 December 2002 and 16
January 2003, respectively.
Yellow Bus Line Employees Union (Union), representing its members Gardonia and
Querol, filed a complaint for illegal dismissal against YBL through the grievance machinery, as
stipulated in their Collective Bargaining Agreement. The Union and YBL failed to resolve their
dispute, thus the case was elevated to the National Conciliation and Mediation Board (NCMB)
Satellite Regional Office in Koronadal City, South Cotabato.
During the initial conference, YBL's representative Norlan Yap allegedly agreed to
reinstate Gardonia and Querol. The management of YBL however refused to abide by the said
agreement. Thus, another conference was conducted in order for the parties to resolve their
dispute but no agreement was reached.
On 25 August 2004, the Panel of Accredited Voluntary Arbitrators (Panel) found that
Gardonia and Querol were illegally dismissed and ordered their reinstatement.
The Panel also ruled that the parties already arrived at a compromise agreement during
the initial conference with respect to the reinstatement of the drivers. Thus, this agreement is
final and binding on the parties pursuant to Article 227 of the Labor Code, which provides that
"any compromise settlement, including those involving labor standard laws, voluntarily agreed
upon by the parties with the assistance of the Bureau or the regional office of the Department of
Labor, shall be final and binding upon the parties."
YBL filed a motion for reconsideration but it was informed by the Panel that its decision
is not subject to reconsideration in accordance with the Revised Procedural Guidelines in the
Conduct of Voluntary Arbitration Proceedings. Anrobleslaw
Issues
The ruling of the Panel delves into two issues: the validity of the alleged compromise
agreement and the validity of the drivers' dismissal.
Ruling
The Union claims that a settlement at the conciliation level has already been forged with YBL,
while YBL claims otherwise.
The pertinent portion of the Conciliation Report is reproduced below:
During the conference, both parties appeared where[in] two of the complainants in the
names of Mr. Quero S. Francisco and Jimmy C. Gardonia manifested that they want [to] be
returned back to their posts in the company and Management representative Mr. Norlan A. Yap,
the Personnel Manager of the Company, accepted the appeal of the above complainants.
xxxx
So, this case is settled into Amicable settlement and the same hereby considered closed.
We cannot consider this Conciliation Report as the complete settlement between the
parties. As reasoned by the Court of Appeals, and we agree, that:
x x x The Conciliation Report. . . did not write finis the issues between the parties as
manifested by a second round of conference in the NCMB office and the subsequent submission
of the dispute to the Panel. If indeed, a compromise had been reached, there should have been
no need for further negotiations and the case would not have reached the Panel. Clearly, the
Panel viewed the grievance machinery and voluntary arbitration underwent [sic] by the parties
in piecemeal instead of looking at it as one process which culminated in the decision of the Panel
now assailed by Yellow Bus.
The facts of the case reveal that private respondents moved for the execution of what was
embodied in the Conciliation Report before the NCMB. This simply cannot be done. The
handwritten report of Conciliator-Mediator Nagarano M. Mascara al Haj could not, by any
stretch of imagination, be considered as a final arbitration award nor a decision of a voluntary
arbitrator within the purview of Article 262-A of the Labor Code which is a proper subject of
execution. In fact, the initial conference before the Conciliator-Mediator is not more than what
it implies - that it is the initial stage of negotiation between the parties prior to the submission
of the dispute to the Panel.
The meat of the controversy actually devolves upon the legality of the dismissal of the two
company drivers, who happen to be a union officer and a member. We have scrutinized the
records and hold that the Panel of Voluntary Arbitrators committed grave abuse of discretion
when its finding, that the drivers were not negligent, disregarded the evidence on record.
As a matter of fact, there is nothing in the records which would support the Panel's
conclusion that the drivers were driving at a moderate speed at that time when the accident
happened, and that it was caused by force majeure. In the case of Gardonia, he admitted that he
was overtaking the motorcycle on its left when said motorcycle suddenly negotiated a left turn
on the intersection causing the bus to hit the motorcycle. Gardonia claimed that he blew his horn
when he tried to overtake the said motorcycle. Before hitting the motorcycle, Gardonia stated
that he tried to apply the brakes and swerved the steering wheel to the left, but it was too late. 12
On the other hand, the bus conductor, who was traveling with Gardonia, insisted that the
motorcyle was running slowly and was about to go to the left side of the road near the intersection
when it was hit by the bus.13 The bus conductor established the fault of Gardonia. Gardonia
already saw that the motorcycle was swerving to the left. Both the bus, with the motorcycle
ahead, were nearing an intersection. It is evidently wrong for Gardonia to proceed in the attempt
to overtake the motorcycle. Section 41 (c),14 Article II of Republic Act No. 4136 prohibits the
overtaking by another vehicle at any intersection of the highway. Gardonia also admitted to
driving at a speed of 60-70 kilometers per hour.15It is reasonable to assume that he accelerated
his speed while overtaking the motorcycle. Thus he did find it difficult to apply his breaks or
make last-minute maneuvers to avoid hitting the motorcycle. Clearly, it was Gardonia's act of
negligence which proximately caused the accident, and so he was dismissed by YBL on the
ground of reckless imprudence resulting in homicide and damage to property.
Anent Querol, he claimed that a bicycle suddenly emerged from the left side of the road
and crossed the highway, causing him to swerve his steering wheel to the left.16The bus rammed
into a sugar plantation. On the contrary, the mechanic of the bus and the driver of the tow truck
both asserted that they saw Querol driving the bus too fast. When they caught up with him,
Querol's bus was already in the sugar plantation. The version of the mechanic and the tow truck
driver was not refuted.17 Querol was driving recklessly despite the fact that said bus was newly
repaired. YBL also conducted its ocular inspection of the area and found that there was no road
crossing at the scene of the incident which contradicts Querol's statement that a bicycle suddenly
crossed the highway. Moreover, it was revealed that the bus was found in the sugar plantation at
a distance of 60 meters from the highway.18This proved that the bus was running very fast. The
accident is evidently caused by Querol. YBL submits that the amount of damages incurred by the
bus totaled P84,446.59. Querol was validly terminated for violation of Company Rules and
Regulations.
Both Gardonia and Querol were dismissed for just cause.
Article 282 of the Labor Code provides that one of the just causes for terminating an
employment is the employee's gross and habitual neglect of his duties. This cause includes gross
inefficiency, negligence and carelessness. Gross negligence connotes want or absence of or failure
to exercise slight care or diligence, or the entire absence of care. It evinces a thoughtless disregard
of consequences without exerting any effort to avoid them.
Indeed, Gardonia and Querol were both negligent in operating the bus causing death and
damages to property.
We also affirm the Court of Appeals holding that YBL failed to observe statutory due
process in dismissing the two drivers.
Section 2, Rule XXIII, Book V of the Rules Implementing the Labor Code expressly states:
Section 2. Standard of due process: requirements of notice.
— In all cases of termination of employment, the following standards of due process shall be
substantially observed.
I. For termination of employment based on just causes as defined in Article 282 of the Code:
chanRoblesvirtualLawlibrary(a) A written notice served on the employee specifying the ground
or grounds for termination, and giving to said employee reasonable opportunity within which to
explain his side;
(b) A hearing or conference during which the employee concerned, with the assistance of counsel
if the employee so desires, is given opportunity to respond to the charge, present his evidence or
rebut the evidence presented against him;
(c) A written notice of termination served on the employee indicating that upon due
consideration of all the circumstance, grounds have been established to justify his termination.
While a hearing was conducted where the two employees were given an opportunity to
air their side, there was only one notice given to the erring drivers. That same notice included
both the charges for negligence and the decision of dismissal from employment. Evidently, the
two employees' rights to due process were violated which warrants their entitlement to
indemnity.
Finally, we affirm the award of nominal damages. Where the dismissal is based on an
authorized cause under Article 283 of the Labor Code but the employer failed to comply with the
notice requirement, the sanction against the employer should be stiff as the dismissal process
was initiated by the employer's exercise of his management prerogative. This is different from
dismissal based on a just cause under Article 282 with the same procedural infirmity. In such
case, the sanction to be imposed upon the employer should be tempered as the dismissal process
was, in effect, initiated by an act imputable to the employee. The amount of P30,000.00 as
nominal damages awarded by the Court of Appeals conforms to prevailing jurisprudence.
PROBATIONARY
ENCHANTED KINGDOM, INC. v. MIGUEL J. VERZO

G.R. No. 209559, December 09, 2015, MENDOZA, J.
A probationary employee's failure to perform the duties and responsibilities which

had been clearly made known to him is a justifiable basis for his non-regularization.
Facts:
Miguel J. Verzo was hired by Enchanted Kingdom Inc. (EK) to work as

Section Head - Mechanical & Instrumentation Maintenance (SH-MIM) for a period
of six (6) months on probationary status. He was provided with a detailed list of
responsibilities that he should fulfill. During the probationary period, EK assessed
Verzo's performance as not up to par. This is because two other section heads made
their recommendations to Rizalito M. Velesrubio, Verzo's immediate supervisor, that
he should not be considered for regularization. Velesrubio agreed with the
observations that Verzo was lax in the performance of his duties. Verzo filed a
complaint for illegal dismissal, damages and attorney's fees before the LA. He
claimed that it was only after he was formally hired by EK that he was informed of
his probationary status; and that even after being placed on a probationary status,
he was not advised as to the standards required for his regularization.
Issue:
Whether Verzo should be regularized
Ruling:
No. In Abbott Laboratories v. Alcaraz (G.R. No. 192571, April 22, 2014), the Court
stated that when dealing with a probationary employee, the employer is made to
comply with two (2) requirements: first, the employer must communicate the
regularization standards to the probationary employee; and second, the employer
must make such communication at the time of the probationary employee's
engagement. If the employer fails to comply with either, the employee is deemed as
a regular and not a probationary employee. An exception to the foregoing rule is when
the job is self-descriptive, as in the case of maids, cooks, drivers, or messengers.
In Aberdeen Court, Inc. v. Agustin (G.R. No. 149371, April 13, 2005,) it was held that
the rule on notifying a probationary employee of the standards of regularization
should not be used to exculpate an employee who acted in a manner contrary to
basic knowledge and common sense in regard to which there was no need to spell
out a policy or standard to be met. In the same light, an employee's failure to perform
the duties and responsibilities which had been clearly made known to him would
constitute a justifiable basis for a probationary employee's non-regularization.
MACARTHUR MALICDEM and HERMENIGILDO FLORES vs. MARULAS INDUSTRIAL

CORPORATION and MIKE MANCILLA
G.R. No. 204406, February 26, 2014
J. Mendoza
"An employee who is allowed to work after a probationary period shall be considered a
regular employee." When an employer renews a contract of employment after the lapse of the six-
month probationary period, the employee thereby becomes a regular employee. No employer is
allowed to determine indefinitely the fitness of its employees. While length of time is not the
controlling test for project employment, it is vital in determining if the employee was hired for a
specific undertaking or tasked to perform functions vital, necessary and indispensable to the usual
business of trade of the employer.
Facts:
Malicdem and Flores were first hired by Marulas as extruder operators in 2006, as shown by their
employment contracts. They were responsible for the bagging of filament yarn, the quality of pp
yarn package and the cleanliness of the work place area. Their employment contracts were for a
period of one (1) year. Every year thereafter, they would sign a Resignation/Quitclaim in favor of
Marulas a day after their contracts ended, and then sign another contract for one (1) year. Until
one day, on December 16, 2010, Flores was told not to report for work anymore after being asked
to sign a paper by Marulas' HR Head to the effect that he acknowledged the completion of his
contractual status. On February 1, 2011, Malicdem was also terminated after signing a similar
document. Thus, both claimed to have been illegally dismissed. Marulas countered, on the other
hand, that their contracts showed that they were fixed-term employees for a specific undertaking
which was to work on a particular order of a customer for a specific period. Thus, their severance
from employment was due to the expiration of their contracts. The Labor Arbiter ruled that as
their employment naturally ceased when their contracts expired, there is no illegal dismissal.
Petitioners found relief when the NLRC partially granted their appeal with the award of payment
of 13th month pay, service incentive leave and holiday pay for three (3) years. However, said ruling
was subsequently overturned when the CA ruled that payment of backwages, separation pay,
damages, and attorney's fees had no factual and legal bases.
Issue:
Whether or not petitioners were illegally dismissed and were thus entitled to full backwages and
other entitlements
Ruling:
The instant petition is meritorious.
A reading of the 2008 employment contracts, denominated as "Project Employment Agreement,"

reveals that there was a stipulated probationary period of six (6) months from its
commencement. It was provided therein that in the event that they would be able to comply with
the company’s standards and criteria within such period, they shall be reclassified as project
employees with respect to the remaining period of the effectivity of the contract.
Under Article 281 of the Labor Code, however, "an employee who is allowed to work after a
probationary period shall be considered a regular employee." When an employer renews a
contract of employment after the lapse of the six-month probationary period, the employee
thereby becomes a regular employee. No employer is allowed to determine indefinitely the fitness
of its employees. While length of time is not the controlling test for project employment, it is
vital in determining if the employee was hired for a specific undertaking or tasked to perform
functions vital, necessary and indispensable to the usual business of trade of the employer. Thus,
in the earlier case of Maraguinot, Jr. v. NLRC it was ruled that a project or work pool employee,
who has been: (1) continuously, as opposed to intermittently, rehired by the same employer for
the same tasks or nature of tasks; and (2) those tasks are vital, necessary and indispensable to the
usual business or trade of the employer, must be deemed a regular employee. To rule otherwise
would allow circumvention of labor laws in industries not falling within the ambit of Policy
Instruction No. 20/Department Order No. 19, hence allowing the prevention of acquisition of
tenurial security by project or work pool employees who have already gained the status of regular
employees by the employer's conduct.
The test to determine whether employment is regular or not is the reasonable connection
between the particular activity performed by the employee in relation to the usual business or
trade of the employer. If the employee has been performing the job for at least one year, even if
the performance is not continuous or merely intermittent, the law deems the repeated and
continuing need for its performance as sufficient evidence of the necessity, if not indispensability
of that activity to the business.
There being no actual project, there was clearly a deliberate intent to prevent the regularization
of the petitioners. The respondents cannot use the alleged expiration of the employment
contracts of the petitioners as a shield of their illegal acts. The project employment contracts that
the petitioners were made to sign every year since the start of their employment were only a
stratagem to violate their security of tenure in the company. As restated in Poseidon Fishing v.
NLRC "if from the circumstances it is apparent that periods have been imposed to preclude
acquisition of tenurial security by the employee, they should be disregarded for being contrary
to public policy."
Thus, since the petitioners were regular employees, their termination is considered illegal for
lack of just or authorized causes. 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.
UNIVERSIDAD DE STA. ISABEL vs. MARVIN-JULIAN L. SAMBAJON, JR.

G.R. Nos. 196280 & 196286, April 2, 2014, J.Villarama, Jr.
A probationary employee is one who is on trial by the employer during which the employer
determines whether or not said employee is qualified for permanent employment. It is well settled
that the employer has the right or is at liberty to choose who will be hired and who will be denied
employment. In that sense, it is within the exercise of the right to select his employees that the
employer may set or fix a probationary period within which the latter may test and observe the
conduct of the former before hiring him permanently. While there is no statutory cap on the
minimum term of probation, the law sets a maximum “trial period” during which the employer may
test the fitness and efficiency of the employee.
Facts:
Universidad de Sta. Isabel (USI) is a nonstick, nonprofit religious educational

institution.USI hired Marvin-Julian L. Sambajon, Jr.(Sambajon) as a full-time college faculty
member with the rank of Assistant Professor on probationary status, as evidenced by an
Appointment Contract dated November 1, 2002, effective November 1, 2002 up to March 30, 2003.
After the aforesaid contract expired, USIcontinued to give teaching loads to Sambajon
who remained a full-time faculty member for the two semesters of school-year(SY) 2003-2004
(June 1, 2003 to March 31, 2004);and two semesters of SY 2004-2005 (June 2004 to March 31, 2005).
Sometime in June 2003, after Sambajon completed his course in Master of Arts in
Education, major in Guidance and Counseling, he submitted the corresponding SpecialOrder
from the Commission on Higher Education (CHED),together with his credentials for the said
master’s degree, to the Human Resources Department of USI for the purpose of salary
adjustment/increase. Subsequently, Sambajon’s salary was increased, as reflected in his pay slips
starting October 1-15, 2004.He was likewise re-ranked from Assistant Professor to Associate
Professor.
In a letter addressed to the President of USI, Sambajon vigorously argued that his salary
increase should be made effective as of June 2003 and demanded the payment of his salary
differential. The school administration replied by explaining its policy on re-ranking of faculty
members, i.e., that teachers in USI are not re-ranked during their probationary period. Sambajon
insisted on his demand for retroactive pay, but the same was not heeded.
On February 26, 2005, Sambajon received his letter of termination which stated that his
full time probationary appointment will not be renewed when it expires at the end of March 31,
2005.
On April 14, 2005, Sambajon filed a complaint for illegal dismissal against USI. In his
decision, the Labor Arbiter ruled that there was no just or authorized cause in the termination of
Sambajon’s probationary employment. Consequently, USI was found liable for illegal dismissal.
USI appealed to the NLRC. The NLRC rendered its Decision affirming the Labor Arbiter
and holding that Sambajon had acquired a permanent status pursuant to Sections 91,92 and 93
of the 1992 Manual of Regulations for Private Schools, in relation to Article 281 of the Labor Code,
as amended. It found that the first contract executed by the parties provides that he was hired
on a probationary status effective November 1, 2002 to March 30,2003. While his employment
continued beyond the abovementioned period and lasted for a total of five (5) consecutive
semesters, it appears that the only other contract he signed is the one for the second semester of
SY 2003-2004. There is no showing that Sambajon signed a contract for the first and second
semesters of SY 2004-2005.The last paragraph of Article 281 of the Labor Code provides that “an
employee whois allowed to work after a probationary period shall be considered a regular
employee.” Based thereon, Sambajon acquired permanent status on the first day of the first
semester of SY2003-2004.
On appeal, the CA sustained the NLRC’s ruling that Sambajon was illegally dismissed.
According to the CA, the first appointment contract which Sambajon signed was dated November
2002 for the period November 1, 2002 to March 30, 2003, as Assistant Professor 10 on probationary
status. The second appointment contract which Sambajon executed was dated February 26, 2004,
for the period November 1,2003 to March 31, 2004.Compared with the first appointment contract,
it was not indicated in the February 26,2004 appointment contract that Sambajon was hired on
probationary status, which explains the NLRC’s conclusion that Sambajon already attained
permanent status. Thus, the CA sustained the NLRC’s conclusion that Sambajon acquired
permanent status on the first day of the first semester of SY 2003-2004 when he was allowed to
continue with his teaching stint after the expiration of his first appointment contract on March
30, 2003.
Issue:
Whether Sambajon’s probationary employment was validly terminated by USI.
Ruling:
No, Sambajon’s probationary employment was not validly terminated by USI.
A probationary employee is one who is on trial by the employer during which the
employer determines whether or not said employee is qualified for permanent employment. It is
well settled that the employer has the right or is at liberty to choose who will be hired and who
will be denied employment. In that sense, it is within the exercise of the right to select his
employees that the employer may set or fix a probationary period within which the latter may
test and observe the conduct of the former before hiring him permanently. While there is no
statutory cap on the minimum term of probation, the law sets a maximum “trial period” during
which the employer may test the fitness and efficiency of the employee.
The probationary employment of teachers in private schools is not governed purely by

the Labor Code. The Labor Code is supplemented with respect to the period of probation by
special rules found in the Manual of Regulations for Private Schools. On the matter of
probationary period, Section 92 of the 1992 Manual of Regulations for Private Schools regulations
states:
Section 92. Probationary Period.— x xx the probationary period for

academic personnel shall not be more than x xx six (6)consecutive regular
semesters of satisfactory service for those in the tertiary level x xx.
Thus, it is the Manual of Regulations for Private Schools, and not the Labor Code, that
determines whether or not a faculty member in an educational institution has attained regular
or permanent status. Section 93 of the1992 Manual of Regulations for Private Schools provides
that full-time teachers who have satisfactorily completed their probationary period shall be
considered regular or permanent.
On record are five appointment contracts of Sambajon. Only the first (dated November
1, 2002 for the period November 1, 2002 to March 30, 2003) and third (dated February 26, 2004
for the period November 1, 2003 to March 31, 2004) contracts were signed by Sambajon. However,
such lack of signature in the second contract appears not to be the crucial element considered
by the CA but the fact that the third contract dated February 26, 2004, unlike the previous
contracts, does not indicate the nature of the appointment as probationary employment.
According to the CA, this implies, as concluded by the NLRC,that Sambajon was already a regular
employee.
The Court disagrees with said CA ruling. The third appointment contract dated February
26, 2004explicitly provided that unless renewed in writing Sambajon’s appointment
automatically expires at the end of the stipulated period of employment. Thus, the CA erred in
concluding that simply because the word “probationary” no longer appears below the designation
(Full-Time Faculty Member), Sambajon had already become a permanent employee.
In this case, USI applied the maximum three-year probationary period — equivalent to
six consecutive semesters — provided in the Manual of Regulations. This can be gleaned from
USI’s letter dated March 24, 2004 addressed to Sambajon, informing the latter of the result of
evaluation of his performance for SY 2003-2004 and stating that November2004 marks his second
year of full-time teaching, which means he had one more year to become a permanent employee.
The circumstance that Sambajon’s services were hired on semester basis did not negate
the applicable probationary period, which is three school years or six consecutive semesters.
Notwithstanding the limited engagement of probationary employees, they are entitled to

constitutional protection of security of tenure during and before the end of the probationary
period. The services of an employee who has been engaged on probationary basis may be
terminated for any of the following: (a) a just or (b) an authorized cause; and (c) when he fails to
qualify as a regular employee in accordance with reasonable standards prescribed by the
employer.
In a letter dated February 26, 2005, USI terminated the services of Sambajon stating that
his probationary employment as teacher will no longer be renewed upon its expiry on March 31,
2005, Sambajon’s fifth semester of teaching. No just or authorized cause was given by USI. Prior
to this, Sambajon had consistently achieved above average rating based on evaluation by USI’s
officials and students. He had also been promoted to the rank of Associate Professor after
finishing his master’s degree course on his third semester of teaching. Clearly, Sambajon’s
termination after five semesters of satisfactory service was illegal.
Sambajon therefore is entitled to continue his three-year probationary period, such that
from March 31, 2005,his probationary employment is deemed renewed for the following semester
(1st semester of SY 2005-2006)
ABBOTT LABORATORIES, PHILIPPINES, CECILLE A. TERRIBLE, EDWIN D. FEIST,

MARIA OLIVIA T. YABUT-MISA, TERESITA C. BERNARDO, AND ALLAN G. ALMAZAR vs.
PEARLIE ANN F. ALCARAZ
G.R. No. 192571, April 22, 2014, J. Perlas-Bernabe
Alcaraz filed a complaint for illegal dismissal before the Labor Arbiter. It is the contention
of the Aboott that the Alzaraz is merely a probationary employee. The Supreme Court ruled that if
the probationary employee had been fully apprised by his employer of these duties and
responsibilities, then basic knowledge and common sense dictate that he must adequately perform
the same, else he fails to pass the probationary trial and may therefore be subject to termination.
Facts:
Respondent Pearlie Ann F. Alcaraz filed a motion for reconsideration assailing the July
23, 2013 decision of the Court.
Alcaraz contends that the Court should not have conducted a re-weighing of evidence
since a petition for review on certiorari under Rule 45 of the Rules of Court is limited to the review
of questions of law. She submits that since what was under review was a ruling of the Court of
Appeals rendered via a petition for certiorari under Rule 65 of the Rules, the Court should only
determine whether or not the CA properly determined that the National Labor Relations
Commission committed a grave abuse of discretion. In addition, Alcaraz posits that, contrary to
the Court’s Decision, one’s job description cannot by and of itself be treated as a standard for
regularization as a standard denotes a measure of quantity or quality. By way of example, Alcaraz
cites the case of a probationary salesperson and asks how does such employee achieve regular
status if he does not know how much he needs to sell to reach the same.
Issue:
Whether or not an appellate court can re-weigh evidence under a petition for review on
certiorari under Rule 45 which petition is merely limited to the review of questions of law.
Whether or not a job description can be treated as standard for regularization of

probationary employees.
Ruling:
On the first Issue: Yes. The appellate courts has the power to re-weigh evidence and
consider matters other the questions of law. At this juncture, it bears exposition that while NLRC
decisions are, by their nature, final and executory and, hence, not subject to appellate review, the
Court is not precluded from considering other questions of law aside from the CA’s finding on
the NLRC’s grave abuse of discretion. While the focal point of analysis revolves on this issue, the
Court may deal with ancillary issues – such as, in this case, the question of how a probationary
employee is deemed to have been informed of the standards of his regularization – if only to
determine if the concepts and principles of labor law were correctly applied or misapplied by the
NLRC in its decision. In other words, the Court’s analysis of the NLRC’s interpretation of the
environmental principles and concepts of labor law is not completely prohibited in – as it is
complementary to – a Rule 45 review of labor cases.
Finally, if only to put to rest Alcaraz’s misgivings on the manner in which this case was
reviewed, it bears pointing out that no "factual appellate review" was conducted by the Court in
the Decision. Rather, the Court proceeded to interpret the relevant rules on probationary
employment as applied to settled factual findings. Besides, even on the assumption that a
scrutiny of facts was undertaken, the Court is not altogether barred from conducting the same.
There are exceptional cases where the court, in the exercise of its discretionary appellate
jurisdiction may be urged to look into factual issues raised in a Rule 45 petition. For instance,
when the Abbott persuasively alleges that there is insufficient or insubstantial evidence on record
to support the factual findings of the tribunal or court a quo, as Section 5, Rule 133 of the Rules
of Court states in express terms that in cases filed before administrative or quasi-judicial bodies,
a fact may be deemed established only if supported by substantial evidence.
On the second Issue: first off, the Court must correct Alcaraz’s mistaken notion: it is not
the probationary employee’s job description but the adequate performance of his duties and
responsibilities which constitutes the inherent and implied standard for regularization. To echo
the fundamental point of the Decision, if the probationary employee had been fully apprised by
his employer of these duties and responsibilities, then basic knowledge and common sense
dictate that he must adequately perform the same, else he fails to pass the probationary trial and
may therefore be subject to termination. The determination of "adequate performance" is not, in
all cases, measurable by quantitative specification. It is also hinged on the qualitative assessment
of the employee’s work; by its nature, this largely rests on the reasonable exercise of the
employer’s management prerogative.
The same logic applies to a probationary managerial employee who is tasked to supervise
a particular department, as Alcaraz in this case. Given that a managerial role essentially connotes
an exercise of discretion, the quality of effective management can only be determined through
subsequent assessment. While at the time of engagement, reason dictates that the employer can
only inform the probationary managerial employee of his duties and responsibilities as such and
provide the allowable parameters for the same. Verily, as stated in the Decision, the adequate
performance of such duties and responsibilities is, by and of itself, an implied standard of
regularization.
PHILIPPINE SPRING WATER RESOURCES INC./DANILO Y. LUA vs. COURT OF APPEALS

and JUVENSTEIN B. MAHILUM
G.R. No. 205278, June 11, 2014, J. Mendoza
The issue in this case is whether or not Mahilum VP for sales and Marketing is considered
as probationary employee. The court ruled that probationary employment shall not exceed six (6)
months from the date the employee started working, unless it is covered by an apprenticeship
agreement stipulating a longer period. The services of an employee who has been engaged on a
probationary basis may be terminated for a just cause or when he fails to qualify as a regular
employee in accordance with reasonable standards made known by the employer to the employee
at the time of his engagement. An employee who is allowed to work after a probationary period shall
be considered a regular employee.
Facts:
Petitioner Philippine Spring Water Resources, Inc. (PSWRI), engaged in the business of
manufacturing, selling and distributing bottled mineral water, hired Mahilum as Vice-President
for Sales and Marketing for the Bulacan-South Luzon Area.
Sometime in November 2004, the inauguration of PSWRI’s Bulacan plant would be
celebrated at the same time with the company’s Christmas party. Mahilum was designated as
over-all chairman of the affair during the affair,Mahilum’s attention was, however, called when
Lua got furious because he was not recognized during the program. He was not mentioned in the
opening remarks or called to deliver his inaugural speech. Upon inquiry from the emcees of the
program, Mahilum learned that they were not apprised of Lua’s decision to deliver the speech
considering that he previously declined to have a part in the program as he would be very busy
during the affair. Thus, Lua’s speech appeared to be "optional" in the printed program during the
affair.
On the following day, Mahilum was required to explain why Lua was not recognized and
made to deliver his speech. At the same time, he was placed under preventive suspension for
thirty (30) days. Mahilum submitted his written explanation. Subsequently, an investigation was
conducted.When his 30-day suspension ended, Mahilum reported for work but was prevented
from entering the workplace. Sometime in the first week of March 2005, he received a copy of
the Memorandum, dated January 31, 2005, terminating his services effective the next day or on
February 1, 2005. On February 9, 2005, a clearance certificate was issued to Mahilum. He received
the amount of P43,998.56 and was made to execute the Release, Waiver and Quitclaim in favor
of the company and Lua.
Mahilum filed a complaint for illegal dismissal with prayer for reinstatement, payment of
back wages and damages. He argued that he was illegally suspended and, thereafter, dismissed
constructively from the service. He also claimed that he was forced to sign the waiver.
CA reconsidered and issued the assailed Amended Decision after finding merit in
Mahilum’s arguments. Finding Mahilum to have been indeed illegally dismissed from
employment, the CA ruled that he was entitled to full backwages and separation pay in lieu of
reinstatement, in view of the strained relations between Mahilum and Lua. With respect to the
quitclaim, the CA declared it to be void for having no consideration at all. All that Mahilum
received by virtue of the said document amounted to what he was legally entitled like salaries
and wages, 13th month pay and commissions. These could not be considered as reasonable and
credible consideration for a quitclaim. By receiving only what he was lawfully entitled to, there
was, in effect, no consideration at all for the quitclaim, rendering it void and ineffective to bar an
action for illegal dismissal.
Issues:
1. Whether or not Mahilum was a Regular Employee

2. Whether or not Mahilum was illegally dismissed from service
Ruling:
1. Yes, Mahilum was a regular employee
Petitioners insisted that Mahilum was a contractual employee and that the period of
probation depended on the agreement of the parties. It is the petitioners’ theory that Mahilum,
who was hired in June 2004, was not a regular employee at the time of his dismissal because his
probationary status would end only if he could satisfactorily perform his duties and functions as
defined in the Personnel’s Manual/Company House Rules of Discipline. This suspensive
condition failed to arise.For his part, Mahilum insists that he was a regular employee entitled to
security of tenure. Having been hired in June 2004, he must be considered to have already served
the company for eight (8) months at the time of his dismissal on February 1, 2005. This fact calls
for the application of Article 281 of the Labor Code:
Probationary employment shall not exceed six (6) months from the date the employee
started working, unless it is covered by an apprenticeship agreement stipulating a longer period.
The services of an employee who has been engaged on a probationary basis may be terminated
for a just cause or when he fails to qualify as a regular employee in accordance with reasonable
standards made known by the employer to the employee at the time of his engagement. An
employee who is allowed to work after a probationary period shall be considered a regular
employee.
Contrary to the claims of the petitioners, Mahilum was correctly considered as a regular
employee. A probationary employee, like a regular employee, enjoys security of tenure. In cases
of probationary employment, however, aside from just or authorized causes of termination, an
additional ground is provided under Article 281 of the Labor Code, that is, the probationary
employee may also be terminated for failure to qualify as a regular employee in accordance with
reasonable standards made known by the employer to the employee at the time of the
engagement. Thus, the services of an employee who has been engaged on probationary basis may
be terminated for any of the following: (1) a just or (2) an authorized cause and (3) when he fails
to qualify as a regular employee in accordance with reasonable standards prescribed by the
employer.
As applied to the petitioner’s arguments, it would seem that PSWRI and Lua now invoke
the first and third ground for Mahilum’s termination. The Court, however, cannot subscribe to
the premise that Mahilum failed to qualify as a regular employee when he failed to perform at
par with the standards made known by the company to him. In this case, it is clear that the
primary cause of Mahilum’s dismissal from his employment was borne out of his alleged lapses
as chairman for the inauguration of the Bulacan plant company’s Christmas party.
In fact, the termination letter to him cited "loss of trust and confidence" as a ground for
his dismissal. Under the circumstances, the petitioners may not be permitted to belatedly harp
on its choice not to extend his alleged probationary status to regular employment as a ground for
his dismissal. Besides, having been allowed to work after the lapse of the probationary period,
Mahilum became a regular employee. He was hired in June 2004 and was dismissed on February
5, 2005. Thus, he served the company for eight (8) months.
This is in consonance with CALS Poultry Supply Corporation v. Roco,where the Court
ruled that the computation of the 6-month probationary period was reckoned from the date of
appointment up to the same calendar date of the 6th month following.
2. Yes, Mahilum was illegally dismissed

According to the petitioners, Mahilum’s behavior during the inauguration/party was
allegedly tantamount to: 1] serious misconduct, as displayed by a drinking binge with his own
visitors causing the shame and humiliation of Lua; and 2] willful disobedience, as shown by his
refusal to carry out legitimate orders.
As previously explained, Mahilum was a regular employee who was entitled to security of
tenure. Thus, he could only be dismissed from service for causes provided in Article 282 of the
Labor Code. At this point, it bears stressing that the NLRC and the CA, in their decisions, both
found Mahilum to have been illegally dismissed.
The well-entrenched rule, especially in labor cases, is that findings of fact of quasi-judicial
bodies, like the NLRC, are accorded with respect, even finality, if supported by substantial
evidence. Particularly when passed upon and upheld by the CA, they are binding and conclusive
upon the Court and will not normally be disturbed. Although this doctrine is not without
exceptions, the Court finds that none is applicable to the present case. Here, the CA affirmed the
ruling of the NLRC and adopted as its own the latter's factual findings as to Mahilum’s illegal
dismissal. Consequently, the Court finds no reason to depart from the finding that Mahilum’s
failure to effectively discharge his assignment as the over-all chairman of the festivities was due
to mere inadvertence and the mistaken belief that he had properly delegated the details of the
program to another officer.
Further, his designation as the chairman of the whole affair did not form part of his duty
as a supervisor. Mahilum was engaged to supervise the sales and marketing aspects of PSWRI’s
Bulacan Plant. Verily, the charge of loss of trust and confidence had no leg tostand on, as the act
complained of was not work-related. Simply put, the petitioners were not able to prove that
Mahilum was unfit to continue working for the company.
Even as jurisprudence has distinguished the treatment of managerial employees or

employees occupying positions of trust and confidence from that of rank-and-file personnel,
insofar as the application of the doctrine of trust and confidence is concerned, such is
inapplicable to the instant case since as above-stated, private Alcaraz’s lapse was justified,
unintentional, without deliberate intent and unrelated to the duty for which he was engaged.
Likewise, warranting the agreement of the Court is the finding of the CA in its Amended
Decision that the quitclaim executed by Mahilum did not operate to bar a cause of action for
illegal dismissal. That the amounts received by Mahilum were only those owing to him under the
law indeed bolstered the fact that the quitclaim was executed without consideration. Suffice it to
say, the subject quitclaim may not be considered as a valid and binding undertaking.
REGULAR
VICMAR DEVELOPMENT CORPORATION v. CAMILO ELARCOSA, et al.

G.R. No. 202215, December 09, 2015, DEL CASTILLO, J.
A regular employee 1) is engaged to perform tasks usually necessary or desirable in
the usual business or trade of the employer, unless the employment is one for a specific
project or undertaking or where the work is seasonal and for the duration of a season; or 2)
has rendered at least 1 year of service, whether such service is continuous or broken, with
respect to the activity for which he is employed and his employment continues as long as
such activity exists.
Facts:
Vicmar is a domestic corporation engaged in manufacturing of plywood for

export and for local sale. According to respondents, Vicmar employed them as
"extra" workers; however, their assignments were necessary and desirable in the
business of Vicmar. They asserted that many of them were assigned at the boilers
for at least 11 hours daily, which was necessary to Vicmar's business. A number of
them were also allegedly assigned at the plywood repair and processing section,
which required longer working hours. In 2004, Vicmar allegedly informed respondents
that they would be handled by contractors. Respondents stated that these contractors
were former employees of Vicmar and had no equipment and facilities of their own.
As a result thereof, their wages were reduced despite overtime work.
Issue:
Whether respondents were regular employees and therefore illegally dismissed
by Vicmar
Ruling:
Yes. Respondents were assigned to activities essential for plywood

production, the central business of Vicmar. More than half of the respondents were
assigned to the boiler, where pieces of plywood were cooked to perfection. While the
other respondents appeared to have been assigned to other sections in the company,
the presumption of regular employment should be granted in their favor pursuant
to Article 280 of the Labor Code since they had been performing the same activity for
at least one year, as they were assigned to the same sections, and there is no
indication that their respective activities ceased.
The test to determine whether an employee is regular is the reasonable

connection between the activity he performs and its relation to the employer's
business or trade, as in the case of respondents assigned to the boiler section.
Nonetheless, the continuous re-engagement of all respondents to perform the same
kind of tasks proved the necessity and desirability of their services in the business of
Vicmar. Likewise, considering that respondents appeared to have been performing
their duties for at least one year is sufficient proof of the necessity, if not the
indispensability of their activities in Vicmar’s business.
ROMEO BASAN, DANILO DIZON, JAIME L. TUMABIAO, JR., ROBERTO DELA RAMA, JR.,
RICKY S. NICOLAS, CRISPULO D. DONOR, GALO FALGUERA, and NATIONAL LABOR
RELATIONS COMMISSION v. COCA-COLA BOTTLERS PHILIPPINES
G.R. Nos. 174365-66, February 4, 2015, PERALTA, J.
Regular employees are classified into: (1) regular employees by nature of work; and
(2) regular employees by years of service. The former refers to those employees who
perform a particular activity which is necessary or desirable in the usual business or trade
of the employer, regardless of their length of service; while the latter refers to those
employees who have been performing the job, regardless of the nature thereof, for at least
a year.
Facts:
Petitioners filed a complaint for illegal dismissal with money claims against
Coca-Cola Bottlers Philippines, alleging that they were dismissed without just cause
and prior written notice. Respondent corporation countered that petitioners were
merely hired as temporary route helpers to act as substitutes for its absent regular
route helpers for a fixed period and as such, petitioners’ claims have no basis for
they knew that their assignment as route helpers was temporary in duration.
Issue:
Whether petitioners were illegally dismissed
Ruling:
Yes. The repeated rehiring of respondent workers and the continuing need for
their services clearly attest to the necessity or desirability of their services in the regular
conduct of the business or trade of petitioner company. There are two kinds of regular
employees, namely: (1) those who are engaged to perform activities which are usually
necessary or desirable in the usual business or trade of the employer; and (2) those
who have rendered at least one year of service, whether continuous or broken, with
respect to the activities in which they are employed.
Petitioners fall under the first kind of regular employee. As route helpers who
are engaged in the service of loading and unloading soft drink products of
respondent company to its various delivery points, which is necessary or desirable
in its usual business or trade, petitioners are regular employees. That they merely
rendered services for periods of less than a year is of no moment, as long as they
were performing activities necessary to the business of respondent. They are
deemed regular employees irrespective of the length of their service.
ARLENE T. SAMONTE, ET AL v. LA SALLE GREENHILLS, INC.,
BRO. BERNARD S. OCA
G.R. No. 199683, February 10, 2016
FACTS
From 1989, and for fifteen (15) years thereafter, LSGI contracted the services of medical
professionals, specifically pediatricians, dentists and a physician, to comprise its Health Service
Team (HST).
Petitioners, along with other members of the HST signed uniform one-page Contracts of Retainer
for the period of a specific academic calendar beginning in June of a certain year (1989 and the
succeeding 15 years) and terminating in March of the following year when the school year ends.
After fifteen consecutive years of renewal each academic year, where the last Contract of Retainer
was for the school year of 2003-2004 i.e., June 1, 2003 to March 31, 2004, LSGI Head Administrator,
Herman Rochester, on that last day of the school year, informed the Medical Service Team,
including herein petitioners, that their contracts will no longer be renewed for the following
school year by reason of LSGI's decision to hire two (2) full-time doctors and dentists. One of the
physicians from the same Health Service Team was hired by LSGI as a full-time doctor.
When petitioners', along with their medical colleagues', requests for payment of their separation
pay were denied, they filed a complaint for illegal dismissal with prayer for separation pay,
damages and attorney's fees before the NLRC.
The Labor Arbiter dismissed petitioners' (and their colleagues') complaint and ruled that
complainants, as propounded by LSGI, were independent contractors under retainership
contracts and never became regular employees of LSGI. The Labor Arbiter based its over-all
finding of the absence of control by LSGI over complainants.
The NLRC disagreed with the Labor Arbiter's ruling that complainants were independent
contractors based on the latter's opinion that the services rendered by complainants are not
considered necessary to LSGI's operation as an educational institution. The NLRC noted that
Presidential Decree No. 856, otherwise known as the Sanitation Code of the Philippines, requires
that private educational institutions comply with the sanitary laws. Nonetheless, the NLRC found
that complainants were fixed-period employees whose terms of employment were subject to
agreement for a specific duration. In all, the NLRC ruled that the Contracts of Retainer between
complainants and LSGI are valid fixed-term employment contracts where complainants as
medical professionals understood the terms thereof when they agreed to such continuously for
more than ten (10) years. Consequently, the valid termination of their retainership contracts at
the end of the period stated therein, did not entitle complainants to reinstatement, nor, to
payment of separation pay.
In dismissing the petition for certiorari, the appellate court ruled that the NLRC did not commit
an error of jurisdiction which is correctible by a writ of certiorari. The Court of Appeals found
that the NLRC's ruling was based on the Contracts of Retainer signed by petitioners who, as
professionals, supposedly ought to have known the import of the contracts they voluntarily
signed, i.e. (a) temporary in character; (b) automatically ceasing on the specified expiration date,
or (c) likewise deemed terminated if job/task shall be completed on a date prior to specified
expiration date.
ISSUE
Whether or not the petitioners were regular employees who may only be dismissed for just and
authorized causes.
RULING
The NLRC correctly identified the existence of an employer-employee relationship between

petitioners and LSGI and not a bilateral independent contractor relationship. On more than one
occasion, we recognized certain workers to be independent contractors: individuals with unique
skills and talents that set them apart from ordinary employees. We found them to be independent
contractors because of these unique skills and talents and the lack of control over the means and
methods in the performance of their work. In some instances, doctors and other medical
professional may fall into this independent contractor category, legitimately providing medical
professional services. However, as has been declared by the-NLRC and the appellate court,
petitioners herein are not independent contractors.
We need to examine next the ruling of the NLRC and the Court of Appeals that petitioners were
fixed-term employees.
To factually support such conclusion, the NLRC solely relied on the case of Brent v. Zamor and
perfunctorily noted that petitioners, professional doctors and dentists, continuously signed the
contracts for more than ten (10) years. Such was heedless of our prescription that the ruling in
Brent be strictly construed, applying only to cases where it appears that the employer and
employee are on equal footing. Observably, nowhere in the two and half page ratiocination of
the NLRC was there reference to the standard that "it [should] satisfactorily appear that the
employer and employee dealt with each other on more or less equal terms with no moral
dominance whatever being exercised by the former on the latter."
From Brent, which remains as the exception rather than the rule in the determination of the
nature of employment, we are schooled that there are employment contracts where a "fixed term
is an essential and natural appurtenance" such as overseas employment contracts and officers in
educational institutions. We learned thus:
[T]he decisive determinant in the term employment contract should not be the activities that the
employee is called upon to perform, but the day certain agreed upon by the parties for the
commencement and termination of their employment relationship, a day certain being
understood to be "that which must necessarily come, although it may not be known when.
xxx
Accordingly, and since the entire purpose behind the development of legislation culminating in
the present Article 280 of the Labor Code clearly appears to have been, as already observed, to
prevent circumvention of the employee's right to be secure in his tenure, the clause in said article
indiscriminately and completely ruling out all written or oral agreements conflicting with the
concept of regular employment as defined therein should be construed to refer to the substantive
evil that the Code itself has singled out: agreements entered into precisely to circumvent security
of tenure. It should have no application to instances where a fixed period of employment was
agreed upon knowingly and voluntarily by the parties, without any force, duress or improper
pressure being brought to bear upon the employee and absent any other circumstances vitiating
his consent, or where it satisfactorily appears that the employer and employee dealt with each
other on more or less equal terms with no moral dominance whatever being exercised by the
former over the latter.
Tersely put, a fixed-term employment is allowable under the Labor Code only if the term was
voluntarily and knowingly entered into by the parties who must have dealt with each other on
equal terms not one exercising moral dominance over the other.
Indeed, Price, et. al. v. Innodata Corp., teaches us, from the wording of Article 280 of the Labor
Code, that the nomenclature of contracts, especially employment contracts, does not define the
employment status of a person: Such is defined and prescribed by law and not by what the parties
say it should be. Equally important to consider is that a contract of employment is impressed
with public interest such that labor contracts must yield to the common good. Thus, provisions
of applicable statutes are deemed written into the contract, and the parties are not at liberty to
insulate themselves and their relationships from the impact of labor laws and regulations by
simply contracting with each other.
Further, a fixed-term contract is an employment contract, the repeated renewals of which make
for a regular employment. In Fuji Network Television v. Espiritu, we noted that Fuji's argument
that Espiritu was an independent contractor under a fixed-term contract is contradictory where
employees under fixed-term contracts cannot be independent contractors because in fixed-term
contracts, an employer-employee relationship exists. Significantly, we ruled therein that
Espiritu's contract indicating a fixed term did not automatically mean that she could never be a
regular employee which is precisely what Article 280 of the Labor Code sought to avoid. The
repeated renewal of Espiritu's contract coupled with the nature of work performed pointed to
the regular nature of her employment despite contrary claims of Fuji and the nomenclature of
the contract. Citing Dumpit-Murillo v. Court of Appeals and Philips Semiconductors, Inc. v.
Fadriquela, we declared in Fuji that the repeated engagement under contract of hire is indicative
of the necessity and desirability of the [employee's] work in respondent's business and where
employee's contract has been continuously extended or renewed to the same position, with the
same duties and remained in the employ without any interruption, then such employee is a
regular employee.
The uniform one-page Contracts of Retainer signed by petitioners were prepared by LSGI alone.
Petitioners, medical professionals as they were, were still not on equal footing with LSGI as they
obviously did not want to lose their jobs that they had stayed in for fifteen (15) years. There is no
specificity in the contracts regarding terms and conditions of employment that would indicate
that petitioners and LSGI were on equal footing in negotiating it. Notably, without specifying
what are the tasks assigned to petitioners, LSGI "may upon prior written notice to the retainer,
terminate [the] contract should the retainer fail in any way to perform his assigned job/task to
the satisfaction of La Salle Greenhills, Inc. or for any other just cause."
While vague in its sparseness, the Contract of Retainer very clearly spelled out that LSGI had the
power of control over petitioners.
Time and again we have held that the power of control refers to the existence of the power and
not necessarily to the actual exercise thereof, nor is it essential for the employer to actually
supervise the performance of duties of the employee. It is enough that the employer has the right
to wield that power.
In all, given the following: (1) repeated renewal of petitioners' contract for fifteen years,
interrupted only by the close of the school year; (2) the necessity of the work performed by
petitioners as school physicians and dentists; and (3) the existence of LSGI's power of control
over the means and method pursued by petitioners in the performance of their job, we rule that
petitioners attained regular employment, entitled to security of tenure who could only be
dismissed for just and authorized causes. Consequently, petitioners were illegally dismissed and
are entitled to the twin remedies of payment of separation pay and full back wages. We order
separation pay in lieu of reinstatement given the time that has lapsed, twelve years, in the
litigation of this case.
HILARIO DASCO, ET AL. v PHILTRANCO SERVICE ENTERPRISES INC/CENTURION

SOLANO, MANAGER
G.R. No. 211141, June 29, 2016
FACT
This case stemmed from a complaint for regularization, underpayment of wages, non-payment
of service incentive leave (SIL) pay, and attorney's fees, filed by the petitioners against Philtranco
Service Enterprises Inc., (PSEI), a domestic corporation engaged in providing public utility
transportation, and its Manager, Centurion Solano (respondents).
On various dates from 2006 to 2010, the petitioners were employed by the respondents as bus
drivers and/or conductors with travel routes of Manila (Pasay) to Bicol, Visayas and Mindanao,
and vice versa.
On July 4, 2011, the petitioners filed a case against the respondents alleging that: (1) they were
already qualified for regular employment status since they have been working with the
respondents for several years; (2) they were paid only P404.00 per round trip, which lasts from
two to five days, without overtime pay and below the minimum wage rate; (3) they cannot be
considered as field personnel because their working hours are controlled by the respondents from
dispatching to end point and their travel time is monitored and measured by the distance because
they are in the business of servicing passengers where time is of the essence; and (4) they had not
been given their yearly five-day SIL since the time they were hired by the respondents.
In response, the respondents asserted that: (1) the petitioners were paid on a fixed salary rate of
P0.49 centavos per kilometer run, or minimum wage, whichever is higher; (2) the petitioners are
seasonal employees since their contracts are for a fixed period and their employment was
dependent on the exigency of the extraordinary public demand for more buses during peak
months of the year; and (3) the petitioners are not entitled to overtime pay and SIL pay because
they are field personnel whose time outside the company premises cannot be determined with
reasonable certainty since they ply provincial routes and are left alone in the field unsupervised.
ISSUE
Whether the petitioners as bus drivers and/or conductors are field personnel, and thus entitled
to overtime pay and SIL pay.
RULING:
As a general rule, [field personnel] are those whose performance of their job/service is not
supervised by the employer or his representative, the workplace being away from the principal
office and whose hours and days of work cannot be determined with reasonable certainty; hence,
they are paid specific amount for rendering specific service or performing specific work. If
required to be at specific places at specific times, employees including drivers cannot be said to be
field personnel despite the fact that they are performing work away from the principal office of the
employee.
It is necessary to stress that the definition of a "field personnel" is not merely concerned with the
location where the employee regularly performs his duties but also with the fact that the
employee's performance is unsupervised by the employer. As discussed above, field personnel are
those who regularly perform their duties away from the principal place of business of the
employer and whose actual hours of work in the field cannot be determined with reasonable
certainty. Thus, in order to conclude whether an employee is a field employee, it is also necessary
to ascertain if actual hours of work in the field can be determined with reasonable certainty by
the employer. In so doing, an inquiry must be made as to whether or not the employee's time
and performance are constantly supervised by the employer.
Guided by the foregoing norms, the NLRC properly concluded that the petitioners are not field
personnel but regular employees who perform tasks usually necessary and desirable to the
respondents' business. Evidently, the petitioners are not field personnel as defined above and the
NLRC's finding in this regard is supported by the established facts of this case: (1) the petitioners,
as bus drivers and/or conductors, are directed to transport their passengers at a specified time
and place; (2) they are not given the discretion to select and contract with prospective passengers;
(3) their actual work hours could be determined with reasonable certainty, as well as their average
trips per month; and (4) the respondents supervised their time and performance of duties.
In order to monitor their drivers and/or conductors, as well as the passengers and the bus itself,
the bus companies put checkers, who are assigned at tactical places along the travel routes that
are plied by their buses. The drivers and/or conductors are required to be at the specific bus
terminals at a specified time. In addition, there are always dispatchers in each and every bus
terminal, who supervise and ensure prompt departure at specified times and arrival at the
estimated proper time. Obviously, these drivers and/or conductors cannot be considered as field
personnel because they are under the control and constant supervision of the bus companies
while in the performance of their work.
The Court agrees with the above-quoted findings of the NLRC. Clearly, the petitioners, as bus
drivers and/or conductors, are left alone in the field with the duty to comply with the conditions
of the respondents' franchise, as well as to take proper care and custody of the bus they are using.
Since the respondents are engaged in the public utility business, the petitioners, as bus drivers
and/or conductors, should be considered as regular employees of the respondents because they
perform tasks which are directly and necessarily connected with the respondents' business. Thus,
they are consequently entitled to the benefits accorded to regular employees of the respondents,
including overtime pay and SIL pay.
DIONARTO Q. NOBLEJAS vs. ITALIAN MARITIME ACADEMY PHILS., INC., CAPT.

NICOLO S. TERREI, RACELI B. FERREZ and MA. TERESA R. MENDOZA
Fair evidentiary rule dictates that before employers are burdened to prove that they did not
commit illegal dismissal, it is incumbent upon the employee to first establish by substantial
evidence the fact of his or her dismissal.
It is likewise incumbent upon the employees, however, that they should first establish by
competent evidence the fact of their dismissal from employment. It is an age-old rule that the one
who alleges a fact has the burden of proving it and the proof should be clear, positive and
convincing. Mere allegation is not evidence. Let it be underscored that the fact of dismissal must be
established by positive and overt acts of an employer indicating the intention to dismiss.
In the case at bench, Noblejas was employed by IMAPI as a training instructor/assessor for
a period of three (3) months effective May 20, 2009. After the end of the 3-month period, he was
rehired by IMAPI for the same position and continued to work as such until March 16, 2010. There
is no dispute that the work of Noblejas was necessary or desirable in the business or trade of IMAPI,
a training and assessment center for seamen and officers of vessels. Moreover, such continuing
need for his services is sufficient evidence of the necessity and indispensability of his services to
IMAPI’s business. Taken in this light, Noblejas had indeed attained the status of a regular employee
at the time he ceased to report for work on March 17, 2010.Aside from his mere assertion, no
corroborative and competent evidence was adduced by Noblejas to substantiate his claim that he
was dismissed from employment.On the contrary, it is rather the apparent disinterest of
complainant to continue his employment with respondent company that may be considered a
covert act that severed his employment when the latter did not grant the litany of his demands.
Facts:
Petitioner Dionarto Q. Noblejas (Noblejas) filed a complaint for illegal dismissal, tax
refund, moral and exemplary damages, non-payment of 13th month pay, food, gasoline and
schooling allowances, health insurance, monetized leave, and attorney's fees, against Italian
Maritime Academy Phils., Inc. (IMAPI), Capt. Nicolo S. Terrei (Capt. Terrei), Raceli S. Ferrez
(Ferrez), and Ma. Teresa R. Mendoza (Mendoza).
IMAPI was a training center for seamen and an assessment center for determination of
the qualifications and competency of seamen and officers for possible promotion. Capt. Terrei
was the Managing Director of IMAPI while Ferrez was his secretary. Mendoza was the company’s
Administrative Manager. Procerfina SA. Terrei, IMAPI President, wrote a Letter to Noblejas
informing him that he had been appointed as training instructor/assessor of the company on a
contractual basis for a period of three (3) months effective May 20, 2009, with a monthly salary
of 75,000.00 inclusive of tax. After the expiration of the 3-month period, IMAPI hired Noblejas
anew as training instructor/assessor with the same salary rate, but no written contract was drawn
for his rehiring.
The absence of a written contract to cover the renewal of his employment became
Noblejas’ major concern so he wrote Capt. Terrei a letter requesting that a new contract be
executed to make new arrangements wherein his monthly salary would be tax excluded and after
the completion of his 3-month contract, he would be given an option to choose either to be
regularly employed as instructor or to go on board a vessel with the company extending him
financial aid for the processing of pertinent documents, which amount would be later on
deducted from his salary. However, according to him, the company did not act on his letter-
request so he sought an audience with Capt. Terreion March 16, 2010 and there was an altercation
between them which prompted Capt. Terrei to instruct Ferrez to dismiss Noblejas from
employment from that day on.
Respondents submitted that they could not be adjudged guilty of illegal dismissal because
there was no positive and overt act of dismissing Noblejas from employment. They presented a
different version of what took place saying that Noblejas got angry and hurled incentives against
Ferrez and even threatened to file a case against them after she had relayed to him the response
of Capt. Terrei to his letter. They, however, insisted that he was not entitled to 13th month pay
because he was hired as a consultant and not as a regular employee. For unused leave credits,
they posited that IMAPI could not be held liable in view of their payment to him of his sick leave
pay in the aggregate amount of P21,075.00.
Labor Arbiter Lutricia F. Quitevis-Alconcel (LA) rendered a decision finding that Noblejas
was illegally dismissed from his employment, and awarded him limited backwages. The LA
concluded that Noblejas was a regular employee and, as such, was entitled to his proportionate
13th month pay.
Respondents appealed the decision of the LA before the National Labor Relations
Commission (NLRC). The NLRC reversed the LA decision in a Judgment exonerating
respondents from the charge of illegal dismissal. The NLRC explained that there was no showing
that respondents committed any positive and overt act of dismissal and that the claim of Noblejas
that Capt. Terrei ordered Ferrez to terminate his employment was not substantiated. . According
to the NLRC, it was Noblejas who severed his employment with IMAPI after it had refused to
grant his numerous demands. Moreover, since Noblejas was a contractual employee of IMAPI,
there was no basis for his monetary award.
Aggrieved, Noblejas filed a petition for certiorari before the CA ascribing grave abuse of
discretion on the part of the NLRC for ruling that he was a contractual employee and that he was
not illegally dismissed. The CA rendered the challenged decision finding the petition for
certiorari to be devoid of merit. It upheld the findings of the NLRC that Noblejas was a
contractual employee of IMAPI and that there was no evidence to prove that he was dismissed
from employment.
Issues:
1. Whether or not Noblejas is a contractual employee.

2. Whether or not Noblejas was illegally dismissed.
3. Whether or not Noblejas was entitled to his money claims.
Ruling:
1. The Court finds Noblejas to be a regular employee of IMAPI.
Pursuant to Article 280 of the Labor Code, there are two kinds of regular employees, namely:
(1) those who are engaged to perform activities which are usually necessary or desirable in the
usual business or trade of the employer; and (2) those who have rendered at least one year of
service, whether continuous or broken, with respect to the activities in which they are employed.
Regular employees are further classified into (1) regular employees - by nature of work and
(2) regular employees - by years of service. The former refers to those employees who perform a
particular function which is necessary or desirable in the usual business or trade of the employer,
regardless of their length of service; while the latter refers to those employees who have been
performing the job, regardless of its nature thereof, for at least a year.
In the case at bench, Noblejas was employed by IMAPI as a training instructor/assessor for a
period of three (3) months effective May 20, 2009. After the end of the 3-month period, he was
rehired by IMAPI for the same position and continued to work as such until March 16, 2010. There
is no dispute that the work of Noblejas was necessary or desirable in the business or trade of
IMAPI, a training and assessment center for seamen and officers of vessels. Moreover, such
continuing need for his services is sufficient evidence of the necessity and indispensability of his
services to IMAPI’s business. Taken in this light, Noblejas had indeed attained the status of a
regular employee at the time he ceased to report for work on March 17, 2010.
2. Noblejas was not illegally dismissed.
Fair evidentiary rule dictates that before employers are burdened to prove that they did not
commit illegal dismissal, it is incumbent upon the employee to first establish by substantial
evidence the fact of his or her dismissal. The Court is not unmindful of the rule in labor cases
that the employer has the burden of proving that the termination was for a valid or authorized
cause. It is likewise incumbent upon the employees, however, that they should first establish by
competent evidence the fact of their dismissal from employment. It is an age-old rule that the
one who alleges a fact has the burden of proving it and the proof should be clear, positive and
convincing. Mere allegation is not evidence.
Aside from his mere assertion, no corroborative and competent evidence was adduced by
Noblejas to substantiate his claim that he was dismissed from employment. The record is bereft
of any indication that he was prevented from returning to work or otherwise deprived of any
work assignment. Respondents’ refusal to grant complainant’s demands does not constitute an
overt act of dismissal. On the contrary, it is rather the apparent disinterest of complainant to
continue his employment with respondent company that may be considered a covert act that
severed his employment when the latter did not grant the litany of his demands.
3. Noblejas was entitled only to his 13th month pay.
The Court sustains the LA in granting Noblejas proportionate 13th month pay covering the
period of January 1, 2010 to March 15, 2010 in the aggregate amount of P15,625.00. Furthermore,
the respondents should accept him back and reinstate him to his former position. There should,
however, be no payment of backwages under the principle of "no work, no pay.”
CRISPIN B. LOPEZ vs. IRVINE CONSTRUCTION CORP. and TOMAS SY SANTOS

G.R. No. 207253, August 20, 2014, J. Perlas-Bernabe
To repeat, Lopez is a regular and not a project employee. Hence, the continuation of his
engagement with Irvine, either in Cavite, or possibly, in any of its business locations, should not
have been affected by the culmination of the Cavite project alone. As the records would show, it
merely completed one of its numerous construction projects which does not, by and of itself,
amount to a bona fide suspension of business operations or undertaking.
Facts:
Irvine Construction Corp. (Irvine) is a construction firm with office address at San Juan,
Manila. It initially hired Lopez as laborer in November 1994 and, thereafter, designated him as a
guard at its warehouse in Dasmarinas, Cavite in the year 2000. On December 18, 2005, Lopez was
purportedly terminated from his employment, whereupon he was told "Ikaw ay lay-off muna."
Thus, on January 10, 2006, he filed a complaint for illegal dismissal.
For its part, Irvine denied Lopez's claims, alleging that he was employed only as a laborer
who, however, sometimes doubled as a guard. Lopez was, however, temporarily laid-off on
December 27, 2005 after the Cavite project was finished.12 Eventually, Lopez was asked to return
to work through a letter13 dated June 5, 2006 (return to work order), allegedly sent to him within
the six ( 6) month period under Article 286 of the Labor Code. As such, Irvine argued that Lopez's
filing of the complaint for illegal dismissal was premature.
The Labor Arbiter (LA) rendered a Decision15 ruling that Lopez was illegally dismissed.
On appeal, the NLRC rendered a Resolution upholding the LA's ruling. On appeal with the CA,
the CA granted Irvine's certiorari petition, thereby reversing the NLRC.Hence, this petition.
Issues:
1. Whether or not Lopez is a regular employee

2. Whether or not Lopez was illegally dismissed
Ruling:
1. Lopez is a regular employee.
Case law states that the principal test for determining whether particular employees are
properly characterized as "project employees", is whether or not the "project employees" were
assigned to carry out a "specific project or undertaking," the duration and scope of which were
specified at the time the employees were engaged for that project. The project could either be (1)
a particular job or undertaking that is within the regular or usual business of the employer
company, but which is distinct and separate, and identifiable as such, from the other
undertakings of the company; or (2) a particular job or undertaking that is not within the regular
business of the corporation.
In this case, the NLRC found that no substantial evidence had been presented by Irvine
to show that Lopez had been assigned to carry out a "specific project or undertaking," with its
duration and scope specified at the time of engagement. This conclusion is bolstered by the
undisputed fact that Lopez had been employed by Irvine since November 1994, or more than 10
years from the time he was laid off on December 27, 2005.
2. Lopez was illegally dismissed.
As a regular employee, Lopez is entitled to security of tenure, and, hence, dismissible only
if a just or authorized cause exists therefore.
As the NLRC correctly ruled in this case, Lopez, who, as earlier discussed was a regular
employee of Irvine, was not merely temporarily laid off from work but was terminated from his
employment without any valid cause therefore; thus, the proper disposition is to affirm the LA's
ruling that Lopez had been illegally dismissed.
Although the NLRC did not expound on the matter, it is readily apparent that the supposed lay-
off of Lopez was hardly justified considering the absence of any causal relation between the
cessation of Irvine's project in Cavite with the suspension of Lopez's work. To repeat, Lopez is a
regular and not a project employee. Hence, the continuation of his engagement with Irvine,
either in Cavite, or possibly, in any of its business locations, should not have been affected by the
culmination of the Cavite project alone. In light of the well-entrenched rule that the burden to
prove the validity and legality of the termination of employment falls on the employer, Irvine
should have established the bona fide suspension of its business operations or undertaking that
would have resulted in the temporary lay-off of its employees for a period not exceeding six (6)
months.
In this case, Irvine failed to prove compliance with the parameters of Article 286 of the Labor
Code. As the records would show, it merely completed one of its numerous construction projects
which does not, by and of itself, amount to a bona fide suspension of business operations or
undertaking. The same can be said of the employee in this case as no evidence was submitted by
Irvine to show any dire exigency which rendered it incapable of assigning Lopez to any of its
projects. Add to this the fact that Irvine did not proffer any sufficient justification for singling out
Lopez for lay-off among its other three hundred employees, thereby casting a cloud of doubt on
Irvine's good faith in pursuing this course of action.
HACIENDA LEDDY/ RICARDO GAMBOA, JR. vs. PAQUITO VILLEGAS

G.R. No. 179654, September 22, 2014, J. Peralta
A regular employee is one who is either engaged to perform activities which are necessary
or desirable in the usual business or trade of the employer; or those casual employees who have
rendered at least one year of service, whether continuous or broken, with respect to the activity in
which he is employed.
Facts:
Villegas is an employee at the Hacienda Leddy as early as 1960, when it was still named
Hacienda Teresa. Later on named Hacienda Leddy owned by Ricardo Gamboa Sr., the same was
succeeded by his son Ricardo Gamboa, Jr. During his employment up to the time of his dismissal,
Villegas performed sugar farming job 8 hours a day, 6 days a week work, continuously for not less
than 302 days a year, and for which services he was paid P45.00 per day. He likewise worked in
Hacienda Leddy's coconut lumber business where he was paid P34.00 a day for 8 hours work. On
June 9, 1993, Gamboa went to Villegas' house and told him that his services were no longer needed
without prior notice or valid reason. Hence, Villegas filed the instant complaint for illegal
dismissal.
Gamboa insisted that the farm records reveal that the only time Villegas rendered service
for the hacienda was only in the year 1993, specifically February 9, 1993 and February 11, 1993
when he was contracted by the farm to cut coconut lumber which were given to regular workers
for the repairs of their houses. Gamboa added that they informed Villegas that they need the
property, hence, they requested that he vacate it, but he refused.
Issue:
Whether Villegas could be deemed a regular worker.
Ruling:
Yes, he is.
A perusal of the records would show that Villegas has been employed in the subject
Hacienda while the same was still being managed by petitioner's father until the latter's death in
1993. While refuting that Villegas was a regular employee, Gamboa however failed to categorically
deny that Villegas was indeed employed in their hacienda albeit he insisted that Villegas was
merely a casual employee doing odd jobs.
In the instant case, if we are to follow the length of time that Villegas had worked with
the Gamboas, it should be more than 20 years of service. Even Gamboa admitted that by act of
generosity and compassion, Villegas was given a privilege of erecting his house inside the
hacienda during his employment. While it may indeed be an act of good will on the part of the
Gamboas, still, such act is usually done by the employer either out of gratitude for the employee’s
service or for the employer's convenience as the nature of the work calls for it. Indeed, Villegas'
length of service is an indication of the regularity of his employment. Even assuming that he was
doing odd jobs around the farm, such long period of doing said odd jobs is indicative that the
same was either necessary or desirable to petitioner's trade or business. Owing to the length of
service alone, he became a regular employee, by operation of law, one year after he was employed.
Article 280 of the Labor Code, describes a regular employee as one who is either (1)
engaged to perform activities which are necessary or desirable in the usual business or trade of
the employer; and (2) those casual employees who have rendered at least one year of service,
whether continuous or broken, with respect to the activity in which he is employed.
ROMEO BASAN, DANILO DIZON, JAIME L. TUMABIAO, JR., ROBERTO DELA RAMA, JR.,
RICKY S. NICOLAS, CRISPULO D. DONOR, GALO FALGUERA, AND NATIONAL LABOR
RELATIONS COMMISSION vs. COCA-COLA BOTTLERS PHILIPPINES
G.R. Nos. 174365-66, February 04, 2015, J. Peralta
The respondents contend that the petitioners are temporary employees who are employed
merely for a fixed term and not regular employees. The Supreme Court ruled that there are two
kinds of regular employees, namely: (1) those who are engaged to perform activities which are
usually necessary or desirable in the usual business or trade of the employer; and (2) those who
have rendered at least one year of service, whether continuous or broken, with respect to the
activities in which they are employed. While fixed term employment is not per se illegal or against
public policy, the criteria above must first be established to the satisfaction of this Court
Facts:
The petitioners were hired as route helpers by respondent company Coca-Cola Bottlers
Philippines. They were then dismissed in different dates which prompted them to file a
complaint for illegal dismissal against Coca-Cola with the Labor Arbiter. They allege that they
are regular employees because they perform work which is necessarily desirable in the business
of their employer. With this, it is their submission that their dismissal without just cause and
prior notice is violative of their constitutional right against security of tenure.
The Labor Arbiter ruled in favor of the petitioners. The NLRC affirmed the same.
However, by way of certiorari to the Court of Appeals, the CA reversed and set aside the decision
of the NLRC and ruled that the petitioners are not regular employees. Hence, the current
petition.
It is the contention of the petitioners that they are regular employees by virtue of the
nature of the work that they perform.
Issue:
Whether or not the petitioners are regular employees and was therefore illegally
dismissed for being dismissed without just cause and prior notice.
Ruling:
The petitioners are regular employees because their work as route helpers is necessarily
desirable in the business of their employers. Thus, being dismissed without just cause and prior
notice constitutes illegal dismissal.
While this Court, in Brent School, Inc. vs. Zamora, has upheld the legality of a fixed-term
employment, it has done so, however, with a stern admonition that where from the
circumstances it is apparent that the period has been imposed to preclude the acquisition of
tenurial security by the employee, then it should be struck down as being contrary to law, morals,
good customs, public order and public policy. The pernicious practice of having employees,
workers and laborers, engaged for a fixed period of few months, short of the normal six-month
probationary period of employment, and, thereafter, to be hired on a day-to-day basis, mocks the
law. Any obvious circumvention of the law cannot be countenanced.
At this point, it is worth recalling that Article 280 of the Labor Code, as amended,
provides:
ART. 280. REGULAR AND CASUAL EMPLOYMENT. - The provisions of written

agreement to the contrary notwithstanding and regardless of the oral agreement of the
parties, an employment shall be deemed to be regular where the employee has been
engaged to perform activities which are usually necessary or desirable in the usual
business or trade of the employer, except where the employment has been fixed for a
specific project or undertaking, the completion or termination of which has been
determined at the time of the engagement of the employee or where the work or services
to be performed is seasonal in nature and the employment is for the duration of the
season.
An employment shall be deemed to be casual if it is not covered by the preceding

paragraph: Provided, That, any employee who has rendered at least one year of service,
whether such service is continuous or broken, shall be considered a regular employee
with respect to the activity in which he is employed and his employment shall continue
while such activity exists.
Thus, pursuant to the Article quoted above, there are two kinds of regular employees,
namely: (1) those who are engaged to perform activities which are usually necessary or desirable
in the usual business or trade of the employer; and (2) those who have rendered at least one year
of service, whether continuous or broken, with respect to the activities in which they are
employed. Simply stated, regular employees are classified into: (1) regular employees by nature
of work; and (2) regular employees by years of service. The former refers to those employees who
perform a particular activity which is necessary or desirable in the usual business or trade of the
employer, regardless of their length of service; while the latter refers to those employees who
have been performing the job, regardless of the nature thereof, for at least a
year.25cralawlawlibrary
Petitioners, in this case, fall under the first kind of regular employee above. As route
helpers who are engaged in the service of loading and unloading softdrink products of respondent
company to its various delivery points, which is necessary or desirable in its usual business or
trade, petitioners are considered as regular employees. That they merely rendered services for
periods of less than a year is of no moment since for as long as they were performing activities
necessary to the business of respondent, they are deemed as regular employees under the Labor
Code, irrespective of the length of their service.
Under the above Brent doctrine, while it was not expressly mentioned in the Labor Code,
this Court has recognized a fixed-term type of employment embodied in a contract specifying
that the services of the employee shall be engaged only for a definite period, the termination of
which occurs upon the expiration of said period irrespective of the existence of just cause and
regardless of the activity the employee is called upon to perform. Considering, however, the
possibility of abuse by employers in the utilization of fixed-term employment contracts, this
Court, in Brent, laid down the following criteria to prevent the circumvention of the employee’s
security of tenure:
1) The fixed period of employment was knowingly and voluntarily agreed upon by the
parties without any force, duress, or improper pressure being brought to bear upon the employee
and absent any other circumstances vitiating his consent; or
2) It satisfactorily appears that the employer and the employee dealt with each other on
more or less equal terms with no moral dominance exercised by the former or the latter.
Unfortunately, however, the records of this case is bereft of any proof which will show
that petitioners freely entered into agreements with respondent to perform services for a
specified length of time. In fact, there is nothing in the records to show that there was any
agreement at all, the contracts of employment not having been presented. While respondent
company persistently asserted that petitioners knowingly agreed upon a fixed period of
employment and repeatedly made reference to their contracts of employment, the expiration
thereof being made known to petitioners at the time of their engagement, respondent failed to
present the same in spite of all the opportunities to do so. Notably, it was only at the stage of its
appeal to the CA that respondent provided an explanation as to why it failed to submit the
contracts they repeatedly spoke of. Even granting that the contracts of employment were
destroyed by fire, respondent could have easily submitted other pertinent files, records,
remittances, and other similar documents which would show the fixed period of employment
voluntarily agreed upon by the parties. They did not, however, aid this Court with any kind of
proof which might tend to show that petitioners were truly engaged for specified periods,
seemingly content with the convenient excuse that the contracts were destroyed by fire. Indeed,
respondent’s failure to submit the necessary documents, which as employers are in their
possession, gives rise to the presumption that their presentation is prejudicial to its cause.
While fixed term employment is not per se illegal or against public policy, the criteria
above must first be established to the satisfaction of this Court. Yet, the records of this case
reveal that for years, petitioners were repeatedly engaged to perform functions necessary to
respondent’s business for fixed periods short of the six-month probationary period of
employment. If there was really no intent to circumvent security of tenure, respondent should
have made it clear to petitioners that they were being hired only for fixed periods in an agreement
freely entered into by the parties. To this Court, respondent’s act of hiring and re-hiring
petitioners for periods short of the legal probationary period evidences its intent to thwart
petitioner’s security of tenure, especially in view of an awareness that ordinary workers, such as
petitioners herein, are never on equal terms with their employers. It is rather unjustifiable to
allow respondent to hire and rehire petitioners on fixed terms, never attaining regular status.
Hence, in the absence of proof showing that petitioners knowingly agreed upon a fixed term of
employment, the court upholds the findings of the Labor Arbiter and the NLRC and so rule that
petitioners are, indeed, regular employees, entitled to security of tenure. Consequently, for lack
of any clear, valid, and just or authorized cause in terminating petitioners’ employment, The
Court finds respondent guilty of illegal dismissal.
PROJECT EMPLOYMENT
MA. CHARITO C. GADIA, ERNESTO M. PEÑAS, GEMMABELLE B. REMO, LORENA S. QUESEA, et

al. v. SYKES ASIA, INC./ CHUCK SYKES/ MIKE HINDS/ MICHAEL HENDERSON
G.R. No. 209499, January 28, 2015, PERLAS-BERNABE, J.
A project employee is assigned to a project which begins and ends at

determined or determinable times.
Facts:
Alltel Communications, Inc., a US-based telecommunications firm, contracted
Sykes Asia’s services to accommodate the needs and demands of Alltel clients for
its postpaid and prepaid services. Petitioners were hired as customer service
representatives, team leaders, and trainers for the Alltel Project. However, Alltel
sent two letters to Sykes Asia informing the latter that it was terminating all
support services provided by Sykes Asia. Sykes Asia informed the petitioners of their
dismissal from employment. Petitioners allege that they were illegally dismissed
while respondents aver that petitioners were not regular employees but merely
project-based employees, and as such, the termination of the Alltel Project served as
a valid ground for their dismissal.
Issue:
Whether petitioners are project-based employees
Ruling:
Yes. The principal test for determining whether particular employees are properly
characterized as “project-based employees” is whether the employees were: (a) assigned to
carry out a “specific project or undertaking,” (b) the duration and scope of which were
specified or determinable at the time they were engaged for that project. The employment
contracts provide that petitioners were hired in connection with the Alltel Project, and that
their positions were “project- based and as such is co-terminus to the project.” The second
requisite was also fulfilled because the statement “co-terminus with the project,” as provided
in the employment contract, is a determinable time. The statement sufficiently apprised
petitioners that their security of tenure with Sykes Asia would only last as long as the Alltel
Project was subsisting. When the Alltel Project was terminated, petitioners no longer had
any project to work on, and hence, Sykes Asia may validly terminate them from employment.
OMNI HAULING SERVICES, INC., LOLITA FRANCO and ANICETO FRANCO vs.
BERNARDO BON, et al.
G.R. No. 199388, September 3, 2014, J. Perlas-Bernabe
In order to safeguard the rights of workers against the arbitrary use of the word “project” to
prevent employees from attaining a regular status, employers claiming that their workers are
project employees should not only prove that the duration and scope of the employment was
specified at the time they were engaged, but also that there was indeed a project. Thus, if a garbage
contractor terminates the employment of its garbage truck drivers and paleros, which the former
alleges were project employees yet the contractor failed to show evidence to prove such assertion,
the presumption under Art. 280 of the labor code that the garbage truck drivers and paleros are
regular employees, and that their refusal to sign employment contract stating that they were
“’rehired’ for the duration of the renewed service contract” is not a valid ground for dismissal.
Facts:
Petitioner Omni Hauling Services, Inc. (Omni), a company owned by petitioners Lolita
and Aniceto Franco (petitioners), was awarded a one (1) year service contract by the local
government of Quezon City to provide garbage hauling services for the period July 1, 2002 to June
30, 2003. For this purpose, Omni hired respondents Bon, et al. as garbage truck drivers and
paleros who were then paid on a per trip basis.
When the service contract was renewed for another year, or for the period July 1, 2003 to
June 30, 2004, petitioners required each of the respondents to sign employment contracts which
provided that they will be “re-hired” only for the duration of the same period. However,
respondents refused to sign the employment contracts, claiming that they were regular
employees since they were engaged to perform activities which were necessary and desirable to
Omni’s usual business or trade. For this reason, Omni terminated the employment of
respondents which, in turn, resulted in the filing of cases for illegal dismissal, nonpayment of
Emergency Cost of Living Allowance (ECOLA) and 13th month pay, and actual, moral, and
exemplary damages.
The LA ruled in favor of petitioners, finding that respondents were not illegally dismissed,
as at the time of their engagement, the latter were informed that their employment will be limited
for a specific period of one year and was co-terminus with the service contract with the Quezon
City government. The NLRC affirmed the LA ruling in toto, finding that respondents were project
employees. The CA reversed and set aside the NLRC, holding that the NLRC failed to consider
the glaring fact that no contract of employment exists to support petitioners’ allegation that
respondents are fixed-term (or properly speaking, project) employees. Petitioners’ claim that
respondents were properly apprised regarding the fixed period of their employment at the time
of their engagement is nothing but a mere allegation which is bereft of substantiation. The
respondents were regular employees and were thus illegally dismissed.
Issue:
Were respondents properly appraised at the time of their engagement that they were
project employees?
Ruling:
The petition is denied.
A project employee is assigned to a project which begins and ends at determined or

determinable times. Unlike regular employees who may only be dismissed for just and/or
authorized causes under the Labor Code, the services of employees who are hired as “project
employees” may be lawfully terminated at the completion of the project.
According to jurisprudence, the principal test for determining whether particular

employees are properly characterized as “project employees” as distinguished from “regular
employees,” is whether or not the employees were assigned to carry out a “specific project or
undertaking,” the duration(and scope) of which were specified at the time they were engaged for
that project. The project could either be (1) a particular job or undertaking that is within the
regular or usual business of the employer company, but which is distinct and separate, and
identifiable as such, from the other undertakings of the company; or (2) a particular job or
undertaking that is not within the regular business of the corporation. In order to safeguard the
rights of workers against the arbitrary use of the word “project” to prevent employees from
attaining a regular status, employers claiming that their workers are project employees should
not only prove that the duration and scope of the employment was specified at the time they
were engaged, but also that there was indeed a project.
Even though the absence of a written contract does not by itself grant regular status to
respondents, such a contract is evidence that respondents were informed of the duration and
scope of their work and their status as project employees. As held in Hanjin Heavy Industries and
Construction Co., Ltd. v. Ibañez, citing numerous precedents on the matter, where no other
evidence was offered, the absence of the employment contracts raises a serious question of
whether the employees were properly informed of their employment status as project employees
at the time of their engagement.
In this case, records are bereft of any evidence to show that respondents were made to
sign employment contracts explicitly stating that they were going to be hired as project
employees, with the period of their employment to be co-terminus with the original period of
Omni’s service contract with the Quezon City government. Neither is petitioners’ allegation that
respondents were duly apprised of the project-based nature of their employment supported by
any other evidentiary proof. Thus, the logical conclusion is that respondents were not clearly and
knowingly informed of their employment status as mere project employees, with the duration
and scope of the project specified at the time they were engaged. As such, the presumption of
regular employment should be accorded in their favor pursuant to Article 280 of the Labor Code
which provides that “[employees] who have rendered at least one year of service, whether such
service is continuous or broken [– as respondents in this case –] shall be considered as[regular
employees] with respect to the activity in which [they] are employed and [their] employment
shall continue while such activity actually exists.” Add to this the obvious fact that respondents
have been engaged to perform activities which are usually necessary or desirable in the usual
business or trade of Omni, i.e., garbage hauling, thereby confirming the strength of the aforesaid
conclusion.
The determination that respondents are regular and not merely project employees
resultantly means that their services could not have been validly terminated at the expiration of
the project, or, in this case, the service contract of Omni with the Quezon City government. As
regular employees, it is incumbent upon petitioners to establish that respondents had been
dismissed for a just and/or authorized cause. However, petitioners failed in this respect; hence,
respondents were illegally dismissed.
FVR SKILLS AND SERVICES EXPONENTS, INC. (SKILLEX), FULGENCIO V. RANA and
MONINA R. BURGOS vs. JOVERT SEVA, et al.
G.R. No. 200857, October 22, 2014, J. Brion
A careful look at the factual circumstances of this case leads us to the legal conclusion that
the respondents are regular and not project employees. The primary standard in determining
regular employment is the reasonable connection between the particular activity performed by the
employee and the employer's business or trade. This connection can be ascertained by considering
the nature of the work performed and its relation to the scheme of the particular business, or the
trade in its entirety.
Guided by this test, the Court concludes that the respondents' work as janitors, service
crews and sanitation aides, are necessary or desirable to the petitioner's business of providing
janitorial and manpower services to its clients as an independent contractor.
To be valid, an employee's dismissal must comply with the substantive and procedural
requirements of due process. Substantively, a dismissal should be supported by a just or authorized
cause. Procedurally, the employer must observe the twin notice and hearing requirements in
carrying out an employee's dismissal.
Having already determined that the respondents are regular employees and not project
employees, and that the respondents' belated employment contracts could not be given any binding
effect for being signed under duress, the Court holds that illegal dismissal took place when the
petitioner failed to comply with the substantive and procedural due process requirements of the
law.
Facts:
The twenty-eight (28) respondents in this case were employees of petitioner FVR Skills
and Services Exponents, Inc. (petitioner), an independent contractor engaged in the business of
providing janitorial and other manpower services to its clients.
Skillex entered into a Contract of Janitorial Service (service contract) with Robinsons
Land Corporation (Robinsons). Both agreed that the petitioner shall supply janitorial, manpower
and sanitation services to Robinsons Place Ermita Mall for a period of one year. Halfway through
the service contract, the Skillex asked the respondents to execute individual contracts which
stipulated that their respective employments shall end at the last day of the year.
Skillex and Robinsons no longer extended their contract of janitorial services.

Consequently, Skillex dismissed the respondents as they were project employees whose duration
of employment was dependent on the petitioner's service contract with Robinsons.
Respondents filed a complaint for illegal dismissal with the NLRC. They argued that they
were not project employees; they were regular employees who may only be dismissed for just or
authorized causes. The LA ruled in Skillex's favor but was reversed by NLRC considering that the
respondents had been under the petitioner's employ for more than a year already and was
affirmed by CA.
Issue:
1) Whether or not Respondents are project employees

2) Whether or not Respondents were illegally dismissed.
Ruling:
1) The respondents are regular employees, not project employees.
Article 280 (now Article 294) of the Labor Code governs the determination of whether an
employee is a regular or a project employee. Under this provision, there are two kinds of regular
employees, namely: (1) those who were engaged to perform activities which are usually necessary
or desirable in the usual business or trade of the employer; and (2) those casual employees who
became regular after one year of service, whether continuous or broken, but only with respect to
the activity for which they have been hired. Court distinguishes these two types of regular
employees from a project employee, or one whose employment was fixed for a specific project or
undertaking, whose completion or termination had been determined at the time of engagement.
A careful look at the factual circumstances of this case leads us to the legal conclusion
that the respondents are regular and not project employees. The primary standard in determining
regular employment is the reasonable connection between the particular activity performed by
the employee and the employer's business or trade. This connection can be ascertained by
considering the nature of the work performed and its relation to the scheme of the particular
business, or the trade in its entirety.
Guided by this test, the Court concludes that the respondents' work as janitors, service
crews and sanitation aides, are necessary or desirable to the petitioner's business of providing
janitorial and manpower services to its clients as an independent contractor. Also, the
respondents had already been working for the petitioner as early as 1998. Even before the service
contract with Robinsons, the respondents were already under the petitioner's employ. They had
been doing the same type of work and occupying the same positions from the time they were
hired and until they were dismissed in January 2009.The petitioner did not present any evidence
torefute the respondents' claim that from the time of their hiring until the time of their dismissal,
there was no gap in between the projects where they were assigned to. The petitioner
continuously availed of their services by constantly deploying them to its clients.
In this light, the Court thus conclude that although the respondents were assigned as
contractual employees to the petitioner's various clients, under the law, they remain to be the
petitioner's regular employees, who are entitled to all the rights and benefits of regular
employment. The respondents' employment contracts, which were belatedly signed, are
voidable.
2) The respondents were illegally dismissed.
To be valid, an employee's dismissal must comply with the substantive and procedural
requirements of due process. Substantively, a dismissal should be supported by a just or
authorized cause. Procedurally, the employer must observe the twin notice and hearing
requirements in carrying out an employee's dismissal.
Having already determined that the respondents are regular employees and not project
employees, and that the respondents' belated employment contracts could not be given any
binding effect for being signed under duress, the Court holds that illegal dismissal took place
when the petitioner failed to comply with the substantive and procedural due process
requirements of the law.
By law, the petitioner must bear the legal consequences of its violation of the respondents'
right to security of tenure. The facts of this case show that since the respondents' hiring, they had
been under the petitioner's employ as janitors, service crews and sanitation aides. Their services
had been continuously provided to the petitioner without any gap. Notably, the petitioner never
refuted this allegation of the respondents. Further, there was no allegation that the petitioner
went out of business after the nonrenewal of the Robinsons' service contract. Thus, had it not
been for the respondents' dismissal, they would have been deployed to the petitioner's other
existing clients.
JEANETTE V. MANALO, et al. vs. TNS PHILIPPINES and GARY OCAMPO

G.R. No. 208567, November 26, 2014, J. Mendoza
Once a project or work pool employee has been: (1) continuously, as opposed to
intermittently, rehired by the same employer for the same tasks or nature of tasks; and (2) these
tasks are vital, necessary and indispensable to the usual business or trade of the employer, then the
employee must be deemed a regular employee. Petitioners’ successive re-engagement in order to
perform the same kind of work firmly manifested the necessity and desirability of their work in the
usual business of TNS as a market research facility. Undisputed also is the fact that the petitioners
were assigned office-based tasks from 9:00 o’clock in the morning up to 6:00 o’clock in the evening,
at the earliest, without any corresponding remuneration. In addition, the phrase “because we need
further time to determine your competence on the job” in the supposed project employment
contract would refer to a probationary employment. Such phrase changes the tenor of the contract
and runs counter to the very nature of a project employment.
Facts:
Respondent TNS Philippines Inc. (TNS), with Gary Ocampo as its president and general
manager, was engaged primarily in the business of marketing research and information, as well
as research consultancy and other value-added services to a wide base of clients, both local and
international, hired petitioners Manalo, et al. as field personnel on various dates starting 1996 for
several projects. They were made to sign a project-to-project employment contract. Thereafter,
TNS would file the corresponding termination report with the Department of Labor and
Employment Regional Office (DOLE-RO). Petitioners were likewise assigned office-based tasks
for which they were required to be in the office from 9:00 o’clock in the morning to 6:00o’clock
in the evening, but most of the time, they worked beyond 6:00o’clock without receiving the
corresponding overtime pay.
Later, petitioners were told by TNS’ field manager that all old FIs assigned in the
“tracking” projects would be pulled out eventually and replaced by new FIs contracted from an
agency. Old FIs would be assigned only to “adhoc” projects which were seasonal. This prompted
petitioners to file a consolidated complaint for regularization before the LA. When TNS informed
them not to report for work anymore, petitioners filed a complaint for illegal dismissal. The cases
for regularization and illegal dismissal were consolidated.
The LA dismissed the complaint on the ground that petitioners were project employees
of TNS, as the petitioners knew that their employment contracts would lapse upon the
completion of the projects in their contracts; hence, TNS is not guilty of illegal dismissal. The
NLRC reversed the LA, holding that despite the completion of the project, petitioners were
allowed to continue working, and TNS’ failure to present employment contracts indicate that
petitioners are regular employees. Therefore, TNS was guilty of illegal dismissal. The CA ruled in
favor of TNS, and held that petitioners were project employees.
Issue:
Were the petitioners regular employees of TNS?
Ruling:
The petition is granted.
Upon review of the records, the evidence failed to clearly, accurately, consistently, and
convincingly show that petitioners were still project employees of TNS.
Article 280 of the Labor Code, as amended, clearly defined a project employee as one
whose employment has been fixed for a specific projector undertaking the completion or
where the work or service to be performed is seasonal in nature and the employment is for the
duration of the season. Additionally, a project employee is one whose termination of his
employment contract is reported to the DOLE everytime the project for which he was engaged
has been completed.
In Maraguinot, Jr. v. NLRC, the Court held that once a project or work pool employee has
been: (1) continuously, as opposed to intermittently, rehired by the same employer for the same
tasks or nature of tasks; and (2) these tasks are vital, necessary and indispensable to the usual
business or trade of the employer, then the employee must be deemed a regular employee.
Although it is true that the length of time of the employee’s service is not a controlling
determinant of project employment, it is vital in determining whether he was hired for a specific
undertaking or in fact tasked to perform functions vital, necessary and indispensable to the usual
business or trade of the employer. Petitioners’ successive re-engagement in order to perform the
same kind of work firmly manifested the necessity and desirability of their work in the usual
business of TNS as a market research facility. Undisputed also is the fact that the petitioners were
assigned office-based tasks from 9:00 o’clock in the morning up to 6:00 o’clock in the evening, at
the earliest, without any corresponding remuneration.
The project employment scheme used by TNS easily circumvented the law and precluded
its employees from attaining regular employment status in the subtlest way possible. Petitioners
were rehired not intermittently, but continuously, contract after contract, month after month,
involving the very same tasks. They practically performed exactly the same functions over several
years. Ultimately, without a doubt, the functions they performed were indeed vital and necessary
to the very business or trade of TNS.
Granting arguendo that petitioners were rehired intermittently, a careful review of the
project employment contracts of petitioners reveals some other vague provisions. Oddly, one of
the terms and conditions in the said contract stated that: “The Company shall have the option
ofrenewing or extending the period of this agreement for such time as it may be necessary to
complete the project or because we need further time to determine your competence on the job.”
To the Court, the phrase “because we need further time to determine your competence on the
job” would refer to a probationary employment. Such phrase changes the tenor of the contract
and runs counter to the very nature of a project employment. TNS can, therefore, extend the
contract which was already fixed when it deemed it necessary to determine whether or not the
employee was qualified and fit for the job. Corollary, TNS can likewise pre-terminate the contract
not because the specific project was completed ahead of time, but because of failure to qualify
for the job.
For said reason, at the outset, the supposed project employment contract was highly
doubtful. In determining the true nature of an employment, the entirety of the contract, not
merely its designation or by which it was denominated, is controlling. Though there is a rule that
conflicting provisions in a contract should be harmonized to give effect to all, in this case,
however, harmonization is impossible because project employment and probationary
employment are distinct from one another and cannot co-exist with each other. Hence, should
there be ambiguity in the provisions of the contract, the rule is that all doubts, uncertainties,
ambiguities and insufficiencies should be resolved in favor of labor. This is in consonance with
the constitutional policy of providing full protection to labor.
In sum, petitioners are deemed to have become regular employees. As such, the burden
of proving the legality of their dismissal rests upon TNS. Having failed to discharge such burden
of proving a just or authorized cause, TNS is liable for illegal dismissal.
MA. CHARITO C. GADIA, et al. vs. SYKES ASIA, INC. / CHUCK SYKES/ MIKE HINDS/
MICHAEL HENDERSON
G.R. No. 209499, January 28, 2015, J. Perlas-Bernabe
Sykes Asia terminated the services of the complainants. Hence, the latter filed complaints
for illegal dismissal. In ruling for Sykes Asia, the Supreme Court held that complainant were just
mere project employees, hence, their dismissal upon the termination of the project is proper.
Accordingly, for an employee to be considered project-based, the employer must show compliance
with two (2) requisites, namely that: (a) the employee was assigned to carry out a specific project
or undertaking; and (b) the duration and scope of which were specified at the time they were
engaged for such project.
Facts:
Sykes Asia is a corporation engaged in Business Process Outsourcing (BPO) which

provides support to its international clients from various sectors by carrying on some of their
operations, governed by service contracts that it enters with them. On September 2, 2003, Alltel
Communications, Inc. (Alltel), a United States-based telecommunications firm, contracted Sykes
Asia’s services to accommodate the needs and demands of Alltel clients for its postpaid and
prepaid services (Alltel Project). Thus, on different dates, Sykes Asia hired petitioners Gadia, et
al. as customer service representatives, team leaders, and trainers for the Alltel Project. Services
for the said project went on smoothly until Alltel sent two (2) letters to Sykes Asia dated August
7, 200914 and September 9, 200915 informing the latter that it was terminating all support
services provided by Sykes Asia related to the Alltel Project. In view of this development, Sykes
Asia sent each of the petitioners end-of-life notices, informing them of their dismissal from
employment due to the termination of the Alltel Project.
Aggrieved, petitioners filed separate complaints for illegal dismissal against respondents
Sykes Asia, Chuck Sykes, the President and Chief Operating Officer of Sykes Enterprise, Inc., and
Mike Hinds and Michael Henderson, the President and Operations Director, respectively, of
Sykes Asia (respondents). In their complaints, petitioners alleged that their dismissal from
service was unjust as the same was effected without substantive and procedural due process. In
their defense, respondents averred that petitioners were not regular employees but merely
project-based employees, and as such, the termination of the Alltel Project served as a valid
ground for their dismissal.
The LA ruled in favor of respondents, and accordingly, dismissed petitioners’ complaints

for lack of merit. The NLRC modified the LA Decision, ruling that petitioners are regular
employees but were validly terminated due to redundancy. In a Decision dated April 29, 2013, the
CA annulled and set aside the ruling of the NLRC, and accordingly, reinstated that of the LA.
Hence, this petition.
Issue:
Were the petitioners regular employees?
Ruling:
Article 294 of the Labor Code, as amended, distinguishes a project-based employee from
a regular employee as follows:
Art. 294. Regular and casual employment.—The provisions of written agreement to the
contrary notwithstanding and regardless of the oral agreement of the parties, an employment
shall be deemed to be regular where the employee has been engaged to perform activities which
are usually necessary or desirable in the usual business or trade of the employer, except where
the employment has been fixed for a specific project or undertaking the completion or
where the work or services to be performed is seasonal in nature and the employment is for the
duration of the season. x xxx
Verily, for an employee to be considered project-based, the employer must show

compliance with two (2) requisites, namely that: (a) the employee was assigned to carry out a
specific project or undertaking; and (b) the duration and scope of which were specified at the
time they were engaged for such project.
In this case, records reveal that Sykes Asia adequately informed petitioners of their
employment status at the time of their engagement, as evidenced by the latter’s employment
contracts which similarly provide that they were hired in connection with the Alltel Project, and
that their positions were “project-based and as such is co-terminus to the project.” In this light,
the CA correctly ruled that petitioners were indeed project-based employees, considering that:
(a) they were hired to carry out a specific undertaking, i.e., the Alltel Project; and (b) the duration
and scope of such project were made known to them at the time of their engagement, i.e., “co-
terminus with the project.”
As regards the second requisite, the CA correctly stressed that “[t]he law and
jurisprudence dictate that ‘the duration of the undertaking begins and ends at determined or
determinable times’” while clarifying that “[t]he phrase ‘determinable times’ simply means
capable of being determined or fixed.”
In this case, Sykes Asia substantially complied with this requisite when it expressly
indicated in petitioners’ employment contracts that their positions were “co-terminus with the
project.” To the mind of the Court, this caveat sufficiently apprised petitioners that their security
of tenure with Sykes Asia would only last as long as the Alltel Project was subsisting. In other
words, when the Alltel Project was terminated, petitioners no longer had any project to work on,
and hence, Sykes Asia may validly terminate them from employment. Further, the Court likewise
notes the fact that Sykes Asia duly submitted an Establishment Employment Report and an
Establishment Termination Report to the Department of Labor and Employment Makati Pasay
Field Office regarding the cessation of the Alltel Project and the list of employees that would be
affected by such cessation. As correctly pointed out by the CA, case law deems such submission
as an indication that the employment was indeed project-based. In sum, respondents have
shown by substantial evidence that petitioners were merely project-based employees, and as
such, their services were lawfully terminated upon the cessation of the Alltel Project.
SEASONAL
UNIVERSAL ROBINA SUGAR MILLING CORPORATION and RENE CABATI

vs. FERDINAND ACIBO, et al.
G.R. No. 186439, 15 January 2014
J. Brion
The period denominated in the contract of employment is not the basis in determining whether an
employee is seasonal or regular.
Facts:
Ferdinand Acibo, et al. were employees of Universal Robina Sugar Milling Corporation
(URSUMCO). Acibo, et al. signed contracts of employment for a given period and after its
expiration, URSUMCO repeatedly hired these employees to perform the same duties and
obligations.
Acibo, et al. filed a complaint before the Labor Arbiter for regularization however it was denied
because the LA argued that they were seasonal employees. Seven of the 22 complainants filed an
appeal to the NLRC. The latter reversed the LA’s ruling claiming that they were regular
employees. The CA affirmed NLRC’s decision but excluded the Acibo, et al. from monetary
benefits under the CBA.
Issue:
Whether or not Acibo, et al. are regular employees of URSUMCO.
Ruling:
Plantation workers or mill employees only work on seasonal basis. This, however, does not
exclude them from the benefits of regularization. Being in such nature, Acibo, et al. are
considered to be regular employees.
Regular employment means that there was an arrangement between the employee and the
employer that the former will be engaged to perform activities which are necessary or desirable
to the usual business or trade of the latter. On the other hand, a project employment is an
arrangement for a specific project or undertaking whose termination is determined by the
completion of the project.
The nature of the employment does not depend solely on the will or word of the employer or on
the procedure for hiring and the manner of designating the employee. Rather, the nature of the
employment depends on the nature of the activities to be performed by the employee,
considering the nature of the employer’s business, the duration and scope to be done.
Accordingly, Acibo, et al. are neither project nor seasonal employees.
Acibo, et al. were made to perform tasks that does not pertain to milling operations of
URSUMCO. However, their duties are regularly and habitually needed in URSUMCO’s operation.
Moreover, they were regularly and repeatedly hired to perform the same tasks. Being repeatedly
hired for the same purpose makes them regularized employees.
The plantation workers or the mill employees do not work continuously for 1 whole year but only
for the duration of the growing or the sugarcane or the milling season. Their seasonal work,
however, does not detract from considering them in regular employment.
HACIENDA CATAYWA/MANUEL VILLANUEVA, et al. vs. ROSARIO LOREZO

G.R. No. 179640, March 18, 2015, J. Peralta
Petitioners failed to dispute the allegation that the respondent performed hacienda work,
such as planting sugarcane point and fertilizing. They merely alleged that respondent was a very
casual worker because she only rendered work for 16 months. Farm workers generally fall under the
definition of seasonal employees. It was also consistently held that seasonal employees may be
considered as regular employees when they are called to work from time to time. They are in regular
employment because of the nature of the job, and not because of the length of time they have
worked. However, seasonal workers who have worked for one season only may not be considered
regular employees. Thus, respondent is considered a regular seasonal worker and not a casual
worker as the petitioners alleged.
Facts:
Rosario Lorezo received, upon inquiry, a letter from the Social Security System, informing
her that she cannot avail of their retirement benefits since per their record she has only paid 16
months. Such is 104 months short of the minimum requirement of 120 months payment to be
entitled to the benefit.
Aggrieved, Lorezo then filed her Amended Petition before the SSC, alleging that she was
employed as laborer in Hda. Cataywa managed by Jose Marie Villanueva in 1970 but was reported
to the SSS only in 1978. She alleged that SSS contributions were deducted from her wages from
1970 to 1995, but not all were remitted to the SSS which, subsequently, caused the rejection of
her claim. She also impleaded Talisay Farms, Inc. by virtue of its Investment Agreement with
Mancy and Sons Enterprises. She also prayed that the veil of corporate fiction be pierced since
she alleged that Mancy and Sons Enterprises and Manuel and Jose Marie Villanueva are one and
the same.
Petitioners Manuel and Jose Villanueva refuted in their answer, the allegation that not
all contributions of respondent were remitted. Petitioners alleged that all farm workers of Hda.
Cataywa were reported and their contributions were duly paid and remitted to SSS. It was the
late Domingo Lizares, Jr. who managed and administered the hacienda. While, Talisay Farms,
Inc. filed a motion to dismiss on the ground of lack of cause of action in the absence of an
allegation that there was an employer-employee relationship between Talisay Farms and
respondent.
The SSC found that Lorezo was a regular employee subject to compulsory coverage of
Hda. Cataywa/Manuel Villanueva/ Mancy and Sons Enterprises, Inc. within the period of 1970 to
February 25, 1990. The SSC denied petitioners' Motion for Reconsideration. The petitioners, then,
elevated the case before the CA where the case was dismissed outright due to technicality.
Issue:
Whether Lorezo is a regular or casual employee of Hda. Cataywa
Ruling:
Loreza is a regular seasonal employee of Hda. Cataywa.
Jurisprudence has identified the three types of employees mentioned in the provision of
the Labor Code: (1) regular employees or those who have been engaged to perform activities that
are usually necessary or desirable in the usual business or trade of the employer; (2) project
employees or those whose employment has been fixed for a specific project or undertaking, the
completion or termination of which has been determined at the time of their engagement, or
those whose work or service is seasonal in nature and is performed for the duration of the season;
and (3) casual employees or those who are neither regular nor project employees.
Farm workers generally fall under the definition of seasonal employees. It was also
consistently held that seasonal employees may be considered as regular employees when they
are called to work from time to time. They are in regular employment because of the nature of
the job, and not because of the length of time they have worked. However, seasonal workers who
have worked for one season only may not be considered regular employees.
The nature of the services performed and not the duration thereof, is determinative of
coverage under the law. To be exempted on the basis of casual employment, the services must
not merely be irregular, temporary or intermittent, but the same must not also be in connection
with the business or occupation of the employer. Thus, it is erroneous for the petitioners to
conclude that the respondent was a very casual worker simply because the SSS form revealed that
she had 16 months of contributions. It does not, in any way, prove that the respondent performed
a job which is not in connection with the business or occupation of the employer to be considered
as casual employee.
A reading of the records would reveal that petitioners failed to dispute the allegation that
the respondent performed hacienda work, such as planting sugarcane point, fertilizing, weeding,
replanting dead sugarcane fields and routine miscellaneous hacienda work. They merely alleged
that respondent was a very casual worker because she only rendered work for 16 months. Thus,
respondent is considered a regular seasonal worker and not a casual worker as the petitioners
alleged.
Petitioners also assert that the sugarcane cultivation covers only a period of six months,
thus, disproving the allegation of the respondent that she worked for 11 months a year for 25
years. This Court has classified farm workers as regular seasonal employees who are called to
work from time to time and the nature of their relationship with the employer is such that during
the off season, they are temporarily laid off; but reemployed during the summer season or when
their service may be needed. Respondent, therefore, as a farm worker is only a seasonal employee.
Since petitioners provided that the cultivation of sugarcane is only for six months, respondent
cannot be considered as regular employee during the months when there is no cultivation.
Based on the foregoing facts and evidence on record, petitioners are liable for delinquent
contributions. It being proven by sufficient evidence that respondent started working for the
hacienda in 1970, it follows that petitioners are liable for deficiency in the SSS contributions.
JOB CONTRACTING
W.M. MANUFACTURING, INC. v. RICHARD R. DALAG AND GOLDEN ROCK MANPOWER

SERVICES
G.R. No. 209418, December 07, 2015, VELASCO, JR., J.
There is "labor-only" contracting where the 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 the workers recruited and
placed by such person are performing activities which are directly related to the principal
business of such employer. In such cases, the person or intermediary shall be considered
merely as an agent of the employer who shall be responsible to the workers in the same
manner and extent as if the latter were directly employed by him.
Facts:
Golden Rock contracted a “Service Agreement” with WM MFG. WM MFG
engaged the services of Dalag as a factory worker assigned at its factory thus creating
a five-month Employment Contract between them. Dalag later on filed a complaint for
illegal dismissal as he was not allowed to work and was allegedly denied due process.
He further claimed that he was assigned as a side seal machine operator, performing
functions necessary and desirable for WM MFG’s plastic manufacturing business,
making him a regular employee. He alleged that Golden Rock and WM MFG engaged
in labor-only contracting because all equipment for the job were furnished by WM MFG
and all jobs were to be done in the vicinity of WM MFG and he was under the control
by the supervisors of WM MFG. WM MFG alleged in their position paper that Dalag was
not dismissed but abandoned his work and was not illegally dismissed.
Issue:
Whether WM MFG and Golden Rock engaged in labor-only contracting
Ruling:
Yes. In labor-only contracting: (1) The contractor or subcontractor does not
have substantial capital or investment which relates to the job, work or service to
be performed and the employees recruited, supplied or placed by such contractor or
subcontractor are performing activities which are directly related to the main
business of the principal and (2) the contractor does not exercise the right to
control over the performance of the work of the contractual employee.
WM MFG and Golden Rock failed to meet these requirements because of the
following:
(1) The DOLE Regional Director was satisfied by Golden Rock's capitalization as
reflected on its financial documents, but the basis for determining the substantiality of
a company's "capital" rests not only thereon but also on the tools and equipment it
owns in relation to the job, work, or service it provides. DO 18-02 defines "substantial
capital or investment" in the context of labor-only contracting as referring not only
to a contractor's financial capability, but also encompasses the tools, equipment,
implements, machineries and work premises, actually and directly used by the
contractor or subcontractor in the performance or completion of the job, work or
service contracted out.
(2) Notwithstanding the contract stipulation leaving Golden Rock the

exclusive right to control the working warm bodies it provides WM MFG, it was
the latter who actually exercised supervision over Dalag's work performance. Dalag
was supervised by WM MFG's employees. WM MFG even furnished Dalag with seven
(7) memos directing him to explain within twenty-four (24) hours his alleged work
infractions. The company likewise took pains in issuing investigation reports detailing
its findings on Dalag's culpability. WM MFG took it upon itself to discipline Dalag
for violation of company rules, regulations, and policies, validating the presence of
the second confirmatory element.
ANTONIO E. UNICA
vs. ANSCOR SWIRE SHIP MANAGEMENT CORPORATION
G.R. No. 184318, February 12, 2014
J. PERALTA
Where the petitioner was repatriated twenty days after the expiration of his contract of
employment, there is no automatic renewal of the contract. It is a settled rule that seafarers are
considered contractual employees. Their employment is governed by the contracts they sign
everytime they are rehired and their employment is terminated when the contract expires. Their
employment is contractually fixed for a certain period of time. Thus, when petitioner's contract
ended on October 25, 2000, his employment is deemed automatically terminated, there being no
mutually-agreed renewal or extension of the expired contract.
Facts:
Antonio Unica (Unica) was employed by Anscor Swire Ship Management Corporation (ASSM) is
a manning agency under various contracts. In his last contract, petitioner was repatriated on
November 14, 2000, or twenty (20) days after the expiration of his contract of employment.
Petitioner averred that since he was allowed to stay in the vessel for another twenty (20) days,
there was an implied renewal of his contract of employment. Hence, when he was repatriated
without a valid cause, he was illegally dismissed.
Due to the foregoing, petitioner filed a case against the respondent for illegal dismissal, payment
of retirement, disability and medical benefits, separation and holiday pay. In its defense,
respondent argued that petitioner was hired for a fixed period, the duration of which depends
upon the mutual agreement of the parties. Petitioner’s employment was, therefore, co-terminus
with the term of his contract. Hence, the claim of petitioner that he was illegally dismissed must
fail, because he was repatriated due to the completion of the term of his contract.
Labor Arbiter (LA) ruled in favor of petitioner. NLRC affirmed LA’s ruling with modification. The
CA annulled and set aside the decision of the NLRC. The CA ruled that there was no implied
renewal of contract and the 20 days extension was due to the fact that the ship was still at sea.
Issue:
Whether there was an implied renewal of petitioner's contract of employment with respondent.
Ruling:
The petition is not meritorious.
In the case at bar, although petitioner's employment contract with respondent ended on October
25, 2000 and he disembarked only on November 14, 2000 or barely 20 days after the expiration of
his employment contract, such late disembarkation was not without valid reason. Respondent
could not have disembarked petitioner on the date of the termination of his employment
contract, because the vessel was still in the middle of the sea. Clearly, it was impossible for
petitioner to safely disembark immediately upon the expiration of his contract, since he must
disembark at a convenient port. Thus, petitioner's stay in the vessel for another 20 days should
not be interpreted as an implied extension of his contract. A seaman need not physically
disembark from a vessel at the expiration of his employment contract to have such contract
considered terminated.
It is a settled rule that seafarers are considered contractual employees. Their employment is
governed by the contracts they sign everytime they are rehired and their employment is
terminated when the contract expires. Their employment is contractually fixed for a certain
period of time. Thus, when petitioner's contract ended on October 25, 2000, his employment is
deemed automatically terminated, there being no mutually-agreed renewal or extension of the
expired contract.
However, petitioner is entitled to be paid his wages after the expiration of his contract until the
vessel's arrival at a convenient port. Section 19 of the Standard Terms and Conditions Governing
the Employment of Filipino Seafarers On-Board Ocean-Going Vessels is clear on this point:
REPATRIATION. A. If the vessel is outside the Philippines upon the expiration of the
contract, the seafarer shall continue his service on board until the vessel's arrival at a
convenient port and/or after arrival of the replacement crew, provided that, in any case,
the continuance of such service shall not exceed three months. The seafarer shall be
entitled to earned wages and benefits as provided in his contract.
DIAMOND FARMS, INC., vs. SOUTHERN PHILIPPINES FEDERATION OF LABOR (SPFL)-

WORKERS SOLIDARITY OF DARBMUPCO/DIAMOND-SPFL, ET AL.
G.R. Nos. 173254-55 & 173263
FACTS:
DFI owns an 800-hectare banana plantation ("original plantation") in Alejal, Carmen, Davao.
Pursuant to Republic Act No. 6657 or the Comprehensive Agrarian Reform Law of 1988 ("CARL"),
commercial farms shall be subject to compulsory acquisition and distribution, thus the original
plantation was covered by the law. However, the Department of Agrarian Reform ("DAR")
granted DFI a deferment privilege to continue agricultural operations until 1998. Due to adverse
marketing problems and observance of the so-called "lay-follow" or the resting of a parcel of land
for a certain period of time after exhaustive utilization, DFI closed some areas of operation in the
original plantation and laid off its employees. These employees petitioned the DAR for the
cancellation of DFI’s deferment privilege alleging that DFI already abandoned its area of
operations. The DAR Regional Director recalled DFI’s deferment privilege resulting in the
original plantation’s automatic compulsory acquisition and distribution under the CARL.
DFI filed a motion for reconsideration which was denied. It then appealed to the DAR Secretary.
In the meantime, to minimize losses, DFI offered to give up its rights and interest over the
original plantation in favor of the government by way of a Voluntary Offer to Sell. The DAR
accepted DFI’s offer to sell the original plantation. However, out of the total 800 hectares, the
DAR only approved the disposition of 689.88 hectares. Hence, the original plantation was split
into two: 689.88 hectares were sold to the government ("awarded plantation") and the remaining
200 hectares, more or less, were retained by DFI ("managed area"). The managed area is subject
to the outcome of the appeal on the cancellation of the deferment privilege before the DAR
Secretary.
On January 1, 1996, the awarded plantation was turned over to qualified agrarian reform
beneficiaries ("ARBs") under the CARL. These ARBs are the same farmers who were working in
the original plantation. They subsequently organized themselves into a multi-purpose
cooperative named "DARBMUPCO," which is one of the respondents in this case.
On March 27, 1996, DARBMUPCO entered into a Banana Production and Purchase Agreement
("BPPA") with DFI. Under the BPPA, DARBMUPCO and its members as owners of the awarded
plantation, agreed to grow and cultivate only high grade quality exportable bananas to be sold
exclusively to DFI. The BPPA is effective for 10 years.
On April 20, 1996, DARBMUPCO and DFI executed a "Supplemental to Memorandum

Agreement" ("SMA"). The SMA stated that DFI shall take care of the labor cost arising from the
packaging operation, cable maintenance, irrigation pump and irrigation maintenance that the
workers of DARBMUPCO shall conduct for DFI’s account under the BPPA.
From the start, DARBMUPCO was hampered by lack of manpower to undertake the agricultural
operation under the BPPA because some of its members were not willing to work. Hence, to assist
DARBMUPCO in meeting its production obligations under the BPPA, DFI engaged the services
of the respondent-contractors, who in turn recruited the respondent-workers.
The engagement of the respondent-workers started a series of labor disputes among

DARBMUPCO, DFI and the respondent-contractors.
ISSUE:
Who among DFI, DARBMUPCO and the respondent-contractors is the employer of the
respondent-workers?
RULING:
Based on the conditions for permissible job contracting, we rule that respondent-contractors are
labor-only contractors.
There is no evidence showing that respondent-contractors are independent contractors. The
respondent-contractors, DFI, and DARBMUPCO did not offer any proof that respondent-
contractors were not engaged in labor-only contracting. In this regard, we cite our ruling in Caro
v. Rilloraza, thus:
"In regard to the first assignment of error, the defendant company pretends to show through
Venancio Nasol's own testimony that he was an independent contractor who undertook to
construct a railway line between Maropadlusan and Mantalisay, but as far as the record shows,
Nasol did not testify that the defendant company had no control over him as to the manner or
methods he employed in pursuing his work. On the contrary, he stated that he was not bonded,
and that he only depended upon the Manila Railroad for money to be paid to his laborers. As
stated by counsel for the plaintiffs, the word ‘independent contractor’ means 'one who exercises
independent employment and contracts to do a piece of work according to his own methods and
without being subject to control of his employer except as to result of the work.' Furthermore, if
the employer claims that the workmen is an independent contractor, for whose acts he is not
responsible, the burden is on him to show his independence.
Tested by these definitions and by the fact that the defendant has presented practically
no evidence to determine whether Venancio Nasol was in reality an independent
contractor or not, we are inclined to think that he is nothing but an intermediary
between the defendant and certain laborers. It is indeed difficult to find that Nasol is an
independent contractor; a person who possesses no capital or money of his own to pay his
obligations to them, who files no bond to answer for any fulfillment of his contract with his
employer and specially subject to the control and supervision of his employer, falls short of the
requisites or conditions necessary for the common and independent contractor."(Citations
omitted; emphasis supplied.)
To support its argument that respondent-contractors are the employers of respondent-workers,

and not merely labor-only contractors, DFI should have presented proof showing that
respondent-contractors carry on an independent business and have sufficient capitalization. The
record, however, is bereft of showing of even an attempt on the part of DFI to substantiate its
argument.
DFI cannot cite the May 24, 1999 Resolution of the NLRC as basis that respondent-contractors
are independent contractors. Nowhere in the NLRC Resolution does it say that the respondent-
contractors are independent contractors. On the contrary, the NLRC declared that "it was not
clearly established on record that said [respondent-]contractors are independent, xxx."
Further, respondent-contractors admit, and even insist that they are engaged in labor-only
contracting. As will be seen below, respondent-contractors made the admissions and
declarations on two occasions: first was in their Formal Appearance of Counsel and Motion for
Exclusion of Individual Party-Respondents filed before the LA; and second was in their Verified
Explanation and Memorandum filed before this Court.
Before the LA, respondent-contractors categorically stated that they are "labor-only" contractors
who have been engaged by DFI and DARBMUPCO. They admitted that they do not have
substantial capital or investment in the form of tools, equipment, machineries, work premises
and other materials, and they recruited workers to perform activities directly related to the
principal operations of their employer.
Before this Court, respondents-contractors again admitted that they are labor-only contractors.
They narrated that:
1. Herein respondents, Voltaire Lopez, Jr., et al., were commissioned and contracted
by petitioner, Diamond Farms, Inc. (DFI) to recruit farm workers, who are the
complaining [respondent-workers] (as represented by Southern Philippines
Federation of Labor (SPFL) in this appeal by certiorari), in order to perform specific
farm activities, such as pruning, deleafing, fertilizer application, bud inject, stem spray,
drainage, bagging, etc., on banana plantation lands awarded to private respondent,
Diamond Farms Agrarian Reform Beneficiaries Multi-Purpose Cooperative
(DARBMUPCO) and on banana planted lands owned and managed by petitioner, DFI.
2. All farm tools, implements and equipment necessary to performance of such farm
activities were supplied by petitioner DFI to respondents Voltaire Lopez, Jr., et. al. as
well as to respondents-SPFL, et. al. Herein respondents Voltaire Lopez, Jr. et. al. had
no adequate capital to acquire or purchase such tools, implements, equipment,
etc.
3. Herein respondents Voltaire Lopez, Jr., et. al. As well as respondents-SPFL, et. al.
were being directly supervised, controlled and managed by petitioner DFI farm
managers and supervisors, specifically on work assignments and performance
targets. DFI managers and supervisors, at their sole discretion and prerogative, could
directly hire and terminate any or all of the respondents-SPFL, et. al., including any or
all of the herein respondents Voltaire Lopez, Jr., et. al.
4. Attendance/Time sheets of respondents-SPFL, et. al. were being prepared by herein
respondents Voltaire Lopez, Jr., et. al., and correspondingly submitted to petitioner DFI.
Payment of wages to respondents-SPFL, et. al. were being paid for by petitioner DFI thru
herein respondents Voltaire Lopez, [Jr.], et. al. The latter were also receiving their
wages/salaries from petitioner DFI for monitoring/leading/recruiting the respondents-
SPFL, et. al.
5. No monies were being paid directly by private respondent DARBMUPCO to
respondents-SPFL, et al., nor to herein respondents Voltaire Lopez, [Jr.], et. al. Nor did
respondent DARBMUPCO directly intervene much less supervise any or all of [the]
respondents-SPFL, et. al. including herein respondents Voltaire Lopez, Jr., et. al.
(Emphasis supplied.)
The foregoing admissions are legally binding on respondent-contractors. Judicial admissions

made by parties in the pleadings, or in the course of the trial or other proceedings in the same
case are conclusive and so does not require further evidence to prove them. Here, the respondent-
contractors voluntarily pleaded that they are labor-only contractors; hence, these admissions
bind them.
A finding that a contractor is a labor-only contractor is equivalent to a declaration that there is
an employer-employee relationship between the principal, and the workers of the labor-only
contractor; the labor-only contractor is deemed only as the agent of the principal. Thus, in this
case, respondent-contractors are the labor-only contractors and either DFI or DARBMUPCO is
their principal.
We hold that DFI is the principal.
Under Article 106 of the Labor Code, a principal or employer refers to the person who enters into
an agreement with a job contractor, either for the performance of a specified work or for the
supply of manpower. In this regard, we quote with approval the findings of the CA, to wit:
The records show that it is DFI which hired the individual [respondent-contractors] who
in turn hired their own men to work in the 689.88 hectares land of DARBMUPCO as well
as in the managed area of the plantation. DFI admits [that] these [respondent-contractors]
worked under the direction and supervision of the DFI managers and personnel. DFI paid the
[respondent-contractors] for the services rendered in the plantation and the [respondent-
contractors] in turn pay their workers after they [respondent-contractors] received payment from
DFI. xxx DARBMUPCO did not have anything to do with the hiring, supervision and payment of
the wages of the workers-respondents thru the contractors-respondents. xxx (Emphasis
supplied.)
DFI does not deny that it engaged the services of the respondent-contractors. It does not dispute
the claims of respondent-contractors that they sent their billing to DFI for payment; and that
DFI’s managers and personnel are in close consultation with the respondent-contractors.
DFI cannot argue that DARBMUPCO is the principal of the respondent-contractors because it
(DARBMUPCO) owns the awarded plantation where respondent-contractors and respondent-
workers were working; and therefore DARBMUPCO is the ultimate beneficiary of the
employment of the respondent-workers.
That DARBMUPCO owns the awarded plantation where the respondent-contractors and
respondent-workers were working is immaterial. This does not change the situation of the
parties. As correctly found by the CA, DFI, as the principal, hired the respondent-contractors and
the latter, in turn, engaged the services of the respondent-workers. This was also the unanimous
finding of the SOLE, the LA, and the NLRC. Factual findings of the NLRC, when they coincide
with the LA and affirmed by the CA are accorded with great weight and respect and even finality
by this Court.
Alilin v. Petron Corporation is applicable. In that case, this Court ruled that the presence of the
power of control on the part of the principal over the workers of the contractor, under the facts,
prove the employer-employee relationship between the former and the latter, thus:
[A] finding that a contractor is a ‘labor-only’ contractor is equivalent to declaring that there is an
employer-employee relationship between the principal and the employees of the supposed
contractor." In this case, the employer-employee relationship between Petron and
petitioners becomes all the more apparent due to the presence of the power of control
on the part of the former over the latter.
It was held in Orozco v. The Fifth Division of the Hon. Court of Appeals that:
This Court has constantly adhered to the "four-fold test" to determine whether there exists an
employer-employee relationship between the parties.1âwphi1 The four elements of an
employment relationship are: (a) the selection and engagement of the employee; (b) the payment
of wages; (c) the power of dismissal; and (d) the power to control the employee’s conduct.
Of these four elements, it is the power to control which is the most crucial and most
determinative factor, so important, in fact, that, the other elements may even be
disregarded.
Hence, the facts that petitioners were hired by Romeo or his father and that their salaries were
paid by them do not detract from the conclusion that there exists an employer-employee
relationship between the parties due to Petron’s power of control over the petitioners. One
manifestation of the power of control is the power to transfer employees from one work
assignment to another. Here, Petron could order petitioners to do work outside of their regular
"maintenance/utility" job. Also, petitioners were required to report for work everyday at the bulk
plant, observe an 8:00 a.m. to 5:00 p.m. daily work schedule, and wear proper uniform and safety
helmets as prescribed by the safety and security measures being implemented within the bulk
plant. All these imply control. In an industry where safety is of paramount concern, control and
supervision over sensitive operations, such as those performed by the petitioners, are inevitable
if not at all necessary. Indeed, Petron deals with commodities that are highly volatile and
flammable which, if mishandled or not properly attended to, may cause serious injuries and
damage to property and the environment. Naturally, supervision by Petron is essential in every
aspect of its product handling in order not to compromise the integrity, quality and safety of the
products that it distributes to the consuming public. (Citations omitted; emphasis supplied)
That DFI is the employer of the respondent-workers is bolstered by the CA’s finding that DFI
exercises control over the respondent-workers. DFI, through its manager and supervisors
provides for the work assignments and performance targets of the respondent-workers. The
managers and supervisors also have the power to directly hire and terminate the respondent-
workers. Evidently, DFI wields control over the respondent-workers.
Neither can DFI argue that it is only the purchaser of the bananas produced in the awarded
plantation under the BPPA, and that under the terms of the BPPA, no employer-employee
relationship exists between DFI and the respondent-workers, to wit:
UNDERTAKING OF THE FIRST PARTY

xxx
3. THE FIRST PARTY [DARBMUPCO] shall be responsible for the proper conduct, safety, benefits
and general welfare of its members working in the plantation and specifically render free and
harmless the SECOND PARTY [DFI] of any expense, liability or claims arising therefrom. It is
clearly recognized by the FIRST PARTY that its members and other personnel utilized in
the performance of its function under this agreement are not employees of the SECOND
PARTY. (Emphasis supplied)
In labor-only contracting, it is the law which creates an employer-employee relationship between

the principal and the workers of the labor-only contractor.
Inasmuch as it is the law that forms the employment ties, the stipulation in the BPPA that
respondent-workers are not employees of DFI is not controlling, as the proven facts show
otherwise. The law prevails over the stipulations of the parties. Thus, in Tabas v. California
Manufacturing Co., Inc., we held that:
The existence of an employer-employees relation is a question of law and being such, it

cannot be made the subject of agreement. Hence, the fact that the manpower supply
agreement between Livi and California had specifically designated the former as the petitioners'
employer and had absolved the latter from any liability as an employer, will not erase either
party's obligations as an employer, if an employer-employee relation otherwise exists between
the workers and either firm. xxx (Emphasis supplied.)
Clearly, DFI is the true employer of the respondent-workers; respondent-contractors are only
agents of DFI. Under Article 106 of the Labor Code, DFI shall be solidarily liable with the
respondent-contractors for the rightful claims of the respondent-workers, to the same manner
and extent as if the latter are directly employed by DFI.
MANILA MEMORIAL PARK CEMETERY, INC. v. EZARD D. LLUZ, NORMAN CORRAL,

ERWIN FUGABAN, VALDIMAR BALISI, EMILIO FABON, JOHN MARK APLICADOR,
MICHAEL CURIOSO, JUNLIN ESPARES, GAVINO FARINAS, AND WARD TRADING AND
SERVICES
G.R. No. 208451, February 03, 2016
FACTS
On 23 February 2006, petitioner Manila Memorial Park Cemetery, Inc. (Manila Memorial)
entered into a Contract of Services with respondent Ward Trading and Services (Ward Trading).
The Contract of Services provided that Ward Trading, as an independent contractor, will render
interment and exhumation services and other related work to Manila Memorial in order to
supplement operations at Manila Memorial Park, Paranaque City.
Among those assigned by Ward Trading to perform services at the Manila Memorial Park were
respondents Ezard Lluz, Norman Corral, Erwm Fugaban, Valdimar Balisi, Emilio Fabon, John
Mark Aplicador, Michael Curioso, Junlin Espares, and Gavino Farinas (respondents). They
worked six days a week for eight hours daily and were paid P250 per day.
On 26 June 2007, respondents filed a Complaint for regularization and Collective Bargaining
Agreement benefits against Manila Memorial; Enrique B. Lagdameo, Manila Memorial's
Executive Vice-President and Director in Charge for Overall Operations, and Ward Trading. On
6 August 2007, respondents filed an amended complaint to include illegal dismissal,
underpayment of 13th month pay, and payment of attorney's fees.
Respondents alleged that they asked Manila Memorial to consider them as regular workers
within the appropriate bargaining unit established in the collective bargaining agreement by
Manila Memorial and its union, the Manila Memorial Park Free Workers Union (MMP Union).
Manila Memorial refused the request since respondents were employed by Ward Trading, an
independent labor contractor. Thereafter, respondents joined the MMP Union. The MMP Union,
on behalf of respondents, sought their regularization which Manila Memorial again declined.
Respondents then filed the complaint. Subsequently, respondents were dismissed by Manila
Memorial. Thus, respondents amended the complaint to include the prayer for their
reinstatement and payment of back wages.
Meanwhile, Manila Memorial sought the dismissal of the complaint for lack of jurisdiction since
there was no employer-employee relationship. Manila Memorial argued that respondents were
the employees of Ward Trading.
In a Decision dated 29 March 2010, the Labor Arbiter dismissed the complaint for failing to prove
the existence of an employer-employee relationship.
Respondents appealed to the NLRC. In a Decision dated 30 September 2010, the NLRC reversed
the Labor Arbiter's findings. The NLRC ruled that Ward Trading was a labor-only contractor and
an agent of Manila Memorial.
Thereafter, Manila Memorial filed an appeal with the CA. In a Decision dated 21 January 2013, the
CA affirmed the ruling of the NLRC. The CA found the existence of an employer-employee
relationship between Manila Memorial and respondents.
ISSUE
Whether or not an employer-employee relationship exists between Manila Memorial and

respondents for the latter to be entitled to their claim for wages and other benefits.ch
RULING
In the present case, Manila Memorial entered into a Contract of Services with Ward Trading, a
single proprietorship owned by Emmanuel Mayor Ward with business address in Las Piñas City
on 23 February 2006. In the Contract of Services, it was provided that Ward Trading, as the
contractor, had adequate workers and substantial capital or investment in the form of tools,
equipment, machinery, work premises and other materials which were necessary in the conduct
of its business.
However, a closer look at the Contract of Services reveals that Ward Trading does not have
substantial capital or investment in the form of tools, equipment, machinery, work premises and
other materials since it is Manila Memorial which owns the equipment used in the performance
of work needed for interment and exhumation services. The pertinent provision in the Contract
of Services which shows that Manila Memorial owns the equipment states:
The COMPANY shall [sell] to the contractor the COMPANY owned equipment in
the amount of ONE MILLION FOUR HUNDRED THOUSAND PESOS ONLY
(Php 1,400,000.00) payable in two (2) years or a monthly payment of FIFTY EIGHT
THOUSAND THREE HUNDRED THIRTY FIVE PESOS ONLY (Php 58,335.00) to
be deducted from the CONTRACTOR'S billing. ry
Just by looking at the provision, it seems that the sale was a regular business transaction between
two parties. However, Manila Memorial did not present any evidence to show that the sale
actually pushed through or that payments were made by Ward Trading to prove an ordinary arms
length transaction. We agree with the NLRC in its findings:
While the above-cited provision of the Contract of Service implies that respondent MMPCI would
sell subject equipment to Ward at some future time, the former failed to present any contract of
sale as proof that, indeed, it actually sold said equipment to Ward. Likewise, respondent MMPCI
failed to present any "CONTRACTOR'S billing" wherein the purported monthly installment of
P58,335.00 had been deducted, to prove that Ward truly paid the same as they fell due. In a
contract to sell, title is retained by the vendor until full payment of the price.
Moreover, the Contract of Service provides that:
"5. The COMPANY reserves the right to rent all or any of the CONTRACTOR'S equipment in the
event the COMPANY requires the use of said equipment, x x x."
This provision is clear proof that Ward does not have an absolute right to use or enjoy subject
equipment, considering that its right to do so is subject to respondent MMPCI's use thereof at
any time the latter requires it. Such provision is contrary to Article 428 of the Civil Code, which
provides that "The owner has the right to enjoy and dispose of a thing, without other limitation
than those established by law." It is plain to see that Ward is not the owner of the equipment
worth P1,400,000.00 that is being actually and directly used in the performance of the services
contracted out.
Further, the Service Contract states that:
"For its part, the COMPANY agrees to provide the following:
a) Area to store CONTRACTOR'S equipment and materials

b) Office space for CONTRACTOR'S staff and personnel"
This provision is clear proof that even the work premises actually and directly used by Ward in
the performance of the services contracted out is owned by respondent MMPCI.vi
Also, the difference in the value of the equipment in the total amount of P1,400,000.00 can be
glaringly seen in Ward Trading's financial statements for the year 2006 when compared to its
2005 financial statements. It is significant to note that these financial statements were submitted
by Manila Memorial without any certification that these financial statements were actually
audited by an independent certified public accountant. Ward Trading's Balance Sheet as of 31
December 2005 showed that it had assets in the amount of P441,178.50 and property and
equipment with a net book value of P86,026.50 totaling P534,705. A year later, Ward Trading's
Balance Sheet ending in 31 December 2006 showed that it had assets in the amount of P57,084.70
and property and equipment with a net book value of Pl,426,468 totaling P1,491,052.70. Ward
Trading, in its Income Statements for the years 2005 and 2006, only earned a net income of
P53,800 in the year ending 2005 and P68,141.50 in 2006. Obviously, Ward Trading could not have
raised a substantial capital of P1,400,000.00 from its income alone without the inclusion of the
equipment owned and allegedly sold by Manila Memorial to Ward Trading after they signed the
Contract of Services on 23 February 2006.
Further, the records show that Manila Memorial and Enrique B. Lagdameo admitted that
respondents performed various interment services at its Sucat, Paranaque branch which were
directly related to Manila Memorial's business of developing, selling and maintaining memorial
parks and interment functions. Manila Memorial even retained the right to control the
performance of the work of the employees concerned. As correctly observed by the CA:
A perusal of the Service Contract would reveal that respondent Ward is still subject to petitioner's
control as it specifically provides that although Ward shall be in charge of the supervision over
individual respondents, the exercise of its supervisory function is heavily dependent upon the
needs of petitioner Memorial Park, particularly:
"It is also agreed that:
a) The CONTRACTOR'S supervisor will conduct a regular inspection of grave sites/areas being
dug to ensure compliance with the COMPANY'S interment schedules and other related
ceremonies.
b) The CONTRACTOR will provide enough manpower during peak interment days including
Sundays and Holidays.
c) The CONTRACTOR shall schedule off-days for its workers in coordination with the
COMPANY'S schedule of interment operation.
d) The CONTRACTOR shall be responsible for any damage done to lawn/s and/or structure/s
resulting from its operation, which must be restored to its/their original condition without
delay and at the expense of CONTRACTOR."
The contract further provides that petitioner has the option to take over the functions of Ward's
personnel if it finds any part or aspect of the work or service provided to be unsatisfactory, thus:
"6.1 It is hereby expressly agreed and understood that, at any time during the effectivity of this
CONTRACT and its sole determination, the COMPANY may take over the performance of any of
the functions mentioned in Paragraph I above, in any of the following cases:
xxx
c. If the COMPANY finds the performance of the CONTRACTOR in any part or aspect of the
grave digging works or other services provided by it to be unsatisfactory."
It is obvious that the aforementioned provision leaves respondent Ward at the mercy of
petitioner Memorial Park as the contract states that the latter may take over if it finds any part
of the services to be below its expectations, including the manner of its performance. x x x.
The NLRC also found that Ward Trading's business documents fell short of sound business
practices. The relevant portion in the NLRC's Decision states:
It is also worth noting that while Ward has a Certificate of Business Name Registration issued by
the Department of Trade and Industry on October 24, 2003 and valid up to October 24, 2008, the
same expressly states that it is not a license to engage in any kind of business, and that it is valid
only at the place indicated therein, which is Las Piñas City. Hence, the same is not valid in
Paranaque City, where Ward assigned complainants to perform interment services it contracted
with respondent MMPCI. It is also noted that the Permit, which was issued to Ward by the Office
of the Mayor of Las Piñas City on October 28, 2003, was valid only up to December 31, 2003.
Likewise, the Sanitary Permit to Operate, which was issued to Ward by the Office of the City
Health Officer of the Las Piñas City Health Office on October 28, 2003, expired on December 31,
2003. While respondents MMPCI and Lagdameo were able to present copies of the above-
mentioned documents, they failed to present any proof that Ward is duly registered as [a]
contractor with the Department of Labor and Employment.
Section 11 of Department Order No. 18-02, which mandates registration of contractors or

subcontractors with the DOLE, states:
Section 11. Registration of Contractors or Subcontractors. - Consistent with authority of the

Secretary of Labor and Employment to restrict or prohibit the contracting out of labor through
appropriate regulations, a registration system to govern contracting arrangements and to be
implemented by the Regional Office is hereby established.
The Registration of contractors and subcontractors shall be necessary for purposes of establishing
an effective labor market information and monitoring.
Failure to register shall give rise to the presumption that the contractor is engaged in labor-only
contracting.
For failing to register as a contractor, a presumption arises that one is engaged in labor-only
contracting unless the contractor overcomes the burden of proving that it has substantial capital,
investment, tools and the like.
In this case, however, Manila Memorial failed to adduce evidence to prove that Ward Trading
had any substantial capital, investment or assets to perform the work contracted for. Thus, the
presumption that Ward Trading is a labor-only contractor stands. Consequently, Manila
Memorial is deemed the employer of respondents. As regular employees of Manila Memorial,
respondents are entitled to their claims for wages and other benefits as awarded by the NLRC
and affirmed by the CA.
EMMANUEL D. QUINTANAR, ET AL. v. COCA-COLA BOTTLERS,
PHILIPPINES, INC.,
G.R. No. 210565, June 28, 2016
FACTS
Complainants allege that they are former employees directly hired by respondent Coca-Cola on
different dates from 1984 up to 2000, assigned as regular Route Helpers under the direct
supervision of the Route Sales Supervisors. Their duties consist of distributing bottled Coca-Cola
products to the stores and customers in their assigned areas/routes, and they were paid salaries
and commissions at the average of P3,000.00 per month. After working for quite sometime as
directly-hired employees of Coca-Cola, complainants were allegedly transferred successively as
agency workers to the following manpower agencies, namely, Lipercon Services, Inc., People's
Services, Inc., ROMAC, and the latest being respondent Interserve Management and Manpower
Resources, Inc.
Further, complainants allege that the Department of Labor and Employment (DOLE) conducted
an inspection of Coca-Cola to determine whether it is complying with the various mandated labor
standards, and relative thereto, they were declared to be regular employees of Coca-Cola, which
was held liable to pay complainants the underpayment of their 13th month pay, emergency cost
of living allowance (ECOLA), and other claims. As soon as respondents learned of the filing of
the claims with DOLE, they were dismissed on various dates in January 2004. Their claims were
later settled by the respondent company, but the settlement allegedly did not include the issues
on reinstatement and payment of CBA benefits. Thus, on November 10, 2006, they filed their
complaint for illegal dismissal.
In support of their argument that they were regular employees of Coca-Cola, the complainants
relied on the pronouncement of the Supreme Court in the case of CCBPI vs. NOWM, G.R. No.
176024, June 18, 2007, as follows:
"In the case at bar, individual complainants were directly hired by respondent Coca-Cola as Route
Helpers. They assist in the loading and unloading of softdrinks. As such they were paid by
respondent Coca-Cola their respective salaries plus commission. It is of common knowledge in
the sales of softdrinks that salesmen are not alone in making a truckload of softdrinks for delivery
to customers. Salesmen are usually provided with route helpers or utility men who does the
loading and unloading. The engagement of the individual complainants to such activity is usually
necessary in the usual business of respondent Coca-Cola.
Contrary to the Labor Arbiter's conclusion that respondent Coca-Cola is engaged

solely in the manufacturing is erroneous as it is also engaged in the sales of the
softdrinks it manufactured.
Moreover, having been engaged to perform, such activity for more than a year all
the more bolsters individual complainants' status as regular employees
notwithstanding the contract, oral or written, or even if their employment was
subsequently relegated to a labor contractor."
Respondent Coca-Cola denies employer-employee relationship with the complainants pointing
to respondent Interserve with whom it has a service agreement as the complainants' employer.
As alleged independent service contractor of respondent Coca-Cola, respondent Interserve "is
engaged in the business of rendering substitute or reliever delivery services to its own clients and
for CCBPI in particular, the delivery of CCBPI's softdrinks and beverage products." It is allegedly
free from the control and direction of CCBPI in all matters connected with the performance of
the work, except as to the results thereof, pursuant to the service agreement. Moreover,
respondent Interserve is allegedly highly capitalized with a total of P21,658,220.26 and with total
assets of P27,509,716.32.
Further, respondent Coca-Cola argued that all elements of employer-employee relationship exist
between respondent Interserve and the complainants. It was allegedly Interserve which solely
selected and engaged the services of the complainants, which paid the latter their salaries, which
was responsible with respect to the imposition of appropriate disciplinary sanctions against its
erring employees, including the complainants, without any participation from Coca-Cola, which
personally monitors the route helpers' performance of their delivery services pointing to Noel
Sambilay as the Interserve Coordinator.
On its part, respondent Interserve merely filed its position paper, pertaining only to complainants
Quintanar and Cabili totally ignoring all the other twenty-eight (28) complainants. It maintains
that it is a legitimate job contractor duly registered as such and it undertakes to perform utility,
janitorial, packaging, and assist in transporting services by hiring drivers. Complainants
Quintanar and Cabili were allegedly hired as clerks who were assigned to CCBPI Mendiola Office,
under the supervision of Interserve supervisors. Respondent Coca-Cola does not allegedly
interfere with the manner and the methods of the complainants' performance at work as long as
the desired results are achieved. While admitting employer-employee relationship with the
complainants, nonetheless, respondent Interserve avers that complainants are not its regular
employees as they were allegedly mere contractual workers whose employment depends on the
service contracts with the clients and the moment the latter sever said contracts, respondent has
allegedly no choice but to either deploy the complainants to other principals, and if the latter are
unavailable, respondent cannot allegedly be compelled to retain them.
ISSUE:
Whether or not the petitioners were illegally dismissed from their employment with Coca-Cola.
This, in turn, necessitates a determination of the characterization of the relationship between
route-helpers such as the petitioners, and softdrink manufacturers such as Coca-Cola,
notwithstanding the participation of entities such as ISI, Lipercon, PSI, ROMAC, and Interserve.
RULING
The Court finds for the petitioners. The reasons are:
First. Contrary to the position taken by Coca-Cola, it cannot be said that route-helpers, such as
the petitioners no longer enjoy the employee-employer relationship they had with Coca-Cola
since they became employees of Interserve. A cursory review of the jurisprudence regarding this
matter reveals that the controversy regarding the characterization of the relationship between
route-helpers and Coca-Cola is no longer a novel one.
As early as May 2003, the Court in Magsalin struck down the defense of Coca-Cola that the
complainants therein, who were route-helpers, were its "temporary" workers. In the said
Decision, the Court explained:
The basic law on the case is Article 280 of the Labor Code. Its pertinent provisions read:C
Art. 280. Regular and Casual Employment. The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of the parties, an employment shall be
deemed to be regular where the employee has been engaged to perform activities which are
usually necessary or desirable in the usual business or trade of the employer, except where the
employment has been fixed for a specific project or undertaking the completion or termination
of which has been determined at the time of the engagement of the employee or where the work
or services to be performed is seasonal in nature and the employment is for the duration of the
season.
An employment shall be deemed to be casual if it is not covered by the preceding paragraph:

Provided, That, any employee who has rendered at least one year of service, whether such service
is continuous or broken, shall be considered a regular employee with respect to the activity in
which he is employed and his employment shall continue while such activity exists.
Coca-Cola Bottlers Phils., Inc. is one of the leading and largest manufacturers of softdrinks in the
country. Respondent workers have long been in the service of petitioner company. Respondent
workers, when hired, would go with route salesmen on board delivery trucks and undertake the
laborious task of loading and unloading softdrink products of petitioner company to its various
delivery points.
Even while the language of law might have been more definitive, the clarity of its spirit and intent,
i.e., to ensure a "regular" worker's security of tenure, however, can hardly be doubted. In
determining whether an employment should be considered regular or non-regular, the applicable
test is the reasonable connection between the particular activity performed by the employee in
relation to the usual business or trade of the employer. The standard, supplied by the law itself,
is whether the work undertaken is necessary or desirable in the usual business or trade of the
employer, a fact that can be assessed by looking into the nature of the services rendered and its
relation to the general scheme under which the business or trade is pursued in the usual course.
It is distinguished from a specific undertaking that is divorced from the normal activities required
in carrying on the particular business or trade. But, although the work to be performed is only
for a specific project or seasonal, where a person thus engaged has been performing the job for
at least one year, even if the performance is not continuous or is merely intermittent, the law
deems the repeated and continuing need for its performance as being sufficient to indicate the
necessity or desirability of that activity to the business or trade of the employer. The employment
of such person is also then deemed to be regular with respect to such activity and while such
activity exists.
The argument of petitioner that its usual business or trade is softdrink manufacturing and that
the work assigned to respondent workers as sales route helpers so involves merely
"postproduction activities," one which is not indispensable in the manufacture of its products,
scarcely can be persuasive. If, as so argued by petitioner company, only those whose work are
directly involved in the production of softdrinks may be held performing functions necessary and
desirable in its usual business or trade, there would have then been no need for it to even
maintain regular truck sales route helpers. The nature of the work performed must be viewed
from a perspective of the business or trade in its entirety and not on a confined scope.
The repeated rehiring of respondent workers and the continuing need for their services clearly
attest to the necessity or desirability of their services in the regular conduct of the business or
trade of petitioner company. The Court of Appeals has found each of respondents to have worked
for at least one year with petitioner company. While this Court, in Brent School, Inc. vs. Zamora,
has upheld the legality of a fixed-term employment, it has done so, however, with a stern
admonition that where from the circumstances it is apparent that the period has been imposed
to preclude the acquisition of tenurial security by the employee, then it should be struck down
as being contrary to law, morals, good customs, public order and public policy. The pernicious
practice of having employees, workers and laborers, engaged for a fixed period of few months,
short of the normal six-month probationary period of employment, and, thereafter, to be hired
on a day-to-day basis, mocks the law. Any obvious circumvention of the law cannot be
countenanced. The fact that respondent workers have agreed to be employed on such basis and
to forego the protection given to them on their security of tenure, demonstrate nothing more
than the serious problem of impoverishment of so many of our people and the resulting
unevenness between labor and capital. A contract of employment is impressed with public
interest. The provisions of applicable statutes are deemed written into the contract, and "the
parties are not at liberty to insulate themselves and their relationships from the impact of labor
laws and regulations by simply contracting with each other."
The Court in Agito similarly struck down Coca-Cola's contention that the salesmen therein were
employees of Interserve, notwithstanding the submission by Coca-Cola of their personal data
files from the records of Interserve; their Contract of Temporary Employment with Interserve;
and the payroll records of Interserve. In categorically declaring Interserve as a labor-only
contractor, the Court found that the work of the respondent salesmen therein, constituting
distribution and sale of Coca-Cola products, was clearly indispensable to the principal business
of petitioner Coca-Cola.
As to the supposed substantial capital and investment required of an independent job contractor,
the Court stated that it "does not set an absolute figure for what it considers substantial capital
for an independent job contractor, but it measures the same against the type of work which the
contractor is obligated to perform for the principal." The Court reiterated that the contractor,
not the employee, had the burden of proof that it has the substantial capital, investment and tool
to engage in job contracting. As applied to Interserve, the Court ruled:
The contractor, not the employee, has the burden of proof that it has the substantial capital,
investment, and tool to engage in job contracting. Although not the contractor itself (since
Interserve no longer appealed the judgment against it by the Labor Arbiter), said burden of proof
herein falls upon petitioner who is invoking the supposed status of Interserve as an independent
job contractor. Noticeably, petitioner failed to submit evidence to establish that the service
vehicles and equipment of Interserve, valued at P510,000.00 and P200,000.00, respectively, were
sufficient to carry out its service contract with petitioner. Certainly, petitioner could have simply
provided the courts with records showing the deliveries that were undertaken by Interserve for
the Lagro area, the type and number of equipment necessary for such task, and the valuation of
such equipment. Absent evidence which a legally compliant company could have easily provided,
the Court will not presume that Interserve had sufficient investment in service vehicles and
equipment, especially since respondents' allegation that they were using equipment, such as
forklifts and pallets belonging to petitioner, to carry out their jobs was uncontroverted.
In sum, Interserve did not have substantial capital or investment in the form of tools, equipment,
machineries, and work premises; and respondents, its supposed employees, performed work
which was directly related to the principal business of petitioner. It is, thus, evident that
Interserve falls under the definition of a labor-only contractor, under Article 106 of the Labor
Code; as well as Section 5(1) of the Rules Implementing Articles 106-109 of the Labor Code, as
amended.
As for the certification issued by the DOLE stating that Interserve was an independent job
contractor, the Court ruled:
The certification issued by the DOLE stating that Interserve is an independent job contractor
does not sway this Court to take it at face value, since the primary purpose stated in the Articles
of Incorporation of Interserve is misleading. According to its Articles of Incorporation, the
principal business of Interserve is to provide janitorial and allied services. The delivery and
distribution of Coca-Cola products, the work for which respondents were employed and assigned
to petitioner, were in no way allied to janitorial services. While the DOLE may have found that
the capital and/or investments in tools and equipment of Interserve were sufficient for an
independent contractor for janitorial services, this does not mean that such capital and/or
investments were likewise sufficient to maintain an independent contracting business for the
delivery and distribution of Coca-Cola products.
Finally, the Court determined the existence of an employer-employee relationship between the
parties therein considering that the contract of service between Coca-Cola and Interserve showed
that the former indeed exercised the power of control over the complainants therein.
The Court once more asserted the findings that route-helpers were indeed employees of Coca-
Cola in Coca-Cola Bottlers Philippines, Inc. v. Dela Cruz and, recently, in Basan v. Coca-Cola
Bottlers Philippines, Inc. and that the complainants therein were illegally dismissed for want of
just or authorized cause. Similar dispositions by the CA were also upheld by this Court in N.O.W
and Ostani, through minute resolutions.
It bears mentioning that the arguments raised by Coca-Cola in the case at bench even bear a
striking similarity with the arguments it raised before the CA in N.O.W and Ostani. Law
From all these, a pattern emerges by which Coca-Cola consistently resorts to various methods in
order to deny its route-helpers the benefits of regular employment. Despite this, the Court,
consistent with sound pronouncements above, adopts the rulings made in Pacquing that
Interserve was a labor-only contractor and that Coca-Cola should be held liable pursuant to the
principle of stare decisis et non quieta movere.
In this case, Coca-Cola has not shown any strong and compelling reason to convince the Court
that the doctrine of stare decisis should not be applied. It failed to successfully demonstrate how
or why both the LA and the NLRC committed grave abuse of discretion in sustaining the pleas of
the petitioners that they were its regular employees and not of Interserve.
Second. A reading of the decision of the CA and the pleadings submitted by Coca-Cola before this
Court reveals that they both lean heavily on the service agreement entered into by Coca-Cola and
Interserve; the admission by Interserve that it paid the petitioners' salaries; and the affidavit of
Sambilay who attested that it was Interserve which exercised the power of control over the
petitioners.
The service agreements entered into by Coca-Cola and Interserve, the earliest being that dated
January 1998, (another one dated July 11, 2006) and the most recent one dated March 21, 2007 -
all reveal that they were entered into One, after the petitioners were hired by Coca-Cola (some of
whom were hired as early as 1984); Two, after they were dismissed from their employment
sometime in January 2004; and Three, after the petitioners filed their complaint for illegal dismissal
on November 10, 2006 with the LA.
To quote with approval the observations of the LA:
x x x The most formidable obstacle against the respondent's theory of lack of employer-employee
relationship is that complainants have [been] performing the tasks of route-helpers for several
years and that practically all of them have been rendering their services as such even before
respondent Interserve entered into a service agreement with Coca-Cola sometime in 1998.
Thus, the complainants in their position paper categorically stated the record of their service
with Coca-Cola as having started on the following dates: Emmanuel Quintanar - October 15, 1994;
Benjamin Durano - November 16, [1987]; Cecilio Delaving - June 10, 1991; Ricardo Gaborni -
September 28, 1992; Romel Gerarman - June 20, 1995; Ramilo Gaviola - October 10, 1988; Joel John
Aguilar - June 1, 1992; Restituto Agsalud - September 7, 1989; Martin Celis - August 15, 1995;
Patricio Arios - June 2, 1989; Michael Bello - February 15, 1992; Lorenzo Quinlog - May 15, 1992;
Junne Blaya - September 15, 1997; Santiago Tolentino, Jr. - May 29, 1989; Nestor Magnaye -
February 15, 1996; Arnold Polvorido - February 8, 1996; Allan Agapito - April 15, 1995; Ariel
Baumbad - January 15, 1995; Jose Lutiya - February 15, 1995; Edgardo Tapalla - August 15, 1994;
Roldan Cadayona - May 14, 1996; Raynaldo Alburo - September 15, 1996; Rudy Ultra - February
28, 1997; Marcelo Cabili - November 15, 1995; Arnold Asiaten - May 2, 1992; Raymundo Macaballug
- July 31, 1995; Joel Delena - January 15, 1991; Danilo Oquino - September 15, 1990; Greg Caparas -
August 15, 1995; and Romeo Escartin - May 15, 1986.
It should be mentioned that the foregoing allegation of the complainants' onset of their services
with respondent Coca-Cola has been confirmed by the Bio-Data Sheets submitted in
evidence by the said respondent [Coca-Cola]. Thus, in the Bio-Data Sheet of complainant
Quintanar (Annex "4"), he stated therein that he was in the service of respondent Coca-Cola
continuously from 1993 up to 2002. Likewise, complainant Quinlog indicated in his Bio-data
Sheet submitted to respondent Interserve that he was already in the employ of respondent Coca-
Cola from 1992 (Annex "12"). Complainant Edgardo Tapalla also indicated in his Bio-Data Sheet
that he was already in the employ of Coca-Cola since 1995 until he was seconded to Interserve in
2002 (Annex "20").
As a matter of fact, complainants' allegation that they were directly hired by respondent Coca-
Cola and had been working with the latter for quite sometime when they were subsequently
referred to successive agencies such as Lipercon, ROMAC, People's Services, and most recently,
respondent Interserve, has not been controverted by the respondents. Even when
respondent Coca-Cola filed its reply to the complainants' position paper, there is nothing therein
which disputed complainant's statements of their services directly with the respondent even
before it entered into service agreement with respondent Interserve.
As to the payment of salaries, although the CA made mention that it was Interserve which paid
the petitioners' salaries, no reference was made to any evidence to support such a conclusion.
The Court, on the other hand, gives credence to the petitioners' contention that they were
employees of Coca-Cola. Aside from their collective account that it was Coca-Cola's Route
Supervisors who provided their daily schedules for the distribution of the company's products,
the petitioners' payslips, tax records, SSS and Pag-Ibig records more than adequately showed that
they were being compensated by Coca-Cola. More convincingly, the petitioners even presented
their employee Identification Cards, which expressly indicated that they were "[d]irect hire[es]"
of Coca-Cola.
As for the affidavit of Sambilay, suffice it to say that the same was bereft of evidentiary weight,
considering that he failed to attest not only that he was already with Interserve at the time of the
petitioners hiring, but also that he had personal knowledge of the circumstances surrounding the
hiring of the petitioners following their alleged resignation from Coca-Cola.
Third. As to the characterization of Interserve as a contractor, the Court finds that, contrary to
the conclusion reached by the CA, the petitioners were made to suffer under the prohibited
practice of labor-only contracting. Article 106 of the Labor Code provides the definition of what
constitutes labor-only contracting. Thus:
Article 106. Contractor or subcontractor. - x x x
There is "labor-only" contracting where the 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 the workers recruited and placed by such person are performing
activities which are directly related to the principal business of such employer. In such cases, the
person or intermediary shall be considered merely as an agent of the employer who shall be
responsible to me workers in the same manner and extent as if the latter were directly employed
by him.
Expounding on the concept, the Court in Agito explained:
The law clearly establishes an employer-employee relationship between the principal employer
and the contractor's employee upon a finding that the contractor is engaged in "labor-only"
contracting. Article 106 of the Labor Code categorically states: "There is labor-only' contracting
where the 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 the
workers recruited and placed by such persons are performing activities which are directly related
to the principal business of such employer." Thus, performing activities directly related to
the principal business of the employer is only one of the two indicators that "labor-only"
contracting exists; the other is lack of substantial capital or investment. The Court finds
that both indicators exist in the case at bar.
[Emphases and Underscoring Supplied]
In this case, the appellate court considered the evidence of Interserve that it was registered with
the DOLE as independent contractor and that it had a total capitalization of P27,509,716.32 and
machineries and equipment worth P12,538859.55. As stated above, however, the possession of
substantial capital is only one element. Labor-only contracting exists when any of the two
elements is present. Thus, even if the Court would indulge Coca-Cola and admit that Interserve
had more than sufficient capital or investment in the form of tools, equipment, machineries,
work premises, still, it cannot be denied that the petitioners were performing activities which
were directly related to the principal business of such employer. Also, it has been ruled that no
absolute figure is set for what is considered 'substantial capital' because the same is measured
against the type of work which the contractor is obligated to perform for the principal.
More importantly, even if Interserve were to be considered as a legitimate job contractor, Coca-
Cola failed to rebut the allegation that petitioners were transferred from being its employees to
become the employees of ISI, Lipercon, PSI, and ROMAC, which were labor-only contractors.
Well-settled is the rule that "[t]he contractor, not the employee, has the burden of proof that it
has the substantial capital, investment, and tool to engage in job contracting." In this case, the
said burden of proof lies with Coca-Cola although it was not the contractor itself, but it was the
one invoking the supposed status of these entities as independent job contractors.
Fourth. In this connection, even granting that the petitioners were last employed by Interserve,
the record is bereft of any evidence that would show that the petitioners voluntarily resigned
from their employment with Coca-Cola only to be later hired by Interserve. Other than insisting
that the petitioners were last employed by Interserve, Coca-Cola failed not only to show by
convincing evidence how it severed its employer relationship with the petitioners, but also to
prove that the termination of its relationship with them was made through any of the grounds
sanctioned by law.
The rule is long and well-settled that, in illegal dismissal cases such as the one at bench, the
burden of proof is upon the employer to show that the employees' termination from service is for
a just and valid cause. The employer's case succeeds or fails on the strength of its evidence and
not the weakness of that adduced by the employee, in keeping with the principle that the scales
of justice must be tilted in favor of the latter in case doubts exist over the evidence presented by
the parties.
For failure to overcome this burden, the Court concurs in the observation of the LA that it was
highly inconceivable for the petitioners, who were already enjoying a stable job at a multi-
national company, to leave and become mere agency workers. Indeed, it is contrary to human
experience that one would leave a stable employment in a company like Coca-Cola, only to
become a worker of an agency like Interserve, and be assigned back to his original employer —
Coca-Cola.
Although it has been said that among the four (4) tests to determine the existence of any
employer-employee relationship, it is the "control test" that is most persuasive, the courts cannot
simply ignore the other circumstances obtaining in each case in order to determine whether an
employer-employee relationship exists between the parties.
FONTERRA BRANDS PHILS., INC. vs. LEONARDO LARGADO and TEOTIMO

ESTRELLADO
G.R. No. 205300, March 18, 2015, J. Velasco, Jr.
The CA correctly found that A.C. Sicat is engaged in legitimate job contracting. It duly noted
that A.C. Sicat was able to prove its status as a legitimate job contractor for having presented the
following evidence, to wit: a) Certificate of Business Registration; b) Certificate of Registration with
the Bureau of Internal Revenue; c) Mayor’s Permit; wd) Certificate of Membership with the Social
Security System; e)Certificate of Registration with the Department of Labor and Employment; f)
Company Profile; g) Certifications issued by its clients. Furthermore, A.C. Sicat has substantial
capital, having assets totaling P5,926,155.76. Too, its Agreement with Fonterra clearly sets forth
that A.C. Sicat shall be liable for the wages and salaries of its employees or workers, including
benefits, premiums, and protection due them, as well as remittance to the proper government
entities of all withholding taxes, Social Security Service, and Medicare premiums, in accordance
with relevant laws.
Facts:
Petitioner Fonterra Brands Phils., Inc. contracted the services of Zytron Marketing and
Promotions Corp. for the marketing and promotion of its milk and dairy products. Pursuant to
the contract, Zytron provided Fonterra with trade merchandising representatives, including
respondents Leonardo Largado and Teotimo Estrellado. The engagement of their services began
on September 15, 2003 and May 27, 2002, respectively, and ended on June 6, 2006.
On May 3, 2006, Fonterra sent Zytron a letter terminating its promotions contract,
effective June 5, 2006. Fonterra then entered into an agreement for manpower supply with A.C.
Sicat Marketing and Promotional Services. Desirous of continuing their work as TMRs,
respondents submitted their job applications with A.C. Sicat, which hired them for a term of five
(5) months, beginning June 7, 2006 up to November 6, 2006.
When respondents’ 5-month contracts with A.C. Sicat were about to expire, they
allegedly sought renewal thereof, but were allegedly refused. This prompted respondents to file
complaints for illegal dismissal, regularization, non-payment of service incentive leave and
13th month pay, and actual and moral damages, against petitioner, Zytron, and A.C. Sicat.
The Labor Arbiter dismissed the complaint and ruled that: (1) respondents were not illegally
dismissed. As a matter of fact, they were the ones who refused to renew their contract and that
they voluntarily complied with the requirements for them to claim their corresponding monetary
benefits in relation thereto; and (2) they were consecutively employed by Zytron and A.C. Sicat,
not by Fonterra. The NLRC affirmed the Labor Arbiter’s decision. The CA found that A.C. Sicat
satisfies the requirements of legitimate job contracting, but Zytron does not. According to the
CA, respondents were Fonterra’s employees.
Issues:
1. Whether or not Zytron and A.C. Sicat are labor-only contractors, making Fonterra the
employer of herein respondents;
2. Whether or not respondents were illegally dismissed
Ruling:
1. No. A person is considered engaged in legitimate job contracting or subcontracting if

the following conditions concur:
a. The contractor or subcontractor carries on a distinct and independent business and

undertakes to perform the job, work or service on its own account and under its own
responsibility according to its own manner and method, and free from the control and
direction of the principal in all matters connected with the performance of the work except
as to the results thereof;
b. The contractor or subcontractor has substantial capital or investment; and
c. The agreement between the principal and 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 and welfare
benefits.
The CA correctly found that A.C. Sicat is engaged in legitimate job contracting. It duly noted
that A.C. Sicat was able to prove its status as a legitimate job contractor for having presented the
following evidence, to wit: a) Certificate of Business Registration; b) Certificate of Registration
with the Bureau of Internal Revenue; c) Mayor’s Permit; wd) Certificate of Membership with the
Social Security System; e) Certificate of Registration with the Department of Labor and
Employment; f) Company Profile; g) Certifications issued by its clients.
Furthermore, A.C. Sicat has substantial capital, having assets totaling P5,926,155.76 as of
December 31, 2006. Too, its Agreement with Fonterra clearly sets forth that A.C. Sicat shall be
liable for the wages and salaries of its employees or workers, including benefits, premiums, and
protection due them, as well as remittance to the proper government entities of all withholding
taxes, Social Security Service, and Medicare premiums, in accordance with relevant laws.
As regards the CA’s conclusion that Zytron is not a legitimate job contractor, the court is
of the view that such is immaterial to the resolution of the illegal dismissal issue for one reason:
We find that respondents voluntarily terminated their employment with Zytron, contrary to their
allegation that their employment with Zytron was illegally terminated.
2. No. As correctly held by the Labor Arbiter and the NLRC, the termination of
respondents’ employment with Zytron was brought about by the cessation of their contracts with
the latter.
By refusing to renew their contracts with Zytron, respondents effectively resigned from
the latter. Resignation is the voluntary act of employees who are compelled by personal reasons
to dissociate themselves from their employment, done with the intention of relinquishing an
office, accompanied by the act of abandonment. Here, it is obvious that respondents were no
longer interested in continuing their employment with Zytron. Their voluntary refusal to renew
their contracts was brought about by their desire to continue their assignment in Fonterra which
could not happen in view of the conclusion of Zytron’s contract with Fonterra. Hence, to be able
to continue with their assignment, they applied for work with A.C. Sicat with the hope that they
will be able to continue rendering services as TMRs at Fonterra since A.C. Sicat is Fonterra’s new
manpower supplier.
As regards respondents’ employment with A.C. Sicat and its termination via non-renewal
of their contracts, considering that in labor-only contracting, the law creates an employer-
employee relationship between the principal and the labor-only contractor’s employee as if such
employees are directly employed by the principal employer, and considers the contractor as
merely the agent of the principal, it is proper to dispose of the issue on A.C. Sicat’s status as a job
contractor first before resolving the issue on the legality of the cessation of respondents’
employment.
MANILA MEMORIAL PARK CEMETERY, INC.v.EZARD D. LLUZ, NORMAN CORRAL,

ERWIN FUGABAN, VALDIMAR BALISI, EMILIO FABON, JOHN MARK APLICADOR,
MICHAEL CURIOSO, JUNLIN ESPARES, GAVINO FARINAS, AND WARD TRADING AND
SERVICES
G.R. No. 208451, February 03, 2016
Facts
On 23 February 2006, petitioner Manila Memorial Park Cemetery, Inc. (Manila Memorial)
entered into a Contract of Services with respondent Ward Trading and Services (Ward Trading).
The Contract of Services provided that Ward Trading, as an independent contractor, will render
interment and exhumation services and other related work to Manila Memorial in order to
supplement operations at Manila Memorial Park, Paranaque City.
Among those assigned by Ward Trading to perform services at the Manila Memorial Park were
respondents Ezard Lluz, Norman Corral, Erwm Fugaban, Valdimar Balisi, Emilio Fabon, John
Mark Aplicador, Michael Curioso, Junlin Espares, and Gavino Farinas (respondents). They
worked six days a week for eight hours daily and were paid P250 per day.
On 26 June 2007, respondents filed a Complaintfor regularization and Collective Bargaining

Agreement benefits against Manila Memorial; Enrique B. Lagdameo, Manila Memorial's
Executive Vice-President and Director in Charge for Overall Operations, and Ward Trading. On
6 August 2007, respondents filed an amended complaint to include illegal dismissal,
underpayment of 13th month pay, and payment of attorney's fees.
Respondents alleged that they asked Manila Memorial to consider them as regular workers
within the appropriate bargaining unit established in the collective bargaining agreement by
Manila Memorial and its union, the Manila Memorial Park Free Workers Union (MMP Union).
Manila Memorial refused the request since respondents were employed by Ward Trading, an
independent labor contractor. Thereafter, respondents joined the MMP Union. The MMP Union,
on behalf of respondents, sought their regularization which Manila Memorial again declined.
Respondents then filed the complaint. Subsequently, respondents were dismissed by Manila
Memorial. Thus, respondents amended the complaint to include the prayer for their
reinstatement and payment of back wages.
Meanwhile, Manila Memorial sought the dismissal of the complaint for lack of jurisdiction since
there was no employer-employee relationship. Manila Memorial argued that respondents were
the employees of Ward Trading.
In a Decision dated 29 March 2010, the Labor Arbiter dismissed the complaint for failing to prove
the existence of an employer-employee relationship.
Respondents appealed to the NLRC. In a Decision dated 30 September 2010, the NLRC reversed
the Labor Arbiter's findings. The NLRC ruled that Ward Trading was a labor-only contractor and
an agent of Manila Memorial.
Thereafter, Manila Memorial filed an appeal with the CA. In a Decision dated 21 January 2013, the
CA affirmed the ruling of the NLRC. The CA found the existence of an employer-employee
relationship between Manila Memorial and respondents.
Issue
Whether or not an employer-employee relationship exists between Manila Memorial and

respondents for the latter to be entitled to their claim for wages and other benefits.
Ruling
In the present case, Manila Memorial entered into a Contract of Services with Ward Trading, a
single proprietorship owned by Emmanuel Mayor Ward with business address in Las Piñas City
on 23 February 2006. In the Contract of Services, it was provided that Ward Trading, as the
contractor, had adequate workers and substantial capital or investment in the form of tools,
equipment, machinery, work premises and other materials which were necessary in the conduct
of its business.
However, a closer look at the Contract of Services reveals that Ward Trading does not have
substantial capital or investment in the form of tools, equipment, machinery, work premises and
other materials since it is Manila Memorial which owns the equipment used in the performance
of work needed for interment and exhumation services. The pertinent provision in the Contract
of Services which shows that Manila Memorial owns the equipment states:
The COMPANY shall [sell] to the contractor the COMPANY owned equipment in the amount of
ONE MILLION FOUR HUNDRED THOUSAND PESOS ONLY (Php 1,400,000.00) payable in two
(2) years or a monthly payment of FIFTY EIGHT THOUSAND THREE HUNDRED THIRTY FIVE
PESOS ONLY (Php 58,335.00) to be deducted from the CONTRACTOR'S billing.
Just by looking at the provision, it seems that the sale was a regular business transaction between
two parties. However, Manila Memorial did not present any evidence to show that the sale
actually pushed through or that payments were made by Ward Trading to prove an ordinary arms
length transaction. We agree with the NLRC in its findings:
While the above-cited provision of the Contract of Service implies that respondent MMPCI would
sell subject equipment to Ward at some future time, the former failed to present any contract of
sale as proof that, indeed, it actually sold said equipment to Ward. Likewise, respondent MMPCI
failed to present any "CONTRACTOR'S billing" wherein the purported monthly installment of
P58,335.00 had been deducted, to prove that Ward truly paid the same as they fell due. In a
contract to sell, title is retained by the vendor until full payment of the price.
Moreover, the Contract of Service provides that:
"5. The COMPANY reserves the right to rent all or any of the CONTRACTOR'S equipment in
the event the COMPANY requires the use of said equipment, x x x."
This provision is clear proof that Ward does not have an absolute right to use or enjoy subject
equipment, considering that its right to do so is subject to respondent MMPCI's use thereof at
any time the latter requires it. Such provision is contrary to Article 428 of the Civil Code, which
provides that "The owner has the right to enjoy and dispose of a thing, without other limitation
than those established by law." It is plain to see that Ward is not the owner of the equipment
worth P1,400,000.00 that is being actually and directly used in the performance of the services
contracted out.
Further, the Service Contract states that:
"For its part, the COMPANY agrees to provide the following:
a) Area to store CONTRACTOR'S equipment and materials

b) Office space for CONTRACTOR'S staff and personnel"
This provision is clear proof that even the work premises actually and directly used by Ward in
the performance of the services contracted out is owned by respondent MMPCI.
Also, the difference in the value of the equipment in the total amount of P1,400,000.00 can be
glaringly seen in Ward Trading's financial statements for the year 2006 when compared to its
2005 financial statements. It is significant to note that these financial statements were submitted
by Manila Memorial without any certification that these financial statements were actually
audited by an independent certified public accountant. Ward Trading's Balance Sheet as of 31
December 2005 showed that it had assets in the amount of P441,178.50 and property and
equipment with a net book value of P86,026.50 totaling P534,705. A year later, Ward Trading's
Balance Sheet ending in 31 December 2006 showed that it had assets in the amount of P57,084.70
and property and equipment with a net book value of Pl,426,468 totaling P1,491,052.70. Ward
Trading, in its Income Statements for the years 2005 and 2006, only earned a net income of
P53,800 in the year ending 2005 and P68,141.50 in 2006. Obviously, Ward Trading could not have
raised a substantial capital of P1,400,000.00 from its income alone without the inclusion of the
equipment owned and allegedly sold by Manila Memorial to Ward Trading after they signed the
Contract of Services on 23 February 2006.
Further, the records show that Manila Memorial and Enrique B. Lagdameo admitted that
respondents performed various interment services at its Sucat, Paranaque branch which were
directly related to Manila Memorial's business of developing, selling and maintaining memorial
parks and interment functions. Manila Memorial even retained the right to control the
performance of the work of the employees concerned. As correctly observed by the CA:
A perusal of the Service Contract would reveal that respondent Ward is still subject to petitioner's
control as it specifically provides that although Ward shall be in charge of the supervision over
individual respondents, the exercise of its supervisory function is heavily dependent upon the
needs of petitioner Memorial Park, particularly:
"It is also agreed that:

a) The CONTRACTOR'S supervisor will conduct a regular inspection of grave sites/areas being
dug to ensure compliance with the COMPANY'S interment schedules and other related
ceremonies.
b) The CONTRACTOR will provide enough manpower during peak interment days including
Sundays and Holidays.
c) The CONTRACTOR shall schedule off-days for its workers in coordination with the
COMPANY'S schedule of interment operation.
d) The CONTRACTOR shall be responsible for any damage done to lawn/s and/or structure/s
resulting from its operation, which must be restored to its/their original condition without delay
and at the expense of CONTRACTOR."
The contract further provides that petitioner has the option to take over the functions of Ward's
personnel if it finds any part or aspect of the work or service provided to be unsatisfactory, thus:
"6.1 It is hereby expressly agreed and understood that, at any time during the effectivity of this
CONTRACT and its sole determination, the COMPANY may take over the performance of any of
the functions mentioned in Paragraph I above, in any of the following cases:
xxx
c. If the COMPANY finds the performance of the CONTRACTOR in any part or aspect of the
grave digging works or other services provided by it to be unsatisfactory."
It is obvious that the aforementioned provision leaves respondent Ward at the mercy of
petitioner Memorial Park as the contract states that the latter may take over if it finds any part
of the services to be below its expectations, including the manner of its performance. x x x.
The NLRC also found that Ward Trading's business documents fell short of sound business
practices. The relevant portion in the NLRC's Decision states:
It is also worth noting that while Ward has a Certificate of Business Name Registration issued by
the Department of Trade and Industry on October 24, 2003 and valid up to October 24, 2008, the
same expressly states that it is not a license to engage in any kind of business, and that it is valid
only at the place indicated therein, which is Las Piñas City. Hence, the same is not valid in
Paranaque City, where Ward assigned complainants to perform interment services it contracted
with respondent MMPCI. It is also noted that the Permit, which was issued to Ward by the Office
of the Mayor of Las Piñas City on October 28, 2003, was valid only up to December 31, 2003.
Likewise, the Sanitary Permit to Operate, which was issued to Ward by the Office of the City
Health Officer of the Las Piñas City Health Office on October 28, 2003, expired on December 31,
2003. While respondents MMPCI and Lagdameo were able to present copies of the above-
mentioned documents, they failed to present any proof that Ward is duly registered as [a]
contractor with the Department of Labor and Employment. Virtuallawlibrar
Section 11 of Department Order No. 18-02, which mandates registration of contractors or

subcontractors with the DOLE, states:
Section 11. Registration of Contractors or Subcontractors. - Consistent with authority of the

Secretary of Labor and Employment to restrict or prohibit the contracting out of labor through
appropriate regulations, a registration system to govern contracting arrangements and to be
implemented by the Regional Office is hereby established.
The Registration of contractors and subcontractors shall be necessary for purposes of establishing
an effective labor market information and monitoring.
Failure to register shall give rise to the presumption that the contractor is engaged in labor-only
contracting.
For failing to register as a contractor, a presumption arises that one is engaged in labor-only
contracting unless the contractor overcomes the burden of proving that it has substantial capital,
investment, tools and the like.
In this case, however, Manila Memorial failed to adduce evidence to prove that Ward Trading
had any substantial capital, investment or assets to perform the work contracted for. Thus, the
presumption that Ward Trading is a labor-only contractor stands. Consequently, Manila
Memorial is deemed the employer of respondents. As regular employees of Manila Memorial,
respondents are entitled to their claims for wages and other benefits as awarded by the NLRC
and affirmed by the CA.
EMMANUEL D. QUINTANAR, ET AL. v.COCA-COLA BOTTLERS,

PHILIPPINES, INC.,
G.R. No. 210565, June 28, 2016
Facts:
Complainants allege that they are former employees directly hired by respondent Coca-Cola on
different dates from 1984 up to 2000, assigned as regular Route Helpers under the direct
supervision of the Route Sales Supervisors. Their duties consist of distributing bottled Coca-Cola
products to the stores and customers in their assigned areas/routes, and they were paid salaries
and commissions at the average of P3,000.00 per month. After working for quite sometime as
directly-hired employees of Coca-Cola, complainants were allegedly transferred successively as
agency workers to the following manpower agencies, namely, Lipercon Services, Inc., People's
Services, Inc., ROMAC, and the latest being respondent Interserve Management and Manpower
Resources, Inc.
Further, complainants allege that the Department of Labor and Employment (DOLE) conducted
an inspection of Coca-Cola to determine whether it is complying with the various mandated labor
standards, and relative thereto, they were declared to be regular employees of Coca-Cola, which
was held liable to pay complainants the underpayment of their 13th month pay, emergency cost
of living allowance (ECOLA), and other claims. As soon as respondents learned of the filing of
the claims with DOLE, they were dismissed on various dates in January 2004. Their claims were
later settled by the respondent company, but the settlement allegedly did not include the issues
on reinstatement and payment of CBA benefits. Thus, on November 10, 2006, they filed their
complaint for illegal dismissal.
In support of their argument that they were regular employees of Coca-Cola, the complainants
relied on the pronouncement of the Supreme Court in the case of CCBPI vs. NOWM, G.R. No.
176024, June 18, 2007, as follows:
"In the case at bar, individual complainants were directly hired by respondent Coca-Cola as Route
Helpers. They assist in the loading and unloading of softdrinks. As such they were paid by
respondent Coca-Cola their respective salaries plus commission. It is of common knowledge in
the sales of softdrinks that salesmen are not alone in making a truckload of softdrinks for delivery
to customers. Salesmen are usually provided with route helpers or utility men who does the
loading and unloading. The engagement of the individual complainants to such activity is usually
necessary in the usual business of respondent Coca-Cola.
Contrary to the Labor Arbiter's conclusion that respondent Coca-Cola is engaged solely in the
manufacturing is erroneous as it is also engaged in the sales of the softdrinks it manufactured.
Moreover, having been engaged to perform, such activity for more than a year all the more
bolsters individual complainants' status as regular employees notwithstanding the contract, oral
or written, or even if their employment was subsequently relegated to a labor contractor."
Respondent Coca-Cola denies employer-employee relationship with the complainants pointing

to respondent Interserve with whom it has a service agreement as the complainants' employer.
As alleged independent service contractor of respondent Coca-Cola, respondent Interserve "is
engaged in the business of rendering substitute or reliever delivery services to its own clients and
for CCBPI in particular, the delivery of CCBPI's softdrinks and beverage products." It is allegedly
free from the control and direction of CCBPI in all matters connected with the performance of
the work, except as to the results thereof, pursuant to the service agreement. Moreover,
respondent Interserve is allegedly highly capitalized with a total of P21,658,220.26 and with total
assets of P27,509,716.32.
Further, respondent Coca-Cola argued that all elements of employer-employee relationship exist
between respondent Interserve and the complainants. It was allegedly Interserve which solely
selected and engaged the services of the complainants, which paid the latter their salaries, which
was responsible with respect to the imposition of appropriate disciplinary sanctions against its
erring employees, including the complainants, without any participation from Coca-Cola, which
personally monitors the route helpers' performance of their delivery services pointing to Noel
Sambilay as the Interserve Coordinator.
On its part, respondent Interserve merely filed its position paper, pertaining only to complainants
Quintanar and Cabili totally ignoring all the other twenty-eight (28) complainants. It maintains
that it is a legitimate job contractor duly registered as such and it undertakes to perform utility,
janitorial, packaging, and assist in transporting services by hiring drivers. Complainants
Quintanar and Cabili were allegedly hired as clerks who were assigned to CCBPI Mendiola Office,
under the supervision of Interserve supervisors. Respondent Coca-Cola does not allegedly
interfere with the manner and the methods of the complainants' performance at work as long as
the desired results are achieved. While admitting employer-employee relationship with the
complainants, nonetheless, respondent Interserve avers that complainants are not its regular
employees as they were allegedly mere contractual workers whose employment depends on the
service contracts with the clients and the moment the latter sever said contracts, respondent has
allegedly no choice but to either deploy the complainants to other principals, and if the latter are
unavailable, respondent cannot allegedly be compelled to retain them.
Issue:
Whether or not the petitioners were illegally dismissed from their employment with Coca-Cola.
This, in turn, necessitates a determination of the characterization of the relationship between
route-helpers such as the petitioners, and softdrink manufacturers such as Coca-Cola,
notwithstanding the participation of entities such as ISI, Lipercon, PSI, ROMAC, and Interserve.
Ruling
The Court finds for the petitioners. The reasons are:
First. Contrary to the position taken by Coca-Cola, it cannot be said that route-helpers, such as
the petitioners no longer enjoy the employee-employer relationship they had with Coca-Cola
since they became employees of Interserve. A cursory review of the jurisprudence regarding this
matter reveals that the controversy regarding the characterization of the relationship between
route-helpers and Coca-Cola is no longer a novel one.
As early as May 2003, the Court in Magsalin struck down the defense of Coca-Cola that the
complainants therein, who were route-helpers, were its "temporary" workers. In the said
Decision, the Court explained:
The basic law on the case is Article 280 of the Labor Code. Its pertinent provisions read:
Art. 280. Regular and Casual Employment. The provisions of written agreement to the contrary
deemed to be regular where the employee has been engaged to perform activities which are
usually necessary or desirable in the usual business or trade of the employer, except where the
employment has been fixed for a specific project or undertaking the completion or termination
of which has been determined at the time of the engagement of the employee or where the work
or services to be performed is seasonal in nature and the employment is for the duration of the
season.

is continuous or broken, shall be considered a regular employee with respect to the activity in
which he is employed and his employment shall continue while such activity exists.
Coca-Cola Bottlers Phils., Inc. is one of the leading and largest manufacturers of softdrinks in the
country. Respondent workers have long been in the service of petitioner company. Respondent
workers, when hired, would go with route salesmen on board delivery trucks and undertake the
laborious task of loading and unloading softdrink products of petitioner company to its various
delivery points.
Even while the language of law might have been more definitive, the clarity of its spirit and intent,
i.e., to ensure a "regular" worker's security of tenure, however, can hardly be doubted. In
determining whether an employment should be considered regular or non-regular, the applicable
test is the reasonable connection between the particular activity performed by the employee in
relation to the usual business or trade of the employer. The standard, supplied by the law itself,
is whether the work undertaken is necessary or desirable in the usual business or trade of the
employer, a fact that can be assessed by looking into the nature of the services rendered and its
relation to the general scheme under which the business or trade is pursued in the usual course.
It is distinguished from a specific undertaking that is divorced from the normal activities required
in carrying on the particular business or trade. But, although the work to be performed is only
for a specific project or seasonal, where a person thus engaged has been performing the job for
at least one year, even if the performance is not continuous or is merely intermittent, the law
deems the repeated and continuing need for its performance as being sufficient to indicate the
necessity or desirability of that activity to the business or trade of the employer. The employment
of such person is also then deemed to be regular with respect to such activity and while such
activity exists.
The argument of petitioner that its usual business or trade is softdrink manufacturing and that
the work assigned to respondent workers as sales route helpers so involves merely
"postproduction activities," one which is not indispensable in the manufacture of its products,
scarcely can be persuasive. If, as so argued by petitioner company, only those whose work are
directly involved in the production of softdrinks may be held performing functions necessary and
desirable in its usual business or trade, there would have then been no need for it to even
maintain regular truck sales route helpers. The nature of the work performed must be viewed
from a perspective of the business or trade in its entirety and not on a confined scope.
The repeated rehiring of respondent workers and the continuing need for their services clearly
attest to the necessity or desirability of their services in the regular conduct of the business or
trade of petitioner company. The Court of Appeals has found each of respondents to have worked
for at least one year with petitioner company. While this Court, in Brent School, Inc. vs. Zamora,
has upheld the legality of a fixed-term employment, it has done so, however, with a stern
admonition that where from the circumstances it is apparent that the period has been imposed
to preclude the acquisition of tenurial security by the employee, then it should be struck down
as being contrary to law, morals, good customs, public order and public policy. The pernicious
practice of having employees, workers and laborers, engaged for a fixed period of few months,
short of the normal six-month probationary period of employment, and, thereafter, to be hired
on a day-to-day basis, mocks the law. Any obvious circumvention of the law cannot be
countenanced. The fact that respondent workers have agreed to be employed on such basis and
to forego the protection given to them on their security of tenure, demonstrate nothing more
than the serious problem of impoverishment of so many of our people and the resulting
unevenness between labor and capital. A contract of employment is impressed with public
interest. The provisions of applicable statutes are deemed written into the contract, and "the
parties are not at liberty to insulate themselves and their relationships from the impact of labor
laws and regulations by simply contracting with each other."
The Court in Agito similarly struck down Coca-Cola's contention that the salesmen therein were
employees of Interserve, notwithstanding the submission by Coca-Cola of their personal data
files from the records of Interserve; their Contract of Temporary Employment with Interserve;
and the payroll records of Interserve. In categorically declaring Interserve as a labor-only
contractor, the Court found that the work of the respondent salesmen therein, constituting
distribution and sale of Coca-Cola products, was clearly indispensable to the principal business
of petitioner Coca-Cola.
As to the supposed substantial capital and investment required of an independent job contractor,
the Court stated that it "does not set an absolute figure for what it considers substantial capital
for an independent job contractor, but it measures the same against the type of work which the
contractor is obligated to perform for the principal." The Court reiterated that the contractor,
not the employee, had the burden of proof that it has the substantial capital, investment and tool
to engage in job contracting. As applied to Interserve, the Court ruled:
The contractor, not the employee, has the burden of proof that it has the substantial capital,
investment, and tool to engage in job contracting. Although not the contractor itself (since
Interserve no longer appealed the judgment against it by the Labor Arbiter), said burden of proof
herein falls upon petitioner who is invoking the supposed status of Interserve as an independent
job contractor. Noticeably, petitioner failed to submit evidence to establish that the service
vehicles and equipment of Interserve, valued at P510,000.00 and P200,000.00, respectively, were
sufficient to carry out its service contract with petitioner. Certainly, petitioner could have simply
provided the courts with records showing the deliveries that were undertaken by Interserve for
the Lagro area, the type and number of equipment necessary for such task, and the valuation of
such equipment. Absent evidence which a legally compliant company could have easily provided,
the Court will not presume that Interserve had sufficient investment in service vehicles and
equipment, especially since respondents' allegation that they were using equipment, such as
forklifts and pallets belonging to petitioner, to carry out their jobs was uncontroverted.
In sum, Interserve did not have substantial capital or investment in the form of tools, equipment,
machineries, and work premises; and respondents, its supposed employees, performed work
which was directly related to the principal business of petitioner. It is, thus, evident that
Interserve falls under the definition of a labor-only contractor, under Article 106 of the Labor
Code; as well as Section 5(1) of the Rules Implementing Articles 106-109 of the Labor Code, as
amended.
As for the certification issued by the DOLE stating that Interserve was an independent job
contractor, the Court ruled:
The certification issued by the DOLE stating that Interserve is an independent job contractor
does not sway this Court to take it at face value, since the primary purpose stated in the Articles
of Incorporation of Interserve is misleading. According to its Articles of Incorporation, the
principal business of Interserve is to provide janitorial and allied services. The delivery and
distribution of Coca-Cola products, the work for which respondents were employed and assigned
to petitioner, were in no way allied to janitorial services. While the DOLE may have found that
the capital and/or investments in tools and equipment of Interserve were sufficient for an
independent contractor for janitorial services, this does not mean that such capital and/or
investments were likewise sufficient to maintain an independent contracting business for the
delivery and distribution of Coca-Cola products.
Finally, the Court determined the existence of an employer-employee relationship between the
parties therein considering that the contract of service between Coca-Cola and Interserve showed
that the former indeed exercised the power of control over the complainants therein.
The Court once more asserted the findings that route-helpers were indeed employees of Coca-
Cola in Coca-Cola Bottlers Philippines, Inc. v. Dela Cruzand, recently, in Basan v. Coca-Cola
Bottlers Philippines, Inc. and that the complainants therein were illegally dismissed for want of
just or authorized cause. Similar dispositions by the CA were also upheld by this Court in
N.O.Wand Ostani, through minute resolutions.
It bears mentioning that the arguments raised by Coca-Cola in the case at bench even bear a
striking similarity with the arguments it raised before the CA in N.O.W and Ostani. Law
From all these, a pattern emerges by which Coca-Cola consistently resorts to various methods in
order to deny its route-helpers the benefits of regular employment. Despite this, the Court,
consistent with sound pronouncements above, adopts the rulings made in Pacquing that
Interserve was a labor-only contractor and that Coca-Cola should be held liable pursuant to the
principle of stare decisis et non quieta movere.
In this case, Coca-Cola has not shown any strong and compelling reason to convince the Court
that the doctrine of stare decisis should not be applied. It failed to successfully demonstrate how
or why both the LA and the NLRC committed grave abuse of discretion in sustaining the pleas of
the petitioners that they were its regular employees and not of Interserve.
Second. A reading of the decision of the CA and the pleadings submitted by Coca-Cola before this
Court reveals that they both lean heavily on the service agreement entered into by Coca-Cola and
Interserve; the admission by Interserve that it paid the petitioners' salaries; and the affidavit of
Sambilay who attested that it was Interserve which exercised the power of control over the
petitioners.
The service agreements entered into by Coca-Cola and Interserve, the earliest being that dated
January 1998, (another one dated July 11, 2006) and the most recent one dated March 21, 2007 -
all reveal that they were entered into One, after the petitioners were hired by Coca-Cola (some of
whom were hired as early as 1984); Two, after they were dismissed from their employment
sometime in January 2004; and Three, after the petitioners filed their complaint for illegal dismissal
on November 10, 2006 with the LA.
To quote with approval the observations of the LA:ChanRoblesVirtualawlibrary
x x x The most formidable obstacle against the respondent's theory of lack of employer-employee
relationship is that complainants have [been] performing the tasks of route-helpers for several
years and that practically all of them have been rendering their services as such even before
respondent Interserve entered into a service agreement with Coca-Cola sometime in 1998.
Thus, the complainants in their position paper categorically stated the record of their service
with Coca-Cola as having started on the following dates: Emmanuel Quintanar - October 15, 1994;
Benjamin Durano - November 16, [1987]; Cecilio Delaving - June 10, 1991; Ricardo Gaborni -
September 28, 1992; Romel Gerarman - June 20, 1995; Ramilo Gaviola - October 10, 1988; Joel John
Aguilar - June 1, 1992; Restituto Agsalud - September 7, 1989; Martin Celis - August 15, 1995;
Patricio Arios - June 2, 1989; Michael Bello - February 15, 1992; Lorenzo Quinlog - May 15, 1992;
Junne Blaya - September 15, 1997; Santiago Tolentino, Jr. - May 29, 1989; Nestor Magnaye -
February 15, 1996; Arnold Polvorido - February 8, 1996; Allan Agapito - April 15, 1995; Ariel
Baumbad - January 15, 1995; Jose Lutiya - February 15, 1995; Edgardo Tapalla - August 15, 1994;
Roldan Cadayona - May 14, 1996; Raynaldo Alburo - September 15, 1996; Rudy Ultra - February
28, 1997; Marcelo Cabili - November 15, 1995; Arnold Asiaten - May 2, 1992; Raymundo Macaballug
- July 31, 1995; Joel Delena - January 15, 1991; Danilo Oquino - September 15, 1990; Greg Caparas -
August 15, 1995; and Romeo Escartin - May 15, 1986.
It should be mentioned that the foregoing allegation of the complainants' onset of their services
with respondent Coca-Cola has been confirmed by the Bio-Data Sheets submitted in
evidence by the said respondent [Coca-Cola]. Thus, in the Bio-Data Sheet of complainant
Quintanar (Annex "4"), he stated therein that he was in the service of respondent Coca-Cola
continuously from 1993 up to 2002. Likewise, complainant Quinlog indicated in his Bio-data
Sheet submitted to respondent Interserve that he was already in the employ of respondent Coca-
Cola from 1992 (Annex "12"). Complainant Edgardo Tapalla also indicated in his Bio-Data Sheet
that he was already in the employ of Coca-Cola since 1995 until he was seconded to Interserve in
2002 (Annex "20").
As a matter of fact, complainants' allegation that they were directly hired by respondent Coca-
Cola and had been working with the latter for quite sometime when they were subsequently
referred to successive agencies such as Lipercon, ROMAC, People's Services, and most recently,
respondent Interserve, has not been controverted by the respondents. Even when
respondent Coca-Cola filed its reply to the complainants' position paper, there is nothing therein
which disputed complainant's statements of their services directly with the respondent even
before it entered into service agreement with respondent Interserve.
As to the payment of salaries, although the CA made mention that it was Interserve which paid
the petitioners' salaries, no reference was made to any evidence to support such a conclusion.
The Court, on the other hand, gives credence to the petitioners' contention that they were
employees of Coca-Cola. Aside from their collective account that it was Coca-Cola's Route
Supervisors who provided their daily schedules for the distribution of the company's products,
the petitioners' payslips, tax records, SSSand Pag-Ibig records more than adequately showed that
they were being compensated by Coca-Cola. More convincingly, the petitioners even presented
their employee Identification Cards, which expressly indicated that they were "[d]irect hire[es]"
of Coca-Cola.
As for the affidavit of Sambilay, suffice it to say that the same was bereft of evidentiary weight,
considering that he failed to attest not only that he was already with Interserve at the time of the
petitioners hiring, but also that he had personal knowledge of the circumstances surrounding the
hiring of the petitioners following their alleged resignation from Coca-Cola.
Third. As to the characterization of Interserve as a contractor, the Court finds that, contrary to
the conclusion reached by the CA, the petitioners were made to suffer under the prohibited
practice of labor-only contracting. Article 106 of the Labor Code provides the definition of what
constitutes labor-only contracting. Thus:
Article 106. Contractor or subcontractor. - x x x
There is "labor-only" contracting where the 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 the workers recruited and placed by such person are performing
activities which are directly related to the principal business of such employer. In such cases, the
person or intermediary shall be considered merely as an agent of the employer who shall be
responsible to me workers in the same manner and extent as if the latter were directly employed
by him.
Expounding on the concept, the Court in Agito explained:
The law clearly establishes an employer-employee relationship between the principal employer
and the contractor's employee upon a finding that the contractor is engaged in "labor-only"
contracting. Article 106 of the Labor Code categorically states: "There is labor-only' contracting
where the 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 the
workers recruited and placed by such persons are performing activities which are directly related
to the principal business of such employer." Thus, performing activities directly related to
the principal business of the employer is only one of the two indicators that "labor-only"
contracting exists; the other is lack of substantial capital or investment. The Court finds
that both indicators exist in the case at bar.
[Emphases and Underscoring Supplied]
In this case, the appellate court considered the evidence of Interserve that it was registered with
the DOLE as independent contractor and that it had a total capitalization of P27,509,716.32 and
machineries and equipment worth P12,538859.55. As stated above, however, the possession of
substantial capital is only one element. Labor-only contracting exists when any of the two
elements is present. Thus, even if the Court would indulge Coca-Cola and admit that Interserve
had more than sufficient capital or investment in the form of tools, equipment, machineries,
work premises, still, it cannot be denied that the petitioners were performing activities which
were directly related to the principal business of such employer. Also, it has been ruled that no
absolute figure is set for what is considered 'substantial capital' because the same is measured
against the type of work which the contractor is obligated to perform for the principal.bleslaw
More importantly, even if Interserve were to be considered as a legitimate job contractor, Coca-
Cola failed to rebut the allegation that petitioners were transferred from being its employees to
become the employees of ISI, Lipercon, PSI, and ROMAC, which were labor-only contractors.
Well-settled is the rule that "[t]he contractor, not the employee, has the burden of proof that it
has the substantial capital, investment, and tool to engage in job contracting." In this case, the
said burden of proof lies with Coca-Cola although it was not the contractor itself, but it was the
one invoking the supposed status of these entities as independent job contractors.
Fourth. In this connection, even granting that the petitioners were last employed by Interserve,
the record is bereft of any evidence that would show that the petitioners voluntarily resigned
from their employment with Coca-Cola only to be later hired by Interserve. Other than insisting
that the petitioners were last employed by Interserve, Coca-Cola failed not only to show by
convincing evidence how it severed its employer relationship with the petitioners, but also to
prove that the termination of its relationship with them was made through any of the grounds
sanctioned by law.
The rule is long and well-settled that, in illegal dismissal cases such as the one at bench, the
burden of proof is upon the employer to show that the employees' termination from service is for
a just and valid cause. The employer's case succeeds or fails on the strength of its evidence and
not the weakness of that adduced by the employee, in keeping with the principle that the scales
of justice must be tilted in favor of the latter in case doubts exist over the evidence presented by
the parties.
For failure to overcome this burden, the Court concurs in the observation of the LA that it was
highly inconceivable for the petitioners, who were already enjoying a stable job at a multi-
national company, to leave and become mere agency workers. Indeed, it is contrary to human
experience that one would leave a stable employment in a company like Coca-Cola, only to
become a worker of an agency like Interserve, and be assigned back to his original employer —
Coca-Cola.
Although it has been said that among the four (4) tests to determine the existence of any
employer-employee relationship, it is the "control test" that is most persuasive, the courts cannot
simply ignore the other circumstances obtaining in each case in order to determine whether an
employer-employee relationship exists between the parties.
LABOR-ONLY CONTRACTING
AVELINO S. ALILIN, et al. vs. PETRON CORPORATION

Generally, the contractor is presumed to be a labor-only contractor, unless such contractor

overcomes the burden of proving that it has the substantial capital, investment, tools and the like.
However, where the principal is the one claiming that the contractor is a legitimate contractor, said
principal has the burden of proving that supposed status. Thus, where the company insists that its
service contractor is a legitimate contractor, it is the company and not the workers, which must
prove the same. The company fails to overcome such presumption when it presents financial
documents which shows the financial capability of the contractor covering the period when the
company and the contractor executed a service contract, and not to the decades prior to the
contract, during which the contractor had already provided workers to the company. In addition,
the workers are employees of the company when the latter exercises the power of control over the
workers as manifested by the power to transfer employees from one work assignment to another.
The workers’ performance of work necessary and related to the company’s business operations for
a long period of time also proves the existence of an employer-employee relationship.
Facts:
Romualdo D. Gindang Contractor, and later on Romeo D. Gindang Services (RDG),

provided manpower services to respondent Petron’s Mandaue Bulk Plant. Petitioners Alilin, et
al. were among those recruited from 1968 to 1993 by Romualdo and RDGto work in the said bulk
plant. On June 1, 2000, Petron and RDG entered into a Contract for Services for the period from
June 1, 2000 to May 31, 2002, whereby RDG undertook to provide Petron with janitorial,
maintenance, tanker receiving, packaging and other utility services in its Mandaue Bulk Plant.
This contract was extended on July 31, 2002 and further extended until September 30, 2002. Upon
expiration thereof, no further renewal of the service contract was done.
The petitioners filed with the Labor Arbiter (LA) a complaint for illegal dismissal against
Petron and RDG, alleging that they were barred from continuing their services. Petitioners did
not deny that RDG hired them and paid their salaries. They, however, claimed that the latter is a
labor-only contractor, which merely acted as an agent of Petron, their true employer. They
asseverated that their jobs, which are directly related to Petron’s business, entailed them to work
inside the premises of Petron using the required equipment and tools furnished by it and that
they were subject to Petron’s supervision. Claiming to be regular employees, petitioners thus
asserted that their dismissal allegedly in view of the expiration of the service contract between
Petron and RDG is illegal. Petron, on the other hand, maintained that RDG is an independent
contractor and the real employer of the petitioners. It was RDG which hired and selected
petitioners, paid their salaries and wages, and directly supervised their work.
The LA ruled that the petitioners are regular employees of Petron. It found that their jobs
were directly related to Petron’s business operations; they worked under the supervision of
Petron’s foreman and supervisor; and they were using Petron’s tools and equipment in the
performance of their works. The Labor Arbiter also found that Petron merely utilized RDG in its
attempt to hide the existence of employee-employer relationship between it and petitioners and
avoid liability under labor laws. And there being no showing that petitioners’ dismissal was for
just or authorized cause, the Labor Arbiter declared them to have been illegally dismissed. The
NLRC affirmed the LA. The CA, however, reversed the NLRC, finding no employer-employee
relationship between Petron and the petitioners. The CA also held that RDG was an independent
labor contractor.
Issues:
1. Is RDG a legitimate job contractor?

2. If not, did an employer-employee relationship exist between the petitioners and Petron
as to make the latter liable for the petitioners’ dismissal?
Ruling:
1. No. Petron failed to prove that RDG is an independent contractor, thus the presumption
that RDG is a labor-only contractor stands.
“Permissible job contracting or subcontracting refers to an arrangement whereby a

principal agrees to farm out with a contractor or subcontractor the performance of a specific job,
work, or service within a definite or predetermined period, regardless of whether such job, work
or, service is to be performed or completed within or outside the premises of the principal. Under
this arrangement, the following conditions must be met:
a) the contractor carries on a distinct and independent business and undertakes the
contract work on his account under his own responsibility according to his own manner
and method, free from the control and direction of his employer or principal in all matters
connected with the performance of his work except as to the results thereof;
b) the contractor has substantial capital or investment; and
c) the agreement between the principal and 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.”
Labor-only contracting, on the other hand, is a prohibited act, defined as “supplying workers
to an employer who does not have substantial capital or investment in the form of tools,
equipment, machineries, work premises, among others, and the workers recruited and placed by
such person are performing activities which are directly related to the principal business of such
employer.”“[I]n distinguishing between prohibited labor-only contracting and permissible job
contracting, the totality ofthe facts and the surrounding circumstances of the case shall be
considered.”
Generally, the contractor is presumed to be a labor-only contractor, unless such

contractor overcomes the burden of proving that it has the substantial capital, investment, tools
and the like. However, where the principal is the one claiming that the contractor is a legitimate
contractor, as in the present case, said principal has the burden of proving that supposed status.
It is thus incumbent upon Petron, and not upon petitioners as Petron insists, to prove that RDG
is an independent contractor.
Here, the audited financial statements and other financial documents of RDG for the
years 1999 to 2001 establish that it does have sufficient working capital to meet the requirements
of its service contract. In fact, the financial evaluation conducted by Petron of RDG’s financial
statements for years 1998-2000 showed RDG to have a maximum financial capability of Php4.807
Millionas of December 1998, and Php1.611 Million as of December 2000. Petron was able to
establish RDG’s sufficient capitalization when it entered into the service contract in 2000. The
Court stresses though that this determination of RDG’s status as an independent contractor is
only with respect to its financial capability for the period covered by the financial and other
documents presented. In other words, the evidence adduced merely proves that RDG was
financially qualified as a legitimate contractor but only with respect to its last service contract
with Petron in the year 2000.
As may be recalled, petitioners have rendered work for Petron for a long period of time
even before the service contract was executed in 2000. The respective dates on which petitioners
claim to have started working for Petron, as well as the fact that they have rendered continuous
service to it until October 16, 2002, when they were prevented from entering the premises of
Petron’s Mandaue Bulk Plant, were not at all disputed by Petron. In fact, Petron even recognized
that some of the petitioners were initially fielded by Romualdo Gindang, the father of Romeo,
through RDG’s precursor, Romualdo D. Gindang Contractor, while the others were provided by
Romeo himself when he took over the business of his father in 1989. Hence, while Petron was
able to establish that RDG was financially capable as a legitimate contractor at the time of the
execution of the service contract in 2000, it nevertheless failed to establish the financial capability
of RDG at the time when petitioners actually started to work for Petron in 1968, 1979, 1981, 1987,
1990, 1992 and 1993.
For job contracting to be permissible, one of the conditions that has to be met is that the
contractor must have substantial capital or investment. Petron having failed to show that this
condition was met by RDG, itcan be concluded, on this score alone, that RDG is a mere labor-
only contractor.Otherwise stated, the presumption that RDG is a labor-only contractor stands
dueto the failure of Petron to discharge the burden of proving the contrary.
2. Yes. Petron has the power of control over the petitioners, and the latter have already
attained regular status as Petron’s employees.
A finding that a contractor is a ‘labor-only’ contractor is equivalent to declaring that there

is an employer-employee relationship between the principal and the employees of the supposed
contractor. The facts that petitioners were hired by Romeo or his father and that their salaries
were paid by them do not detract from the conclusion that there exists an employer-employee
relationship between the parties due to Petron’s power of control over the petitioners.
One manifestation of the power of control is the power to transfer employees from one
work assignment to another. Here, Petron could order petitioners were required to report for
work everyday at the bulk plant, observe an8:00 a.m. to 5:00 p.m. daily work schedule, and wear
proper uniform and safety helmets as prescribed by the safety and security measures being
implemented within the bulk plant. All these imply control. In an industry where safety is of
paramount concern, control and supervision over sensitive operations, such as those performed
by the petitioners, are inevitable if not at all necessary. Indeed, Petron deals with commodities
that are highly volatile and flammable which, if mishandled or not properly attended to, may
cause serious injuries and damage to property and the environment. Naturally, supervision by
Petron is essential in every aspect of its product handling in order not to compromise the
integrity, quality and safety of the products that it distributes to the consuming public.
Petitioners were given various work assignments such as tanker receiving, barge loading,
sounding, gauging, warehousing, mixing, painting, carpentry, driving, gasul filling and other
utility works. Petron refers to these work assignments as menial works which could be performed
by any able-bodied individual. The Court finds, however, that while the jobs performed by
petitioners may be menial and mechanical, they are nevertheless necessary and related to
Petron’s business operations. If not for these tasks, Petron’s products will not reach the
consumers in their proper state. Indeed, petitioners’ roles were vital inasmuch as they involve
the preparation of the products that Petron will distribute to its consumers.
Furthermore, while it may be true that any able-bodied individual can perform the tasks
assigned to petitioners, the Court notes the undisputed fact that for many years, it was the same
able-bodied individuals (petitioners) who performed the tasks for Petron. The engagement of
petitioners for the same works for a long period of time is a strong indication that such works
were indeed necessary to Petron’s business. In view of these, and considering further that
petitioners’ length of service entitles them to become regular employees under the Labor Code,
petitioners are deemed by law to have already attained the status as Petron’s regular employees.
As such, Petron could not terminate their services on the pretext that the service contract it
entered with RDG has already lapsed. For one, and as previously discussed, such regular status
had already attached to them even before the execution of the service contract in 2000. For
another, the same does not constitute a just or authorized cause for a valid dismissal of regular
employees.
DISMISSAL FROM EMPLOYMENT
ATTY. JACINTO C. GONZALES v. MAILA CLEMEN F. SERRANO

G.R. No. 175433, March 11, 2015, PERALTA, J.
Corruption, as an element of grave misconduct, consists in the act of an official
or fiduciary person who unlawfully and wrongfully uses his station or character to procure
some benefit for himself or for another person, contrary to duty and the rights of others.
Facts:
Atty. Maila was receiving several untoward advances from her direct supervisor
and Head of the Legal Division, Atty. Jacinto, ever since she first met him at their office.
During her birthday, Atty. Jacinto invited her and her officemates to eat lunch at a
restaurant. While waiting for their food to be served, Atty. Jacinto suddenly took hold
of Atty. Maila’s face, and forcefully kissed her lips in the presence of her officemates.
Atty. Maila tried to ward off Atty. Jacinto, but he persisted. After releasing her,
Atty. Jacinto said, “Ang sarap pala ng labi ni Maila…” Then he held her hand and said,
“Maila, sige na…” She took her hand away and reported the incident. She filed an
administrative complaint against Atty. Jacinto for grave misconduct. Atty. Maila lost her
job thereafter.
Issue:
Whether petitioner is liable for grave misconduct
Ruling:
Yes. Misconduct is a transgression of some established and definite rule of
action, more particularly, unlawful behavior or gross negligence by a public officer.
The misconduct is considered as grave if it involves additional elements such as
corruption or willful intent to violate the law or to disregard established rules.
The element of corruption is present in this case. Atty. Jacinto used his position
and authority as Head of the Legal Division of PHILRACOM, as well as his moral
ascendancy, to elicit sexual favors and to indulge in sexually malicious acts from his
respondent, his female subordinate. Atty. Jacinto’s act of kissing Atty. Maila without her
consent was an unmistakable manifestation of his intention to violate the law (RA
7877) that specifically prohibited sexual harassment in the work environment.
OIKONOMOS INT’L RESOURCES CORPORATION v. ANTONIO Y NAVAJA JR.
G.R. No. 214915, December 7, 2015, MENDOZA, J.
Misconduct is defined as improper and wrongful conduct. It is the transgression

of some established and definite rule of action, a forbidden act, a dereliction of duty,
willful in character, and implies wrongful intent and not mere error in judgment. The
misconduct must (1) be serious; (2) relate to the performance of the employee's duties;
and (3) show that the employee has become unfit to continue working for the employer.
Facts:
Navaja works at Oikonomos as a room attendant. He entered Room 1202 in

which he found and took a white Nike jacket. The hotel’s CCTV footage showed
Navaja entering Room 1202 twice after the guests had left. After coming out from the
room the second time, he acted suspiciously and made an effort to hide the jacket
from the view of the CCTV. The following day, he was asked about his work details
but he never mentioned that he found the jacket. He eventually surrendered the
jacket to the security office. He was investigated and placed under preventive
suspension for suspicion of theft. He submitted his written explanation and
appeared at the administrative hearing of his case. Oikonomos eventually sent him a
memorandum dismissing him from service for theft and dishonesty. It asserted that
prior to the incident, Navaja had a history of committing infractions. Navaja filed
an illegal dismissal complaint before the Regional Arbitration Board.
Issue:
Whether Navaja was validly dismissed
Ruling:
Yes. Serious misconduct by the employee justifies the employer in

terminating his or her employment. Ordinary misconduct would not justify the
termination of the services of an employee. In order for the misconduct to be
considered serious, it must be of such grave and aggravated character and not
merely trivial or unimportant.
Oikonomos established with substantial evidence that Navaja committed

serious misconduct, specifically, theft, dishonesty and violation of company policy.
Navaia committed theft when he has failed to surrender the white Nike jacket upon
inquiry of the head of the hotel. The CCTV footages show that Navaja acted strangely
outside the elevator. Under normal circumstances, a person would not stand in such
an awkward position to hide his back from a camera’s view. Navaja even placed the
jacket inside a black plastic bag when he arrived at the housekeeping office. Navaja
also violated company policy regarding their lost and found procedure which required
employees to immediately report lost and found items to the security office. Navaja
had several opportunities to report the missing item but he failed to do so.
PUNONGBAYAN AND ARAULLO (P&A), BENJAMIN R. PUNONGBAYAN., JOSE G.

ARAULLO, GREGORIO S. NAVARRO, ALFREDO V. DAMIAN AND JESSIE C. CARPIO v.
ROBERTO PONCE LEPON
G.R. No. 174115, November 09, 2015, JARDELEZA, J.
To justify a valid dismissal based on loss of trust and confidence, the employee
concerned must be one holding a position of trust and confidence and there must be an act
that would justify the loss of trust and confidence.
Facts:
Lepon was the Manager-in-Charge of the Cebu operations and the Director of
the Visayas- Mindanao operations of P&A. He objected to the planned merger of P&A
with SGV. Subsequently, P&A learned that Lepon met with P&A's clients and invited
them to engage the services of LM-KPMG, a competing accounting firm, have discussed
his terms of employment with said firm, and attempted to pirate the entire staff of
P&A's Cebu City Office and Davao City Office. However, Lepon denied the said
allegations against him and reiterated his worries about the merger. Later, he was
terminated due to loss of trust and confidence. He then filed a complaint for illegal
dismissal.
Issue:
Whether there is valid dismissal based on loss of trust and confidence.
Ruling:
Yes. Lepon was a managerial employee at the time he was terminated, and
P&A's loss of trust and confidence is based on a willful breach of trust, and is founded
on clearly established facts. As regards a managerial employee, the mere existence
of a basis for believing that such employee has breached the trust of his employer
would suffice for his dismissal; proof beyond reasonable doubt is not required.
However, with respect to rank-and-file personnel, loss of trust and confidence as
ground for valid dismissal requires proof of involvement in the alleged events in
question, and that mere uncorroborated assertions and accusations by the employer
will not be sufficient.
Lepon breached the trust reposed in him by committing the following acts: (1)
negotiating to transfer to a competing firm while still employed with P&A; (2) enjoining
a number of P&A's clients to transfer their audit business to a competing firm; (3)
inviting P&A's staff to join him in his transfer to a competing firm; and (4) enjoining
P&A's staff to engage in a sympathy strike during his preventive suspension. These
acts are sufficient basis for the loss of trust and confidence of P&A. For as an agent of
his employer, an employee cannot act inconsistently with his agency or trust. He
cannot solicit his employer's customers or co-employees for himself or for a business
competitor of his employer. He should not further induce them to patronize the rival
firm he intended to join.
ST. LUKE’S MEDICAL CENTER, INC. v. MARIA THERESA V. SANCHEZ
G.R. No. 212054, March 11, 2015, PERLAS-BERNABE, J.
For an employee to be dismissed for the just cause of “willful disobedience”, the
employer’s regulations must be (1) reasonable and lawful, (2) sufficiently known to the
employee, and (3) in connection with the duties which the employee has been engaged to
discharged.
Facts:
At the end of her shift at St. Luke’s Medical Center, Staff Nurse Maria Theresa
was accosted during the standard inspection procedure after the security guard found
an assortment of medical stocks inside her bag. She categorically admitted in her
handwritten apology letter that “Kahit alam kong bawal ay nagawa kong makapag
uwi ng gamit,” referring to the SLMC Code of Discipline sanctioning “acts of
dishonesty”, which includes theft and pilferage. She was terminated after observance
of due process.
Issue:
Whether Maria Theresa may be lawfully dismissed based on the SLMC
Code of Discipline
Ruling:
Yes. The right of an employer to regulate all aspects of employment, i.e.

“management prerogative,” gives employers the freedom to regulate, according to
their best judgment, all aspects of employment, including the right to prescribe
reasonable rules necessary for the conduct of its business and to provide disciplinary
measures to implement said rules. The employee also has the duty to obey all
reasonable rules, of the employer; and willful or intentional disobedience thereto is a
just cause for the termination of the employee. SLMC’s regulation (i.e. punishing theft
and pilferage) is reasonable and lawful. It is also known to the employee through
Maria Theresa’s categorical admission. The rule is also connected to Maria Theresa’s
work as staff nurse, who is tasked with the proper stewardship of medical supplies.
CHERYLL SANTOS LEUS v. ST. SCHOLASTICA’S COLLEGE WESTGROVE AND/OR SR.

EDNA QUIAMBAO, OSB
The Secretary of Education has the authority to issue a rule, which provides for the
dismissal of teaching and non-teaching personnel of private schools based on their
incompetence, inefficiency, or some other disqualification.
Facts:
Cheryll Santos Leus was hired by St. Scholastica's College Westgrove
(SSCW) as a non- teaching personnel. Leus and her boyfriend conceived a child out
of wedlock. Upon knowing Leus’ pregnancy, Sr. Quiambao, SSCW’s Directress,
advised her to file a resignation letter. Leus replied that she would not resign from
her employment just because she got pregnant without the benefit of marriage.
Sr. Quiambao then informed Leus that engaging in pre-marital sexual relations and
getting pregnant as a result thereof amounts to serious misconduct and conduct
of unbecoming of an employee of a Catholic school and that SSCW follows the 1992
Manual of Regulations for Private Schools (1992 MRPS) on the causes for termination
of employments; which provides that disgraceful or immoral conduct constitutes
as a ground for dismissal in addition to the just causes for termination of
employment provided under the Labor Code. Leus contended that pre-marital sex
between two consenting adults without legal impediment to marry each other who
later on married each other does not fall within the contemplation of "disgraceful or
immoral conduct" and "serious misconduct" of the MRPS and the Labor Code. Thus,
Leus filed a complaint for illegal dismissal.
Issue:
Whether the 1992 MRPS shall govern the termination of employment of
teaching and non- teaching personnel of private schools
Ruling:
Yes. The 1992 MRPS, the regulation in force at the time, was issued by the
Secretary of Education pursuant to BP 232. BP 232 vests the Secretary of Education
with the authority to issue rules and regulations to implement the provisions of BP
232. It also empowers the Department of Education to promulgate rules and
regulations necessary for the administration, supervision and regulation of the
educational system in accordance with the declared policy of BP 232.
The qualifications of teaching and non-teaching personnel of private schools,

as well as the causes for the termination of their employment, are an integral aspect
of the educational system of private schools. BP 232 authorizes the Secretary of
Education to prescribe and impose such administrative sanction as he may deem
reasonable and appropriate in the implementing rules and regulations for the gross
inefficiency of the teaching or non-teaching personnel of private schools.
CHERYLL SANTOS LEUS v. ST. SCHOLASTICA’S COLLEGE WESTGROVE AND/OR SR.
EDNA QUIAMBAO, OSB
Pre-marital sexual relations between two consenting adults who have no impediment
to marry each other and consequently conceiving a child out of wedlock, does not amount
to disgraceful or immoral conduct.
Facts:
Cheryll Santos Leus was hired by St. Scholastica's College Westgrove (SSCW)
as a non- teaching personnel. Leus and her boyfriend conceived a child out of wedlock.
Upon knowing Leus’ pregnancy, Sr. Quiambao, SSCW’s Directress, advised her to file a
resignation letter. Leus refused. Sr. Quiambao then informed Leus that engaging in pre-
marital sexual relations and getting pregnant as a result thereof amounts to serious
misconduct and conduct unbecoming of an employee of a Catholic school and that
SSCW follows the 1992 Manual of Regulations for Private Schools (1992 MRPS) on the
causes for termination of employments; which provides that disgraceful or immoral
conduct constitutes as a ground for dismissal in addition to the just causes for
termination of employment provided under the Labor Code. Leus contended that pre-
marital sex between two consenting adults without legal impediment to marry each
other who later on married each other does not fall within the contemplation of
"disgraceful or immoral conduct" and "serious misconduct" of the MRPS and the Labor
Code. Leus filed a complaint for illegal dismissal. SSCW claimed that there was just
cause to terminate the Leus’ employment with SSCW.
Issue:
Whether Leus’ pregnancy out of wedlock constitutes a valid ground for
dismissal
Ruling:
No, Leus and her boyfriend, at the time they conceived a child, had no legal impediment
to marry. Even prior to her dismissal, Leus married her boyfriend, the father of her child.
There is no law which penalizes an unmarried mother by reason of her sexual conduct or
proscribes the consensual sexual activity between two unmarried persons. Admittedly, the
petitioner is employed in an educational institution where the teachings and doctrines of
the Catholic Church, including that on pre-marital sexual relations, is strictly upheld and
taught to the students; that her indiscretion, which resulted in her pregnancy out of
wedlock, is anathema to the doctrines of the Catholic Church. However, viewed against
the prevailing norms of conduct, her conduct cannot be considered as disgraceful or
immoral; such conduct is not denounced by public and secular morality.
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VICENTE C. TATEL v. JLFP INVESTIGATION AND SECURITY AGENCY, INC., JOSE LUIS
F. PAMINTUAN, AND/OR PAOLO C. TURNO
G.R. No. 206942, December 09, 2015, PERLAS-BERNABE, J.
The burden of proving the allegations rests upon the party alleging and the proof must
be clear, positive, and convincing.
Facts:
JLFP hired Vicente Tatel as one of its security guards. Tatel filed a complaint before
the NLRC against JLFP and SKI Group of Companies for underpayment and other money
claims. Thereafter, Tatel was placed on "floating status." Notwithstanding the pendency
of the underpayment case, JLFP sent a Memorandum directing Tatel to report back to
work. However, Tatel claimed that when he went to the JLFP office, he was merely
advised to "wait for possible posting." After six months from being on a “floating status”,
without having been given any assignments, he filed another complaint against JLFP and
its officers for illegal dismissal with other money claim.
Issue:
Whether the SC’s finding of constructive dismissal should be reconsidered Ruling:
Yes. In the absence of any showing of an overt act to establish that

respondents had dismissed Tatel, the latter's claim of illegal dismissal cannot be
sustained. Conversely, respondents acted in good faith when they offered another
posting to Tatel through a Memorandum sent during the pendency of the
underpayment case that Tatel had, by then, lodged against respondents. This showed
good faith on the part of the respondents. It is unfair to declare the mere lapse of the
six- month period of "floating status" as a case of constructive dismissal without looking
into the peculiar circumstances that resulted in the security guard's failure to assume
another post, as in this case. Tatel's lack of an assignment for the six-month period
cannot be attributed to respondents.
Be that as it may, Tatel did not abandon his work. Abandonment requires,
first, that the employee must have failed to report for work or must have been absent
without valid or justifiable reason; and second, that there must have been a clear
intention on the part of the employee to sever the employer-employee relationship
manifested by some overt act. The burden to prove whether the employee abandoned
his or her work rests on the employer. The mere absence or failure to report for work,
even after notice to return, does not necessarily amount to abandonment. Abandonment
is a matter of intention and cannot lightly be presumed from certain equivocal acts.
NIGHTOWL WATCHMAN & SECURITY AGENCY, INC. v. NESTOR LUMAHAN

G.R. No. 212096, October 14, 2015, BRION, J.
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In every employee dismissal case, the employer bears the burden of proving the validity
of the employee's dismissal, i.e., the existence of just or authorized cause for the dismissal and
the observance of the due process requirements. The employer's burden of proof, however,
presupposes that the employee had in fact been dismissed, with the burden to prove the
fact of dismissal resting on the employee. Without any dismissal action on the part of the
employer, valid or otherwise, no burden to prove just or authorized cause arises.
Facts:
Nightowl Watchman & Security Agency, Inc. hired Nestor Lumahan as a security
guard. The latter’s last assignment was at the Steelworld Manufacturing Corporation.
Lumahan filed a complaint for illegal dismissal with other prayers against Nightowl
before the LA. Lumahan admitted in his pleadings that he did not report to work for
a time because he had to go to Iloilo to attend to his dying grandfather. Steelworld
permitted him to do so but Nightowl refused. The LA dismissed the
complaint on the ground that Lumahan abandoned his work. When the NLRC
remanded the case to another LA, the latter decided in Lumahan’s favor. On appeal to the
NLRC, Lumahan’s complaint was dismissed. The CA ruled in favor of Lumahan, opining
that Nightowl failed to discharge its burden of proving that Lumahan unjustly refused to
return to work.
Issue:
Whether Lumahan had been dismissed
Ruling:
No. Nightowl never raised abandonment as a defense. What Nightowl
persistently argued was that Lumahan stopped reporting for work beginning April 22,
1999; and that it had been waiting for Lumahan to show up so that it could impose
on him the necessary disciplinary action for abandoning his post at Steelwork, only
to learn that Lumahan had filed an illegal dismissal complaint. Nightowl did not at all
argue that Lumahan had abandoned his work, thereby warranting the termination
of his employment. Significantly, the CA construed these arguments as abandonment
of work under the labor law construct. However, Nightowl did not dismiss Lumahan;
hence, it never raised the defense of abandonment. Besides, Nightowl did not say
that Lumahan "abandoned his work;" rather, Nightowl stated that Lumahan
"abandoned his post" at Steelwork. When read together with its arguments, what this
phrase simply means is that Lumahan abandoned his assignment at Steelwork;
nonetheless, Nightowl still considered him as its employee whose return they had
been waiting for.
Finally, failure to send notices to Lumahan to report back to work should not
be taken against Nightowl despite the fact that it would have been prudent, given the
circumstance, had it done so. Report-to-work notices are required, as an aspect of
procedural due process, only in situations involving the dismissal, or the possibility of
dismissal, of the employee. Verily, report-to- work notices could not be required when
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dismissal, or the possibility of dismissal, of the employee does not exist.
SAUDI ARABIAN AIRLINES AND BRENDA J. BETIA v. MA. JOPETTE M. REBESENCIO,

et al.
The very nature of a maternity leave means that a pregnant employee will not
report for work only temporarily and that she will resume the performance of her duties
as soon as the leave allowance expires.
Facts:
Rebesencio, et al. were hired by Saudi Arabian Airlines (Saudia) as Temporary Flight Attendants.
Respondents continued their employment with Saudia until they were separated from service on
various dates in 2006. Respondents contended that the termination of their employment was
illegal as it was made solely because they were pregnant. Saudia anchored its disapproval of
respondents' maternity leaves and demand for their resignation on its Unified Contract which
provides that the employment of a Flight Attendant who becomes pregnant is rendered void.
Respondents filed a Complaint against Saudia and its officers for illegal dismissal. Saudia
contended that respondents had no cause of action as they resigned voluntarily.
Issue:
Whether respondents were illegally dismissed
Ruling:
Yes. Respondents were constructively dismissed. As noted by the CA, pregnancy

is a time when they need employment to sustain their families. It goes against
reasonable human behavior to abandon one's livelihood in a time of great financial need.
Respondents intended to remain employed with Saudia. They merely availed of their
maternity leaves. It is also clear that respondents exerted all efforts to remain employed
with Saudia. Each of them repeatedly filed appeal letters asking Saudia to reconsider the
ultimatum that they resign or be terminated along with the forfeiture of their
benefits. The resignation letters are proof of how any supposed resignation did not arise
from respondents' own initiative. Respondents' resignations were executed on Saudia's
blank letterheads that Saudia had provided. These letterheads already had the word
"RESIGNATION" typed on the subject portion of their respective headings when these
were handed to respondents.
GRAND ASIAN SHIPPING LINES, INC., EDUARDO P. FRANCISCO and WILLIAM HOW,
vs. WILFREDO GALVEZ, JOEL SALES, et. al.
G.R. No. 178184, January 29, 2014
J. DEL CASTILLO
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Despite the charge against the respondent of qualified theft, the mere filing of a formal charge,
to our mind, does not automatically make the dismissal valid. Evidence submitted to support the
charge should be evaluated to see if the degree of proof is met to justify respondents’ termination. The
affidavit executed by Montegrico simply contained the accusations of Abis that respondents
committed pilferage, which allegations remain uncorroborated. "Unsubstantiated suspicions,
accusations, and conclusions of employers do not provide for legal justification for dismissing
employees.” The other bits of evidence were also inadequate to support the charge of pilferage.
Facts:
One of the vessel’s Oilers, Richard Abis (Abis), reported to Grand Asian Shipping Lines,
Inc. (GASLI) Office and Crewing Manager, Elsa Montegrico (Montegrico), an alleged illegal activity
being committed by respondents aboard the vessel. Abis revealed that after about four to five
voyages a week, a substantial volume of fuel oil is unconsumed and stored in the vessel’s fuel tanks.
However, Gruta, one of the respondents, would misdeclare it as consumed fuel in the Engineer’s
Voyage Reports. Then, the saved fuel oil is siphoned and sold to other vessels out at sea usually at
nighttime. Respondents would then divide among themselves the proceeds of the sale.
An investigation on the alleged pilferage was conducted. After audit and examination of the
Engineer’s Voyage Reports, GASLI’s Internal Auditor that for the period June 30, 1999 to February
15, 2000 fuel oil consumption was overstated by 6,954.3 liters amounting to P74,737.86.
A case of qualified theft was filed against the respondents and GASLI placed respondents under
preventive suspension. After conducting administrative hearings, petitioners decided to terminate
respondents from employment. It appears that several other employees and crewmembers of
GASLI’s two other vessels were likewise suspended and terminated from employment.
Crewmembers of the two other vessels filed with the NLRC separate complaints for illegal
suspension and dismissal, underpayment/non-payment of salaries/wages, overtime pay, premium
pay for holiday and rest day, holiday pay, service incentive leave pay, hazard pay, tax refunds and
indemnities for damages and attorney’s fees against petitioners.
Labor Arbiter rendered a Decision finding the dismissal of all 21 complainants illegal. As regards the
dismissal of herein respondents, the Labor Arbiter ruled that the filing of a criminal case for
qualified theft against them did not justify their termination from employment.
Issue:
Whether the accused were validly dismissed.
Ruling:
As specified in the termination notice, respondents were dismissed on the grounds of (i) serious
misconduct, particularly in engaging in pilferage while navigating at sea, (ii) willful breach of the
trust reposed by the company, and (iii) commission of a crime or offense against their employer.
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Petitioners claim that based on the sworn statement of Abis, joint affidavit of Bernabe and De la
Rama, letter of petitioner Francisco requesting assistance from the CIDG, formal complaint sheet,
complaint and supplementary complaint affidavit of Montegrico, CIDG’s letter referring
respondents’ case to the Office of the City Prosecutor of Manila, resolution of the City Prosecutor
finding a prima facie case of qualified theft, and the Information for qualified theft, there is a
reasonable ground to believe that respondents were responsible for the pilferage of diesel fuel oil
at M/T Dorothy Uno, which renders them unworthy of the trust and confidence reposed on them.
After examination of the evidence presented, however, we find that petitioners failed to
substantiate adequately the charges of pilferage against respondents. "[T]he quantum of proof
which the employer must discharge is substantial evidence. x x x Substantial evidence is that
amount of relevant evidence as a reasonable mind might accept as adequate to support a
conclusion, even if other minds, equally reasonable, might conceivably opine otherwise."
Here, the mere filing of a formal charge, to our mind, does not automatically make the dismissal
valid. Evidence submitted to support the charge should be evaluated to see if the degree of proof is
met to justify respondents’ termination. The affidavit executed by Montegrico simply contained the
accusations of Abis that respondents committed pilferage, which allegations remain
uncorroborated. "Unsubstantiated suspicions, accusations, and conclusions of employers do not
provide for legal justification for dismissing employees.” The other bits of evidence were also
inadequate to support the charge of pilferage. The findings made by GASLI’s port captain and
internal auditor and the resulting certification executed by De la Rama merely showed an
overstatement of fuel consumption as revealed in the Engineer’s Voyage Reports. The report of Jade
Sea Land Inspection Services only declares the actual usage and amount of fuel consumed for a
particular voyage. There are no other sufficient evidence to show that respondents participated in
the commission of a serious misconduct or an offense against their employer.
As for the second ground for respondents’ termination, which is loss of trust and confidence,
distinction should be made between managerial and rank and file employees. "[W]ith respect to
rank-and-file personnel, loss of trust and confidence, as ground for valid dismissal, requires proof
of involvement in the alleged events x x x [while for] managerial employees, the mere existence of
a basis for believing that such employee has breached the trust of his employer would suffice for
his dismissal."
In the case before us, Galvez, as the ship captain, is considered a managerial employee since his
duties involve the governance, care and management of the vessel. Gruta, as chief engineer, is also
a managerial employee for he is tasked to take complete charge of the technical operations of the
vessel. As captain and as chief engineer, Galvez and Gruta perform functions vested with authority
to execute management policies and thereby hold positions of responsibility over the activities in
the vessel. Indeed, their position requires the full trust and confidence of their employer for they
are entrusted with the custody, handling and care of company property and exercise authority over
it.
Thus, we find that there is some basis for the loss of confidence reposed on Galvez and Gruta. The
certification issued by De la Rama stated that there is an overstatement of fuel consumption.
Notably, while respondents made self-serving allegations that the computation made therein is
erroneous, they never questioned the competence of De la Rama to make such certification. Neither
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did they question the authenticity and validity of the certification. Thus, the fact that there was an
overstatement of fuel consumption and that there was loss of a considerable amount of diesel fuel
oil remained unrefuted. Their failure to account for this loss of company property betrays the trust
reposed and expected of them. They had violated petitioners’ trust and for which their dismissal is
justified on the ground of breach of confidence.
As for Arguelles, Batayola, Fresnillo, Noble, Dominico, Nilmao and Austral, proof of involvement
in the loss of the vessel’s fuel as well as their participation in the alleged theft is required for they
are ordinary rank and file employees. And as discussed above, no substantial evidence exists in the
records that would establish their participation in the offense charged. This renders their dismissal
illegal, thus, entitling them to reinstatement plus full backwages, inclusive of allowances and other
benefits, computed from the time of their dismissal up to the time of actual reinstatement.
LORELEI O. ILADAN, Petitioner, v. LA SUERTE INTERNATIONAL MANPOWER AGENCY,

INC., AND DEBBIE LAO, Respondents.
G.R. No. 203882, January 11, 2016
FACTS
La Suerte is a recruitment agency duly authorized by the Philippine Overseas Employment

Administration (POEA) to deploy workers for overseas employment. On March 20, 2009, La Suerte
hired Iladan to work as a domestic helper in Hongkong for a period of two years with a monthly
salary of HK$3,580.00. On July 20, 2009, Iladan was deployed to her principal employer in
Hongkong, Domestic Services International (Domestic Services), to work as domestic helper for
Ms. Muk Sun Fan.
On July 28, 2009 or barely eight days into her job, Iladan executed a handwritten resignation letter.
On August 6, 2009, in consideration of P35,000.00 financial assistance given by Domestic Services,
Iladan signed an Affidavit of Release, Waiver and Quitclaim duly subscribed before Labor Attache
Leonida V. Romulo (Labor Attache Romulo) of the Philippine Consulate General in Hongkong. On
the same date, an Agreement, was signed by Iladan, Conciliator-Mediator Maria Larisa Q. Diaz
(Conciliator-Mediator Diaz) and a representative of Domestic Services, whereby Iladan
acknowledged that her acceptance of the financial assistance would constitute as final settlement
of her contractual claims and waiver of any cause of action against respondents and Domestic
Services. The Agreement was also subscribed before Labor Attache Romulo. On August 10, 2009,
Iladan returned to the Philippines.
Thereafter, or on November 23, 2009, Iladan filed a Complaint for illegal dismissal, refund of
placement fee, payment of salaries corresponding to the unexpired portion of the contract, as well
as moral and exemplary damages, against respondents. Iladan alleged that she was forced to resign
by her principal employer, threatened with incarceration; and that she was constrained to accept
the amount of P35,000.00 as financial assistance as she needed the money to defray her expenses
in going back to the Philippines. She averred that the statements in the Affidavit of Release, Waiver
and Quitclaim and the Agreement were not fully explained in the language known to her; that they
were considered contracts of adhesion contrary to public policy; and were issued for an
unreasonable consideration. Iladan claimed to have been illegally dismissed and entitled to
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backwages corresponding to the unexpired portion of the contract, reimbursement of the
placement fee in the amount of P90,000.00, as well as payment of damages and attorney's fee for
the litigation of her cause.
To prove that she incurred debts for the placement fee, Iladan presented a) a mortgage deed and a
deed of transfer of rights over her family's properties in favor of other persons, b) a sworn statement
of her mother, Rebecca U. Ondoy (Ondoy), stating that Iladan paid P30,000.00 in cash to
respondents for the placement fee, and borrowed P60,000.00 from Nippon Credit Corp., Inc.
(Nippon), a lending company referred by respondents, and c) a demand letter14 from Nippon
demanding payment of her loan.
Respondents, on the hand, averred that Iladan was not illegally dismissed but voluntarily resigned
as shown by: (1) her handwritten resignation letter and (2) the Affidavit of Release, Waiver and
Quitclaim and the Agreement, both voluntarily executed by her before Philippine Consulate
officials in Hongkong. Respondents also denied collecting a placement fee considering the
prohibition in the POEA rules against the charging of placement fee for domestic helpers deployed
to Hongkong.
ISSUES
Whether or not Iladan's resignation and her execution of the Affidavit of Release, Waiver and
Quitclaim and the Agreement were all voluntarily made.
Whether or not Iladan was illegally dismissed.
RULING
Iladan's resignation was voluntary; there was no illegal dismissal
In illegal dismissal cases, the employer has the burden of proving that the employee's dismissal was
legal. However, to discharge this burden, the employee must first prove, by substantial evidence,
that he had been dismissed from employment.
Iladan maintains that she was threatened and coerced by respondents to write the resignation
letter, to accept the financial assistance and to sign the waiver and settlement. Consequently, she
insists that her act of resigning was involuntary.
The Court is not convinced as we find no proof of Iladan's allegations. It is a settled jurisprudence
that it is incumbent upon an employee to prove that his resignation is not voluntary. However,
Iladan did not adduce any competent evidence to prove that respondents used force and threat.
For intimidation to vitiate consent, the following requisites must be present; (1) that the
intimidation paused the consent to be given; (2) that the threatened act be unjust or unlawful; (3)
that the threat be real or serious, there being evident disproportion between the evil and the
resistance which all men can offer, leading to the choice of doing the act which is forced on the
person to do as the lesser evil; and (4) that it produces a well-grounded fear from the fact that the
person from whom it comes has the necessary means or ability to inflict the threatened injury to
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his person or property. In the instant case, not one of these essential elements was amply proven
by [Iladan]. Bare allegations of threat or 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 dissociate oneself from employment. It is a formal pronouncement or relinquishment
of an office, with the intention of relinquishing the office accompanied by the act of relinquishment.
As the intent to relinquish must concur with the overt act of relinquishment, the acts of the
employee before and after the alleged resignation must be considered in determining whether in
fact, he or she intended to sever from his or her employment.
In the instant case, Iladan executed a resignation letter in her own handwriting. She also accepted
the amount of P35,000.00 as financial assistance and executed an Affidavit of Release, Waiver and
Quitclaim and an Agreement, as settlement and waiver of any cause of action against respondents.
The affidavit of waiver and the settlement were acknowledged/subscribed before Labor Attache
Romulo on August 6, 2009, and duly authenticated by the Philippine Consulate. An affidavit of
waiver duly acknowledged before a notary public is a public document which cannot be impugned
by mere self-serving allegations. Proof of an irregularity in its execution is absolutely essential. The
Agreement likewise bears the signature of Conciliator-Mediator Diaz. Thus, the signatures of these
officials sufficiently prove that Iladan was duly assisted when she signed the waiver and settlement.
Concededly, the presumption of regularity of official acts may be rebutted by affirmative evidence
of irregularity or failure to perform a duty. In this case, no such evidence was presented. Besides,
"[t]he Court has ruled that a waiver or quitclaim is a valid and binding agreement between the
parties, provided that it constitutes a credible and reasonable settlement, and that the one
accomplishing it has done so voluntarily and with a full understanding of its import." Absent any
extant and clear proof of the alleged coercion and threats Iladan allegedly received from
respondents that led her to terminate her employment relations with respondents, it can be
concluded that Iladan resigned voluntarily.
All told, the Labor Arbiter and the NLRC erred in finding that petitioner was illegally dismissed as
no substantial evidence was adduced to sustain this finding. As shown above, Iladan failed to
substantiate her claim of illegal dismissal for there was no proof that her resignation was tainted
with coercion and threats, as she strongly claims.
"Although the Supreme Court has, more often than not, been inclined towards the workers and has
upheld their cause in their conflicts with the employers, such inclination has not blinded it to the
rule that justice is in every case for the deserving, to be dispensed in the light of the established
facts and applicable law and doctrine."
SILVERTEX WEAVING CORPORATION/ARMANDO

ARCENAL/ROBERT ONG, v. TEODORA F. CAMPO
G.R. No. 211411, March 16, 2016
FACTS
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The case stems from a complaint for illegal dismissal and monetary claims filed by Teodora F.
Campo (respondent) against the petitioners, wherein she claimed that she worked for STWC as a
weaving machine operator beginning June 11, 1999, until she was unlawfully dismissed from
employment on November 21, 2010. Prior to her dismissal, she was suspended for one week
beginning November 14, 2010 after a stitching machine that she was operating overheated and
emitted smoke on November 13, 2010. When the respondent tried to report back to work on
November 21, 2010, she was denied entry by the STWC's security guard, reportedly upon the
instructions of Arcenal.
For their defense, the petitioners argued that the respondent, who was hired only in June 2009,
voluntarily resigned from STWC after she was reprimanded for poor job performance. They
submitted a handwritten resignation letter allegedly executed by the respondent on November 13,
2010, together with the Waiver, Release and Quitclaims Statement that she supposedly signed
following her receipt of P30,000.00 from STWC. The respondent, however, denied having executed
the resignation letter, the quitclaim, and the supposed receipt of the P30,000.00.
ISSUE
Whether or not respondent was illegally dismissed.
RULING
The Court underscores the petitioners' insistent claim that the respondent was not dismissed, but
had voluntarily resigned from employment with STWC. The respondent, on the other hand,
consistently and vehemently denied the genuineness of the signatures in the two subject
documents presented by the petitioners. She likewise denied any intention to sever her
employment with the company.
Anent the foregoing circumstances, it is well-settled by jurisprudence that in labor cases, "the
employer has the burden of proving that the employee was not dismissed, or, if dismissed, that the
dismissal was not illegal." The NLRC's pronouncement that it was incumbent upon the respondent
to dispute the genuineness of her signature on the resignation letter was then clearly misplaced. As
the Court emphasized in San Miguel Properties Philippines, Inc. v. Gucaban:
Resignation - the formal pronouncement or relinquishment of a position or office - is the voluntary

act of an employee who is in a situation where he believes that personal reasons cannot be sacrificed
in favor of the exigency of the service, and he has then no other choice but to disassociate himself
from employment. The intent to relinquish must concur with the overt act of relinquishment;
hence, the acts of the employee before and after the alleged resignation must be considered in
determining whether he in fact intended to terminate his employment. In illegal dismissal cases,
fundamental is the rule that when an employer interposes the defense of resignation, on
him necessarily rests the burden to prove that the employee indeed voluntarily resigned. x
x x. (Citations omitted and emphasis ours)
The petitioners attempted to discharge the burden of proving the respondent's resignation by
referring mainly to a letter allegedly executed by the respondent. The CA, however, correctly
explained that the NLRC's reliance thereon and on the QDR from the PNP Crime Laboratory to
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prove the letter's authenticity was unsatisfactory. In contrast with the NLRC's conclusion in its
Resolution dated March 19, 2012 that the respondent actually executed the resignation letter, the
full report of the PNP Crime Laboratory actually indicated that the signature appearing on the
alleged resignation letter did not appear to be written by the same person who signed the several
payroll slips and Philhealth records, respectively marked as "S-l" to "S-14" and "S-15" to "S-17", that
were submitted by the petitioners as reference on the respondent's true handwriting.
Although the same report from the PNP provided that the signature on the resignation letter
matched the supposed handwriting of the respondent in her bio-data dated April 1, 2009, the
conflicting findings and the fact that only one of the 18 documents used as reference for the
examination matched the signature in the letter only supported the respondent's claim that she did
not execute the resignation letter. Furthermore, there was no showing that the sample signature
considered by the PNP Crime Laboratory was a genuine signature of the respondent, rendering it
insufficient basis for the conclusion arrived at by the document examiner and relied upon by the
NLRC.
Clearly then, given the vehement claim of the respondent that her signature on the resignation
letter was a mere forgery, the evidence presented by the petitioners to establish their defense of
voluntary resignation failed to suffice. Several other indicators cast doubt on the letter's
authenticity, as the NLRC itself cited in its Resolution dated November 29, 2011 that:
As shown on records, the [respondent's] original and genuine signature appeared for several times
in her documents, evidence and pleadings x x x. The signatures of the [respondent] therein manifest
a similar stroke with an upper loop, downslide on the letter "t", letters "c" and "a" not distinct from
each other, downslide on the letter "p" and an upward loop on the letter "o". By a careful
examination, the said signatures are far and different from the alleged [respondent's] signatures on
the "resignation letter, Waiver, Release and Quitclaims Statement and payslips" x x x presented by
the [petitioners]. In the resignation letter in particular x x x, the letter "t" does not have an upper
loop. Also in the said documents x x x the letters "c" and "a" are distinct from each other, and the
letter "p" x x x contains an outside downward loop which obviously differ from the original signature
of the [respondent]. On the same tack, the [respondent] specifically denied under oath the
genuineness of her signatures in the [petitioners'] documents as well as [their] truthfulness x x x.
The foregoing observations of the NLRC appeared consistent with the PNP Crime Laboratory's
report that the signature on the resignation letter did not match the several other documents
supposedly executed by the respondent.
The authenticity and due execution of the undated Waiver, Release and Quitclaims Statement
purportedly signed by the respondent was also not sufficiently established. The QDR was not
conclusive on the issue of its genuineness. Even granting that such document was actually executed
by the respondent, its execution was not fatal to the respondent's case for illegal dismissal. The
finding of illegal dismissal could still stand, as jurisprudence provides that "[a]n employee's
execution of a final settlement and receipt of amounts agreed upon do not foreclose his right to
pursue a claim for illegal dismissal."
All told, the Court finds no cogent reason to reverse the CA's finding that the respondent was
illegally dismissed and thus entitled to reinstatement and monetary awards plus interest. The
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reckoning date for the computation of the awarded interest, however, needs to be modified after
the CA ruled that it should be at the rate of six percent (6%) per annum, to be computed from the
date of dismissal on November 21, 2010 until full payment. To conform with prevailing
jurisprudence, interest on the monetary awards shall only be computed from the date this
Resolution becomes final and executory, until full satisfaction.
ROBINA FARMS CEBU/UNIVERSAL ROBINA CORPORATION

vs. ELIZABETH VILLA
G.R. No. 175869, April 18, 2016
FACTS
Respondent Elizabeth Villa brought against the petitioner her complaint for illegal suspension,
illegal dismissal, nonpayment of overtime pay, and nonpayment of service incentive leave pay in
the Regional Arbitration Branch No. VII of the NLRC in Cebu City.
In her verified position paper, Villa averred that she had been employed by petitioner Robina Farms
as sales clerk since August 1981; that in the later part of 2001, the petitioner had enticed her to avail
herself of the company's special retirement program; that on March 2, 2002, she had received a
memorandum from Lily Ngochua requiring her to explain her failure to issue invoices for
unhatched eggs in the months of January to February 2002; that she had explained that the invoices
were not delivered on time because the delivery receipts were delayed and overlooked; that despite
her explanation, she had been suspended for 10 days from March 8, 2012 until March 19, 2002; that
upon reporting back to work, she had been advised to cease working because her application for
retirement had already been approved; that she had been subsequently informed that her
application had been disapproved, and had then been advised to tender her resignation with a
request for financial assistance; that she had manifested her intention to return to work but the
petitioner had confiscated her gate pass; and that she had since then been prevented from entering
the company premises and had been replaced by another employee.
The petitioner admitted that Villa had been its sales clerk at Robina Farms. It stated that on
December 12, 2001, she had applied for retirement under the special privilege program offered to its
employees in Bulacan and Anti polo who had served for at least 10 years; that in February 2002, her
attention had been called by Anita Gabatan of the accounting department to explain her failure to
issue invoices for the unhatched eggs for the month of February; that she had explained that she
had been busy; that Gabatan had referred the matter to Florabeth Zanoria who had in turn relayed
the matter to Ngochua; and that the latter had then given Villa the chance to explain, which she
did.
The petitioner added that after the administrative hearing Villa was found to have violated the
company rule on the timely issuance of the invoices that had resulted in delay in the payment of
buyers considering that the payment had depended upon the receipt of the invoices; that she had
been suspended from her employment as a consequence; that after serving the suspension, she had
returned to work and had followed up her application for retirement with Lucina de Guzman, who
had then informed her that the management did not approve the benefits equivalent to 86% of her
salary rate applied for, but only 1/2 month for every year of service; and that disappointed with the
outcome, she had then brought her complaint against the petitioners.
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ISSUES
Whether or not the NLRC correctly gave due course to Villa’s appeal despite the fact that she had
accompanied her appeal with the same verification attached to her position paper.
Whether or not Villa had been illegally dismissed.
Whether or not Villa is entitled to overtime pay.
Whether or not Villa is entitled to service incentive leave pay.
RULING
The petitioner prays that Villa's appeal should be treated as an unsigned pleading because she had
accompanied her appeal with the same verification attached to her position paper.
The petitioner cannot be sustained. The NLRC justifiably gave due course to Villa's appeal.
Section 4(a), Rule VI of the Amended NLRC Rules of Procedure requires an appeal to be verified by
the appellant herself. The verification is a mere formal requirement intended to secure and to give
assurance that the matters alleged in the pleading are true and correct. The requirement is complied
with when one who has the ample knowledge to swear to the truth of the allegations in the
complaint or petition signs the verification, or when the matters contained in the petition have
been alleged in good faith or are true and correct. Being a mere formal requirement, the courts may
even simply order the correction of improperly verified pleadings, or act on the same upon waiving
the strict compliance with the rules of procedure. It is the essence of the NLRC Rules of Procedure
to extend to every party-litigant the amplest opportunity for the proper and just determination of
his cause, free from the constraints of technicalities. Accordingly, the substantial compliance with
the procedural rules is appreciated in favor of Villa.
The petitioner next submits that the CA erred in holding that Villa had been illegally dismissed;
that it had no intention to terminate her; that de Guzman had merely suggested to her that she
should be filing the letter of resignation with the request for financial assistance because the
management had disapproved her application for the 86% salary rate as basis for her retirement
benefits; that it was Villa who had the intention to sever the employer-employee relationship
because she had kept on following up her application for retirement; that she had prematurely filed
the complaint for illegal dismissal; that she had voluntarily opted not to report to her work; and
that she had not presented proof showing that it had prevented her from working and entering its
premises.
The petitioner's submissions are bereft of merit.
We note that the CA and the NLRC agreed on their finding that the petitioner did not admit Villa
back to work after the completion of her 10-day suspension. In that regard, the CA observed:
It is undeniable that private respondent was suspended for ten (10) days beginning March 8, 2002
to March 19, 2002. Ordinarily, after an employee [has] served her suspension, she should be
admitted back to work and to continue to receive compensation for her services. In the case at
bar, it is clear that private respondent was not admitted immediately after her suspension.
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Records show that when private respondent reported back after her suspension, she was advised
by Lucy de Guzman not to report back anymore as her application was approved, which was latter
[sic] on disapproved. It is at this point that, said Lucy de Guzman had advised private respondent
to tender a resignation letter with request for financial assistance. Not only Lucy De Guzman has
advised her to tender her resignation letter. The letter of petitioner Lily Ngochua dated April 11,
2002 to private respondent which reads:
"As explained by Lucy de Guzman xxx your request for special retirement with financial assistance
of 86%/year of service has not been approved. Because this offer was for employees working in
operations department and not in Adm. & Sales.
"However, as per Manila Office, you can be given financial assistance of V2 per year of service if you
tender letter of resignation with request for financial assistance." shows that petitioner Lily
Ngochua has also advised private respondent to the same. These acts are strong indication that
petitioners wanted to severe [sic] the employer-employee relationship between them and that of
private respondent. This is buttressed by the fact that when private respondent signified her
intention to return back to work after learning of the disapproval of her application, she was
prevented to enter the petitioner's premises by confiscating her ID and informing her that a new
employee has already replaced her.
It should be noted that when private respondent averred this statement in her position paper
submitted before the Labor Arbiter petitioners did not refute the same. Neither did they contest
this allegation in their supposed Appeal Memorandum nor in their Motion for Reconsideration of
the assailed decision of public respondent. Basic is the rule that matters not controverted are
deemed admitted. To contest this allegation at this point of proceeding is not allowed for it is a
settled rule that matters, theories or arguments not brought out in the original proceedings cannot
be considered on review or appeal where they arc raised for the first time. To consider the alleged
facts and arguments raised belatedly would amount to trampling on the basic principles of fair play,
justice and due process.
Neither did Villa's application for early retirement manifest her intention to sever the employer-
employee relationship. Although she applied for early retirement, she did so upon the belief that
she would receive a higher benefit based on the petitioner's offer. As such, her consent to be retired
could not be fairly deemed to have been knowingly and freely given.
Retirement is the result of a bilateral act of both the employer and the employee based on their
voluntary agreement that upon reaching a certain age, the employee agrees to sever his
employment. The difficulty in the case of Villa arises from determining whether the retirement was
voluntary or involuntary. The line between the two is thin but it is one that the Court has drawn.
On one hand, voluntary retirement cuts the employment ties leaving no residual employer liability;
on the other, involuntary retirement amounts to a discharge, rendering the employer liable for
termination without cause. The employee's intent is decisive. In determining such intent, the
relevant parameters to consider are the fairness of the process governing the retirement decision,
the payment of stipulated benefits, and the absence of badges of intimidation or coercion.
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In case of early retirement programs, the offer of benefits must be certain while the acceptance to
be retired should be absolute. The acceptance by the employees contemplated herein must be
explicit, voluntary, free and uncompelled. In Jaculbe v. Silliman University, we elucidated that:
[A]n employer is free to impose a retirement age less than 65 for as long as it has the employees'
consent. Stated conversely, employees are free to accept the employer's offer to lower the
retirement age if they feel they can get a better deal with the retirement plan presented by
the employer. Thus, having terminated petitioner solely on the basis of a provision of a
retirement plan which was not freely assented to by her, respondent was guilty of illegal
dismissal. (bold emphasis supplied)
Under the circumstances, the CA did not err in declaring the petitioner guilty of illegal dismissal
for violating Article 282 of the Labor Code and the twin notice rule.
The petitioner posits that the CA erroneously affirmed the giving of overtime pay and service
incentive leave pay to Villa; that she did not adduce proof of her having rendered actual overtime
work; that she had not been authorized to render overtime work; and that her availment of vacation
and sick leaves that had been paid precluded her claiming the service incentive leave pay.
We partly agree with the petitioner's position.
Firstly, entitlement to overtime pay must first be established by proof that the overtime work was
actually performed before the employee may properly claim the benefit. The burden of proving
entitlement to overtime pay rests on the employee because the benefit is not incurred in the normal
course of business. Failure to prove such actual performance transgresses the principles of fair play
and equity.
And, secondly, the NLRC's reliance on the daily time records (DTRs) showing that Villa had stayed
in the company's premises beyond eight hours was misplaced. The DTRs did not substantially prove
the actual performance of overtime work. The petitioner correctly points out that any employee
could render overtime work only when there was a prior authorization therefor by the
management. Without the prior authorization, therefore, Villa could not validly claim having
performed work beyond the normal hours of work. Moreover, Section 4(c), Rule I, Book III of the
Omnibus Rules Implementing the Labor Code relevantly states as follows:
Section 4. Principles in determining hours worked. – The following general principles shall govern
in determining whether the time spent by an employee is considered hours worked for purposes of
this Rule:
(a) x x x.
(b) x x x.
(c) If the work performed was necessary, or it benefited the employer, or the employee
could not abandon his work at the end of his normal working hours because he had no
replacement, all time spent for such work shall be considered as hours worked, if
the work was with the knowledge of his employer or immediate supervisor. (bold
emphasis supplied)
(d) x x x.
We uphold the grant of service incentive leave pay.
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Although the grant of vacation or sick leave with pay of at least five days could be credited as
compliance with the duty to pay service incentive leave, the employer is still obliged to prove that
it fully paid the accrued service incentive leave pay to the employee.
The Labor Arbiter originally awarded the service incentive leave pay because the petitioner did not
present proof showing that Villa had been justly paid. The petitioner submitted the affidavits of
Zanoria explaining the payment of service incentive leave after the Labor Arbiter had rendered her
decision. But that was not enough, for evidence should be presented in the proceedings before the
Labor Arbiter, not after the rendition of the adverse decision by the Labor Arbiter or during appeal.
Such a practice of belated presentation cannot be tolerated because it defeats the speedy
administration of justice in matters concerning the poor workers.
JUST CAUSES
CEBU PEOPLE'S MULTI-PURPOSE COOPERATIVE and MACARIO G. QUEVEDO, vs.

NICERATO E. CARBONILLA, JR.
G.R. No. 212070, January 27, 2016
FACTS:
On November 14, 2005, CPMPC hired Carbonilla, Jr. as a Credit and Collection Manager and, as
such, was tasked with the handling of the credit and collection activities of the cooperative, which
included recommending loan approvals, formulating and implementing credit and collection
policies, and conducting trainings. Sometime in 2007, CPMPC underwent a reorganization whereby
Carbonilla, Jr. was also assigned to perform the duties of Human Resources Department (HRD)
Manager, i.e., assisting in the personnel hiring, firing, and handling of labor disputes. In 2008, he
was appointed as Legal Officer and subsequently, held the position of Legal and Collection
Manager.
However, beginning February 2008, CPMPC, through its HRD Manager, Ma. Theresa R. Marquez
(HRD Manager Marquez), sent various memoranda to Carbonilla, Jr. seeking explanation on the
various infractions he allegedly committed.
Unconvinced by Carbonilla, Jr.'s explanations, CPMPC scheduled several clarificatory hearings, but
the former failed to attend despite due notice. Later, CPMPC conducted a formal investigation
where it ultimately found Carbonilla, Jr. to have committed acts prejudicial to CPMPC's interests.As
such, CPMPC, CEO Quevedo, sent Carbonilla, Jr. a Notice of Dismissal dated August 5, 2008
informing the latter of his termination on the grounds of: (a) loss of trust and confidence; (b) gross
disrespect; (c) serious misconduct; (d) gross negligence; (e) commission of a crime of
falsification/inducing Aguipo to violate the law or the Land Transportation and Traffic Code; and
(e) committing acts highly prejudicial to the interest of the cooperative.
Consequently, Carbonilla, Jr. filed the instant case for illegal dismissal, non-payment of salaries,
13th month pay, as well as damages and backawages, against CPMPC, before the NLRC, docketed
as NLRC RAB VII-08-1856-2008. In support of his claims, Carbonilla, Jr. denied the administrative
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charges against him, asserting that the Management and Board of Directors of CPMPC merely
orchestrated means to unjustly dismiss him from employment.
In defense, CPMPC maintained that the totality of Carbonilla, Jr.'s infractions was sufficient to
warrant his dismissal, and that it had complied with the procedural due process in terminating him.
Further, CPMPC pointed out that Carbonilla, Jr. had been fully paid of all his benefits,
notwithstanding his unsettled obligations to it in the form of loans, insurance policy premiums,
and cash advances, among others, amounting to a total of P129,455.00.
ISSUE
Whether or not Carbonilla, Jr. 's dismissal was valid.
RULING
The Court finds that the CA committed reversible error in granting Carbonilla, Jr. 's certiorari
petition since the NLRC did not gravely abuse its discretion in ruling that he was validly dismissed
from employment as CPMPC was able to prove, through substantial evidence, the existence of just
causes warranting the same.
As may be gathered from the tenor of CPMPC's Notice of Dismissal, it is apparent that Carbonilla,
Jr.'s employment was terminated on the grounds of, among others, serious misconduct and loss of
On the first ground, case law characterizes misconduct as a transgression of some established and
definite rule of action, a forbidden act, a dereliction of duty, willful in character and implies
wrongful intent and not mere error in judgment. For misconduct to be considered as a just cause
for termination, the following requisites must concur: (a) the misconduct must be serious; (b) it
must relate to the performance of the employee's duties showing that the employee has become
unfit to continue working for the employer; and (c) it must have been performed with wrongful
intent.
All of the foregoing requisites have been duly established in this case. Records reveal that
Carbonilla, Jr. 's serious misconduct consisted of him frequently exhibiting disrespectful and
belligerent behavior, not only to his colleagues, but also to his superiors. He even used his stature
as a law graduate to insist that he is "above" them, often using misguided legalese to weasel his way
out of the charges against him, as well as to strong-arm his colleagues and superiors into
succumbing to his arrogance. Carbonilla Jr.'s obnoxious attitude is highlighted by the following
documents on record: (a) his reply to HRD 202 File 2008.02.26.036 dated February 26, 2008 wherein
he threatened HRD Manager Marquez with a lawsuit, stating that if the memorandum is "proven
malicious, [she] might be answerable to a certain degree of civil liability which the 1987 Constitution
has given to individuals"; (b) HRD 202 File 2008.06.26.086 dated June 26, 2008 wherein he berated
COO Bentillo in front of her subordinates with the statement: "[i]kaw ra may di mosalig ba, ka
kwalipikado adto niya, maski mag contest pa mo, lupigon gani ka"or "[y ]ou're the only one who
doesn't trust her, she is very qualified, you even lose in comparison to her[,]"and his reply thereto
wherein he dismissed the charge as made with malicious intent and aimed to discredit his person;
(c) HRD 202 File 2008.06.26.088 dated June 26, 2008wherein he argued with the CEO Quevedo,
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insisting that he had the authority to hire a new staff, and his reply thereto where he cited the
Philippine Law Dictionary to maintain that his act did not amount to insubordination; (d) HRD 202
File 2008.06.26.087 dated June 26, 2008 wherein he openly questioned the authority of HRD
Manager Marquez in refusing to hire a new staff and his reply thereto where he again cited the
Philippine Law Dictionary to insist that he did not commit acts of insubordination; and (e) HRD
202 File 2008.07.04.095 dated July 4, 2008 wherein he openly and improperly confronted the
CPMPC CEO during a Board of Directors' inquiry hearing, to which he again maintained that his
acts did not constitute misconduct, gross disrespect, and loss of trust and confidence as he was only
looking after the welfare of the cooperative.
Indisputably, Carbonilla, Jr. 's demeanor towards his colleagues and superiors is serious in nature
as it is not only reflective of defiance but also breeds of antagonism in the work environment. Surely,
within the bounds of law, management has the rightful prerogative to take away dissidents and
undesirables from the workplace. It should not be forced to deal with difficult personnel, especially
one who occupies a position of trust and confidence, as will be later discussed, else it be compelled
to act against the best interest of its business. Carbonilla, Jr.'s conduct is also clearly work-related
as all were incidents which sprung from the performance of his duties. Lastly, the misconduct was
performed with wrongful intent as no justifiable reason was presented to excuse the same. On the
contrary, Carbonilla, Jr. comes off as a smart aleck who would even go to the extent of dangling
whatever knowledge he had of the law against his employer in a combative manner. As succinctly
put by CPMPC, "[e]very time [Carbonilla, Jr.'s] attention was called for some inappropriate actions,
he would always show his Book, Philippine Law Dictionary and would ask the CEO or HRD
Manager under what provision of the law he would be liable for the complained action or omission."
Irrefragably, CPMPC is justified in no longer tolerating the grossly discourteous attitude of
Carbonilla, Jr. as it constitutes conduct unbecoming of his managerial position and a serious breach
of order and discipline in the workplace.
With all these factored in, CPMPC's dismissal of Carbonilla, Jr. on the ground of serious misconduct
was amply warranted.
For another, Carbonilla, Jr.'s dismissal was also justified on the ground of loss of trust and
confidence. According to jurisprudence, loss of trust and confidence will validate an employee's
dismissal when it is shown that: (a) the employee concerned holds a position of trust and
confidence; and ( b) he performs an act that would justify such loss of trust and confidence. There
are two (2) classes of positions of trust: first, managerial employees whose primary duty consists of
the management of the establishment in which they are employed or of a department or a
subdivision thereof, and to other officers or members of the managerial staff; and second, fiduciary
rank-and-file employees, such as cashiers, auditors, property custodians, or those who, in the
normal exercise of their functions, regularly handle significant amounts of money or property.
These employees, though rank-and-file, are routinely charged with the care and custody of the
employer's money or property, and are thus classified as occupying positions of trust and
confidence.
Records reveal that Carbonilla, Jr. occupied a position of trust and confidence as he was employed
as Credit and Collection Manager, and later on, as Legal and Collection Manager, tasked with the
duties of, among others, handling the credit and collection activities of the cooperative, which
included recommending loan approvals, formulating and implementing credit and collection
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policies, and conducting trainings. With such responsibilities, it is fairly evident that Carbonilla, Jr.
is a managerial employee within the ambit of the first classification of employees afore-discussed.
The loss of CPMPC's trust and confidence in Carbonilla, Jr., as imbued in that position, was later
justified in light of the latter's commission of the following acts: (a) the forwarding of the mediation
settlements for notarization to a lawyer who was not the authorized legal retainer of CPMPC (HRD
202 File 2008.07.09.103 dated July 9, 2008); (b) the pull-out of important records and vital
documents from the office premises, which were either lost or returned already tampered and
altered (HRD 202 File 2008.07.15.106 dated July 15, 2008and HRD 202 File 2008.07.19.111 dated July
19, 2008); and (c) the incurring of unliquidated cash advances related to the notarial transactions
of the mediation agreements (HRD 202 File 2008.07.16.107 dated July 16, 2008). While Carbonilla,
Jr. posited that these actuations were resorted with good intentions as he was only finding ways for
CPMPC to save up on legal fees, this defense can hardly hold, considering that all of these
transactions were not only highly irregular, but also done without the prior knowledge and consent
of CPMPC's management. Cast against this light, Carbonilla, Jr.'s performance of the said acts
therefore gives CPMPC more than enough reason to lose trust and confidence in him. To this, it
must be emphasized that "employers are allowed a wider latitude of discretion in terminating the
services of employees who perform functions by which their nature require the employer's full trust
and confidence. Mere existence of basis for believing that the employee has breached the trust and
confidence of the employer is sufficient and does not require proof beyond reasonable doubt. Thus,
when an employee has been guilty of breach of trust or his employer has ample reason to distrust
him, a labor tribunal cannot deny the employer the authority to dismiss him," as in this case.
Perforce, having established the actual breaches of duty committed by Carbonilla, Jr. and CPMPC's
observance of due process, the Court no longer needs to further examine the other charges against
Carbonilla, Jr., as it is already clear that the CA erred in ascribing grave abuse of discretion on the
part of the NLRC when the latter declared that CPMPC validly dismissed Carbonilla, Jr. from his
job. The totality and gravity of Carbonilla, Jr. 's infractions throughout the course of his employment
completely justified CPMPC's decision to finally terminate his employment. The Court's
pronouncement in Realda v. New Age Graphics, Inc. is instructive on this matter, to wit:
The totality of infractions or the number of violations committed during the period of
employment shall be considered in determining the penalty to be imposed upon an erring
employee. The offenses committed by petitioner should not be taken singly and separately.
Fitness for continued employment cannot be compartmentalized into tight little cubicles
of aspects of character, conduct and ability separate and independent of each other. While
it may be true that petitioner was penalized for his previous infractions, this does not and should
not mean that his employment record would be wiped clean of his infractions. After all, the record
of an employee is a relevant consideration in determining the penalty that should be meted out
since an employee's past misconduct and present behavior must be taken together in determining
the proper imposable penalty[.] Despite the sanctions imposed upon petitioner, he continued to
commit misconduct and exhibit undesirable behavior on board. Indeed, the employer cannot be
compelled to retain a misbehaving employee, or one who is guilty of acts inimical to its
interests. (Emphases and underscoring supplied)
On a final point, the Court notes that Carbonilla, Jr.'s award of unpaid salaries and 13th month pay
were validly offset by his accountabilities to CPMPC in the amount of P129,455.00. Pursuant to
Article 1278 in relation to Article 1706 of the Civil Code and Article 113 (c) of the Labor Code,
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compensation can take place between two persons who are creditors and debtors of each other.
Considering that Carbonilla, Jr. had existing debts to CPMPC which were incurred during the
existence of the employer-employee relationship, the amount which may be due him in wages was
correctly deducted therefrom.
JENNIFER C. LAGAHIT vs. PACIFIC CONCORD CONTAINER LINES/MONETTE CUENCA

(BRANCH MANAGER)
G.R. No. 177680, January 13, 2016
FACTS
In February 2000, respondent Pacific Concord Container Lines (Pacific Concord), a domestic
corporation engaged in cargo forwarding, hired the petitioner as an Account Executive/Marketing
Assistant. In January 2002, Pacific Concord promoted her as a sales manager with the monthly
salary rate of P25,000.00, and provided her with a brand new Toyota Altis plus gasoline allowance.
On November 8, 2002, she reported for work at 9:00 a.m. and left the company premises at around
10:30 a.m. to make client calls. At 1:14 p.m. of that day, she received the following text message from
respondent Monette Cuenca advising her that she was no longer connected with Pacific Concord.
The petitioner immediately tried to contact Cuenca, but the latter refused to take her calls. On the
same day, the petitioner learned from clients and friends that the respondents had disseminated
notices, flyers and memos informing all clients of Pacific Concord that she was no longer connected
with the company as of November 8, 2002. Pacific Concord also caused the publication of the notice
to the public in the Sunstar Daily issue of December 15, 2002.
On November 13, 2002, the petitioner sent a letter to Pacific Concord with the following contents:
In connection with your text message and flyers advising me that you have terminated my
employment, please arrange and expedite settlement of all benefits due to me under the law.
In as much as the facts of my termination has not been formally detailed to me, I believe I was
deprived of the due process that would have given me the chance to formally present my side. It
startled me at first but I have accepted my fate. However, we both have names and reputations
to protect. Factual incidents made as basis of my termination can help us mutually clear our
names.
On November 26, 2002, the petitioner filed her complaint for constructive dismissal in the Regional
Arbitration Branch of the National Labor Relations Commission (NLRC) in Cebu City.
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In their position paper, the respondents denied having terminated the petitioner despite the fact
that there were valid grounds to do so. They insisted that the petitioner had betrayed the trust and
confidence reposed in her when she: (a) used the company-issued vehicle for her own personal
interest; (b) failed to achieve her sales quota, and to enhance and develop the Sales Department;
(c) enticed her marketing assistant, Jo Ann Otrera, to resign and join her in transferring to another
forwarding company; (d) applied for other employment during office hours and using company
resources; (e) solicited and offered the services of Seajet International, Inc. during her employment
with Pacific Concord; (f) received a personal commission from Wesport Line, Inc. for container
shipments; and (g) illegally manipulated and diverted several containers to Seajet International.
The respondents claimed that Pacific Concord even issued at one time a memorandum to the
petitioner to cite her insubordination in refusing to participate in the company’s teambuilding
activity; that in the two meetings held on September 27, 2002 and October 9, 2002, she was afforded
the chance to explain her side on the reports that she was looking for other employment, but she
dismissed the reports as mere speculations and assured them of her loyalty; that although valid
grounds to terminate the petitioner already existed, they did not dismiss her; and that she
voluntarily resigned on November 13, 2002 after probably sensing that the management had gotten
wind of her anomalous transactions. They submitted affidavits to support their allegations.
ISSUES
Whether or not the petitioner resigned as sales manager of Pacific Concord?

Whether or not Pacific Concord had sufficient grounds to terminate her for breach of trust and
confidence under Article 282 of the Labor Code?
RULING
Lagahit did not resign from her employment
As a rule, the employer who interposes the resignation of the employee as a defense should prove
that the employee voluntarily resigned. A valid resignation is the voluntary act of an employee who
finds herself in a situation where she believes that personal reasons cannot be sacrificed in favor of
the exigency of the service and that she has no other choice but to disassociate herself from
employment. The resignation must be unconditional and with a clear intention to relinquish the
position. Consequently, the circumstances surrounding the alleged resignation must be consistent
with the employee’s intent to give up the employment. In this connection, the acts of the employee
before and after the resignation are considered to determine whether or not she intended, in fact,
to relinquish the employment.
The facts and circumstances before and after the petitioner’s severance from her employment on
November 8, 2002 did not show her resolute intention to relinquish her job. Indeed, it would be
unfounded to infer the intention to relinquish from her November 13, 2002 letter, which, to us, was
not a resignation letter due to the absence therefrom of anything evincing her desire to sever the
employer-employee relationship. The letter instead presented her as a defenseless employee
unjustly terminated for unknown reasons who had been made the subject of notices and flyers
informing the public of her unexpected termination. It also depicted her as an employee meekly
accepting her unexpected fate and requesting the payment of her backwages and accrued benefits
just to be done with the employer.
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For sure, to conclude that the petitioner resigned because of her letter of November 13, 2002 is
absurd in light of the respondents having insisted that she had been terminated from her
employment earlier on November 8, 2002. In that regard, every resignation presupposes the
existence of the employer-employee relationship; hence, there can be no valid resignation after the
fact of termination of the employment simply because the employee had no employer-employee
relationship to relinquish.
Lagahit did not breach her employer’s trust; her dismissal was, therefore, illegal
Article 282(c) of the Labor Code authorizes an employer to dismiss an employee for committing
fraud, or for willful breach of the trust reposed by the employer. However, loss of confidence is
never intended to provide the employer with a blank check for terminating its employee. For this
to be a valid ground for the termination of the employee, the employer must establish that: (1) the
employee must be holding a position of trust and confidence; and (2) the act complained against
would justify the loss of trust and confidence.
There are two classes of employees vested with trust and confidence. To the first class belong the
managerial employees or those vested with the powers or prerogatives to lay down management
policies and to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees or
effectively recommend such managerial actions. The second class includes those who in the normal
and routine exercise of their functions regularly handle significant amounts of money or property.
Cashiers, auditors, and property custodians are some of the employees in the second class.
The petitioner’s position as sales manager did not immediately make the petitioner a managerial
employee. The actual work that she performed, not her job title, determined whether she was a
managerial employee vested with trust and confidence. Her employment as sales manager was
directly related with the sales of cargo forwarding services of Pacific Concord, and had nothing to
do with the implementation of the management’s rules and policies. As such, the position of sales
manager came under the second class of employees vested with trust and confidence. Therein was
the flaw in the CA’s assailed decision. Although the mere existence of the basis for believing that
the managerial employee breached the trust reposed by the employer would normally suffice to
justify a dismissal, we should desist from applying this norm against the petitioner who was not a
managerial employee.
At any rate, the employer must present clear and convincing proof of an actual breach of duty
committed by the employee by establishing the facts and incidents upon which the loss of
confidence in the employee may fairly be made to rest. The required amount of evidence for doing
so is substantial proof. With these guidelines in mind, we cannot hold that the evidence submitted
by the respondents (consisting of the three affidavits) sufficiently established the disloyalty of the
petitioner. The affidavits did not show how she had betrayed her employer’s trust. Specifically, the
affidavit of Russell B. Noel only stated that she and her husband Roy had met over lunch with Garcia
Imports and a certain Wilbur of Sea-Jet International Forwarder in the first week of November 2002.
To conclude that such lunch caused Pacific Concord to lose its trust in the petitioner would be
arbitrary. Similarly, the affidavit of Mark Anthony G. Lim was inconclusive. Therein affiant Lim
deposed:
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1. That I was present when Ms. Vivian Veloso, former Branch Manager of Westport Line Inc.,
disclosed to Ms. Monette Cuenca and Ms. Mitzie Ibona on November 11, 2002 at the office of
Admiral Overseas Shipping Corp., where she is presently employed with, that Ms. Jennifer C.
Lagahit received a personal commission or rebate for the full container shipments moved via
Westport Line Inc. in the amount of USD 50.00 per container.
The foregoing statement was bereft of the particulars about how the petitioner had entered into
the transaction, as well as about the prejudice that Pacific Concord had suffered from her receipt
of the commission. Also, that this information was made known to Cuenca three days after she had
already terminated the petitioner belied the relevance of the information to the termination.
In her affidavit, Jo Ann Otrera declared that the petitioner had called other forwarding companies
to inquire about any vacant positions, and that the petitioner had enticed her to transfer to another
company. However, such declarations did not provide the sufficient basis to warrant the
respondents’ loss of confidence in the petitioner. We stress that although her supposedly frantic
search for gainful employment opportunities elsewhere should be considered as inappropriate for
being made during office hours, the same did not constitute willful breach of trust and confidence
of the employer. The loss of trust and confidence contemplated under Article 282(c) of the Labor
Code is not ordinary but willful breach of trust. Verily, the breach of trust is willful if it is intentional,
knowing, deliberate and without justifiable excuse, as distinguished from an act done carelessly,
thoughtlessly, heedlessly or inadvertently. Most importantly, the cause of the loss of trust must be
work-related as to expose the employee as unfit to continue working for the employer.
Considering that the petitioner’s duties related to the sales of forwarding services offered
by Pacific Concord, her calling other forwarding companies to inquire for vacant positions
did not breach the trust reposed in her as sales manager. Such act, being at worst a simple
act of indiscretion, did not constitute the betrayal of trust that merited the extreme penalty
of dismissal from employment. We remind that dismissal is a penalty of last resort, to be meted
only after having appreciated and evaluated all the relevant circumstances with the goal of ensuring
that the ground for dismissal was not only serious but true.
CHRISTINE JOY CAPIN-CADIZ v. BRENT HOSPITAL AND COLLEGES, INC.,

G.R. No. 187417, February 24, 2016
FACTS
Cadiz was the Human Resource Officer of respondent Brent Hospital and Colleges, Inc. (Brent) at
the time of her indefinite suspension from employment in 2006. The cause of suspension was
Cadiz's Unprofessionalism and Unethical Behavior Resulting to Unwed Pregnancy. It appears that
Cadiz became pregnant out of wedlock, and Brent imposed the suspension until such time that she
marries her boyfriend in accordance with law.
Cadiz then filed with the Labor Arbiter (LA) a complaint for Unfair Labor Practice, Constructive
Dismissal, Non-Payment of Wages and Damages with prayer for Reinstatement.
ISSUES
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Whether or not Cadiz was illegally dismissed.
RULING
Admittedly, one of the grounds for disciplinary action under Brent's policies is immorality, which
is punishable by dismissal at first offense Brent's Policy Manual provides:
CATEGORY IV
In accordance with Republic Act No. 1052, the following are just cause for terminating an
employment of an employee without a definite period:
xxxx
2. Serious misconduct or willful disobedience by the employee of the orders of his employer or
representative in connection with his work, such as, but not limited to the following:
xxxx
b. Commission of immoral conduct or indecency within the company premises, such as an act of
lasciviousness or any act which is sinful and vulgar in nature.
c. Immorality, concubinage, bigamy.
Its Employee's Manual of Policies, meanwhile, enumerates "[a]cts of immorality such as scandalous
behaviour, acts of lasciviousness against any person (patient, visitors, co-workers) within hospital
premises" as a ground for discipline and discharge. Brent also relied on Section 94 of the Manual of
Regulations for Private Schools (MRPS), which lists "disgraceful or immoral conduct" as a cause for
terminating employment.
Thus, the question that must be resolved is whether Cadiz's premarital relations with her boyfriend
and the resulting pregnancy out of wedlock constitute immorality. To resolve this, the Court makes
reference to the recently promulgated case of Cheryll Santos Lens v. St. Scholastica 's College
Westgrove and/or Sr. Edna Quiambao, OSB
Leus involved the same personal circumstances as the case at bench, albeit the employer was a
Catholic and sectarian educational institution and the petitioner, Cheryl 1 Santos Leus (Leus),
worked as an assistant to the school's Director of the Lay Apostolate and Community Outreach
Directorate. Leus was dismissed from employment by the school for having borne a child out of
wedlock. The Court ruled in Leus that the determination of whether a conduct is disgraceful or
immoral involves a two-step process: first, a consideration of the totality of the circumstances
surrounding the conduct; and second, an assessment of the said circumstances vis-a-vis the
prevailing norms of conduct, i.e., what the society generally considers moral and respectable.
In this case, the surrounding facts leading to Cadiz's dismissal are straightforward - she was
employed as a human resources officer in an educational and medical institution of the Episcopal
Church of the Philippines; she and her boyfriend at that time were both single; they engaged in
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premarital sexual relations, which resulted into pregnancy. The labor tribunals characterized these
as constituting disgraceful or immoral conduct. They also sweepingly concluded that as Human
Resource Officer, Cadiz should have been the epitome of proper conduct and her indiscretion
"surely scandalized the Brent community."
The foregoing circumstances, however, do not readily equate to disgraceful and immoral conduct.
Brent's Policy Manual and Employee's Manual of Policies do not define what constitutes
immorality; it simply stated immorality as a ground for disciplinary action. Instead, Brent
erroneously relied on the standard dictionary definition of fornication as a form of illicit relation
and proceeded to conclude that Cadiz's acts fell under such classification, thus constituting
immorality.
Jurisprudence has already set the standard of morality with which an act should be gauged - it is
public and secular, not religious. Whether a conduct is considered disgraceful or immoral should
be made in accordance with the prevailing norms of conduct, which, as stated in Leus, refer to those
conducts which are proscribed because they are detrimental to conditions upon which depend
the existence and progress of human society. The fact that a particular act does not conform to
the traditional moral views of a certain sectarian institution is not sufficient reason to qualify such
act as immoral unless it, likewise, does not conform to public and secular standards. More
importantly, there must be substantial evidence to establish that premarital sexual relations and
pregnancy out of wedlock is considered disgraceful or immoral.
The totality of the circumstances of this case does not justify the conclusion that Cadiz committed
acts of immorality. Similar to Leus, Cadiz and her boyfriend were both single and had no legal
impediment to marry at the time she committed the alleged immoral conduct. In fact, they
eventually married on April 15, 2008. Aside from these, the labor tribunals' respective conclusion
that Cadiz's "indiscretion" "scandalized the Brent community" is speculative, at most, and there is
no proof adduced by Brent to support such sweeping conclusion. Even Brent admitted that it came
to know of Cadiz's "situation" only when her pregnancy became manifest. Brent also conceded that
"[a]t the time [Cadiz] and Carl R. Cadiz were just carrying on their boyfriend-girlfriend relationship,
there was no knowledge or evidence by [Brent] that they were engaged also in premarital sex." This
only goes to show that Cadiz did not flaunt her premarital relations with her boyfriend and it was
not carried on under scandalous or disgraceful circumstances. As declared in Leus, "there is no law
which penalizes an unmarried mother by reason of her sexual conduct or proscribes the consensual
sexual activity between two unmarried persons; that neither does such situation contravene[s] any
fundamental state policy enshrined in the Constitution." The fact that Brent is a sectarian
institution does not automatically subject Cadiz to its religious standard of morality absent an
express statement in its manual of personnel policy and regulations, prescribing such religious
standard as gauge as these regulations create the obligation on both the employee and the employer
to abide by the same.
Brent, likewise, cannot resort to the MRPS because the Court already stressed in Leus that
"premarital sexual relations between two consenting adults who have no impediment to marry each
other, and, consequently, conceiving a child out of wedlock, gauged from a purely public and
secular view of morality, does not amount to a disgraceful or immoral conduct under Section 94(e)
of the 1992 MRPS."
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Marriage as a condition for reinstatement
In this case, Brent imposed on Cadiz the condition that she subsequently contract marriage with
her then boyfriend for her to be reinstated. According to Brent, this is "in consonance with the
policy against encouraging illicit or common-law relations that would subvert the sacrament of
marriage."
Statutory law is replete with legislation protecting labor and promoting equal opportunity in
employment. No less than the 1987 Constitution mandates that the "State shall afford full protection
to labor, local and overseas, organized and unorganized, and promote full employment and equality
of employment opportunities for all." The Labor Code of the Philippines, meanwhile, provides:
Art. 136. Stipulation against marriage. It shall be unlawful for an employer to require
as a condition of employment or continuation of employment that a woman
employee shall not get married, or to stipulate expressly or tacitly that upon getting
married, a woman employee shall be deemed resigned or separated, or to actually
dismiss, discharge, discriminate or otherwise prejudice a woman employee merely
by reason of her marriage.
With particular regard to women, Republic Act No. 9710 or the Magna Carta of Women protects
women against discrimination in all matters relating to marriage and family relations, including
the right to choose freely a spouse and to enter into marriage only with their free and full
consent.
Weighed against these safeguards, it becomes apparent that Brent's condition is coercive,
oppressive and discriminatory. There is no rhyme or reason for it. It forces Cadiz to marry for
economic reasons and deprives her of the freedom to choose her status, which is a privilege that
inheres in her as an intangible and inalienable right. While a marriage or no-marriage qualification
may be justified as a "bona fide occupational qualification," Brent must prove two factors
necessitating its imposition, viz: (1) that the employment qualification is reasonably related to
the essential operation of the job involved; and (2) that there is a factual basis for believing that
all or substantially all persons meeting the qualification would be unable to properly perform the
duties of the job. Brent has not shown the presence of neither of these factors. Perforce, the Court
cannot uphold the validity of said condition.
Given the foregoing, Cadiz, therefore, is entitled to 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 should
be awarded as an alternative and as a form of financial assistance. In the computation of separation
pay, the Court stresses that it should not go beyond the date an employee was deemed to
have been actually separated from employment, or beyond the date when reinstatement
was rendered impossible. In this case, the records do not show whether Cadiz already severed
her employment with Brent or whether she is gainfully employed elsewhere; thus, the computation
of separation pay shall be pegged based on the findings that she was employed on August 16, 2002,
on her own admission in her complaint that she was dismissed on November 17, 2006, and that she
was earning a salary of P9,108.70 per month, which shall then be computed at a rate of one (1)
month salary for every year of service.
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The Court also finds that Cadiz is only entitled to limited backwages. Generally, the computation
of backwages is reckoned from the date of illegal dismissal until actual reinstatement. In case
separation pay is ordered in lieu of reinstatement or reinstatement is waived by the employee,
backwages is computed from the time of dismissal until the finality of the decision ordering
separation pay. Jurisprudence further clarified that the period for computing the backwages during
the period of appeal should end on the date that a higher court reversed the labor arbitration ruling
of illegal dismissal. If applied in Cadiz's case, then the computation of backwages should be from
November 17, 2006, which was the time of her illegal dismissal, until the date of promulgation of
this decision. Nevertheless, the Court has also recognized that the constitutional policy of providing
full protection to labor is not intended to oppress or destroy management. The Court notes that at
the time of Cadiz's indefinite suspension from employment, Leus was yet to be decided by the
Court. Moreover, Brent was acting in good faith and on its honest belief that Cadiz's pregnancy out
of wedlock constituted immorality. Thus, fairness and equity dictate that the award of backwages
shall only be equivalent to one (1) year.
SECURITY BANK SAVINGS CORPORATION (formerly PREMIERE DEVELOPMENT

BANK)/HERMINIO M. FAMATIGAN, JR., vs. CHARLES M. SINGSON
G.R. No. 214230, February 10, 2016
FACTS
On November 25, 1985, respondent was initially employed by petitioner Premiere Development
Bank (now Security Bank Savings Corporation [SBSC]) as messenger until his promotion as loans
processor at its Sangandaan Branch. Thereafter, he was appointed as Acting Branch Accountant
and, in June 2007, as Acting Branch Manager. On March 26, 2008, he was assigned to its Quezon
Avenue Branch under the supervision of Branch Manager Corazon Pinero (Pinero) and held the
position of Customer Service Operations Head (CSOH) tasked with the safekeeping of its
checkbooks and other bank forms.
On July 22, 2008, respondent received a show-cause memorandum from Ms. Ruby O. Go, head of
West Regional Operations, charging him of violating the bank's Code of Conduct when he
mishandled various checkbooks under his custody. The matter was referred to SBSC's Investigation
Committee which discovered, among others, that as of July 11, 2008, forty-one (41) pre-encoded
checkbooks of the Quezon Avenue Branch were missing.
At the scheduled conference before the Investigating Committee, respondent readily admitted
having allowed the Branch Manager (i.e., Pinero) to bring out of the bank's premises the missing
checkbooks and other bank forms on the justification that the latter was a senior officer with
lengthy tenure and good reputation. He claimed that it was part of Pinero's marketing strategy to
procure more clients for the bank and that he did not receive any consideration for consenting to
such practice. He added that the reported missing checkbooks had been returned by Pinero to his
custody after the inventory.
Pending investigation, respondent was transferred to SBSC's Pedro Gil Branch. On September 30,
2008, he was again issued a memorandum directing him to explain his inaccurate reporting of some
Returned Checks and Other Cash Items (RCOCI) which amounted to P46,279.33. The said
uncovered amount was treated as an account receivable for his account. A month thereafter,
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respondent was again transferred and reassigned to another branch in Sampaloc, Manila. Dismayed
by his frequent transfer to different branches, respondent tendered his resignation on November
10, 2008, effective thirty (30) days from submission. However, SBSC rejected the same in view of its
decision to terminate his employment on November 11, 2008 on the ground of habitual neglect of
duties.
Consequently, respondent instituted a complaint for illegal dismissal with prayer for backwages,
damages, and attorney's fees against SBSC and its President, Herminio M. Famatigan, Jr.
(petitioners), before the NLRC, docketed as NLRC-NCR Case No. 10-14683-09.
The Labor Arbiter dismissed the complaint and accordingly, declared respondent to have been
terminated from employment for a valid cause. The LA found that respondent not only committed
a violation of SBSC's Code of Conduct but also gross and habitual neglect of duties when he
repeatedly allowed Pinero to bring outside the bank premises the checkbooks and bank forms
despite knowledge of the bank's prohibition on the matter. This notwithstanding, the LA awarded
respondent separation pay by way of financial assistance.
ISSUE
Whether or not the respondent is entitled to the award of separation pay as financial assistance to
despite having been validly dismissed.
RULING
The grant of separation pay to a dismissed employee is primarily determined by the cause of the
dismissal. In the case at bar, respondent's established act of repeatedly allowing Branch Manager
Pinero to bring the checkbooks and bank forms outside of the bank's premises in violation of the
company's rules and regulations had already been declared by the LA to be gross and habitual
neglect of duty under Article 282 of the Labor Code, which finding was not contested on appeal by
respondent. It was petitioners who interposed an appeal solely with respect to the award of
separation pay as financial assistance. As they aptly pointed out, the infractions, while not clearly
indicative of any wrongful intent, is, nonetheless, serious in nature when one considers the
employee's functions, rendering it inequitable to award separation pay based on social justice. As
the records show, respondent was the custodian of accountable bank forms in his assigned branch
and as such, was mandated to strictly comply with the monitoring procedure and disposition
thereof as a security measure to avoid the attendant high risk to the bank. Indeed, it is true that the
failure to observe the processes and risk preventive measures and worse, to take action and address
its violation, may subject the bank to regulatory sanction. It bears stressing that the banking
industry is imbued with public interest. Banks are required to possess not only ordinary diligence
in the conduct of its business but extraordinary diligence in the care of its accounts and the interests
of its stakeholders. The banking business is highly sensitive with a fiduciary duty towards its client
and the public in general, such that central measures must be strictly observed. It is undisputed
that respondent failed to perform his duties diligently, and therefore, not only violated established
company policy but also put the bank's credibility and business at risk. The excuse that his Branch
Manager, Pinero, merely prompted him towards such ineptitude is of no moment. He readily
admitted that he violated established company policy against bringing out checkbooks and bank
forms, which means that he was well aware of the fact that the same was prohibited. Nevertheless,
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he still chose to, regardless of his superior's influence, disobey the same not only once, but on
numerous occasions. All throughout, there is no showing that he questioned the acts of Branch
Manager Pinero; neither did he take it upon himself to report said irregularities to a higher
authority. Hence, under these circumstances, the award of separation pay based on social justice
would be improper.
UNIVERSAL ROBINA SUGAR MILLING CORPORATION v. ELMER ABLAY, ILDEFONSO

CLAVECILLAS, STANLEY BLAZA, VINCENT VILLAVICENCIO, ROBERTO CACAS, AND ELSA
CADAYUNA, IN BEHALF OF HER DECEASED HUSBAND, ELEAZAR CADAYUNA
G.R. No. 218172, March 16, 2016
FACTS
The instant case arose from a complaint dated June 1, 2004 for illegal dismissal, unfair labor practice,
and recovery of damages filed by respondents, members of the Nagkahiusang Mamumuo sa
Ursumco-National Federation of Labor (the Union), against petitioner before the Sub-Regional
Arbitration Branch No. VII, Dumaguete City of the NLRC. Respondents alleged that sometime in
1997, the Union filed a complaint against petitioner for non-compliance with Wage Order No. 3
issued by the Regional Tripartite Wages and Productivity Board before the Department of Labor
and Employment (DOLE). After due proceedings, the DOLE found petitioner liable to the members
of the Union in the total amount of P210,217.54 and, consequently, issued a Writ of Execution to
enforce the said ruling. On September 11, 2003, DOLE Sheriff Ignacio Calinawan (Sheriff Calinawan)
went to petitioner's premises to serve the writ to petitioner's Personnel Manager, Jocelyn Teo (Teo),
but the latter refused to comply by reason of petitioner's pending appeal before the Secretary of
Labor. Two (2) months later, or on November 12, 2003, Sheriff Calinawan went back to petitioner's
premises in another attempt to serve the writ of execution, this time, seeking the help of the Union
Officers, including respondents, in its enforcement. Despite Teo's refusal to receive the writ, Sheriff
Calinawan and respondents still effected a levy on one of petitioner's forklifts, took it outside the
company premises, and deposited it at the municipal hall for safekeeping.
Due to the foregoing incidents, petitioner issued a Notice of Offense dated November 18, 2003 to
each of the respondents, requiring them to explain in writing why no disciplinary action should be
taken against them. Thereafter, or on November 24, 2003, petitioner issued a Notice of
Administrative Investigation to each of the respondents, charging them of stealing company
property, fraudulent acquisition or release to other persons of company property, unauthorized
possession/use of company property, unauthorized operation of company equipment, and serious
misconduct during official working hours or within company premises. On December 1, 2003, after
due investigation, petitioner furnished respondents with a Notice of Dismissal for being found
guilty as charged. This prompted the filing of the instant complaint.
ISSUES
Whether or not the CA correctly ruled that: (a) respondents were illegally dismissed as the penalty
of suspension would have sufficed; and (b) Ablay is entitled to his benefits prior to his conviction,
i.e., separation pay, backwages, and other benefits.
RULING
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Article 297 (formerly Article 282) of the Labor Code, which includes the ground of serious
misconduct, provides for the just causes where the employee may be validly terminated from
employment. It reads in full:
Article 297 [282]. Termination by Employer. - An employer may terminate an employment for any
of the following causes:
(c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly
authorized representative;
(d) Commission of a crime or offense by the employee against the person of his employer or any
immediate member of his family or his duly authorized representatives; and
(e) Other causes analogous to the foregoing. (Emphasis and underscoring supplied)
Misconduct is defined as an improper or wrong conduct. It is a transgression of some established

and definite rule of action, a forbidden act, a dereliction of duty, willful in character, and implies
wrongful intent and not mere error in judgment. To constitute a valid cause for the dismissal within
the text and meaning of Article 282 of the Labor Code, the employee's misconduct must be serious,
i.e., of such grave and aggravated character, and not merely trivial or unimportant. Additionally,
the misconduct must be related to the performance of the employee's duties showing him to be
unfit to continue working for the employer. Further, and equally important and required, the act
or conduct must have been performed with wrongful intent. In other words, for serious misconduct
to be a just cause for dismissal, the concurrence of the following elements is required: (a) the
misconduct must be serious; (b) it must relate to the performance of the employee's duties showing
that the employee has become unfit to continue working for the employer; and (c) it must have
been performed with wrongful intent.
In this case, the following facts are undisputed: (a) the Union, which the respondents are members
of, filed a case for violation of labor standards against petitioner before the DOLE; (b) after due
proceedings, the DOLE ruled in favor of the Union and awarded its members the aggregate amount
of P210,217.54, and accordingly, a writ of execution was issued in the Union's favor; (c) Sheriff
Calinawan failed in his first attempt to enforce the writ of execution as Teo refused to receive a copy
of the same; (d) on Sheriff Calinawan's second attempt to enforce the writ of execution, he sought
the assistance of Union members, including respondents, and insisted that Teo comply with said
writ, but the latter still refused; (e) despite Teo's refusal, Sheriff Calinawan and the respondents
effected a levy on one of petitioner's forklifts, took it outside the company premises, and deposited
it at the municipal hall for safekeeping; and (f) the taking of the forklift was without authority from
petitioner or any of its officers.
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Clearly, respondents committed some form of misconduct when they assisted Sheriff Calinawan in
effecting the levy on the forklift and depositing the same to the municipal hall for safekeeping as
they operated the forklift and took it out of company premises, all without the authority and
consent from petitioner or any of its officers. However, as correctly pointed out by the CA,
respondents did not perform the said acts with intent to gain or with wrongful intent. Rather, they
were impelled by their belief - albeit misplaced - that they were merely facilitating the enforcement
of a favorable decision in a labor standards case in order to finally collect what is due them as a
matter of right, which is the balance of their unpaid benefits. In light of the foregoing, the Court
upholds the right of petitioner to take the appropriate disciplinary action against respondents, but
nevertheless, holds that respondents should not have been dismissed from service as a less punitive
sanction, i.e., suspension, would have sufficed. In Philippine Long Distance Company v. Teves, the
Court stressed that while it is the prerogative of the management to discipline its employees, it
should not be indiscriminate in imposing the ultimate penalty of dismissal as it not only affect the
employee concerned, but also those who depend on his livelihood, viz.:
While management has the prerogative to discipline its employees and to impose appropriate
penalties on erring workers, pursuant to company rules and regulations, however, such
management prerogatives must be exercised in good faith for the advancement of the employer's
interest and not for the purpose of defeating or circumventing the rights of the employees under
special laws and valid agreements. The Court is wont to reiterate that while an employer has
its own interest to protect, and pursuant thereto, it may terminate an employee for a just
cause, such prerogative to dismiss or lay off an employee must be exercised without abuse
of discretion. Its implementation should be tempered with compassion and understanding. The
employer should bear in mind that, in the execution of said prerogative, what is at stake is not only
the employee's position, but his very livelihood, his very breadbasket.
Dismissal is the ultimate penalty that can be meted to an employee. Even where a worker
has committed an infraction, a penalty less punitive may suffice, whatever missteps maybe
committed by labor ought not to be visited with a consequence so severe. This is not only
the laws concern for the workingman. There is, in addition, his or her family to consider.
Unemployment brings untold hardships and sorrows upon those dependent on the wage-earner.
(Emphases and underscoring supplied)
Further, considering the fact that respondents were mere equipment operators, technicians, and
electricians, and thus, not occupying managerial nor confidential positions, and that the incident
concerning the forklift was only their first offense in their 14-15 years of service, the Court agrees
with the CA that they should have only been meted a penalty that is less severe than dismissal, i.e.,
suspension. Hence, respondents could not be validly dismissed by petitioner.
As a general rule, an illegally dismissed employee is entitled to reinstatement (or separation pay, if
reinstatement is not viable) and payment of full backwages. In certain cases, however, the Court
has carved out an exception to the foregoing rule and thereby ordered the reinstatement of the
employee without backwages on account of the following: (a) the fact that the dismissal of the
employee would be too harsh a penalty; and (b) that the employer was in good faith in terminating
the employee. The application of such exception was thoroughly discussed in the case of Pepsi-Cola
Products Philippines, Inc. v. Molon, to wit:
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An illegally dismissed employee is entitled to either reinstatement, if viable, or separation pay if
reinstatement is no longer viable, and backwages. In certain cases, however, the Court has
ordered the reinstatement of the employee without backwages considering the fact that (1)
the dismissal of the employee would be too harsh a penalty; and (2) the employer was in
good faith in terminating the employee. For instance, in the case of Cruz v. Minister of Labor
and Employment the Court ruled as follows:
The Court is convinced that petitioner's guilt was substantially established. Nevertheless, we
agree with respondent Minister's order of reinstating petitioner without backwages
instead of dismissal which may be too drastic. Denial of backwages would sufficiently
penalize her for her infractions. The bank officials acted in good faith. They should be
exempt from the burden of paying backwages. The good faith of the employer, when clear
under the circumstances, may preclude or diminish recovery of backwages. Only employees
discriminately dismissed are entitled to backpay. x x x
Likewise, in the case of Itogon-Suyoc Mines, Inc. v. National Labor Relations Commission, the Court
pronounced that "[t]he ends of social and compassionate justice would therefore be served
if private respondent is reinstated but without backwages in view of petitioner's good
faith." (Emphasis and underscoring supplied)
To reiterate, respondents were indeed guilty of some form of misconduct and, as such, petitioner
was justified in exercising disciplinary action against them. Absent any evidence to the contrary,
petitioner's resort to disciplinary proceedings should be presumed to have been done in good faith.
Thus, perceiving that petitioner had ample ground to proceed with its disciplinary action against
respondents, and that the disciplinary proceedings appear to have been conducted in good faith,
the Court finds it proper to apply the exception to the rule on backwages, and consequently, direct
the deletion of backwages in favor of respondents.
Finally, the CA correctly observed that Ablay's conviction as an accomplice to the murder of
petitioner's former assistant manager had strained the relationship between Ablay and petitioner.
Hence, Ablay should not be reinstated in the company and, instead, be paid separation pay, as
reinstatement would only create an atmosphere of antipathy and antagonism would be generated
as to adversely affect his efficiency and productivity. In this relation, it should be clarified that said
strained relation should not affect the grant of benefits in his favor prior to his conviction, as the
latter pertains to an offense entirely separate and distinct from the acts constituting petitioner's
charges against him in the case at bar, i.e., taking of the company equipment without authority.
Petitioner's payment of separation pay to Ablay in lieu of his reinstatement is therefore warranted.
COCOPLANS, INC. and CAESAR T. MICHELENA vs.

MA. SOCORRO R. VILLAPANDO
G.R. No. 183129, May 30, 2016
FACTS
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Respondent Ma. Socorro R. Villapando, began working as a Financial Advisor for petitioner
Cocoplans, Inc., (Coco plans) in 1995. On October 11, 2000, she was eventually promoted to Division
Head/Senior Sales Manager.
On November 4, 2002, however, her employment was terminated by Cocoplans, through its
President, Caesar T. Michelena, on the alleged ground that she was deliberately influencing people
to transfer to another company thereby breaching the trust and losing the confidence given to her
by Cocoplans.
Consequently, Villapando filed an action for illegal dismissal alleging that she was dismissed
without the just cause mandated by law. In her Position Paper, Villapando essentially alleged that
she was accused by Michelana of ordering her subordinates to ''stop selling" and of influencing
them to "leave the company" by way of sympathy to Dario B. Martinez who was compelled to resign
from the company due to a personal quarrel with respondent Michelena. Villapando claimed that
she was likewise required to resign by Michelena However, respondent Michelena surprisingly did
not accept the resignation that he originally asked for and instead convened a Committee on
Employee Discipline. Complainant was also placed under preventive suspension in said letter.
Obviously, respondents realized that they erred in not investigating the issues first before asking
complainant to resign. Eventually, Villapando’s employment was formally terminated.
Villapando maintained that she was illegally dismissed for her employment was terminated on
baseless and untruthful grounds. According to her, Michelena simply wanted to oust her from the
company because he felt that she was sympathizing with the Vice-President for Marketing, Dario
B. Martinez, an officer with whom Michelena had a personal quarrel. That she was influencing the
company's employees to transfer to another company, particularly, Pioneer Allianz, was improbable
and preposterous for she never invited nor encouraged anyone to leave the company. In fact, up
until the present time, not a single subordinate nor Villapando, herself, has transferred to said other
company.
In support of her stance, Villapando submitted a written statement signed by Ms. Milagros Perez,
Senior Area Manager, together with six (6) other officers of the company, wherein they attested
that Villapando never influenced them to resign or join another company. With respect to a
contradictory Joint Affidavit likewise executed by the same Ms. Perez, together with Senior Area
Manager David M. Sandoval, wherein they stated that Villapando, indeed, motivated them to
transfer to another company.
Villapando alleged that the written statement earlier signed by Ms. Perez belies the Joint Affidavit
she subsequently executed. Thus, the contents of the written statement should be controlling. In
view of the baseless allegations the company dismissed her on, Villapando prayed that her
termination from employment be declared illegal and that she be awarded full backwages,
separation pay, and moral damages.
ISSUE
Whether or not Villapando’s dismissal was valid and just.
RULING
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In the instant case, the Court does not find the evidence presented by petitioners to be substantial
enough to discharge the burden of proving that Villapando was, indeed, dismissed for just cause.
As borne by the records, petitioners submitted the following pieces of evidence in support of their
claims: (1) Affidavit of Ms. Gurango dated September 19, 2002; (2) Affidavit of petitioner Michelena
dated October 21, 2002; and (3) Joint Affidavit of Mr. Sandoval and Ms. Perez dated October 9, 2002.
Yet, as clearly discussed by the CA, the documents fail to convince.
First of all, there exist certain discrepancies surrounding the presentation of Ms. Gurango's affidavit
that warrant the Court's attention. In the words of the appellate court:
Regarding the Affidavit of Sharon H. Gurango, dated September 19, 2002, the Court notes that this
affidavit was never presented during the time that the Committee on Employee Discipline was still
investigating the charges against the petitioner as the said affidavit surfaced only during the
proceedings before the labor arbiter. The Court further notes that the said affidavit's date
(September 9, 2002) is even way before the convening of the Committee on Employee Discipline
(October 10, 2002), thus, the Court is curious as to why the said affidavit was never presented during
the committee's investigatory hearings. In fact, based on the final report of the said committee
entitled "Final Recommendation on the Case of Ma. Socorro R. Villapando, Senior Sales Manager -
South Tagalog Operations," dated November 4, 2002, the affidavit of Ms. Gurango was never
considered by the committee since all that was brought before it was only the joint affidavit of
Milagros Perez and David Sandoval and the affidavit of private respondent Michelena. Having not
been brought before the committee, therefore, the petitioner never had the opportunity to answer
the charges against her in the Gurango affidavit. As such, the said affidavit should not be
considered.
At any rate, even if the Gurango affidavit would be considered, the said affidavit docs not, in any
way, prove that the petitioner influenced people to join another company. All that the affidavit
proves is that it was the First Vice-President Dario B. Martinez who tried to influence Sharon H.
Gurango to move to another company and not the petitioner [Socorro] R. Villapando. While the
said affidavit appears to show that the petitioner knew of Mr. Martinez's plans of moving to another
company, mere knowing and deliberately influencing people to leave the company are two very
different things.
Thus, in view of the irregularities identified by the CA, the Court cannot take Ms. Gurango's
affidavit into account. In dismissing an employee for just cause, it must be shown that the employer
fairly made a determination of just cause in good faith, taking into consideration all of the evidence
available to him. But as the appellate court noted, the affidavit of Ms. Gurango was never presented
before the investigation panel, merely surfacing only during the proceedings before the Labor
Arbiter, in spite of the fact that the same was supposedly executed as early as September 9, 2002,
an entire month before the time the Committee on Employee Discipline convened. Thus, not only
is there no showing that said affidavit was considered by petitioners in arriving at their decsiion to
dismiss Villapando, Villapando never had the opportunity to address the accusations stated therein.
As such, the Court cannot consider the same.
Neither can the Court give due regard to the affidavit of petitioner Michelena for as the CA
mentioned, he did not witness first-hand Villapando's alleged disloyal acts of influencing people to
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transfer to a competing company. Moreover, Michelena's allegation that Villapando answered in
the affirmative when he asked her if she told her subordinates to leave Cocoplans for another
company can hardly suffice as convincing proof in light of the obvious hostility between him and
Villapando as well as Villapando's categorical and repeated denials of the imputations against her.
Thus, bearing in mind the fact that the Court cannot take into consideration the foregoing
documentary proof submitted by petitioners for the aforestated reasons, it appears that the only
remaining piece of evidence that petitioners could have used in arriving at their decision to dismiss
Villapando is the Joint Affidavit executed by Ms. Perez and Mr. Sandoval. Yet, as pointed out by the
appellate court, the probative value of the same is rather doubtful.
It is not disputed that apart from the Joint Affidavit, records reveal another document likewise
executed by Ms. Perez containing statements directly contradictory to those found in the Joint
Affidavit. To this Court, the same, indeed, casts doubt on the reliability of the Joint Affidavit. The
fact that the earlier written statement was not notarized nor affirmed by Ms. Perez does not
automatically make it fabricated, especially since no proof was offered to sufficiently dispute its
authenticity. In the face of two conflicting pieces of evidence, the Court is curious as to why
petitioners did not exert any effort in verifying with Ms. Perez the reliability of said documents.
Moreover, even granting the Joint Affidavit to be valid as to Mr. Sandoval, such affidavit cannot
adequately amount to instigating a "mass resignation" with the end goal of completely abandoning
petitioner Cocoplans. If there were really multiple invitations to join "nationwide mass
resignations," petitioners could have easily found many other witnesses, apart from Mr. Sandoval,
to categorically attest thereto. Also, if Villapando truly desired to boycott Cocoplans and convince
Mr. Sandoval in transferring to another company, why is that she promoted him to Senior Area
Manager in May 2002 an act that might even encourage him to stay?
In justifying dismissals due to loss of trust and confidence, there must be an actual breach of duty
committed by the employee, established by substantial evidence. The Court is of the view, however,
that a single Joint Affidavit of doubtful probative value can hardly be considered as substantial. Had
petitioners provided the Court with other convincing proof, apart from said Joint Affidavit, that
Villapando had, indeed, wilfully influenced her subordinates to transfer to a competing company,
their claims of loss of confidence could have been sustained. As the Court now sees it, petitioners
terminated the services of Villapando on the mere basis of the Joint Affidavit executed by Ms. Perez
and Mr. Sandoval, which, as previously discussed, is put in doubt by conflicting evidence. Hence,
in the absence of sufficient proof, the Court finds that petitioners failed to discharge the onus of
proving the validity of Villapando's dismissal.
Indeed, while an employer may terminate managerial employees for just cause to protect its own
interest, such prerogative must be exercised with compassion and understanding bearing in mind
that, in the execution of said prerogative, what is at stake is not only the employee's position, but
his very livelihood, his very breadbasket. As such, when there is doubt between the evidence
submitted by the employer and that submitted by the employee, the scales of justice must be tilted
in favor of the employee. This is consistent with the rule that an employer's cause could only
succeed on the strength of its own evidence and not on the weakness of the employee's. Thus, when
the breach of trust or loss of confidence alleged is not borne by clearly established facts, an
employee's dismissal on said ground cannot be sustained.
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GREGORIO "TONGEE" BALAIS, JR. v. SE'LON BY AIMEE, AMELITA REVILLA AND ALMA
BELARMINO
G.R. No. 196557, June 15, 2016
FACTS
The instant petition stemmed from a complaint for illegal dismissal, non-payment of 13th month
pay, damages and attorney's fees filed by Gregorio "Tongee" Balais, Jr. (Balais) against Se'lon by
Aimee, Amelita Revilla and Alma Belarmino before the NLRC.
Balais narrated that he was Salon de Orient's senior hairstylist and make-up artist from October 16,
2004 until November 26, 2007 when respondent Amelita Revilla (Revilla) took over the business.
Revilla, however, retained his services as senior hairstylist and make-up artist. Under the new
management, Salon De Orient became Se'lon by Aimee and respondent Alma Belarmino
(Belarmino) was appointed as its salon manager, who was in-charge of paying the employees' wages,
dismissing erring employees, and exercising control over them. Balais, on the other hand, being the
senior hairstylist and make-up artist, allegedly had the discretion to choose from among the junior
hairstylist who should assist him in servicing his clients, as customarily observed in beauty salons.
He worked during the 10am-7pm shift or 11am-8pm shift, six (6) days a week with Sunday as his
regular rest day for a monthly salary of Php18,500.00 paid every two (2) weeks. In June 2008, his
salary was reduced to Php15,000.00. Balais claimed that his working relationship with respondents
had been harmonious until the evening of July 1, 2008 when Belarmino dismissed him without due
process.
Balais felt humiliated as he was berated in front of his co-workers. The next day, he did not report
for work anymore and instead filed the complaint before the NLRC.
For their part, respondents alleged that it was known to all their employees that one of the salon's
policies was for junior stylists to take turns in assisting any of the senior stylists for purposes of
equalizing commissions. However, Belarmino was told that Balais failed to comply with this policy
as the latter allegedly gave preference to only two (2) junior stylists, disregarding the other two (2)
junior stylists. When Belarmino asked Balais for explanation, the latter allegedly snapped and
retorted that he would do whatever he wanted. Belarmino reminded him of the salon's policy and
his duty to comply with it but petitioner allegedly insisted he would do as he pleased and if they
can no longer take it, they would have to dismiss him. After the incident, Balais sued them and
never reported back to work.
Respondents insisted that Balais was not terminated from employment but he instead abandoned
his work. Respondents explained that even assuming that he was indeed dismissed, there was a
valid ground therefor as his acts amounted to serious misconduct against a superior and willful
disobedience to reasonable policy related to his work.
ISSUE
Whether there was a valid dismissal.
RULING
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Respondents averred that there was abandonment as Balais failed to report back to work the
following day after the incident.
In this regard, this Court finds that respondents failed to establish that Balais abandoned his work.
To constitute abandonment, two elements must concur: (a) the failure to report for work or absence
without valid or justifiable reason, and (b) a clear intention to sever the employer-employee
relationship, with the second element as the more determinative factor and being manifested by
some overt acts. Mere absence is not sufficient. The employer has the burden of proof to show a
deliberate and unjustified refusal of the employee to resume his employment without any intention
of returning. Respondents, other than their bare allegation of abandonment, failed to prove that
these two elements were met. It cannot be said that Balais failed to report back to work without
justifiable reason as in fact he was told that he was no longer wanted in the salon.
Moreover, we likewise note the high improbability of petitioner intentionally abandoning his work,
taking into consideration his length of service, i.e., 18 years of service with the salon, it does not
make sense for an employee who had worked for his employer for 18 years would just abandon his
work and forego whatever benefits he may be entitled, unless he was made to believe or was told
that he was already terminated.
Respondents cannot discharge the burden of proving a valid dismissal by merely alleging that they
did not dismiss Balais; neither can they escape liability by claiming that Balais abandoned his work.
When there is no showing of a clear, valid and legal cause for the termination of employment, the
law considers it a case of illegal dismissal.
Thus, respondents, presumably thinking that their claim of abandonment holds no water, it
likewise manifested that assuming Balais was indeed terminated, there was a valid ground therefor
because of his insubordination.
We disagree.
Willful disobedience of the employer's lawful orders, as a just cause for the dismissal of an
employee, envisages the concurrence of at least two requisites: (1) the employee's assailed conduct
must have been willful or intentional, the willfulness being characterized by a "wrongful and
perverse attitude;" and (2) the order violated must have been reasonable, lawful, made known to
the employee and must pertain to the duties which he had been engaged to discharge.
It must be likewise stressed anew that the burden of proving the insubordination as a just and valid
cause for dismissing an employee rests on the employer and his failure to do so shall result in a
finding that the dismissal is unjustified.
In this case, the salon policy of rotating the junior stylists who will assist the senior stylist appears
to be reasonable, lawful, made known to petitioner and pertained to his duty as senior hairstylist
of respondent. However, if we will look at Balais' explanation for his alleged disobedience thereto,
it likewise appears to be reasonable and lawful, to wit:
xxxx
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The duty of the Senior Stylist has the overall function in seeing to it that the service accorded to
the client is excellent, thus, he has the right to refuse service of a junior stylist whom he thinks
that such junior stylist cannot give equal or over and above the service that he can give to the
client, thus his refusal to obey the respondent does not constitute a just cause for the treatment
given by respondent to herein respondent (sic).
xxxx
The fact alone that Balais failed to comply with the salon policy does not establish that his conduct
in failing to comply with the salon's policy had been willful, or characterized by a wrongful and
perverse attitude. Balais' justification maybe adverse to that of the salon's policy but it was neither
willful nor characterized by a perverse attitude. We take note that the alleged non-compliance with
the salon policy was brought to the attention of Balais for the first time only during the said
incident. There was no showing of prior warnings as to his non-compliance. While respondents
wield a wide latitude of discretion in the promulgation of policies, rules and regulations on work-
related activities of its employees, these must, however, be fair and reasonable at all times, and the
corresponding sanctions for violations thereof, when prescribed, must be commensurate thereto as
well as to the degree of the infraction. Given that Balais' preference on who will assist him is based
on the junior stylists' competence, the same should have been properly taken into account in the
imposition of the appropriate penalty for violation of the rotation policy. Suspension would have
sufficed to caution him and other employees who may be wont to violate the same policy.
In adjudging that the dismissal was grounded on a just and valid cause, the totality of infractions
or the number of violations committed during the period of employment shall be considered in
determining the penalty to be imposed upon an erring employee. Let it not be forgotten that what
is at stake is the means of livelihood, the name, and the reputation of the employee. To countenance
an arbitrary exercise of the management's prerogative to terminate an employee is to negate the
employee's constitutional right to security of tenure.
Whether the dismissal was effected with due process of law.
Here, a perusal of the records revealed that, indeed, Belarmino's manner of verbally dismissing
Balais on-the-spot fell short of the two-notice requirement. There was no showing of prior warnings
on Balais' alleged non-compliance with the salon policy. There was no written notice informing him
of his dismissal as in fact the dismissal was done verbally and on-the-spot. Respondents failed to
furnish Balais the written notice apprising him of the charges against him, as prescribed by the
Labor Code. There was no attempt to serve a notice of dismissal on Balais. Consequently, he was
denied due process of law accorded in dismissals.
ZAIDA R. INOCENTE v. ST. VINCENT FOUNDATION FOR CHILDREN

AND AGING, INC./VERONICA MENGUITO
G.R. No. 202621, June 22, 2016
FACTS
Respondent St. Vincent Foundation for Children and Aging, Inc. (St. Vincent) is a non-stock, non-
profit foundation engaged in providing assistance to children and aging people and conducting
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weekly social and educational activities among them. It is financially supported by the Kansas based
Catholic Foundation for Children and Aging (CFCA), a Catholic foundation dedicated to promoting
Christian values and uplifting the welfare of the children all over the world. Respondent Veronica
Menguito is St. Vincent's President/Directress.
In 2000, St. Vincent hired Zaida as Program Assistant; it promoted her as Program Officer the
following year. Zaida, then single, was known as Zaida Febrer Ranido. Zaida's duties as program
officer included the following: monitoring and supervising the implementation of the programs of
the foundation, providing training to the staff and sponsored members, formulating and developing
program policies for the foundation, facilitating staff meetings, coordinating and establishing
linkages with other resource agencies and persons, as well as preparing St. Vincent's annual
program plan and budget, and year-end reports.
In 2001, Zaida met Marlon D. Inocente. Marlon was then assigned at St. Vincent's Bataan sub-
project. In 2002, Marlon was transferred to St. Vincent's sub-project in Quezon City. Zaida and
Marlon became close and soon became romantically involved with each other.
In September 2006, St. Vincent adopted the CFCA's Non-Fraternization Policy; it reads in full:
CFCA Policy 4.2.2.3. Non-Fraternization Policy
While CFCA does not wish to interfere with the off-duty and personal conduct
of its employees, to prevent unwarranted sexual harassment claims,
uncomfortable working relationships, morale problems among other employees,
and even the appearance of impropriety, employees who direct and coordinate the
work of others are strongly discouraged from engaging in consensual romantic or
sexual relationships with any employee or volunteer of CFCA.6 [Emphasis supplied]
Despite St. Vincent's adoption of the Non-Fraternization Policy, Zaida and Marlon discretely
continued their relationship; they kept their relationship private and unknown to St. Vincent even
after Marlon resigned in July 2008.
On February 19, 2009, Zaida experienced severe abdominal pain requiring her to go to the hospital.
The doctor later informed her that she had suffered a miscarriage. While confined at the hospital,
Zaida informed St. Vincent of her situation. Menguito verbally allowed Zaida to go on maternity
leave until April 21, 2009. Zaida was released from the hospital two days after her confinement.
On March 31, 2009, Zaida was again confined at the hospital for ectopic pregnancy. Zaida,
thereafter, underwent surgery to have one of her fallopian tubes removed. She was discharged from
the hospital on April 4, 2009.
On May 18, 2009, Zaida received from St. Vincent a letter dated May 14, 2009 and signed by
Menguito requiring her to explain in writing why no administrative action should be taken against
her. St. Vincent charged her with violation of the CFCA Non-Fraternization Policy and of the St.
Vincent's Code of Conduct provisions prohibiting: (1) acts against agency interest and policy by
indulging in immoral and indecent act; (2) acts against persons by challenging superiors' authority,
threatening and intimidating co-employees, and exerting undue influence on subordinates to gain
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personal benefit; and (3) violations within the terms of employment by doing an act offensive to
the moral standard of the Foundation.
In her May 19, 2009 reply-letter, Zaida defended that: (1) her relationship with Marlon started long
before St. Vincent's Non-Fraternization Policy took effect; (2) Marlon was no longer connected with
St. Vincent since 2008; (3) her relationship with Marlon is not immoral as they were both of legal
age and with no impediments to marry; (4) they kept their relationship private and were discreet
in their actions; (5) Marlon stayed at her place only to take care of her while she was sick; and (6)
they already planned to get married as soon as she recovers and their finances improve.
Zaida's explanation failed to convince St. Vincent. In the letter dated May 30, 2009, St. Vincent
terminated Zaida's employment for immorality, gross misconduct and violation of St. Vincent's
Code of Conduct.
Zaida and Marlon were subsequently married on June 23, 2009.
On July 14, 2009, Zaida filed before the LA her complaint for illegal dismissal, with prayer for
reinstatement, backwages, moral and exemplary damages and litigation expenses.
ISSUES
Whether or not Zaida was illegally dismissed.
Whether or not there was compliance of procedural due process requirements.
RULING
To place our discussions in proper perspective, the determination of whether Zaida was validly
dismissed on the ground of willful breach of trust and serious misconduct requires the prior
determination of, first, whether Zaida's intimate relationship with Marlon was, under the
circumstances, immoral; and, second, whether such relationship is absolutely prohibited by or is
strictly required to be disclosed to the management under St. Vincent's Non-Fraternization Policy.
We shall separately address these grounds in the discussions below.
On the charge of immorality and engaging in conduct prejudicial to the interest of St.
Vincent
We find the NLRC's findings of immorality or of committing acts prejudicial to the interest of St.
Vincent to be baseless.
The totality of the attendant circumstances must be considered in determining whether an

employee's conduct is immoral
Immorality pertains to a course of conduct that offends the morals of the community. It connotes
conduct or acts that are willful, flagrant or shameless, and that shows indifference to the moral
standards of the upright and respectable members of the community
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Conducts described as immoral or disgraceful refer to those acts that plainly contradict accepted
standards of right and wrong behavior; they are prohibited because they are detrimental to the
conditions on which depend the existence and progress of human society.
Notwithstanding this characterization, the term "immorality" still often escapes precise definition;
the determination of whether it exists or has taken place depends on the attendant circumstances,
prevailing norms of conduct, and applicable laws.
In other words, it is the totality of the circumstances surrounding the conduct per se viewed in
relation with the conduct generally accepted by society as respectable or moral, which determines
whether the conduct is disgraceful or immoral. The determination of whether a particular conduct
is immoral involves: (1) a consideration of the totality of the circumstances surrounding the
conduct; and (2) an assessment of these circumstances in the light of the prevailing norms of
conduct, i.e., what the society generally considers moral and respectable, and of the applicable laws.
In dismissal situations, the sufficiency of a conduct claimed to be immoral must be judged based on
secular, not religious standards.
In general, in determining whether the acts complained of constitute "disgraceful and immoral"
behavior under our laws, the distinction between public and secular morality on the one hand, and
religious morality, on the other hand, should be kept in mind. This distinction as expressed - albeit
not exclusively - in the law, on the one hand, and religious morality, on the other, is important
because the jurisdiction of the Court extends only to public and secular morality.
In this case, we note that both Zaida and Marlon at all times had no impediments to marry each
other. They were adults who met at work, dated, fell in love and became sweethearts. The intimate
sexual relations between them were consensual, borne by their love for one another and which they
engaged in discreetly and in strict privacy. They continued their relationship even after Marlon left
St. Vincent in 2008. They took their marriage vows soon after Zaida recovered from her miscarriage,
thus validating their union in the eyes of both men and God.
All these circumstances show the sincerity and honesty of the relationship between Zaida and
Marlon. They also show their genuine regard and love for one another - a natural human emotion
that is neither shameless, callous, nor offensive to the opinion of the upright and respectable
members of the secular community. While their actions might not have strictly conformed with
the beliefs, ways, and mores of St. Vincent - which is governed largely by religious morality - or with
the personal views of its officials, these actions are not prohibited under any law nor are they
contrary to conduct generally accepted by society as respectable or moral.
Significantly, even the timeline of the events in this case supports our observation that their
intimate relations was founded on love, viz: Zaida and Marlon met in 2002 and soon become
sweethearts; St. Vincent adopted the Non-Fraternization policy in September 2006; Marlon
resigned from St. Vincent in July 2008; in February 2009, Zaida had the miscarriage that disclosed
to St. Vincent Zaida's relationship with Marlon; and St. Vincent terminated Zaida's employment in
May 2009.
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Clearly from this timeline, Zaida and Marlon have long been in their relationship (for about four
years) by the time St. Vincent adopted the Policy; their relationship, by that time and given the turn
out of the events, would have already been very serious. To be sure, no reasonable person could
have expected them to sever the relationship simply because St. Vincent chose to adopt the Non-
Fraternization Policy in 2006. As Zaida aptly argued, love is not a mechanical emotion that can
easily be turned on and off. This is the lesson Shakespeare impressed on us in Romeo and Juliet - a
play whose setting antedated those of Marlon and Zaida by about 405 hundred years.
We thus reiterate that mere private sexual relations between two unmarried and consenting adults,
even if the relations result in pregnancy or miscarriage out of wedlock and without more, are not
enough to warrant liability for illicit behavior. The voluntary intimacy between two unmarried
adults, where both are not under any impediment to marry, where no deceit exists, and which was
done in complete privacy, is neither criminal nor so unprincipled as to warrant disciplinary action.
To use an example more recent than Shakespeare's, if the Court did not consider the complained
acts in Escritor immoral, more so should the Court in this case not consider Zaida's consensual
intimate relationship with Marlon immoral.
Zaida's relationship with Marlon was not an act per se prejudicial to the interest of St. Vincent.
Since Zaida and Marlon's relationship was not per se immoral based on secular morality standards,
St. Vincent carries the burden of showing that they were engaged in an act prejudicial to its interest
and one that it has the right to protect against. We reiterate, in this respect, that Zaida and Marlon
were very discrete in their relationship and kept this relationship strictly private. They did not
flaunt their affections for each other at the workplace. No evidence to the contrary was ever
presented. Zaida and Marlon's relationship, in short, was almost completely unknown to everyone
in St. Vincent; the respondents in fact even admitted that they discovered the relationship only in
2009.
Significantly, St. Vincent has fully failed to expound on the interest that is within its own right to
protect and uphold. The respondents did not specify in what manner and to what extent Zaida and
Marlon's relationship prejudiced or would have prejudiced St. Vincent's interest. To be sure, the
other employees and volunteers of St. Vincent know, by now, what had happened to Zaida and the
circumstances surrounding her dismissal. But, the attention which the relationship had drawn
could hardly be imputed to her; if at all, it was the respondents' actions and reactions which should
be blamed for the undesired publicity.
On the charge of violation of the Non-Fraternization Policy
Neither can we agree with the NLRC's findings that Zaida's relationship with Marlon violated St.
Vincent's Non-Fraternization Policy.
A reading of the Policy's provisions shows that they profess to touch only on on-duty conduct of its
employees. Contrary to the respondents' arguments, too, the CFCA employees who direct or
coordinate the work of others are only "strongly discouraged from engaging in consensual
romantic or sexual relationships with any employee or volunteer of CFCA. " It does not prohibit them,
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(either absolutely or with qualifications) from engaging in consensual romantic or sexual
relationships.
To discourage means "to deprive of courage or confidence: dishearten, deject; to attempt to

dissuade from action: dampen or lessen the boldness or zeal of for some action."
To prohibit, on the other hand, means "to forbid by authority or command: enjoin, interdict; to
prevent from doing or accomplishing something: effectively stop; to make impossible: disbar,
hinder, preclude."
While "to discourage" and "to prohibit" are essentially similar in that both seek to achieve similar
ends, i.e., the non-happening or non-accomplishment of an event or act, they are still significantly
different in degree and in terms of their effect and impact in the realm of labor relations laws.
The former - "to discourage" - may lead the actor i.e., the employee, to disfavor, disapprobation, or
some other unpleasant consequences, but the actor/employee may still nonetheless do or perform
the "discouraged" act. If the actor/employee does or performs the "discouraged" act, the employee
may not be subjected to any punishment or disciplinary action as he or she does not violate any
rule, policy, or law.
In contrast, "to prohibit" will certainly subject the actor/employee to punishment or disciplinary
action if the actor/employee does or performs the prohibited act as he or she violates a rule, policy
or law.
From this perspective, a St. Vincent employee who directs or coordinates the work of other St.
Vincent employee or volunteer, and who engages in a consensual romantic or sexual relationship
with a St. Vincent employee or volunteer will not violate the Non-Fraternization Policy unless
circumstances are shown that the act goes beyond the usual norms of morality. For example, the
employees' ascendancy or supervising authority, over another employee with whom he or she had
a relationship, and the undue advantage taken because of this ascendancy or authority, if shown,
would lead to a different conclusion. At most, the employee may be considered to have committed
an act that is frowned upon; but certainly, the employee does not commit an act that would warrant
his or her dismissal.
In addition, an examination of the Policy's provisions shows that it does not require St. Vincent's
employees to disclose any such consensual romantic or sexual relationships to the management. In
fact, nowhere in the records does it show that St. Vincent employees are under any obligation to
make the disclosure, whose violation would subject the employee to disciplinary action.
Accordingly, the failure of a St. Vincent employee to disclose to the management his or her
consensual romantic or sexual relationship with another employee or volunteer does not constitute
a violation of the Non-Fraternization Policy.
On the charge of violation of the Code of Conduct provisions prohibiting acts against
agency interest, acts against persons, and violations of the terms of employment
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We also do not find sufficient basis for Zaida's dismissal for violation of the Code of Conduct
provisions prohibiting: acts against agency interest by indulging in immoral and indecent act; acts
against persons by challenging superiors' authority, threatening and intimidating co-employees
and exerting undue influence on subordinates to gain personal benefit; and violations of the terms
of employment by doing an act offensive to the moral standards of the foundation.
We point out in this respect that the charges of violating the Code of Conduct provisions
prohibiting acts against agency interest and violations of the terms of employment are both
premised on the alleged immoral and indecent acts committed by Zaida in engaging in consensual
romantic or sexual relationship with Marlon. Since Zaida did not violate the Non-Fraternization
Policy, these other charges were clearly unwarranted and baseless.
In the same vein, we likewise find no sufficient basis for Zaida's dismissal for allegedly violating the
Code of Conduct provisions prohibiting acts against persons. While St. Vincent claimed, in the May
28, 2009 Notice of Termination, that Zaida "exerted undue influence on [her co-workers and
subordinates] to favor [herself] and/or Mr. Inocente", it did not specify in what manner and to what
extent she unduly influenced her co-workers and subordinates for hers and Marlon's benefit.
To justify a dismissal based on the act of "exert[ing] undue influence," the charge must be supported
by a narration of the specific act/s she allegedly committed by which she unduly influenced her co-
worker and subordinates, of the dates when these act/s were committed, and of the names of the
co-workers and/or subordinates affected by her alleged actions. The respondents, however,
miserably failed to establish these relevant facts. In other words, the charge of exerting undue
influence is a conclusion that was not supported by any factual or evidentiary basis.
Dismissal on the ground of serious misconduct and willful breach of trust and confidence
Based on the above considerations, we find Zaida's dismissal illegal for lack of valid cause. St.
Vincent failed to sufficiently prove its charges against Zaida to justify her dismissal for serious
a. Serious misconduct
For an employee to be validly dismissed on the ground of serious misconduct, the employee must
first, have committed misconduct or an improper or wrong conduct. And second, the
misconduct or improper behavior is: (1) serious; (2) relate to the performance of the
employee's duties; and (3) show that the employee has become unfit to continue working
for the employer.law
As we explained above, Zaida's relationship with Marlon is neither illegal nor immoral; it also did
not violate the Non-Fraternization Policy. In other words, Zaida did not commit any misconduct,
serious or otherwise, that would justify her dismissal based on serious misconduct.
Moreover, St. Vincent failed to show how Zaida's relationship with Marlon affected her
performance of her duties as a Program Officer and that she has become unfit to continue working
for it, whether for the same position or otherwise. Her dismissal based on this ground, therefore, is
without any factual or legal basis.
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b. Willful breach of trust and confidence
Willful breach of trust, as just cause for the termination of employment, is founded on the fact that
the employee concerned: (1) holds a position of trust and confidence, i.e., managerial personnel or
those vested with powers and prerogatives to lay down management policies and/or to hire,
transfer, suspend, lay-off, recall, discharge, assign or discipline employees; or (2) is routinely
charged with the care and custody of the employer's money or property, i.e., cashiers, auditors,
property custodians, or those who, in normal and routine exercise of their functions, regularly
handle significant amounts of money or property. In any of these situations, it is the employee's
breach of the trust that his or her position holds which results in the employer's loss of confidence.
Significantly, loss of confidence is, by its nature, subjective and prone to abuse by the employer.
Thus, the law requires that the breach of trust -which results in the loss of confidence - must be
willful. The breach is willful if it is done intentionally, knowingly and purposely, without justifiable
excuse, as distinguished from an act done carelessly, thoughtlessly, heedlessly, or inadvertently.
We clarify, however, that it is the breach of the employer's trust, not the specific employee act/s
which the employer claims caused the breach, which the law requires to be willful, knowingly and
purposefully done by the employee to justify the dismissal on the ground of loss of trust and
confidence.
In Vitarich Corp. v. NLRC, we laid out the guidelines for the application of the doctrine of loss of
confidence, namely: (1) the loss of confidence should not be simulated; (2) it should not be
used as a subterfuge for causes which are improper, illegal or unjustified; (3) it should not
be arbitrarily asserted in the face of overwhelming evidence to the contrary; and (4) it must
be genuine, not a mere afterthought to justify earlier action taken in bad faith. In short,
there must be an actual breach of duty which must be established by substantial evidence.
In the present case, we agree that Zaida indeed held a position of trust and confidence. Nonetheless,
we cannot support the NLRC's findings that she committed act/s that breached St. Vincent's trust.
Zaida's relationship with Marlon, to reiterate, was not wrong, illegal, or immoral from the
perspective of secular morality; it is also not prohibited by the Non-Fraterni2^ation Policy nor is it
required, by the Policy, to be disclosed to St. Vincent's management or officials. In short, Zaida did
not commit any act or misconduct that willfully, intentionally, or purposely breached St. Vincent's
trust.
Notably, St. Vincent did not charge Zaida with, nor terminate her employment for, willful breach
of trust. Rather, it charged her with violation of the Non-Fraternization Policy and of the Code of
Conduct, and dismissed her for immorality, gross misconduct, and violation of the Code of Conduct
- none of which implied or suggested willful breach of trust.
In this regard, we reiterate, with approval, Zaida's observations on this point: the labor tribunals'
findings of willful breach of trust and confidence shows clear bad faith as it effectively deprived her
of an opportunity to rebut any charge of willful breach of trust.
C. Compliance with the Procedural Due Process Requirements
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As pointed out above, St. Vincent did not specify in what manner and to what extent Zaida unduly
influenced her co-workers and subordinates for hers and Marlon's benefit with regard to the charge
of committing acts against persons. For the charge of "exert[ing] undue influence" to have validly
supported Zaida's dismissal, it should have been supported by a narration of the specific act/s she
allegedly committed by which she unduly influenced her co-worker and subordinates, of the dates
when these act/s were committed, and of the names of the co-workers and/or subordinates affected
by her alleged actions.
The specification of these facts and matters is necessary in order to fully apprise her of all of the
charges against her and enable her to present evidence in her defense. St. Vincent's failure to make
this crucial specification in the notice to explain and in the termination letter clearly deprived Zaida
of due process.
In light of these findings, we find the NLRC in grave abuse of its discretion in affirming the LA's
ruling as it declared that St. Vincent complied with the due process requirements.
Specifically, the NLRC capriciously and whimsically exercised its judgment by using the wrong
considerations and by failing to consider all relevant facts and evidence presented by the parties, as
well as the totality of the surrounding circumstances, as it upheld Zaida's dismissal. Consequently,
we find the CA in grave error as it affirmed the NLRC's ruling; the CA reversibly erred in failing to
recognize the grave abuse of discretion which the NLRC committed in concluding that Zaida's
dismissal was valid.
PHILIPPINE SAVINGS BANK v. MANUEL P. BARRERA

G.R. No. 197393, June 15, 2016
FACTS
Petitioner is a banking institution organized and existing under the laws of the Philippines.
Respondent worked for petitioner for seven years in various capacities. In 2004, he was assigned to
the Bacolod branch as a marketing officer and was put in command of the loans department.
During a quality assurance review, it was discovered that respondent had allowed a contractual
employee to use the former's user ID for account booking and approval in the bank's Integrated
Loans System. The unauthorized disclosure of system ID and password was a violation of bank
policy.
Respondent admitted that he had disclosed his user ID and password, but only to a Ms. Mary Ann
Cacal - a regular employee who had to go on maternity leave. He explained that he did so for the
continuity of transactions in instances when he had to go out of the bank to coordinate with dealers
or interview clients. He insisted that he was merely following a precedent set by the branch head,
Mr. Loubert Sajo. y
While the investigation of this matter was pending, the bank discovered another infraction
committed by respondent - the unauthorized issuance of bank certifications. The internal audit
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group found that he, along with other officers, was involved in lending the account of Spouses
Armando and Grace Ong (Sps. Ong) to different individuals in order to generate bank certifications
in favor of the latter. Bank policy explicitly stated that "no account shall be allowed to be opened
for certification purposes only."
As a result of the investigation, it was discovered that a Request for Change was accomplished on 2
June 2004 to change the account name of Sps. Ong to that of Spouses Orville and Lolita Bautista
(Sps. Bautista). The account number remained the same. Respondent was shown to be a signatory
to the Certification that there existed a deposit with the bank of a sum of money as of 1 June 2004
in the name of Sps. Bautista. After two days, another Request for Change was processed to revert
the account name to that of Sps. Ong. On 7 June 2004, respondent again signed and approved a
bank certification in favor of a certain Karen Galoyo using the same account number. Documents
showed deficiencies in the signature cards and other requirements for the processing of a request
for change of account name.
On 15 February 2005, an administrative hearing was conducted. On 15 March 2005, petitioner served
on respondent a Notice of Termination for grave violation of bank policies, code of conduct, and
On 4 April 2005, respondent filed a Complaint for illegal dismissal.
The labor arbiter ruled in favor of respondent and ordered his immediate reinstatement, as well as
the payment of P476,137.39 representing back wages, 13th month pay, moral and exemplary
damages, attorney's fees, quarterly bonus, and refund for travel expenses and other benefits.
Petitioner appealed to the NLRC. Respondent filed a Motion to Dismiss on the ground of lack of
authority to file appeal memorandum and non-perfection thereof. He pointed out that the
supersedeas bond was irregular, because the Certification of Accreditation and Authority issued by
the Office of the Court Administrator (OCA) stated that the Philippine Charter Insurance
Corporation (PCIC) was only authorized to issue bonds for civil cases.
Nevertheless, the NLRC gave due course to the appeal and reversed the Decision of the labor arbiter.
It found that the complainant had been dismissed for cause and afforded due process.
The NLRC Decision, however, did not address the argument raised in the Motion to Dismiss
regarding the irregularity of the appeal bond. Respondent therefore filed a Petition for Certiorari
with the CA.
The CA held that the NLRC had committed grave abuse of discretion amounting to lack or excess
of jurisdiction when the latter gave due course to the bank's appeal even if it was apparent that the
appeal had not been perfected owing to a defective and irregular appeal bond. The CA observed
that the certification and accreditation issued by the OCA did not state that the PCIC was allowed
to issue bonds relative to labor cases filed before the NLRC. The appellate court further held that
the appeal should not have been given due course because of its non-perfection within the
reglementary period.
ISSUES
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Whether or not the CA properly found that the appeal before the NLRC had not been perfected;
hence, the Decision of the labor arbiter has become final and executory.
Whether or not the respondent was illegally dismissed.
RULING
The Court was confronted with a similar question in U-Bix Corp. v. Hollero. In that case, both the
NLRC and the CA held that the supersedeas bond posted by petitioners had no force and effect,
because a perusal of the bond revealed that the Certification of Accreditation and Authority issued
by the OCA covers an authority to transact surety business in relation to "civil/special proceedings
cases only" and does not include labor cases filed before the NLRC. The Court therein ruled that
the bonds may also be used for labor cases.
In the present case, the CA overlooked the fact that it is within the province of the NLRC to accredit
surety companies for cases it hears. The Supreme Court only accredits surety companies for judicial
courts:
II. ACCREDITATION OF SURETY COMPANIES: In order to preclude spurious and delinquent

surety companies from transacting business with the courts, no surety company or its authorized
agents shall be allowed to transact business involving surety bonds with the Supreme Court, Court
of Appeals, the Court of Tax Appeals, the Sandiganbayan, Regional Trial Courts, Shari'a District
Courts, Metropolitan Trial Courts, Municipal Trial Courts in Cities, Municipal Trial Courts,
Municipal Circuit Trial Courts, Shari'a Circuit Courts and other courts which may thereafter be
created, unless accredited and authorized by the Office of the Court Administrator.
This fact explains why labor cases were not enumerated in the Certification of Accreditation and
Authority issued to the PC1C. This is not to say that the certification issued by the OCA is worthless
before the NLRC. On the contrary, the 2005 Revised Rules of Procedure of the NLRC expressly
provided that bonds issued by a reputable bonding company duly accredited by the Supreme Court
are acceptable.
In addition, the Court has relaxed the requirement of posting a supersedeas bond for the perfection
of an appeal when there has been substantial compliance with the rule. For example, in Del Rosario
v. Philippine Journalists, Inc., the Court allowed the appeal to proceed despite the subsequent
revocation of the authority of a bonding company, because "technical rules of procedure should not
hamper the quest for justice and truth."
We find that the purpose of the appeal bond - to ensure, during the period of appeal, against any
occurrence that would defeat or diminish recovery by the aggrieved employees under the judgment
if subsequently affirmed - has been met. Records show that as of 22 January 2011, the supersedeas
bond in the amount of P476,137.39 was still in existence.
We uphold the finding of the NLRC that respondent was validly dismissed.
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The unauthorized disclosure of username and password exposed the bank to incalculable
losses.
The loss of confidence had sufficient basis. As an account and marketing officer, respondent was
tasked with the approval of loans, which is an element of a core banking function. Without a doubt,
he was entrusted with delicate matters, including the custody, handling, care and protection of the
bank's assets. Given the sensitive functions of his position, he was expected to strictly observe and
comply with the bank's standard operating procedures.
This he failed to do.
The bank has an existing policy on user IDs and passwords: BOPD Code 003-01 -04.244 dated 6
August 2002, obligating designated branch personnel to keep their passwords confidential at all
times. The purpose was to establish accountabilities and limit control over transactions and/or
functions. Respondent, who was one of those branch personnel so designated, disclosed his
password to another employee, who later disclosed it to a contractual employee.
Respondent tried to excuse his action by pointing out that the branch head was also guilty of the
same offense. (After investigation, this allegation proved to be false.) Although respondent later
attempted to seek understanding on account of his heavy workload, we cannot force the employer
to accept these excuses. We understand that the failure of respondent to report irregularities being
committed in the branch, coupled with his disregard of the control procedure, allowed
unauthorized access into the bank system. To a great degree, it exposed the bank to unauthorized
transactions that would have been difficult to trace and determine.
Aside from breaking the trust of his employer, respondent also demonstrated gross and habitual
negligence when he delegated a function that had been specifically reposed in him. His thoughtless
disregard of the consequences of allowing an unauthorized person to have unbridled access to the
bank's system and his repeated failure to perform his duties for a period of time justified his
dismissal.
Respondent's complicity in the issuance of fraudulent bank certifications justifies the loss
of confidence.
On 19 October 2001, the bank released IOL No. OPS 01-023 regarding the issuance of bank
certifications for deposits and loans, the relevant portions of which state:
All concerned Department/Branches are hereby reminded to be careful in issuing bank certification
by observing necessary procedures such as but not limited to the following:
1. The branch/department shall restrict the issuance of Bank Certificate to bonafide Bank clients
who:
- must have opened their accounts legitimately, complete with the usual identity requirements, and
- has written a request for bank certifications on deposits and loans, signed by him, signature
verified and approved by the concerned Operating/Department Head.
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x x x x.
3. No account shall be allowed to be opened for certification purposes only.

x x x x.
Issuance of false certification shall be dealt with in accordance with the Bank's
Officers/Employees Code of Ethics and Behavior.
Respondent claimed that he was merely prevailed upon by the branch head to sign the bank
certifications, and that the signing was ministerial upon the presentation of a letter-request and a
printout of the client's name and account number.
First, We cannot fault petitioner for dismissing a bank officer who has failed to grasp the
significance of bank certifications despite his employment with the bank for seven years. In his
reply to petitioner's Memorandum dated 29 December 2004, respondent explained that he had
signed the Bank Certification dated 4 June 2004, because there were only two bank officers at that
time - he and the branch head - and "the client was getting impatient waiting for his document."
In Sajo v. Philippine Saving's Bank involving the very same branch head and including the very same
bank certifications referred to in this case, the Court did not find reversible error on the part of the
CA in ruling that the termination was valid. Indeed, the question of whether the employee received
monetary consideration for the issuance of fraudulent bank certificates was immaterial; what was
reprehensible was that the employee allowed himself to be a conduit for defrauding persons and/or
institutions that relied on the certificates.
In Rivera v. Allied Banking Corp., the dismissed employee explained that the arrangement with the
client regarding the opening of joint accounts for her foreign currency check deposits used for
rediscounting transactions was merely an accommodation service, which was done in good faith
and in accordance with the bank's policies. The Court, nonetheless, upheld the validity of his
termination.
Second, respondent was guilty of gross and habitual negligence when he failed to exercise the
requisite amount of care or diligence in signing the bank certifications. Bank policy clearly required
that certifications be issued only to clients who had opened their accounts legitimately with the
usual identity requirements. Even if it were true that he had no access to the information,
respondent should have been alerted of the irregularity by the fact that at least three requests for
change of account name had been submitted in the course of a week. However, respondent
proceeded to sign the certifications without question, evincing a thoughtless disregard of the
consequences of his actions.
Third, respondent cannot hide behind his designation as an account officer in charge of loans to
claim ignorance of branch operations. It must be emphasized that he admitted to having been
appointed as branch head of PSB-Bacolod from 1 June 1998 to 30 June 2001; and assistant branch
head of PSB-Cebu City and PSB-General Santos from 1 July 2001 to 31 August 2002 and from 1 August
2002 to 30 June 2003, respectively. He cannot deny that for at least five years, he should have had
an in-depth knowledge and understanding of bank operations and policies.
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Fourth, respondent had the discretion to refuse to sign the document. Even if he was under
compulsion from the branch head to sign, the act would still have been inexcusable. In fact, the
Court has upheld the dismissal of employees who claimed that they only committed illegal acts
upon the instructions of their superior.
Petitioner properly exercised its management prerogative in terminating the services of

respondent.
Because of its status as a business affected with public interest, a bank is expected to exercise the
highest degree of diligence in the selection and supervision of its employees.
We cannot coerce petitioner to retain an employee whom it cannot trust to perform duties of the
highest fiduciary nature. As a general rule, employers are allowed wider latitude of discretion in
terminating the employment of managerial employees, as the latter perform functions that require
the employers' full trust and confidence. y
TING TRUCKING/MARY VIOLAINE A. TING v. JOHN C. MAKILAN

G.R. No. 216452, June 20, 2016
FACTS
Petitioner Ting Trucking is a sole proprietorship owned by Mary Violaine A. Ting (petitioner), and
is engaged in hauling services to and from Negros, Cebu, and Iloilo, with nine (9) employees in its
workforce.
On February 12, 2010, respondent was hired as a driver with the following wage conditions: standby
pay of P150.00 per day, additional allowance of P300.00 for trips from Bacolod City to Iloilo City
and vice versa, and P500.00 for trips from Bacolod City to Cebu City and vice versa, weekly food
supply in the amount of P539.00, and additional out of town allowance of P100.00 for trips from
Bacolod City to Iloilo City and P150.00 for trips from Bacolod City to Cebu City. In the course of his
employment, respondent was assigned one (1) helper, Genesis O. Chavez (Chavez). Slaw
On August 20, 2010, respondent claimed that while on his way to work, he received a call from
petitioner informing him to stop reporting for work purportedly to avoid his regularization,
prompting him to file a complaint for illegal dismissal against petitioner before the NLRC Regional
Arbitration Branch No. VI, docketed as NLRC RAB Case No. VI-09-10705-10. He maintained that he
did not receive oral or written notice of any fault or infraction and that he was not given any notice
of dismissal.
On the other hand, petitioner denied that respondent was illegally dismissed. She stated that the
latter was never hired on a probationary basis and that he was a regular employee. Nonetheless,
respondent abused the trust and confidence reposed on him after learning from Chavez the several
anomalies he had committed while in the performance of his duties,12 namely: (a) he would only
put in P2,500.00 worth of fuel into the truck despite being given a gas allowance of P3,500.00, and
pocket the balance, (b) on June 23, 2010, he took twenty (20) kilos of corn worth P600.00 from the
cargo he was to deliver and brought it home, (c) on July 16, 2010, while the truck was at the Roro
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Port of Bacolod City, he siphoned ten (10) liters of diesel fuel valued at P470.00 and sold the same,
and (d) he took the spare parts of the truck worth P15,000.00 which he likewise sold, and when
asked to return the said parts, instructed Chavez to look for scrap spare parts to present to
petitioner.13 In addition, petitioner learned from her secretary, Fely M. Bonganciso (Bonganciso),
that respondent's truck ran out of fuel on eight (8) different occasions prompting the former to
demand the turn over of the fuel receipts which was not heeded. On August 16, 2010, respondent's
truck ran out of fuel again and upon reaching its destination, the cargo owner informed petitioner
that several kilos of corn cargo - valued at P2,800.00 - were missing, and that they would deduct
the said amount from their payment. Thereafter, or from August 17 to 20, 2010, respondent no
longer reported for work and was spotted by his co-workers driving a public utility jeepney. Thus,
on August 20, 2010, petitioner called respondent and confronted him about the discrepancy in the
cargo he delivered on August 16, 2010, and reiterated the demand to turn over the fuel receipts as
well as the spare parts of the motor vehicle which he failed to comply. As a result, a complaint for
Qualified Theft was filed against him before the City Prosecutor of Bacolod. Lastly, petitioner
contended that respondent's claim of illegal dismissal was belied by his receipt of his standby pay
on August 21, 2010, and that his money claims were without legal basis. In support thereof,
petitioner submitted, among others, the affidavits of Bonganciso, Chavez and co-employees, as well
as several charge invoices that were signed by respondent acknowledging receipt of the spare parts
on behalf of Ting Trucking.
ISSUE
Whether or not respondent’s dismissal was valid
RULING
Fundamental is the rule that an employee can be dismissed from employment only for a valid
cause. Serious misconduct is one of the just causes for termination under Article 297 of the Labor
Code, which reads in part:
ART. 297. Termination By Employer. - An employer may terminate an employment for any of
the following causes:
xxxx
Misconduct is defined as an improper or wrong conduct. It is a transgression of some established

and definite rule of action, a forbidden act, a dereliction of duty, willful in character, and implies
wrongful intent and not mere error in judgment. To constitute a valid cause for the dismissal within
the text and meaning of Article [297] of the Labor Code, the employee's misconduct must be serious
- that is, of such grave and aggravated character and not merely trivial or unimportant. Additionally,
the misconduct must be related to the performance of the employee's duties showing him to be
unfit to continue working for the employer. Further, the act or conduct must have been performed
with wrongful intent. Thus, for serious misconduct to be a just cause for dismissal, the concurrence
of the following elements is required: (a) the misconduct must be serious; (b) it must relate to
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the performance of the employee's duties showing that the employee has become unfit to
continue working for the employer; and (c) it must have been performed with wrongful
intent.
In the case at bar, all of the foregoing requisites have been duly established by substantial evidence.
Records disclose that respondent was charged of misappropriating fuel allowance, theft of fuel and
corn, and sale of spare parts while in the performance of his duties. Submitted as proof thereof was
the affidavit of Chavez, among others. Contrary to the findings of the CA, the Court finds the same
to be substantial evidence. Other than respondent's claim that the charges were fabricated and that
Chavez was a biased witness, no evidence was presented that would taint the latter's credibility. In
fact, it was not shown that Chavez was impelled by dubious or ill-motive to testify falsely against
respondent; hence, his testimony should be accorded full faith and credence.
It is worthy to note that despite the absence of fuel receipts to substantiate the charge of
misappropriation of the P3,500.00 gas/fuel allowance by filling the truck's fuel tank with P2,500
worth of fuel only and pocketing the rest, it is undisputed that respondent's truck ran out of fuel
on eight (8) separate occasions, including his last trip on August 16, 2010 with no justification
proffered for such shortages. And while the July 16, 2010 incident where Chavez claimed to have
seen respondent siphon fuel from the truck's fuel tank was not one of the eight (8) instances that
his truck ran out of fuel, the foregoing charge cannot be disregarded given the pattern of
unexplained fuel shortages incurred by respondent which naturally leads one to a fair and
reasonable conclusion that at the very least he may have either under-filled his assigned truck's fuel
tank or siphoned fuel therefrom to petitioner's prejudice.
The same holds true for the charge of theft of corn given that respondent blatantly failed to account
for the discrepancy in the weight of his cargo worth P2,800.00 that he delivered on August 16, 2010.
Likewise, while the receipts do not prove that respondent sold the replaced spare parts, it was
nonetheless established that the said spare parts were turned over to his custody and possession. It
was therefore incumbent upon respondent to show that he had turned over possession of these
spare parts to petitioner, which the former utterly failed to discharge.
Indeed, it bears stressing that while there may be no direct evidence to prove that respondent
actually committed the offenses charged, there was substantial proof of the existence of the
irregularities committed by him. It is well to point out that substantial proof, and not clear and
convincing evidence or proof beyond reasonable doubt, is sufficient as basis for the imposition of
any disciplinary action upon the employee. The standard of substantial evidence is satisfied where
the employer has reasonable ground to believe that the employee is responsible for the misconduct
and his participation therein renders him unworthy of the trust and confidence demanded by his
position, as in this case.
YELLOW BUS LINE EMPLOYEES UNION (YBLEU) v.

YELLOW BUS LINE, INC. (YBLI)
G.R. No. 190876, June 15, 2016
FACTS
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The primary issue for resolution pivots on the validity of the dismissal of two drivers working for
petitioner Yellow Bus Line, Inc. (YBL).
Gardonia and Querol were hired by YBL as drivers on 17 December 1993 and 14 February 1995,
respectively.
In October 2002, Gardonia was driving along the National Highway in Polomolok, South Cotabato
when his bus bumped into a motorcycle while trying to overtake it. The collision resulted in the
death of the motorcycle driver and his passenger. YBL shouldered the hospitalization bills
amounting to P290,426.91 and paid P135,000.00 as settlement of the claim of the heirs of the
motorcycle riders.
Three (3) months later, the bus that Querol was driving suffered a mechanical breakdown. A
mechanic and a towing truck arrived to pick up Querol. He was ordered by the mechanic to drive
the bus while the towing truck would trail behind. Querol was apparently driving too fast and he
rammed the bus into a sugar plantation in Barangay Talus, Malungon, South Cotabato.
YBL conducted separate hearings on the two incidents. Thereafter, Gardonia and Querol were
found to be negligent. Termination letters were sent to them on 16 December 2002 and 16 January
2003, respectively.
Yellow Bus Line Employees Union (Union), representing its members Gardonia and Querol, filed a
complaint for illegal dismissal against YBL through the grievance machinery, as stipulated in their
Collective Bargaining Agreement. The Union and YBL failed to resolve their dispute, thus the case
was elevated to the National Conciliation and Mediation Board (NCMB) Satellite Regional Office
in Koronadal City, South Cotabato.
During the initial conference, YBL's representative Norlan Yap allegedly agreed to reinstate
Gardonia and Querol. The management of YBL however refused to abide by the said agreement.
Thus, another conference was conducted in order for the parties to resolve their dispute but no
agreement was reached.
On 25 August 2004, the Panel of Accredited Voluntary Arbitrators (Panel) found that Gardonia and
Querol were illegally dismissed and ordered their reinstatement.
The Panel also ruled that the parties already arrived at a compromise agreement during the initial
conference with respect to the reinstatement of the drivers. Thus, this agreement is final and
binding on the parties pursuant to Article 227 of the Labor Code, which provides that "any
compromise settlement, including those involving labor standard laws, voluntarily agreed upon by
the parties with the assistance of the Bureau or the regional office of the Department of Labor, shall
be final and binding upon the parties."
YBL filed a motion for reconsideration but it was informed by the Panel that its decision is not
subject to reconsideration in accordance with the Revised Procedural Guidelines in the Conduct of
Voluntary Arbitration Proceedings.
ISSUES
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The ruling of the Panel delves into two issues: the validity of the alleged compromise agreement
and the validity of the drivers' dismissal.
RULING
The Union claims that a settlement at the conciliation level has already been forged with YBL,
while YBL claims otherwise.
The pertinent portion of the Conciliation Report is reproduced below:
During the conference, both parties appeared where[in] two of the complainants in the names of
Mr. Quero S. Francisco and Jimmy C. Gardonia manifested that they want [to] be returned back to
their posts in the company and Management representative Mr. Norlan A. Yap, the Personnel
Manager of the Company, accepted the appeal of the above complainants.
xxxx
So, this case is settled into Amicable settlement and the same hereby considered closed.
We cannot consider this Conciliation Report as the complete settlement between the parties. As
reasoned by the Court of Appeals, and we agree, that:
x x x The Conciliation Report. . . did not write finis the issues between the parties as manifested by
a second round of conference in the NCMB office and the subsequent submission of the dispute to
the Panel. If indeed, a compromise had been reached, there should have been no need for further
negotiations and the case would not have reached the Panel. Clearly, the Panel viewed the grievance
machinery and voluntary arbitration underwent [sic] by the parties in piecemeal instead of looking
at it as one process which culminated in the decision of the Panel now assailed by Yellow Bus.
The facts of the case reveal that private respondents moved for the execution of what was embodied
in the Conciliation Report before the NCMB. This simply cannot be done. The handwritten report
of Conciliator-Mediator Nagarano M. Mascara al Haj could not, by any stretch of imagination, be
considered as a final arbitration award nor a decision of a voluntary arbitrator within the purview
of Article 262-A of the Labor Code which is a proper subject of execution. In fact, the initial
conference before the Conciliator-Mediator is not more than what it implies - that it is the initial
stage of negotiation between the parties prior to the submission of the dispute to the Panel.
The meat of the controversy actually devolves upon the legality of the dismissal of the two company
drivers, who happen to be a union officer and a member. We have scrutinized the records and hold
that the Panel of Voluntary Arbitrators committed grave abuse of discretion when its finding, that
the drivers were not negligent, disregarded the evidence on record.
As a matter of fact, there is nothing in the records which would support the Panel's conclusion that
the drivers were driving at a moderate speed at that time when the accident happened, and that it
was caused by force majeure. In the case of Gardonia, he admitted that he was overtaking the
motorcycle on its left when said motorcycle suddenly negotiated a left turn on the intersection
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causing the bus to hit the motorcycle. Gardonia claimed that he blew his horn when he tried to
overtake the said motorcycle. Before hitting the motorcycle, Gardonia stated that he tried to apply
the brakes and swerved the steering wheel to the left, but it was too late.12 On the other hand, the
bus conductor, who was traveling with Gardonia, insisted that the motorcyle was running slowly
and was about to go to the left side of the road near the intersection when it was hit by the bus. 13
The bus conductor established the fault of Gardonia. Gardonia already saw that the motorcycle was
swerving to the left. Both the bus, with the motorcycle ahead, were nearing an intersection. It is
evidently wrong for Gardonia to proceed in the attempt to overtake the motorcycle. Section 41 (c),14
Article II of Republic Act No. 4136 prohibits the overtaking by another vehicle at any intersection
of the highway. Gardonia also admitted to driving at a speed of 60-70 kilometers per hour.15 It is
reasonable to assume that he accelerated his speed while overtaking the motorcycle. Thus he did
find it difficult to apply his breaks or make last-minute maneuvers to avoid hitting the motorcycle.
Clearly, it was Gardonia's act of negligence which proximately caused the accident, and so he was
dismissed by YBL on the ground of reckless imprudence resulting in homicide and damage to
property.
Anent Querol, he claimed that a bicycle suddenly emerged from the left side of the road and crossed
the highway, causing him to swerve his steering wheel to the left.16 The bus rammed into a sugar
plantation. On the contrary, the mechanic of the bus and the driver of the tow truck both asserted
that they saw Querol driving the bus too fast. When they caught up with him, Querol's bus was
already in the sugar plantation. The version of the mechanic and the tow truck driver was not
refuted. Querol was driving recklessly despite the fact that said bus was newly repaired. YBL also
conducted its ocular inspection of the area and found that there was no road crossing at the scene
of the incident which contradicts Querol's statement that a bicycle suddenly crossed the highway.
Moreover, it was revealed that the bus was found in the sugar plantation at a distance of 60 meters
from the highway. This proved that the bus was running very fast. The accident is evidently caused
by Querol. YBL submits that the amount of damages incurred by the bus totaled P84,446.59. Querol
was validly terminated for violation of Company Rules and Regulations.
Both Gardonia and Querol were dismissed for just cause.
Article 282 of the Labor Code provides that one of the just causes for terminating an employment
is the employee's gross and habitual neglect of his duties. This cause includes gross inefficiency,
negligence and carelessness. Gross negligence connotes want or absence of or failure to exercise
slight care or diligence, or the entire absence of care. It evinces a thoughtless disregard of
consequences without exerting any effort to avoid them.
Indeed, Gardonia and Querol were both negligent in operating the bus causing death and damages
to property.
We also affirm the Court of Appeals holding that YBL failed to observe statutory due process in
dismissing the two drivers.
Section 2, Rule XXIII, Book V of the Rules Implementing the Labor Code expressly states:
Section 2. Standard of due process: requirements of notice.
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— In all cases of termination of employment, the following standards of due process shall be
substantially observed.
I. For termination of employment based on just causes as defined in Article 282 of the Code:
(a) A written notice served on the employee specifying the ground or grounds for termination,
and giving to said employee reasonable opportunity within which to explain his side;
(b) A hearing or conference during which the employee concerned, with the assistance of
counsel if the employee so desires, is given opportunity to respond to the charge, present his
evidence or rebut the evidence presented against him; and
(c) A written notice of termination served on the employee indicating that upon due
consideration of all the circumstance, grounds have been established to justify his
termination.
While a hearing was conducted where the two employees were given an opportunity to air their
side, there was only one notice given to the erring drivers. That same notice included both the
charges for negligence and the decision of dismissal from employment. Evidently, the two
employees' rights to due process were violated which warrants their entitlement to indemnity.
Finally, we affirm the award of nominal damages. Where the dismissal is based on an authorized
cause under Article 283 of the Labor Code but the employer failed to comply with the notice
requirement, the sanction against the employer should be stiff as the dismissal process was initiated
by the employer's exercise of his management prerogative. This is different from dismissal based
on a just cause under Article 282 with the same procedural infirmity. In such case, the sanction to
be imposed upon the employer should be tempered as the dismissal process was, in effect, initiated
by an act imputable to the employee. The amount of P30,000.00 as nominal damages awarded by
the Court of Appeals conforms to prevailing jurisprudence.
BLUER THAN BLUE JOINT VENTURES COMPANY/MARY ANN DELA VEGA, vs. GLYZA
ESTEBAN
It is not the job title but the actual work that the employee performs that determines whether
he or she occupies a position of trust and confidence." In this case, while Esteban's position was
denominated as Sales Clerk, the nature of her work included inventory and cashiering, a function that
clearly falls within the sphere of rank-and-file positions imbued with trust and confidence.
Loss of trust and confidence to be a valid cause for dismissal must be work related such as
would show the employee concerned to be unfit to continue working for the employer and it must be
based on a willful breach of trust and founded on clearly established facts. Such breach is willful if it
is done intentionally, knowingly, and purposely, without justifiable excuse as distinguished from an
act done carelessly, thoughtlessly, heedlessly or inadvertently
In this case, the Court finds that the acts committed by Esteban do not amount to a willful
breach of trust. She admitted that she accessed the POS system with the use of the unauthorized
"123456" password. She did so, however, out of curiosity and without any obvious intention of
defrauding the BTB. As professed by Esteban, "she was acting in good faith in verifying what her co-
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staff told her about the opening of the computer by the use of the "123456" password, x xx. She even
told her co-staff not to open again said computer, and that was the first and last time she opened said
computer.
Facts:
Respondent Glyza Esteban was employed as Sales Clerk, and assigned at Bluer Than Blue
Joint Ventures Company's (BTB) EGG boutique in SM City Marilao, Bulacan. Part of her primary
tasks were attending to all customer needs, ensuring efficient inventory, coordinating orders from
clients, cashiering and reporting to the accounting department.
The Company received a report that several employees have access to its point-of-sale (POS)
system through a universal password given by Elmer Flores (Flores). Upon investigation, it was
discovered that it was Esteban who gave Flores the password. BTB sent a letter memorandum to
Esteban, asking her to explain in writing why she should not be disciplinary dealt with for
tampering with the company’s POS system through the use of an unauthorized password. Esteban
was also placed under preventive suspension for ten days.
In her explanation, Esteban admitted that she used the universal password three times, after
she learned of it from two other employees who she saw browsing through the Company’s sales
inquiry. She inquired how the employees were able to open the system and she was told that they
used the "123456" password.
Later, Esteban’s preventive suspension was lifted, but at the same time, a notice of
termination was sent to her, finding her explanation unsatisfactory and terminating her
employment immediately on the ground of loss of trust and confidence.
Esteban filed a complaint for illegal dismissal, illegal suspension, holiday pay, rest day and
separation pay at LA which ruledin favor of Esteban and found that she was illegally dismissed.
However, NLRC reversed the decision of the LA and dismissed the case for illegal dismissal. CA
granted Esteban’s petition and reinstated the LA decision
Issue:
Whether or not Esteban’s acts constitute just cause to terminate her employment with the
company on the ground of loss of trust and confidence.
Ruling:
Loss of trust and confidence is premised on the fact that the employee concerned holds a
position of responsibility, trust and confidence. The employee must be invested with confidence on
delicate matters, such as the custody, handling, care and protection of the employer’s property and
funds. With respect to rank-and-file personnel, loss of trust and confidence as ground for valid
dismissal requires proof of involvement in the alleged events in question, and that mere
uncorroborated assertions and accusations by the employer will not be sufficient. Esteban is, no
doubt, a rank-and-file employee. The question now is whether she occupies a position of trust and
confidence.
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Among the fiduciary rank-and-file employees are cashiers, auditors, property custodians, or
those who, in the normal exercise of their functions, regularly handle significant amounts of money
or property. These employees, though rank-and-file, are routinely charged with the care and
custody of the employer’s money or property, and are thus classified as occupying positions of trust
and confidence.
In this case, Esteban was a sales clerk. Her duties, however, were more than that of a sales
clerk. Aside from attending to customers and tending to the shop, Esteban also assumed cashiering
duties. This, she does not deny; instead, she insists that the competency clause provided that her
tasks were that of a sales clerk and the cashiering function was labelled "to follow."
A perusal of the competency clause, however, shows that it is merely an attestation on her
part that she is competent to "meet the basic requirements needed for the position [she] is applying
for x xx". It does not define her actual duties. As consistently ruled by the Court, it is not the job
title but the actual work that the employee performs that determines whether he or she occupies a
position of trust and confidence. In Esteban’s case, given that she had in her care and custody the
store’s property and funds, she is considered as a rank-and-file employee occupying a position of
would show the employee concerned to be unfit to continue working for the employer and it must
be based on a willful breach of trust and founded on clearly established facts. Such breach is willful
if it is done intentionally, knowingly, and purposely, without justifiable excuse as distinguished
from an act done carelessly, thoughtlessly, heedlessly or inadvertently. The loss of trust and
confidence must spring from the voluntary or willful act of the employee, or by reason of some
blameworthy act or omission on the part of the employee.
defrauding BTB. As professed by Esteban, "she was acting in good faith in verifying what her co-
staff told her about the opening of the computer by the use of the "123456" password, x xx. She even
told her co-staff not to open again said computer, and that was the first and last time she opened
said computer."
Moreover, Company even admitted that Esteban has her own password to the POS system.
If it was her intention to manipulate the store’s inventory and funds, she could have done so long
before she had knowledge of the unauthorized password. But the facts on hand show that she did
not. BTB also failed to establish a substantial connection between Esteban’s use of the "123456"
password and any loss suffered by BTB. Indeed, it may be true that, as posited by BTB, it is the fact
that she used the password that gives cause to the loss of trust and confidence on Esteban.
However, as ruled above, such breach must have been done intentionally, knowingly, and
purposely, and without any justifiable excuse, and not simply something done carelessly,
thoughtlessly, heedlessly or inadvertently. To the Court’s mind, Esteban’s lapse is, at best, a careless
act that does not merit the imposition of the penalty of dismissal.
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Court must sustain the conclusion that Esteban was illegally dismissed. As stated by the CA,
"[s]uspension would have sufficed as punishment, considering that BTB had already been with the
company for more than 2 years, and BTB apologized and readily admitted her mistake in her written
explanation, and considering that no clear and convincing evidence of loss or prejudice, which was
suffered by [BTB] from [Esteban’s] supposed infraction."
Preventive suspension is a measure allowed by law and afforded to the employer if an

employee’s continued employment poses a serious and imminent threat to the employer’s life or
property or of his co-workers. It may be legally imposed against an employee whose alleged
violation is the subject of an investigation.
In this case, the Company was acting well within its rights when it imposed a 10-day
preventive suspension on Esteban. While it may be that the acts complained of were committed by
Esteban almost a year before the investigation was conducted, still, it should be pointed out that
Esteban was performing functions that involve handling of BTB’s property and funds, and the
Company had every right to protect its assets and operations pending Esteban’s investigation.
LIGHT RAIL TRANSIT AUTHORITY, represented by its Administrator MELQUIADES A.

ROBLES vs. AURORA A. SALVAÑA
G.R. No. 192074, June 10, 2014, J. Leonen
Serious dishonesty is punishable by dismissal. Less serious dishonesty is punishable by

suspension for six months and one day to one year for the first offense and dismissal for the second
offense. Simple dishonesty is punishable by suspension of one month and one day to six months for
the first offense, six months and one day to one year for the second offense, and dismissal for the third
offense. Falsification of a document cannot be classified as serious since the information falsified had
no direct relation to her employment. Whether or not she was suffering from hypertension is a matter
that has no relation to the functions of her office.
Facts:
Then Administrator of the Light Rail Transit Authority, Melquiades Robles, issued an order
which revoked Atty. Aurora A. Salvaña’s designation as Officer-in-Charge (OIC) of the LRTA
Administrative Department. It "directed her instead to handle special projects and perform such
other duties and functions as may be assigned to her" by the Administrator.
Atty. Salvaña was directed to comply with this office order through a memorandum issued
by Atty. Elmo Stephen P. Triste, the newly designated OIC of the administrative department.
Instead of complying, Salvaña questioned the order with the Office of the President.
In the interim, Salvaña applied for sick leave of absence on May 12, 2006 and from May 15
to May 31, 2006. In support of her application, she submitted a medical certificate.
LRTA discovered that Dr. Blanco did not issue this medical certificate. Dr. Blanco also
denied having seen or treated Salvaña on May 15, 2006, the date stated on her medical
certificate. Administrator Robles issued a notice of preliminary investigation. The notice directed
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Salvaña to explain in writing within 72 hours from her receipt of the notice "why no disciplinary
action should be taken against her" for not complying with Office Order No. 119 and for submitting
a falsified medical certificate.
The LRTA’s Fact-finding Committee issued a formal charge against her for Dishonesty,
Falsification of Official Document, Grave Misconduct, Gross Insubordination, and Conduct
Prejudicial to the Best Interest of the Service.
The Fact-finding Committee issued a resolution "finding Salvaña guilty of all the charges
against her and imposed on her the penalty of dismissal from . . . service with all the accessory
penalties." The LRTA Board of Directors approved the findings of the Fact-finding Committee.
Salvaña appealed with the Civil Service Commission. The Civil Service Commission
modified the decision, finding that Salvaña was guilty only of simple dishonesty. She was meted a
penalty of suspension for three months.
LRTA moved for reconsideration but this was denied. LRTA then filed a petition for review
with the Court of Appeals which was dismissed. LRTA moved for reconsideration of this decision
but was denied.Hence, LRTA filed this present petition.
Issue:
Was Salvaña correctly found guilty of simple dishonesty only?
Ruling:
The offense committed was less serious dishonesty, not simple dishonesty.
Dishonesty has been defined "as the ‘disposition to lie, cheat, deceive, or defraud;
untrustworthiness, lack of integrity’ . . . ." Since the utmost integrity is expected of public servants,
its absence is not only frowned upon but punished severely.
However, on April 4, 2006, the Civil Service Commission issued Resolution No. 06-0538 or
the Rules on the Administrative Offense of Dishonesty.Resolution No. 06-0538 recognizes that
dishonesty is a grave offense punishable by dismissal from service. It, however, also recognizes that
"some acts of Dishonesty are not constitutive of an offense so grave as to warrant the imposition of
the penalty of dismissal from the service."
Recognizing the attendant circumstances in the offense of dishonesty, the Civil Service
Commission issued parameters "in order to guide the disciplining authority in charging the proper
offense" and to impose the proper penalty.
The resolution classifies dishonesty in three gradations: (1) serious; (2) less serious; and (3)
simple. Serious dishonesty is punishable by dismissal. Less serious dishonesty is punishable by
suspension for six months and one day to one year for the first offense and dismissal for the second
offense. Simple dishonesty is punishable by suspension of one month and one day to six months
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for the first offense, six months and one day to one year for the second offense, and dismissal for
the third offense.
The medical certificate Salvaña submitted to support her application for sick leave was
falsified. The question remains as to whether this act could be considered serious dishonesty, less
serious dishonesty, or simple dishonesty.
This court previously ruled that "[f]alsification of an official document, as an administrative

offense, is knowingly making false statements in official or public documents." Salvaña knew that
she was not examined by Dr. Blanco, the medical certificate’s signatory. She knew that she would
not be able to fully attest to the truthfulness of the information in the certificate. Despite this, she
still submitted the certificate in support of her application for leave.
The Commission correctly found respondent guilty of dishonesty.However, it would be

wrong to classify this offense as simple dishonesty.
This act of causing damage or prejudice, however, cannot be classified as serious since the
information falsified had no direct relation to her employment. Whether or not she was suffering
from hypertension is a matter that has no relation to the functions of her office.
TEEKAY SHIPPING PHILIPPINES, INC., TEEKA Y SHIPPING LIMITED and ALEX VERCHEZ
vs. EXEQUIEL O. JARIN
G.R. No. 195598, June 25, 2014, J. Reyes
The Court has held that the enumeration in Section 32-A does not preclude other
illnesses/diseases not so listed from being compensable. The POEA-SEC cannot be presumed to
contain all the possible injuries that render a seafarer unfit for further sea duties. This is in view of
Section 20(B)(4) of the POEA-SEC which states that "(t)hose 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. In the case at bar, Jarin was able to prove that
his rheumatoid arthritis was contracted out of his daily duties as Chief Cook onboard M.T. Erik Spirit
where he was also tasked to carry heavy things.
Facts:
Petitioners Teekay Phils. is a domestic corporation engaged in the recruitment of maritime

personnel for its foreign principal, Teekay Ltd. Verchez is the president of Teekay Phils.
After passing the standard Pre-Employment Medical Examination, the petitioners hired
Jarin as Chief Cook for a period of eight months. Jarin was deployed on July 9, 2006 onboard M.T.
Erik Spirit, a crude oil tanker. During the third week of February 2007, M.T. Erik Spirit was in
Canada when Jarin complained of swelling in the joints of his two elbows. Jarin was taken to a
Canadian hospital where he was diagnosed with rheumatoid arthritis. Steroid-based medications
were administered to him and they caused him the side effects of puffiness of the face and edema.
Despite of this, however, Jarin was able to complete his employment contract.
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Upon arrival in the Philippines, Jarin immediately reported to the petitioners. Company-
designated physician, Dr. Christine O. Bocek whose Post-Medical Report showed that Jarin has
"moon facies and bipedal edema secondary to steroid intake, rheumatoid arthritis, resolving and
upper respiratory tract infection." Jarin was referred to another company-designated physician at
the Metropolitan Medical Center for further assessment under the care of Dr. Wilanie Romero-
Dacanay, whose medical report stated that Jarin’s arthritis and cushingnoid features were not work-
related. Dr. Dacanay noted that chronic obstructive pulmonary disease is almost always the result
of cigarette smoking to which Jarin admitted to have been engaged in since he was in high school.
Jarin underwent laboratory tests and was advised to come back on September 17, 2007. The
following day, Dr. Mylene Cruz-Balbon issued a private and confidential evaluation stating that
rheumatoid arthritis is a chronic illness "which can become progressive that has the potential to
cause joint destruction and functional disability." Jarin was "no longer recommended for further
sea duties."
Upon Teekay Phils.’s direction, Jarin went to Pandiman where he was informed that his
illness is not work-related and that Teekay Phils. stopped paying for his medical treatments. Jarin
filed a complaint before the Arbitration Branch of the National Labor Relations Commission
claiming US$60,000.00 as permanent total disability benefit, US$2,889.60 as sickness allowance for
his incapacity to work for 120 days pursuant to the Philippine Overseas Employment Agency-
Standard Employment Contract for Filipino Seafarers (POEA-SEC), US$10,000.00 as moral damages
and exemplary damages and ten percent (10%) of the total monetary award as attorney’s fees. The
Labor Arbiter granted Jarin’s money claims. The NLRC ruled in favour of the petitioners. CA
reversed the NLRC.
Issue:
Is Jarin’s illness work-related?
Ruling:
Yes. Under the 2000 POEA-SEC, a work-related illness is "any sickness resulting to
disability or death as a result of an occupational disease listed under Section 32-A with the
conditions set therein satisfied."
The Court has held, however, that the enumeration in Section 32-A does not preclude other
illnesses/diseases not so listed from being compensable. The POEA-SEC cannot be presumed to
contain all the possible injuries that render a seafarer unfit for further sea duties. This is in view of
Section 20(B)(4) of the POEA-SEC which states that "(t)hose illnesses not listed in Section 32 of this
Contract are disputably presumed as work-related." Concomitant with such presumption is the
burden placed upon the claimant to present substantial evidence that his working conditions
caused or at least increased the risk of contracting the disease. "It is not sufficient to establish that
the 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."
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
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his employment and his illness, or that the risk of contracting the illness was increased by his
working conditions. Only a reasonable proof of work-connection, not direct causal relation is
required to establish compensability of a non-occupational disease.
In the case at bar, Jarin was able to prove that his rheumatoid arthritis was contracted out
of his daily duties as Chief Cook onboard M.T. Erik Spirit. The narration of facts in his position
paper detailed the nature of his work as Chief Cook and the daily working conditions on sea duty.
“Sa bawat kada-dalawang buwan kami ay nagkakaroon ng food supply or provision sa aming
kompanya.\ Sa araw na ito dumating sa puerto ang aming provision iyon ayaming hinahakot o
binubuhat at ipapasok sa loob ng freezer. Kahit na kami ay pawis na pawis ay hindi kami tumitigil
hangga’t hindi natataposang mga hakutin at pagkatapos ng aming maghapong trabaho sa galley sa
mga 7:00 ng gabi ay aming isasalansan sa kanya-kanyang lalagyanang bawat isa na aming natanggap
na provision sa mga dry store at sa malamig na freezer at lalo na yong mga manok, karne, baboy at
kung ano-ano pa.”
Further, a careful study of the medical opinions issued by the petitioners’ doctors strikes
this Court to declare that as early as February 2007, Jarin’s rheumatoid arthritis was already detected
by a doctor in Canada. This was fully verified by the medical opinions issued by the petitioners’
company-designated physicians in Manila which all indicated that Jarin has rheumatoid arthritis.
This is why an intensive medical treatment was administered to him under their care. To recall,
even the medical report dated August 16, 2007 advised Jarin to continue his medication and to come
back to them on September 17, 2007 considering that his body did not respond well to the injections
already given him. On August 17, 2007, Dr. Balbon issued an opinion declaring him
unrecommendable for further sea duties coupled with the drastic withdrawal of the medical
treatment given to him by the petitioners. It is unmistakable from such recommendation that
Jarin’s rheumatoid arthritis has rendered him permanently incapacitated to work as a seaman
COLEGIO DE SAN JUAN DE LETRAN-CALAMBA vs. ENGR. DEBORAH P. TARDEO

G.R. No. 190303, July 9, 2014, J. Perez
Misconduct is defined as improper and wrongful conduct. It is the transgression of some

established and definite rule of action, a forbidden act, a dereliction of duty, willful in character, and
implies wrongful intent and not mere error in judgment. To be a just cause for terminating an
employee, the employer must prove the following: 1) it is of a grave and aggravated character; (2) it
relates to the performance of the employee’s duties; and (3) show that the employee has become unfit
to continue working for the employer. As such, there must be substantial evidence to prove that the
employee acted in malicious and contemptuous manner with the intent to cause damage to the
employer. Otherwise, the penalty imposed, albeit a suspension, is illegal.
Facts:
Colegio De San Juan De Letran-Calamba (petitioner) is an educational institution created

and existing under Philippine laws. Engr. Deborah P. Tardeo (Tardeo), on the other hand, was
employed as a full-time faculty member of the petitioner since 1985. In August 2006, she was elected
as Union President of Letran-Calamba Faculty and Employees Association (LECFEA) and served in
such capacity until she was suspended from work in 2008. The said suspension arose when in a
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letter dated 25 March 2008, addressed to Vice-President for Academic Affairs Dr. Rhodora Odejar,
she manifested her intention to participate in the 30th National Physics Seminar Workshop
Convention in Siquijor State College. In connection therewith, she requested for fund assistance in
the amount of P17,000.00. Attached to her request was a two-page invitation allegedly downloaded
from Philippine Physics Society’s (PPS) website which detailed the supposed expenses in the
upcoming convention. Eventually, such request was approved. However, during pre-audit, the
Vice-President for Finance and concurrently Letran’s Controller Rodolfo Ondevilla (Ondevilla)
noted that the supporting document appended to her request was altered. While the documents
appeared to have been taken from the PPS website, significant portions thereof were found missing.
It was later on found out that she requested for the amount of P600.00 for the workshop kit when
the same was already covered by the registration fee as it appears in the PPS website. Consequently,
Ondevilla disapproved her request for fund assistance on the ground that her fund request was
significantly higher compared to the amount requested by another faculty member who also
wanted to participate in the same convention.
Convinced that the misrepresentation committed by Tardeo constitutes a grave offense, the
Committee of Discipline was convened to investigate the matter. Subsequently, by way of a letter,
she was informed that she is under investigation for dishonesty and serious misconduct and was
given the opportunity to defend herself. After investigation, she was found guilty of dishonesty and
serious misconduct and meted out the penalty of suspension for one semester starting 19 August
2008 up to 20 December 2008
Feeling aggrieved, Tardeo assailed the said decision to the Office of the Voluntary Arbitrator
(OVA) arguing that she was denied of her right to due process when she was not allowed to confront
Ondevilla in person during the hearing. In her Complaint for Illegal Suspension, she argued that
she was unlawfully deprived of her salary and her economic and social benefits under the Collective
Bargaining Agreement (CBA) when petitioner hastily suspended her from employment. She finally
claimed that petitioner was guilty of unfair labor practice when, after her suspension from her job,
she was prevented from entering the school premises to perform her task as President of LECFEA.
Eventually, the OVA declared her suspension from employment illegal. On appeal to the
Court of Appeals, the said decision was affirmed.
Issue:
Whether or not Tardeo committed dishonesty and serious misconduct in knowingly

submitting a materially altered document to support her funding request.
Ruling:
The petition is devoid of merit.
Misconduct is defined as improper and wrongful conduct. It is the transgression of some

and implies wrongful intent and not mere error in judgment. Under Article 282 of the Labor Code,
the misconduct, to be just cause for termination, must be serious. Clearly, ordinary misconduct
would not justify the termination of the services of an employee. It is settled that in order for
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misconduct to be serious, it must be of such grave and aggravated character and not merely trivial
or unimportant. As amplified by jurisprudence, the misconduct must (1) be serious; (2) relate to the
performance of the employee’s duties; and (3) show that the employee has become unfit to continue
working for the employer.
Although Tardeo was not terminated from employment but was merely suspended from
work for one semester or equivalent to 101 days school days, her infraction should still be measured
against the foregoing standards considering that the charge leveled against her is serious
misconduct.
As correctly ruled by the OVA and pointed out by the appellate court, there is no substantial
evidence to prove that in not including a portion of the invitation to her fund request, Tardeo acted
in malicious and contemptuous manner with the intent to cause damage to the petitioner. In other
words, there is no basis for the allegation that her act constituted serious misconduct that warrants
the imposition of penalty of suspension. Indeed, considering the fact that before the act complained
of, she has been rendering service untarnished for 23 years, it is not easy to conclude that for
P600.00, she would willfully and for wrongful intentions omit portions of the documents taken
from the PPS website. In other words, as found by the Voluntary Arbitrator and the Court of
Appeals, there is no substantial proof of petitioner's allegation of malicious conduct against Tardeo.
The Court recognizes the right of the employers to discipline its employees for serious
violations of company rules after affording the latter due process and if the evidence warrants. Such
right, however, should be exercised in consonance with sound discretion putting into mind the
basic elements of justice and fair play.
FLP ENTERPRISES, INC. - FRANCESCO SHOES /EMILIO FRANCISCO FAJARO vs.

MA JOERALYN DELA CRUS AND VILMA MALUNES
G.R. No. 198388, July 28, 2014, J. Peralta
In this case, as the CA correctly ruled, in order to sustain herein respondents’ dismissal, FLPE
must show, by substantial evidence, that the following are extant: 1) the existence of the subject
company policy;2) the dismissed employee must have been properly informed of said policy; 3) actions
or omissions on the part of the dismissed employee manifesting deliberate refusal or wilful disregard
of said company policy; and 4) such actions or omissions have occurred repeatedly. However, FLPE
failed to establish that such a company policy actually exists, and if it does truly exist, that it was, in
fact, posted and/or disseminated accordingly. Neither is there anything in the records which reveals
that the dismissed respondents were informed of said policy. The company vehemently insists that it
posted, announced, and implemented the subject Safekeeping Policy in all its retail stores, especially
the one in Alabang Town Center. It, however, failed to substantiate said claim. It could have easily
produced a copy of said memorandum bearing the signatures of Dela Cruz and Malunes to show that,
indeed, they have been notified of the existence of said company rule and that they have received, read,
and understood the same. FLPE could likewise have simply called some of its employees to testify on
the rule’s existence, dissemination, and strict implementation. But aside from its self-serving and
uncorroborated declaration, and a copy of the supposed policy as contained in the October 23, 2003
Memorandum, FLPE adduced nothing more.
Facts:
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Petitioner FLPE hired respondent Dela Cruz in 1991 and respondent Malunes in 1998 as sales
ladies and assigned them both at its Alabang Town Center store in Muntinlupa City. On March
10,2008, at around 10:00 a.m., it was discovered that the store’s sales proceeds for March 7 to March
9, 2008, amounting to P26, 372.75, were missing. The investigating authorities found that it resulted
from an “inside job” since the cash register remained closed and there was no indication of forced
entry into the store.
FLPE thus required respondents Dela Cruz and Malunes to explain in writing why they
should not be terminated. It contended that respondents clearly violated its company policy
prohibiting sales proceeds from being stored in the cash register.
Accordingly, Dela Cruz and Malunes submitted their respective written explanations. They
both denied the existence of such company policy and having knowledge thereof. FLPE thereafter
removed respondents from service, which took effect on May 26, 2008.
Aggrieved, respondents filed a complaint for illegal dismissal with money claims against the
company. The LA dismissed respondents’ claim and held that FLPE was able to sufficiently prove
that respondents were guilty of habitually violating the company standard procedure on
safekeeping of cash collection. NLRC affirmed. CA set aside the NLRC ruling and pronounced
respondents as having been illegally dismissed by FLPE. Hence, this petition.
FLPE contends that because of the several previous incidents of theft in its retail outlets, it
formlated a policy, requiring its sales staff to keep the sales proceeds in the stockroom instead of
the cash register. It maintains that said policy was properly announced, posted, and implemented
in all its retail outlets, particularly in Alabang Town Center. Despite that, respondents still refused
to comply.
Issue:
Whether or not the respondents were legally dismissed,
Ruling:
No. The respondents were not legally dismissed.
The Court finds the instant petition to be without merit.
After a thorough review of the case, the Court finds no cogentreason to deviate from the
CA’s determination of grave abuse of discretion on the NLRC and its consequent substitution of its
own ruling over that of the latter.
The findings of fact of an administrative agency, which has acquired expertise in the
particular field of its endeavor, are accorded great weight on appeal. This rule, however, is not
absolute and admits of certain well-recognized exceptions, such as when, as in this case, the labor
tribunals’ findings of fact are not supported by substantial evidence. The CA may then make its own
independent evaluation of the facts, even if it may be contrary to that of the LA and the NLRC. Also,
where the contesting party’s claim appears to be clearly meritorious, or where the broader interest
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of justice and public policy so requires, the court may, in a certiorari proceeding, correct the error
committed. The CA, in view of its expanded jurisdiction over labor cases, may look into the records
of the case and re-examine the questioned findings if it considers the same to be necessary to arrive
at a just and equitable decision.
It is a fundamental rule that an employee can be discharged from employment only for a
valid cause. Here, both the LA and the NLRC found that respondents have been validly terminated
for gross and habitual neglect of duties, constituting just cause for termination under Article 282 of
the Labor Code. As a valid ground for dismissal under said provision, neglect of duty must be both
gross and habitual. Gross negligence entails want of care in the performance of one’s duties, while
habitual neglect imparts repeated failure to perform such duties for a period of time, depending on
the circumstances.
Substantial evidence is also necessary for an employer to effectuate any dismissal.

Uncorroborated assertions and accusations by the employer would not suffice, otherwise, the
constitutional guaranty of security of tenure would be put in jeopardy.
In this case, as the CA correctly ruled, in order to sustain herein respondents’ dismissal,
FLPE must show, by substantial evidence, that the following are extant:1) the existence of the
subject company policy;2) the dismissed employee must have been properly informed of
saidpolicy;3) actions or omissions on the part of the dismissed employee manifesting deliberate
refusal or wilful disregard of said company policy;and 4) such actions or omissions have occurred
repeatedly.
However, FLPE failed to establish that such a company policy actually exists, and if it does
truly exist, that it was, in fact, posted and/or disseminated accordingly. Neither is there anything
in the records which reveals that the dismissed respondents were informed of said policy. The
company vehemently insists that it posted, announced, and implemented the subject Safekeeping
Policy in all its retail stores, especially the one in Alabang Town Center. It, however, failed to
substantiate said claim. It could have easily produced a copy of said memorandum bearing the
signatures of DelaCruz and Malunes to show that, indeed, they have been notified of the existence
of said company rule and that they have received, read, and understood the same. FLPE could
likewise have simply called some of its employees to testify on the rule’s existence, dissemination,
and strict implementation. But aside from its self-serving and uncorroborated declaration, and a
copy of the supposed policy as contained in the October 23, 2003 Memorandum, FLPE adduced
nothing more.
In termination cases, the burden of proof rests on the employer to show that the dismissal
is for a just cause. The one who alleges a fact has the burden of proving it; thus, FLPE should prove
its allegation that it terminated respondents for a valid and just cause. It must be stressed that the
evidence to prove this fact must be clear, positive, and convincing. When there is no showing of a
clear, valid, and legal cause for the termination of employment, the law considers the matter a case
of illegal dismissal. Unfortunately, FLPE miserably failed to discharge this burden. To rule otherwise
and simply allow the presumption as to the existence and dissemination of the supposed company
policy would lead to a proliferation of fabricated notices, and entice further abuse by unscrupulous
persons. Workers could then be arbitrarily terminated without much of an effort, running afoul of
the State’s clear duty to show compassion and afford the utmost protection to laborers.
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WESLEYAN UNIVERSITY PHILIPPINES vs. NOWELLA REYES
G.R. No. 208321, July 30, 2014, J. Velasco, Jr.
There is a difference between the criteria for determining the validity of invoking loss of trust
and confidence as a ground for terminating a managerial employee on the one hand and a rank-and-
file employee on the other. However the question of whether she was a managerial or rank-and file
employee does not matter if not only is there basis for believing that she breached the trust of her
employer, her involvement in the irregularities attending to petitioner’s finances has also been proved.
Facts:
Respondent Nowella Reyes was appointed as petitioner WUP's University Treasurer on

probationary basis. A little over a year after, she was appointed as full time University Treasurer.
Several years after, a new WUP Board of Trustees was constituted. Among its first acts was
to engage the services of Nepomuceno Suner & Associates Accounting Firm (External Auditor) to
investigate circulating rumors on alleged anomalies in the contracts entered into by petitioner and
in its finances.
Discovered following an audit were irregularities in the handling of WUP’s finances, mainly,
the encashment by its Treasury Department of checks issued to WUP personnel, a practice
purportedly in violation of the impress system of cash management, and the encashment of various
crossed checks payable to the University Treasurer by Chinabank despite management’s intention
to merely have the funds covered thereby transferred from one of petitioner’s bank accounts to
another.
Upon receipt of her notice of termination, respondent post-haste filed a complaint for illegal
dismissal with the Arbitration Branch of the National Labor Relations Commission. WUP, for its
part, predicated its defense on the contention that respondent was a highly confidential employee
who handled significant amounts of money as University Treasurer and that the irregularities
attributed to her in the performance of her duties justify her dismissal on the basis of loss of trust
and confidence. Labor Arbiter rendered a Decision finding complainant herein respondent illegally
dismissed and that she be reinstated her former or equivalent position without loss of seniority
right.
The NLRC ruled in favour of WUP. In net effect, the NLRC found WUP’s contention of loss
of trust and confidence in respondent with sufficient basis. However, the Court of Appeals reversed
the NLRC decision and reinstated the decision of the LA.
Issue:
Was Reyes illegally dismissed by WUP on the ground of loss of trust and confidence?
Ruling:
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No, she was not illegally dismissed. The CA erred in reinstating the Labor Arbiter’s Decision
and in finding that respondent was illegally dismissed.
Article 282 (c) of the Labor Code allows an employer to terminate the services of an
employee for loss of trust and confidence. Certain guidelines must be observed for the employer to
terminate an employee for loss of trust and confidence:
Article 282. Termination by employer. An employer may terminate an employment for any
xxxx
c. Fraud or willful breach by the employee of the trust reposed in him by his employer or
duly authorized representative;
The first requisite is that the employee concerned must be one holding a position of trust
and confidence, thus, one who is either: (1) a managerial employee; or (2) a fiduciary rank-and-file
employee, who, in the normal exercise of his or her functions, regularly handles significant amounts
of money or property of the employer. The second requisite is that the loss of confidence must be
based on a willful breach of trust and founded on clearly established facts.
There is a difference between the criteria for determining the validity of invoking loss of
trust and confidence as a ground for terminating a managerial employee on the one hand and a
rank-and-file employee on the other. With respect to rank-and-file personnel, loss of trust and
confidence, as ground for valid dismissal, requires proof of involvement in the alleged events in
question, and that mere uncorroborated assertions and accusations by the employer would not
suffice. With respect to a managerial employee, the mere existence of a basis for believing that such
employee has breached the trust of his employer would suffice for his dismissal.
There is no doubt that Reyes held a position of trust; thus, greater fidelity is expected of her.
She was not an ordinary rank-and-file employee but an employee occupying a very sensitive
position. As University Treasurer, she handled and supervised all monetary transactions and was
the highest custodian of funds belonging to WUP. To be sure, in the normal exercise of her
functions, she regularly handled significant amounts of money of her employer and managed a
critical department.
The presence of the first requisite is certain. So is as regards the second requisite. Indeed,
the Court finds that WUP adequately proved Reyes’s dismissal was for a just cause, based on a
willful breach of trust and founded on clearly established facts as required by jurisprudence. At the
end of the day, the question of whether she was a managerial or rank-and file employee does not
matter in this case because not only is there basis for believing that she breached the trust of her
employer, her involvement in the irregularities attending to petitioner’s finances has also been
proved.
First, on the Reyes’s encashment of checks, jurisprudence has pronounced that the crossing
of a check means that the check may not be encashed but only deposited in the bank. As Treasurer,
respondent knew or is at least expected to be aware of and abide by this basic banking practice and
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commercial custom. Here, Reyes, as aptly detailed in the auditor’s report, disregarded
management’s intentions and ignored the measures in place to secure the handling of WUP’s funds.
By encashing the crossed checks, Reyes put the funds covered thereby under the risk of being lost,
stolen, co-mingled with other funds or spent for other purposes. Furthermore, the accommodation
and encashment by the Treasury Department of checks issued to WUP personnel were highly
irregular. First, WUP, not being a bank, had no business encashing the checks of its personnel.
More importantly, in encashing the said checks, the Treasury Department made disbursements
contrary to the wishes of management because, in issuing said checks, management has made clear
its intention that monies therefore would be sourced from WUP’s deposit with Chinabank, under
a specific account, and not from the cash available in the Treasury Department.
Second, on the issue of unliquidated cash advances, even if there is truth in the contention
of Reyes that she was no longer the one in charge of the liquidation proceedings, the same would
not absolve her from gross negligence of duties. The fact that the said function was with her office
until August 2008, with unliquidated cash advances even bigger, still showed that she reneged in
her duties which she had overlooked for so long. She now mistakenly points the responsibility to
the Office of the University Auditor. These information are enough to be considered as Reyes’s acts
constitutive of breach of trust and confidence.
In all, the Court finds the Investigation Report of the HRDO a credible, extensive and
thorough account of respondent’s involvement in incidents which are sufficient grounds for WUP’s
loss of trust and confidence in her. Indeed, Reyes has committed breach of trust and confidence in
the conduct of her office.
An employer cannot be compelled to retain an employee who is guilty of acts inimical to

the interests of the employer. A company has the right to dismiss its employees if only as a measure
of self-protection. This is all the more true in the case of supervisors or personnel occupying
positions of responsibility. In this case, let it be remembered that respondent was not an ordinary
rank-and-file employee as she was no less the Treasurer who was in charge of the coffers of the
University. It would be oppressive to require WUP to retain in their management an officer who
has admitted to knowingly and intentionally committing acts which jeopardized its finances and
who was untrustworthy in the handling and custody of University funds.
DR. PHYLIS C. RIO vs. COLEGIO DE STA. ROSAMAKATI and/or SR. MARILYN B. GUSTILO
G.R. No. 189629, August 6, 2014, J. Perez
The failure of the school physician to perform his duties such as failure to conduct medical
examination on all students for two (2) to five (5) consecutive years, lack of medical records on all
students; and students having medical records prior to their enrollment constitute gross neglect,
hence his dismissal is legal.
Facts:
Dr. Phylis Rio was hired by respondent Colegio De Sta. Rosa-Makati as a part-time school
physician. After 10 years of service, Dr. Rio received a Contract of Appointment form Sr. Marilyn B.
Gustilo, Directress/Principal, requiring Dr. Rio to report from Monday to Friday, from 8:00 a.m. to
3:00 p.m. Due to the substantial change in the work schedule and decrease in her salary, Dr. Rio
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declined the Contract of Appointment.
In a letter, Gustilo charged Dr. Rio of "grave misconduct, dishonesty and/or gross neglect of
duty detrimental not only to the school but, principally, to the health and well-being of the pupils
based on the Manual of Regulations for Private Schools and the Labor Code. In the same letter, Dr.
Rio and Alonzo were preventively suspended for a period of thirty (30) days.
Dr. Rio was made to answer for the following: (1) nine students have medical records for
school years during which they were not in the school yet, thus could not have been the subject of
medical examination/evaluation; (2) seventy-nine students of several classes/sections during certain
school years were not given any medical/health evaluation/examination; and failure to conduct
medical/health examination on all students of several classes of different grade levels for the school
year 2001-2002.
Dr. Rio denied the charges. Subsequently, Dr. Rio filed a complaint for constructive dismissal
and illegal suspension against Colegio de Sta. RosaMakati and Gustilo before the Labor Arbiter.
Issue:
Was the failure of Dr. Rio to conduct medical examinations on the students and negligence
in keeping of school student records are grounds for dismissal for gross inefficiency and
incompetence?
Ruling:
Yes.
Gross inefficiency is closely related to gross neglect because both involve specific acts of
omission resulting in damage to another. Gross neglect of duty or gross negligence refers to
negligence characterized by the want of even slight care, acting or omitting to act in a situation where
there is a duty to act, not inadvertently but willfully and intentionally, with a conscious indifference
to consequences insofar as other persons may be affected.
As borne by the records, Dr. Rio’s actions fall within the purview of the above-definitions. Dr.
Rio failed to diligently perform her duties. It was unrefuted that: (1) there were dates when a medical
examination was supposed to have been conducted and yet the dates fell on weekends; (2) failure to
conduct medical examination on all students for two (2) to five (5) consecutive years; (3) lack of
medical records on all students; and (4) students having medical records prior to their enrollment.
Indeed, Dr. Rio was grossly inefficient and negligent in performing her duties.
COLEGIO DE SAN JUAN DE LETRAN vs. ISIDRA DELA ROSA-MERIS

G.R. No. 178837, September 1, 2014, J. Peralta
Contending that Dela Rosa’s dismissal was valid and legal, Letran questions the decision of
the CA holding that petitioner has been illegally dismissed. Ruling in favor of Letran, the SC held that
in the termination of employment the employer must (a) give the employee a written notice specifying
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the ground or grounds of termination, giving to said employee reasonable opportunity within which
to explain his side; (b) conduct a hearing or conference during which the employee concerned, with
the assistance of counsel if the employee so desires, is given the opportunity to respond to the charge,
present his evidence or rebut the evidence presented against him; and (c) give the employee a written
notice of termination indicating that upon due consideration of all circumstances, grounds have been
established to justify his termination. Letran had complied with all of the above-stated requirements.
Indubitably, Dela Rosa was dismissed from employment for a just cause and in accordance with due
process
Facts:
Respondent Delo Rosa was employed by the Petitioner Colegio De San Juan De Letran as a
teacher in 1971. However, in 2003, several parents of the Preparatory (Prep) pupils who were under
the class of Dela Rosa went to the Principal’s Office to lodge a complaint against her alleging the
she tampered the grades of some of her students. Thereafter, petitioner Letran conducted an
investigation relative to the parents’ concerns by gathering Dela Rosa’s class records as well as her
students’ test papers and report cards. The investigation revealed that there were certain
discrepancies in the entries of grades in Dela Rosa’s Dirty Record Book (Dirty Records) as against
her Clean Record Book (Clean Records). Furthermore, it was likewise discovered that there were
erasures on the grades of some of the pupils which appeared in the Clean Records. As a result
thereof, petitioner Letran sent Dela Rosa a letter which detailed the parents’ complaints and the
aforementioned discrepancies. Dela Rosa was given seventy-two (72) hours from receipt thereof
within which to explain why she should not be charged with tampering with school records in
violation of Letran’s Elementary Faculty Manual .Due to Dela Rosa’s refusal to receive the letter,
petitioner Letran was prompted to send the same by LBC express.
Thereafter, upon Dela Rosa’s receipt of the aforesaid letter, she approached the Principal
and asked that the complaints of the parents be reduced to writing. Dela Rosa, however, never
received such written complaint.
Due to Dela Rosa’s failure to give an explanation, despite receipt of the letter, Fr. Edwin Lao,
O.P. arranged a conference with her during which the former advised Dela Rosa to give a written
explanation of why she tampered her class records; otherwise, she would be terminated without
further investigation as her refusal will be taken as a waiver of her right to be heard. Despite the
admonition of Fr. Lao, Dela Rosa still refused to give her side in writing. Hence, Fr. Lao served her
with a copy of the termination letter, but still, Dela Rosa refused to receive it. Accordingly, the
matter was forwarded to the Head of the Human Resource Division who attempted to serve the
letter of termination to Dela Rosa. However, Dela Rosa relentlessly refused to receive and affix her
signature thereon. Instead, she asked the head of the HR not to require her to receive the
termination letter as she may consider filing a resignation letter. She promised the head of the HR
that she will return the following day to inform her of her decision. However, she did not return
and stopped reporting to the school then.
Alleging that she was dismissed without cause and in violation of her right to due process,
Dela Rosa filed a complaint against petitioner Letran with the Labor Arbiter. As regards the
discrepancies, Dela Rosa alleged that that the students made significant improvements from the
time she finished with her Dirty Records up to the time she filled up the Clean Records which,
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according to her, was still within the first grading period. Accordingly, she made the alterations in
the Clean Records to effect the same. Dela Rosa added that the said alterations are inconsequential,
because the Dirty Record is merely a rough draft, and as such, the grades entered therein were not
yet final.
The LA found the dismissal of Dela Rosa valid and legal. On appeal, the NLRC affirmed in
toto the decision of the LA. The Court of Appeals, however, reversed the decision of the NLRC and
held Dela Rosa to have been illegally dismissed. Hence, this petition.
Issues:
1. Was Dela Rosajustified to make the erasures and alterations in the grades?
2. Did Letran comply with the procedural aspect of lawful dismissal?
Ruling:
1. No, Dela Rosa was not justified to make the erasures and alterations in the grades.
The Court finds the explanations of Dela Rosa incredible and conflicting on two points.
First, Dela Rosa finished recording the grades in the Clean Records and submitted the same
for review to the subject coordinators on August 27 and 28, 2003, after the last day of examinations
for the first grading period. At the time the subject coordinators checked the Dirty and Clean
Records of Dela Rosa, they did not notice anything wrong in them as the grades in the Dirty Records
tally or jibe with the ones entered in the Clean Records, and there were no erasures found therein.
Accordingly, the same were approved as shown by the notations of the subject coordinators in the
Clean Records for Physical Education, Music & Arts, and Writing. Given the foregoing, it appears
that the assailed erasures and alterations were effected after the subject coordinators have already
approved the same on August 27 and 28, 2003, respectively.
Curiously, why would Dela Rosa effect the alterations after the Clean Records were already
reviewed and approved by the subject coordinators? If there were in fact some improvements
exhibited by the students in any subject after the grades in the Dirty and Clean Records were already
recorded and approved, these should no longer be reflected in the first grading period as such
improvements took place after the last day of examinations for the first grading period. Rather, it
should have been reflected on the records for the second grading period.
In the alternative, if said improvements were exhibited within the first grading period but
were mistakenly not reflected by Dela Rosa in her records, she could have easily informed the
subject coordinators about this for proper documentation, in order to avoid any questions relative
thereto. However, Dela Rosa never acknowledged these alterations and erasures until she was
questioned thereon. Even then, she refused to explain the discrepancies to the Principal at first
instance.
Second, contrary to Dela Rosa’s view, the erasures in the Dirty Records are not acceptable,
since records reveal that the Dirty Records is, indeed, an official document from which the entries
of grades in the Clean Records are taken.
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Paragraph 1.2.2 of Letran’s Faculty Manual provides that faculty members should keep an
updated record of their student’s quizzes, examination results and other records of the students’
performance in a particular subject, which the Court can only assume is served by the Dirty Records.
Accordingly, the Clean Records is a mere transcription of the entries in the Dirty Records, as
correctly observed by the LA. These records (without distinction, whether classified as dirty or
clean) are then submitted to the subject coordinators for verification at the end of each quarter or
at any particular time they ask for them. Moreover, the class records are submitted to the Office of
the Principal for filing purposes at the end of every school year. The formality of the Dirty Records
cannot, therefore, be discounted.
This is why erasures in the Class Records "should" bear the initials of the teacher/s
concerned, to wit:
Class Records
Faculty members should keep an updated record of their students’ quizzes, examination
results and other records of the students’ performance in a particular subject. These are to be
submitted to the Subject Coordinator for checking at the end of each quarter or at any particular
time they ask for them. The Class Records are then submitted to the Office of the Principal for filing
purposes at the end of every school year. Erasures in the Class Records should bear the initials of
the teacher/s concerned.
Such procedure obviates any room for confusion or issue on the objectivity of the grading
system. Here, no initials were placed on the erasures in either the Dirty or Clean Records. Clearly,
this is a patent violation of the aforequoted procedure.
The timing of such alterations and erasures is crucial in determining the soundness of Dela
Rosa’s reasons for making them, and whether bad faith was obtaining in the instant case.
Unfortunately for Dela Rosa, the Court finds her acts and omissions highly irregular and suspicious.
2. Yes, Letran had complied with the procedural aspect of lawful dismissal.
In the termination of employment the employer must (a) give the employee a written notice
specifying the ground or grounds of termination, giving to said employee reasonable opportunity
within which to explain his side; (b) conduct a hearing or conference during which the employee
concerned, with the assistance of counsel if the employee so desires, is given the opportunity to
respond to the charge, present his evidence or rebut the evidence presented against him; and (c)
give the employee a written notice of termination indicating that upon due consideration of all
circumstances, grounds have been established to justify his termination.
Letran had complied with all of the above-stated requirements as shown by the following:
First. After receiving information from parents who lodged complaints against Dela Rosa, Letran
immediately conducted an investigation which included a verification of Dela Rosa’s class records,
which uncovered the aforementioned discrepancies.
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Second. Finding discrepancies and irregularities from the aforesaid examination, Letran
directed Dela Rosa to explain why no disciplinary action should be taken against her for tampering
her class records, through a letter dated September 12, 2003, which was personally served on Dela
Rosa but which the latter refused to receive twice on the same day.In the said letter, the charges
against Dela Rosa were stated, and Dela Rosa was given seventy-two (72) hours to air her side of
the story.
Thereafter, particularly on September 16, 2003, Letran called Dela Rosa to a conference
wherein the notice of charge was again served upon her. However, Dela Rosa refused to receive the
same because according to her, she will just be the subject of ridicule by the people. Because of her
persistent refusal to receive the letter, Letran was constrained to send it by registered mail under
Registry Receipt No. 985943, and another set was sent through LBC Express, which were all shown
to have been received by Dela Rosa on September 23, 2003.The foregoing notwithstanding, Dela
Rosa did not bother to submit an explanation, which would have instigated a conference for the
parties to thresh out all the issues accordingly.
Third. On October 2, 2003, Fr. Lao arranged a conference with Dela Rosa during which the
former explained to her why she should give her side on the charge contained in the letter dated
September 12, 2003. In fact, Dela Rosa was advised by Fr. Lao to give a written explanation of why
she tampered her class records, otherwise, she would be terminated without further investigation
as her refusal will be taken as a waiver of her right to be heard. Despite the admonition of Fr. Lao,
Dela Rosa still refused to give her side in writing. Hence, Fr. Lao served her with a copy of the
termination letter dated September 29, 2003, but which she refused to receive once again.
Accordingly, the matter was forwarded to the Head of the Human Resource Division, Ms. Nimfa
Maduli, who attempted to serve the letter of termination to Dela Rosa on the samedate. However,
Dela Rosa refused to receive and affix her signature thereon as she may consider filing a resignation
letter instead. Despite Dela Rosa’s promise to return the next day to inform Ms.Maduli of her
decision, she did not return and stopped reporting to the school then.
Indubitably, Dela Rosa was dismissed from employment for a just cause and in accordance
with due process under existing labor laws, rules and regulations. Accordingly, she is not entitled
to reinstatement or separation pay, backwages or other claims for damages. No court, not even this
Court, can make an award that is not based on law.
NORTHWEST AIRLINES, INC. vs. MA. CONCEPCION M. DEL ROSARIO

G.R. No. 157633, September 10, 2014, J. Bersamin
Misconduct or improper behavior, to be a just cause for termination of employment, must: (a)
be serious; (b) relate to the performance of the employee’s duties; and (c) show that the employee has
become unfit to continue working for the employer.
In this case, even assuming arguendo that the incident was the kind of fight between Del
Rosario and Gamboa is prohibited by Northwest's Rules of Conduct, the same could not be considered
as of such seriousness as to warrant Del Rosario's dismissal from the service. The gravity of the fight,
which was not more than a verbal argument between them, was not enough to tarnish or diminish
Northwest's public image.
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Facts:
Petitioner Northwest Airlines, Inc. (Northwest) employed Ma. Concepcion M. Del Rosario
(Del Rosario) as one of its Manila-based flight attendants. Del Rosario was assigned at the Business
Class Section of Northwest Flight NW 26 bound for Japan. During the boarding preparations,
Kathleen Gamboa (Gamboa), another flight attendant assigned at the First Class Section of Flight
NW 26, needed to borrow a wine bottle opener from her fellow attendants because her wine bottle
opener was dull. Vivien Francisco, Gamboa’s runner, went to the Business Class Section to borrow
a wine bottle opener from Del Rosario, but the latter remarked that any flight attendant who could
not bring a wine bottle opener had no business working in the First Class Section. Upon hearing
this, Aliza Ann Escaño (Escaño), another flight attendant, offered her wine bottle opener to
Francisco. Apparently, Gamboa overheard Del Rosario’s remarks, and later on verbally confronted
her. Their confrontation escalated into a heated argument. Escaño intervened but the two ignored
her, prompting her to rush outside the aircraft to get Maria Rosario D. Morales, the Assistant Base
Manager, to pacify them.
The parties differed on what happened thereafter. Del Rosario claimed that only an
animated discussion had transpired between her and Gamboa, but Morales insisted that it was more
than an animated discussion, recalling that Del Rosario had even challenged Gamboa to a brawl
(sabunutan). Morales asserted that she had tried topacify Del Rosario and Gamboa, but the two did
not stop; that because the two were still arguing although the Business Class passengers were
already boarding, she ordered them out of the plane and transfer to another nearby Northwest
aircraft; that she inquired from them about what had happened, and even asked if they were willing
to fly on the condition that they would have to stay away from each other during the entire flight;
that because Del Rosario was not willing to commit herself to do so, she decided not to allow both
of them on Flight NW 26, and furnished them a Notice of Removal from Service (effectively
informing Del Rosario of her dismissal from the service pending an investigation of the fighting
incident between her and Gamboa).
Morales sent a letter to Del Rosario telling her that Northwest would conduct an
investigation of the incident involving her and Gamboa. Later, Del Rosario was informed of her
termination from the service. Northwest stated that based on the results of the investigation, Del
Rosario and Gamboa had engaged in a fight on board the aircraft, even if there had been no actual
physical contact between them; and that because fighting was strictly prohibited by Northwest to
the point that fighting could entail dismissal from the service even if committed for the first time,
Northwest considered her dismissal from the service justified and in accordance with the Rules of
Conduct for Employees.
Del Rosario subsequently filed her complaint for illegal dismissal against Northwest.
The Labor Arbiter ruled in favor of Northwest, holding that the dismissal of Del Rosario had
been justified and valid upon taking into account that Northwest had been engaged in the airline
business in which a good public image had been demanded, and in which flight attendants had
been expected to maintain an image of sweetness and amiability and that fighting among its
employees even in the form of heated arguments or discussions were very contradictory to that
expected image; and that it could validly dismiss its employees like the respondent because it had
been entitled to protect its business interests by putting up an impeccable image to the public.
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Upon appeal, the NLRC reversed the decision of the LA, and ruled in favor of Del Rosario,
declaring that the incident between her and Gamboa could not be considered as synonymous with
fighting as the activity prohibited by Northwest’s Rules of Conduct; that based on Black’s Law
Dictionary, “fight” referred to a hostile encounter, affray, or altercation; a physical or verbal struggle
for victory, pugilistic combat and that the incident between Del Rosario and Gamboa could not be
held similar to the fight that Northwest penalized under its Rules of Conduct. The NLRC ordered
the reinstatement of Del Rosario to her former position without loss of seniority rights and with
payment of backwages, per diems, other lost income and benefits from June 19, 1998; as well as the
payment of attorney’s fees equivalent to 10% of the monetary award.
The CA sustained the NLRC, observing that Northwest did not discharge its burden to prove
not merely reversible error but grave abuse of discretion amounting to lack or excess of jurisdiction
on the part of the NLRC; and that, indeed, the NLRC had correctly held that Del Rosario’s conduct
did not constitute serious misconduct, because the NLRC, in determining the usual, ordinary and
commonly understood meaning of the word fighting, had resorted to authoritative lexicons that
supported its conclusion that the exchange of words between Del Rosario and Gamboa did not
come within the definition of the word “fighting.”
It then ordered to pay Del Rosario separation pay equivalent to one month's salary for every
year of service plus full backwages without deduction or qualification, counted from the date of
dismissal until finality of this decision including other benefits to which she is entitled under the
law. Northwest was likewise ordered to pay respondent Del Rosario attorney’s fees consisting of
five (5%) per cent of the adjudged relief.
Issues:
Was Del Rosario’s dismissal from service valid?
Ruling:
No. The Court AFFIRMS the decision of the CA.
As provided in Article 282 of the Labor Code, an employer may terminate an employee for
a just cause, to wit:
Art. 282. TERMINATION BY EMPLOYER

An employer may terminate an employee for any of the following causes:
(a) Serious misconduct or willful disobedience by the employee of the lawful
orders of his employer or representative in connection with his work;
(c) Fraud or willful breach by the employee of the trust reposed in him by
his employer or duly authorized representative;
(d) Commission of a crime or offense by the employee against the person of
his employer or any immediate member of his family or his duly authorized
representative; and
(e) Other causes analogous to the foregoing.
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Northwest argues that Del Rosario was dismissed on the grounds of serious misconduct and
willful disobedience. Misconduct refers to the improper or wrong conduct that transgresses some
and implies wrongful intent and not mere error in judgment. But misconduct or improper behavior,
to be a just cause for termination of employment, must: (a) be serious; (b) relate to the performance
ofthe employee’s duties; and (c) show that the employee has become unfit to continue working for
the employer.
There is no doubt that the last two elements of misconduct were present in the case of Del
Rosario. The cause of her dismissal related to the performance of her duties as a flightattendant,
and she became unfit to continue working for Northwest. Remaining to be determined is, therefore,
whether the misconduct was serious as to merit Del Rosario’s dismissal. In that respect, the fight
between her and Gamboa should be so serious that it entailed the termination of her employment
even if it was her first offense. Northwest insists that what transpired on May 18, 1998 between her
and Gamboa was obviously a form of fight that it strictly prohibited, but Del Rosario disputes this
by contending that it was only an animated discussion between her and Gamboa. She argues that
as settled in American jurisprudence fight pertained to combat or battle, like the hostile encounter
or engagement between opposing forces, suggesting primarily the notion of a brawl or
unpremeditated encounter, or of a pugilistic combat; while argument was a connected discourse
based upon reason, or a course of reasoning tending and intended to establish a position and to
induce belief.
Based on the foregoing, the incident involving Del Rosario and Gamboa could not be justly
considered as akin to the fight contemplated by Northwest. In the eyes of the NLRC, Del Rosario
and Gamboa were arguing but not fighting. The understanding of fight as one that required physical
combat was absent during the incident of May 18, 1998. Moreover, the claim of Morales that Del
Rosario challenged Gamboa to a brawl (sabunutan) could not be given credence by virtue of its
being self-serving in favor of Northwest, and of its being an apparent afterthought on the part of
Morales during the investigation of the incident, without Del Rosario having the opportunity to
contest Morales' statement. In that context, the investigation then served only as Northwest's
means to establish that the grounds of a valid dismissal based on serious misconduct really existed.
Moreover, even assuming arguendo that the incident was the kind of fight prohibited by
Northwest's Rules of Conduct, the same could not be considered as of such seriousness as to
warrant Del Rosario's dismissal from the service. The gravity of the fight, which was not more than
a verbal argument between them, was not enough to tarnish or diminish Northwest's public image.
ROSALIE L. GARGOLES vs. REYLITA S. DEL ROSARIO, DOING BUSINESS UNDER THE
NAME AND
STYLE JAY ANNE'S ONE HOUR PHOTO SHOP
G.R. No. 158583, September 10, 2014, J. Bersamin
Gargoles was charged with act of dishonesty but denied such and contended that she was
illegally dismissed. An act of dishonesty by an employee who has been put in charge of the employer’s
money and property amounts to breach of the trust reposed by the employer, and normally leads to loss
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of confidence in her. Such dishonesty comes within the just and valid causes for the termination of her
employment under Article 282 of the Labor Code.
Facts:
Rosalie Gargoles started working as an “all-around employee” acting as “cashier, sales clerk,
xerox operator, janitress, photo printer, and messenger/delivery person” at Jay-Anne’s One Hour
Photo Shop, the proprietress of which was respondent Reylita S. Del Rosario. On March 28, 1998, the
Rosalie Gargoles received a letter terminating her employment for dishonesty. As a result, she lodged
a complaint for illegal dismissal, seeking her reinstatement and backwages. To answer the complaint
for illegal dismissal, Del Rosario laid out the reason for the termination of the Rosalie Gargoles that
the latter tampered with the daily printer's production reports/sales whichas consequence thereof,
the total number of prints made for the day was podded and erroneously reported thru double entries
of the same job envelope and one (1) twin check number for every fresh role [sic] of film for photo-
developing and printing or even recopying; it was on the same entry with two (2) twin check numbers
instead of just one (1) number of the same job envelope that complainant pocketed and appropriated
for her own benefit and gain the cash value or cash equivalent of the excessive or padded daily total
of number of prints made and erroneously reported to the respondent store damage and prejudice
amounting to P11,305.00 computed at 2,207 prints x P5.00 per print during the period December 1,
1997 to March 25, 1998
Issue:
Was Rosalie Gargoles illegally dismissed?
Ruling:
No, Rosalie Gargoles was not illegally dismissed.
One of just and valid causes for the dismissal of an employee, as enumerated in Article 282 of
the Labor Code, fraud or willful breach by the employee of the trust reposed in her by her employer
or duly authorized representativeThe dishonesty imputed to Gargoles included the making of double
entries in the production reports and thereby enriching herself by pocketing the extra cash generated
from the double entries. Contrary to her assertion that there was no substantial evidence to justify
her dismissal, the production reports containing the double entries were presented as evidence; and
her double entries were confirmed in the affidavit executed by RedelitoCaranay, Jr., her co-employee.
As such, the finding of the just cause for her dismissal did not emanate from mere speculation,
suspicion or assumption.
OFFICE OF THE COURT ADMINISTRATOR, vs. EDGAR S. CRUZ, CLERK III, REGIONAL
TRIAL COURT, BRANCH 52, GUAGUA, PAMPANGA,
A.M. No. P-14-3260 (Formerly A.M. No. 12-2-38- RTC ), September 16, 2014, Per Curiam
Cruz was administratively charged due to his habitual absences. He alleged he should not be
dismissed from service. The court ruled that an employee should submit in advance, whenever possible,
an application for vacation leave of absence for action by the proper chief of agency prior to the effective
date of the leave. In case of sick leave of absence, the application should be filed immediately upon the
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employee’s return. In the instant case, it is clear from respondent Cruz’s own admission that he failed
to file or acquire the necessary leave permits for his absences. Therefore constitutes as habitual
absenteeism under administrative code.
Facts:
Cruz was administratively charged due to habitual absence. Cruz explained that he was forced
to skip work during the dates reported because of circumstances beyond his control. He explained
that since his wife works overseas, he had to attend to the needs of their children first before reporting
for work. He added that he often got sick and, as proof, he submitted medical certificates showing
that he was diagnosed and treated for systemic viral infection on 3 November 2011, acute gastro-
enteritis on 8 November 2011, and an infected wound on 14 November 2011. Cruz prayed for
compassion from the Court and promised not to commit the same mistake again. He likewise
promised to inform his superiors whenever he will absent himself from work. The OCA found
sufficient evidence to hold Cruz and recommended that he be dismissed from the service.
Issue:
Whether or not Cruz should be dismissed due to his habitual absences.
Ruling:
Yes, he must be dismissed from service.
Cruz admitted skipping work without filing the corresponding leave applications during the
dates mentioned in the report of the Leave Division, OAS, OCA. In his comment, Cruz could only
present medical certificates to substantiate his explanation that he fell sick during the subject
dates. He, however, failed to submit any duly accomplished and approved leave applications from
his executive/presiding judge. The Omnibus Rules Implementing Book V of Executive Order No. 292
and Other Pertinent Civil Service Laws (Civil Service Rules) mandate that an employee must submit
an application for both sick and vacation leaves.
Under the Civil Service Rules, an employee should submit in advance, whenever possible,
an application for vacation leave of absence for action by the proper chief of agency prior to the
effective date of the leave. In case of sick leave of absence, the application should be filed immediately
upon the employee’s return. In the instant case, it is clear from respondent Cruz’s own admission
that he failed to file or acquire the necessary leave permits for his absences. Under Administrative
Circular No. 14-20024 (Re: Reiterating the Civil Service Commission’s Policy on Habitual
Absenteeism), “[a]n officer or employee in the civil service shall be considered habitually absent if he
incurs unauthorized absences exceeding the allowable 2.5 days monthly leave credit under the law
for at least three (3) months in a semester or at least three (3) consecutive months during the year[.]”
Although strictly speaking respondent Cruz may not yet be considered habitually absent on
the basis of his unauthorized absences in November and December 2011, he should still be penalized
because his omissions clearly caused inefficiency and hampered public service.
TEMIC AUTOMOTIVE (PHILIPPINES), INC. vs. RENATO M. CANTOS
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G.R. No. 200729, September 29, 2014, J. Brion
The principle in employee dismissals that it is the employer’s burden to prove that the
dismissal was for a just or authorized cause. Temic failed to discharge this burden of proof in Cantos’
case.
Facts:
On March 9, 2009, respondent Renato M. Cantos filed a complaint for illegal dismissal
against petitioner Temic Automotive Inc. Cantos started his employment with Temic on July 16,
1993 as Special Projects Officer of the company's Materials Department. Sometime in 1998, he was
appointed Purchasing & Import-Export Manager of the Logistics Department and, on December 1,
2007, he was named Wimpex Manager, the last position he held before he was allegedly dismissed
illegally.
The audit team of Temic allegedly discovered several irregularities, particularly with respect
to Temic’s purchasing transactions supposedly attended by “fraudulent activities.” Some purchase
orders, it was claimed, were ensured to go to some suppliers, thereby systematically avoiding a
competitive tender process. Temic believed the irregularities could only have happened with the
participation of personnel in the Purchasing and Manufacturing departments. It stressed that initial
findings indicated that Cantos, as former Purchasing Manager, was likely involved in said
transactions.
Temic issued a Show Cause and Preventive Suspension Notice to Cantos, requiring him to
explain in writing several infractions which he allegedly committed during his stint as Purchasing
Manager. He was charged principally with having violated Temic’s procedures on purchases,
particularly the Purchase Activities in System, Application, Products in Data Processing (FV 9-
F0081) and the Non-Production/Indirect Material Purchasing Procedures (FV 9-F0158). Allegedly,
Cantos failed to meet the required number of purchase quotations, in violation of paragraph 10.6.1
of FV 9-F0158under which purchases of all articles must conform to Continental Temic Electronics
Inc. (CTEPI) Procurement Policy and that of Temic as a general rule. Cantos allegedly allowed the
proliferation of deviations from the established procedures and resorted instead to the PDTA.
Under both the Temic and CTEPI purchasing procedures, the acquisition of machines without the
three quotations/bids is allowed through the PDTA. Cantos would claim that from 2005 to early
2008, he was tasked to also serve the Purchasing Department of CTEPI, a sister firm of Temic
located in Calamba, Laguna and that it was in relation with his work in CTEPI that his dismissal
was chiefly based.
Temic then conducted an administrative investigation. Cantos believed he was able to

establish his compliance with Temic’s procurement procedures during his term as Purchasing
Manager and was confident he would be found innocent of the charges against him. However,
Temic issued a notice of termination of employment to Cantos, with immediate effect, on grounds
of loss of trust and confidence. It stressed that while Cantos initially denied any wrongdoing, he
eventually admitted having bypassed some purchasing procedures and/or local controls, although
allegedly due to simple oversight on his part.
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Cantos filed a complaint for illegal dismissal. The Labor Arbiter dismissed the complaint for
lack of merit. On appeal to NLRC, the decision of LA was affirmed. Thus, he appealed to CA. The
CA granted the petition, it reversed the NLRC rulings and declared that Cantos had been illegally
dismissed. It found no valid cause for his dismissal and he was not accorded due process. While the
CA noted that Cantos occupied a position of trust and confidence as Purchasing Manager, it found
that Temic “utterly” failed to establish the requirements under the law and jurisprudence for his
dismissal on that ground. Hence this petition for review on certiorari. Petitioner contends that the
appellate court should have accorded respect to the labor tribunals’ rulings because they were
supported by overwhelming evidence consisting of affidavits of key officers and pertinent
documents as compared with Cantos’ bare assertions.
Issue:
Was Cantos illegally dismissed?
Ruling:
The Court denies the petition for patent lack of merit.
The POs Temic offered in evidence to prove the principal charge against Cantos pertained
to its sister company CTEPI. It is puzzling that Temic did not bother to explain why it proceeded
against Cantos based on purchase transactions entered into by CTEPI and not by itself; it did not
also explain the precise relationship between it and CTEPI with respect to the POs in question. The
reason for this was Temic’s undue haste to dismiss Cantos, such that it did not even check on the
documentary support for the charges it laid against him. Thus, and apparently without being aware
that it was referring to CTEPI’s purchasing procedures, it faulted Cantos for resorting to thePDTAs
without the signature and approval of the GM. Under Temic rules, the GM approves and signs the
PDTA; it is not a requirement under CTEPI rules. There is no basis therefore for making Cantos
accountable for the absence of the GM’s signature for CTEPI’s PDTAs. Also, Temic faulted Cantos
for belatedly presenting to the LA the purchasing procedures of Temic and CTEPI to prove his
point, which the labor official rejected for not having been raised during the company investigation.
Nowhere in the records is there evidence that directly pointed to Cantos as having
deliberately violated the company procedures for the procurement of services and materials by
allowing the proliferation of PDTAs. Other than the fact that Cantos was the Purchasing Manager
at the time and was a signatory to the PDTAs in question, The Court finds no other indication of
his involvement in the execution of the subject PDTAs. More importantly, his position as
Purchasing Manager and his signature appearing on the PDTAs do not prove that they were
executed in violation of Temic’s purchasing procedures and that he was responsible for their
execution. Indeed, there is no evidence on record that it was Cantos who caused the execution of
the subject PDTAs or that he did it for his personal gain or in collusion. In fact, as the records show,
Temic never refuted Cantos’ submission that under the purchasing procedures of both Temic and
CTEPI, a PDTA starts at an end-user department and that the PDTAs in question came from the
Manufacturing Department as the end-user.
P.J. LHUILLIER, INC. and MARIO RAMON LUDENA vs. FLORDELIZ VELAYO
G.R. No. 198620, November 12, 2014, J. Reyes
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The respondent contends that she was illegally dismissed by the petitioner. The Supreme
Court ruled that Article 282 of the Labor Code allows an employer to dismiss an employee for willful
breach of trust or loss of confidence. It has been held that a special and unique employment
relationship exists between a corporation and its cashier. Truly, more than most key positions, that
of a cashier calls for utmost trust and confidence, and it is the breach of this trust that results in an
employer’s loss of confidence in the employee.
Facts:
The respondent Flordeliz Velayo worked as an Accounting Clerk with the petitioner P.J.
Lhuillier, Inc. She was dismissed by Lhuillier because of serious misconduct and dishonesty. It was
alleged that she failed to report an amount of Php 540.00 overage. Because of this, Velayo filed a
complaint for illegal dismissal with the Labor Arbiter.
The Labor Arbiter ruled in favor of Velayo and declared that she was illegally dismissed. The
NLRC reversed and set aside the decision of the Labor Arbiter. On appeal, the Court of Appeals
affirmed the decision of the NLRC. Hence, the current petition. It is the contention of Lhuillier that
Velayo committed acts of dishonesty under the Code of Professional Conduct. Therefore, the
dismissal of Velayo is valid and should not be held as illegal.
Issue:
Whether or not Velayo was illegally dismissed.
Ruling:
No. Velayo was not illegally dismissed. There is an authorized cause allowing the
termination of her services to the company.
It need not be stressed that the nature or extent of the penalty imposed on an erring
employee must be commensurate to the gravity of the offense as weighed against the degree of
responsibility and trust expected of the employee’s position. On the other hand,the respondent is
not just charged with a misdeed, but with loss of trust and confidence under Article 282(c) of the
Labor Code, a cause premised on the fact that the employee holds a position whose functions may
only be performed by someone who enjoys the trust and confidence of management. Needless to
say, such an employee bears a greater burden of trustworthiness than ordinary workers, and the
betrayal of the trust reposed is the essence of the loss of trust and confidence which is a ground for
the employee’s dismissal.
The respondent’s misconduct must be viewed in light of the strictly fiduciary nature of her
position.
There are two classes of corporate positions of trust: on the one hand are the managerial
employees whose primary duty consists of the management of the establishment in which they are
employed or of a department or a subdivision thereof, and other officers or members of the
managerial staff; on the other hand are the fiduciary rank-and-file employees, such as cashiers,
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auditors, property custodians, or those who, in the normal exercise of their functions, regularly
handle significant amounts of money or property. These employees, though rank-and-file, are
routinely charged with the care and custody of the employer’s money or property, and are thus
classified as occupying positions of trust and confidence.
The series of willful misconduct committed by the respondent in mishandling the

unaccounted cash receipt exposes her as unworthy of the utmost trust inherent in her position as
branch cashier and vault custodian and bookkeeper.
The respondent insists that she never intended to appropriate the money but was afraid
that Tuling would scold her, and that she kept the money for a long time in her drawer and only
decided to take it home after her search for the cause of the cash overage had proved futile. Both
the CA and the NLRC agreed with her, and held that what she committed was a simple mistake or
simple negligence.
Granting arguendo that for some reason not due to her fault, the respondent could not trace
the source of the cash surplus, she nonetheless well knew and understood the company’s policy
that unexplained cash must be treated as miscellaneous income under the account "Other Income,"
and that the same must be so recognized and recorded at the end of the day in the branch books
or "operating system." No such entry was made by the respondent, resulting in unrecorded cash in
her possession of P540.00, which the company learned about only two months thereafter through
a branch audit.
Significantly, when Tuling returned on November 3, 2007 from her leave of absence, the
respondent did not just withhold from her the fact that she had an unaccounted overage, but she
refused to seek her help on what to do about it, despite having had five days to mull over the matter
until Tuling’s return.
In order that an employer may invoke loss of trust and confidence in terminating an
employee under Article 282(c) of the Labor Code, certain requirements must be complied with,
namely: (1) the employee must be holding a position of trust and confidence; and (2) there must be
an act that would justify the loss of trust and confidence. While loss of trust and confidence should
be genuine, it does not require proof beyond reasonable doubt, it being sufficient that there is some
basis to believe that the employee concerned is responsible for the misconduct and that the nature
of the employee’s participation therein rendered him unworthy of trust and confidence demanded
by his position.
Mere substantial evidence is sufficient to establish loss of trust and confidence
The respondent’s actuations were willful and deliberate. A cashier who, through
carelessness, lost a document evidencing a cash receipt, and then wilfully chose not to record the
excess cash as miscellaneous income and instead took it home and spent it on herself, and later
repeatedly denied or concealed the cash overage when confronted, deserves to be dismissed.
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Article 282 of the Labor Code allows an employer to dismiss an employee for willful breach
of trust or loss of confidence. It has been held that a special and unique employment relationship
exists between a corporation and its cashier. Truly, more than most key positions, that of a cashier
calls for utmost trust and confidence, and it is the breach of this trust that results in an employer’s
loss of confidence in the employee.
[T]he language of Article 282(c) of the Labor Code states that the loss of trust and
confidence must be based on willful breach of the trust reposed in the employee by his employer.
Such breach is willful if it is done intentionally, knowingly, and purposely, without justifiable
excuse, as distinguished from an act done carelessly, thoughtlessly, heedlessly or inadvertently.
Moreover, it must be based on substantial evidence and not on the employer’s whims or caprices
or suspicions otherwise, the employee would eternally remain at the mercy of the employer. Loss
of confidence must not be indiscriminately used as a shield by the employer against a claim that
the dismissal of an employee was arbitrary. And, in order to constitute a just cause for dismissal,
the act complained of must be work-related and shows that the employee concerned is unfit to
continue working for the employer. In addition, loss of confidence as a just cause for termination
of employment is premised on the fact that the employee concerned holds a position of
responsibility, trust and confidence or that the employee concerned is entrusted with confidence
with respect to delicate matters, such as the handling or care and protection of the property and
assets of the employer. The betrayal of this trust is the essence of the offense for which an employee
is penalized.
A cashier’s inability to safeguard and account for missing cash is sufficient cause to dismiss
her.
STANLEY FINE FURNITURE, ELENA AND CARLOS WANG vs. VICTOR T. GALLANO AND
ENRIQUITO SIAREZ
G.R. No. 190486, November 26, 2014, J. Leonen
To terminate the employment of workers simply because they asserted their legal rights by
filing a complaint is illegal. It violates their right to security of tenure and should not be tolerated.
In this case, Elena failed to pinpoint the overt acts of respondents that show they had
abandoned their work. There was a mere allegation that she was “forced to declare them dismissed
due to their failure to report back to work for a considerable length of time” but no evidence to prove
the intent to abandon work. It is the burden of the employer to prove that the employee was not
dismissed or, if dismissed, that such dismissal was not illegal. Unfortunately for Elena, she failed to
do so.
Facts:
Stanley Fine Furniture (Stanley Fine), through its owners Elena and Carlos Wang, hired
Victor T. Gallano and Enriquito Siarez (respondents) in 1995 as painters/carpenters. Respondents
each received P215.00 basic salary per day.
Respondents filed a labor complaint for underpayment/non-payment of salaries, wages,

Emergency Cost of Living Allowance (ECOLA), and 13th month pay. They indicated in the
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complaint form that they were “still working” for Stanley Fine. They filed an amended complaint
on May 31, 2005, for actual illegal dismissal, underpayment/non-payment of overtime pay, holiday
pay, premium for holiday pay, service incentive leave pay, 13th month pay, ECOLA, and Social
Security System (SSS) benefit. In the amended complaint, Respondents claimed that they were
dismissed on May 26, 2005.
Respondents were allegedly scolded for filing a complaint for money claims. Later on, they
were not allowed to work. On the other hand, petitioner Elena Briones (Elena) claimed that
Respondents were “required to explain their absences for the month of May 2005, but they refused.”
Labor Arbiter found that Respondents were illegally dismissed. The Labor Arbiter noted
the following contradictory statements in Stanley Fine’s position paper. Also, Stanley Fine was
forced to declare them dismissed due to their failure to report back to work for a considerable
length of time and also, due to the filing of an unmeritorious labor case against it by the two
complainants.
LA resolved the case by ruling that the admission that complainants were dismissed due to
the filing of a case against them by complainants is a blatant transgression of the Labor Code that
no retaliatory measure shall be leveled against an employee by reason of an action commenced
against an employer and awarded awarded moral and exemplary damages to respondents.
On appeal, the National Labor Relations Commission reversed the Labor Arbiter’s decision,
ruling that the Labor Arbiter erred in considering the statement, “due to the filing of an
unmeritorious labor case,” as an admission against interest.
Respondents filed a motion for reconsideration, which the NLRC denied. Thus, they filed a
petition for certiorari before the Court of Appeals. Generally, petitions for certiorari are limited to
the determination and correction of grave abuse of discretion amounting to lack or excess of
jurisdiction. However, the Court of Appeals reviewed the findings of facts and of law of the labor
tribunals, considering that the LA and the NLRC had different findings.
CA found that Stanley Fine failed to show any valid cause for respondents’ termination and
to comply with the two-notice rule. Also, the CA noted that Stanley Fine’s statements — that it was
“forced to declare them dismissed” due to their absences and “due to the filing of an unmeritorious
labor case against it by the two complainants” — were admissions against interest and binding upon
Stanley Fine.
Stanley Fine, Elena, and Carlos Wang filed a motion for extension of time to file petition for
review on certiorari.
Elena filed a petition for review. Elena alleged that she is the “registered owner/proprietress
of the business operation doing business under the name and style ‘Stanley Fine Furniture.’” She
argued that the Court of Appeals erred in ruling that Respondents were illegally dismissed
considering that she issued several memoranda to them, but they refused to accept the memoranda
and explain their absences
Issues:
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1. Were Gallano and Siarez legally dismissed?
2. Did the Court of Appeals err when it agreed with the Labor Arbiter that the statement,
“filing of an unmeritorious labor case,” is an admission against interest and binding against
Stanley Fine Furniture?
Ruling:
1. There was no just cause in the dismissal of respondents
The Court of Appeals found grave abuse of discretion on the part of the National Labor
Relations Commission when it reversed the Labor Arbiter’s decision. The Court of Appeals held
that respondents were illegally dismissed because no valid cause for dismissal was shown. Also,
there was no compliance with the two-notice requirement.
Elena admitted that no notices of dismissal were issued to respondents. However,

memoranda were given to respondents, requiring them to explain their absences. She claimed that
the notices to explain disprove respondents’ allegation that there was intent to dismiss them.
The Grounds for termination of employment are provided under the Labor Code. Just causes
for termination of an employee are provided under Article 282 of the Labor Code:
ARTICLE 282. Termination by employer. - An employer may terminate an

employment for any of the following causes:
(a) Serious misconduct or willful disobedience by the employee of the lawful orders
of his employer or representative in connection with his work;
(c) Fraud or willful breach by the employee of the trust reposed in him by his
employer or duly authorized representative;
(d) Commission of a crime or offense by the employee against the person of his
employer or any immediate member of his family or his duly authorized
representatives; and
(e) Other causes analogous to the foregoing.
Although abandonment of work is not included in the enumeration, this court has
held that “abandonment is a form of neglect of duty.” To prove abandonment, two elements
must concur:
1. Failure to report for work or absence without valid or justifiable reason; and
2. A clear intention to sever the employer-employee relationship.
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Absence must be accompanied by overt acts unerringly pointing to the fact that the
employee simply does not want to work anymore. And the burden of proof to show that there was
unjustified refusal to go back to work rests on the employer.
The Court of Appeals ruled that the alleged abandonment of work is negated by the
immediate filing of the complaint for illegal dismissal on May 31, 2005. The Court of Appeals further
stated that long standing is the rule that the filing of the complaint for illegal dismissal negates the
allegation of abandonment. Human experience dictates that no employee in his right mind would
go through the trouble of filing a case unless the employer had indeed terminated the services of
the employee.
In this case, Elena failed to pinpoint the overt acts of respondents that show they had
abandoned their work. There was a mere allegation that she was “forced to declare them dismissed
due to their failure to report back to work for a considerable length of time” but no evidence to
prove the intent to abandon work. It is the burden of the employer to prove that the employee was
not dismissed or, if dismissed, that such dismissal was not illegal.Unfortunately for Elena, she failed
to do so.
2. Non-compliance with procedural due process supports the finding of illegal dismissal.
Assuming that the statement, “filing of an unmeritorious labor case,” is not an admission
against interest, still, the Court of Appeals did not err in reinstating the Labor Arbiter’s
decision. Elena admittedthat no notices of dismissal were issued.
Elena pointed out that there is no evidence showing that at the time she sent the
memoranda, she already knew of the complaint for money claims filed by respondents. The
allegation that she told respondents “Nag complain pa kayo sa Labor ha, sige tanggalna kayo” is
hearsay and inadmissible.
In cases of termination of employment, Article 277(b) of the Labor Code provides that:
ARTICLE 277. Miscellaneous provisions. –
(b) Subject to the constitutional right of workers to security of tenure and their right
to be protected against dismissal except for a just and authorized cause and without
prejudice to the requirement of notice under Article 283 of this Code, the employer
shall furnish the worker whose employment is sought to be terminated a written
notice containing a statement of the causes for termination and shall afford the
latter ample opportunity to be heard and to defend himself with the assistance of
his representative if he so desires in accordance with company rules and regulations
promulgated pursuant to guidelines set by the Department of Labor and
Employment. Any decision taken by the employer shall be without prejudice to the
right of the worker to contest the validity or legality of his dismissal by filing a
complaint with the regional branch of the National Labor Relations
Commission. The burden of proving that the termination was for a valid or
authorized cause shall rest on the employer.
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Book VI, Rule I, Section 2(d) of the Omnibus Rules Implementing the Labor Code further
provides:
Section 2. Security of tenure
(d) In all cases of termination of employment, the following standards of due process
shall be substantially observed:
For termination of employment based on just causes as defined in Article 282 of the
Code:
(i) A written notice served on the employee specifying the ground or grounds for
termination, and giving said employee reasonable opportunity within which to
explain his side.
(ii) A hearing or conference during which the employee concerned, with the
assistance of counsel if he so desires is given opportunity to respond to the charge,
present his evidence, or rebut the evidence presented against him.
(iii) A written notice of termination served on the employee, indicating that upon
due consideration of all the circumstances, grounds have been established to justify
his termination.
Apparently, in this case, the owners forgot that labor is not merely a factor of production. It
is a human product no matter how modest it may seem to them.
IMASEN PHILIPPINE MANUFACTURING CORPORATION vs. RAMONCHITO T. ALCON

and JOANN S. PAPA
G .R. No. 194884, October 22, 2014, J. Brion
Alcon and Papa were dismissed by Imasen Philippine Manufacturing Corporation for allegedly
having sexual intercourse inside company premises during work hours. In upholding that their
dismissal is valid, the Court held that whether aroused by lust or inflamed by sincere affection, sexual
acts should be carried out at such place, time and circumstance that, by the generally accepted norms
of conduct, will not offend public decency nor disturb the generally held or accepted social
morals. Under these parameters, sexual acts between two consenting adults do not have a place in
the work environment. These circumstances, by themselves, are already punishable misconduct.
Facts:
Petitioner Imasen Philippine Manufacturing Corporation is a domestic corporation engaged

in the manufacture of auto seat-recliners and slide-adjusters. It hired the respondents as manual
welders in 2001. On October 5, 2002, the respondents reported for work on the second shift – from
8:00 pm to 5:00 am of the following day.
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At around 12:40 am, Cyrus A. Altiche, Imasen’s security guard on duty, went to patrol and
inspect the production plant’s premises. When Altiche reached Imasen’s Press Area, he heard the
sound of a running industrial fan. Intending to turn the fan off, he followed the sound that led him
to the plant’s “Tool and Die” section. At the “Tool and Die” section, Altiche saw the respondents
having sexual intercourse on the floor, using a piece of carton as mattress. Altiche immediately
went back to the guard house and relayed what he saw to Danilo S. Ogana, another security guard
on duty.
Altiche then submitted a handwritten report of the incident to Imasen’s Finance and
Administration Manager. On December 4, 2002, Imasen issued the respondents separate interoffice
memoranda terminating their services. It found the respondents guilty of the act charged which it
considered as “gross misconduct contrary to the existing policies, rules and regulations of the
company.”
On December 5, 2002, the respondents filed before the LA the complaint for illegal
dismissal. In the December 10, 2004 decision, the LA dismissed the respondents’ complaint for lack
of merit. In its December 24, 2008 decision, the NLRC dismissed the respondents’ appeal for lack
of merit. In its June 9, 2010 decision, the CA nullified the NLRC’s ruling. The CA agreed with the
labor tribunals’ findings regarding the infraction charged – engaging in sexual intercourse on
October 5, 2002 inside company premises – and Imasen’s observance of due process in dismissing
the respondents from employment. The CA, however, disagreed with the conclusion that the
respondents’ sexual intercourse inside company premises constituted serious misconduct that the
Labor Code considers sufficient to justify the penalty of dismissal. The CA pointed out that the
respondents’ act, while provoked by “reckless passion in an inviting environment and time,” was
not done with wrongful intent or with the grave or aggravated character that the law requires.
Issue:
Whether the respondents’ infraction – engaging in sexual intercourse inside company

premises during work hours – amounts to serious misconduct within the terms of Article 282 (now
Article 296) of the Labor Code justifying their dismissal.
Ruling:
The petition is granted.
The just causes for dismissing an employee are provided under Article 28226 (now Article
296)27 of the Labor Code. Under Article 282(a), serious misconduct by the employee justifies the
employer in terminating his or her employment.

dismissal within the text and meaning of Article 282 of the Labor Code, the employee’s misconduct
must be serious, i.e., of such grave and aggravated character and not merely trivial or
unimportant. Additionally, the misconduct must be related to the performance of the employee’s
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duties showing him to be unfit to continue working for the employer. Further, and equally
important and required, the act or conduct must have been performed with wrongful intent. To
summarize, for misconduct or improper behavior to be a just cause for dismissal, the following
elements must concur: (a) the misconduct must be serious; (b) it must relate to the performance of
the employee’s duties showing that the employee has become unfit to continue working for the
employer; and (c) it must have been performed with wrongful intent.
Sexual acts and intimacies between two consenting adults belong, as a principled ideal, to
the realm of purely private relations. Whether aroused by lust or inflamed by sincere affection,
sexual acts should be carried out at such place, time and circumstance that, by the generally
accepted norms of conduct, will not offend public decency nor disturb the generally held or
accepted social morals. Under these parameters, sexual acts between two consenting adults do not
have a place in the work environment. Indisputably, the respondents engaged in sexual intercourse
inside company premises and during work hours. These circumstances, by themselves, are already
punishable misconduct. Added to these considerations, however, is the implication that the
respondents did not only disregard company rules but flaunted their disregard in a manner that
could reflect adversely on the status of ethics and morality in the company. Additionally, the
respondents engaged in sexual intercourse in an area where co-employees or other company
personnel have ready and available access. The respondents likewise committed their act at a time
when the employees were expected to be and had, in fact, been at their respective posts, and when
they themselves were supposed to be, as all other employees had in fact been, working.
All told, the respondents’ misconduct, under the circumstances of this case, fell within the
terms of Article 282 (now Article 296) of the Labor Code. Consequently, we reverse the CA’s
decision for its failure to recognize that no grave abuse of discretion attended the NLRC’s decision
to support the respondents’ dismissal for serious misconduct.
JOEL N. MONTALLANA vs. LA CONSOLACION COLLEGE MANILA, SR. IMELDA A. MORA,

and ALBERT D. MANALILI
G.R. No. 208890, December 08, 2014, J. Perlas-Bernabe
The refusal of an employee to issue a public apology to his superior due to a pendency of
criminal action arising therefrom shall not constitute insubordination if the employee honestly
believed that the public apology shall incriminate him.
Facts:
Montallana was a faculty member of La Consolacion’s College. On January 12, 2009 while
the Dean’s Secretary and a student assistant were numbering the lockers, pursuant to a policy
implemented by Assistant Dean Juan. Upon learning of the reassignment of lockers of faculty
members through drawing of lots, a colleague commented, saying “para naman tayong bata nyan,”
to which Montallana followed suit and, in a loud voice, remarked “oo nga naman para tayong mga
grade one nyan, anong kabubuhan ng grade one yan.” Juan heard Montallana’s remark and
confronted him, resulting in a heated altercation that ended with the latter walking out of the room
while Juan was still talking to him.
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After due investigation, La Consolacion’s fact-finding committee found Montallana guilty
of serious misconduct in making derogatory and insulting remarks about his superior, aggravated
by the fact that he made such remarks in a loud voice so that Juan would hear them. The committee
observed that it was his first offense and stressed on the reformative and redemptive facets of the
case and Montallana was suspended without pay for a period of two (2) months and directed him
to submit a written public apology to Juan.
Montallana refused elucidating that a written public apology was inappropriate at that time
in view of the pendency of a criminal complaint for grave oral defamation filed by Juan against him
before the City Prosecutor’s Office. He mentioned that his issuance of a written public apology
while the criminal case was being heard might incriminate himself.
An administrative complaint was filed against Montallana. The LA ruled that the conduct
of Montallana did not constitute serious misconduct. However, the NLRC reversed the decision of
the LA and found him guilty of serious misconduct as his behavior was completely against the rule
of decency of a teacher.
Having failed to write a public apology, Montallana was dismissed from work. This
prompted him to file a case for illegal dismissal against La Consolacion. The LA dismissed his
complaint citing that there was no illegal dismissal as his termination was due to his own refusal of
issuing a public apology. The NLRC reversed the ruling stating that Montallana did not
intentionally and openly defy the order of La Consolacion but had a valid reason for refusing to
issue the public apology. The CA then set aside the NLRC decision ratiocinating that La Consolacion
as a private educational institution had the right to impose certain standards of behavior to its
faculty. Hence, the present petition.
Issue:
Whether or not Montallana’s termination from work is lawful
Ruling:
No. “Willful disobedience by the employee of the lawful orders of his employer or
representative in connection with his work” is one of the just causes to terminate an employee
under Article 296 (a) (formerly Article 282[a]) of the Labor Code. In order for this ground to be
properly invoked as a just cause for dismissal, the conduct must be willful or intentional, willfulness
being characterized by a wrongful and perverse mental attitude. In Dongon v. Rapid Movers and
Forwarders Co., Inc., “willfulness” was described as “attended by a wrongful and perverse mental
attitude rendering the employee’s act inconsistent with proper subordination.”
In the case at bar, respondents failed to prove, by substantial evidence, that Montallana’s
non-compliance with respondents’ directive to apologize was “willful or intentional.” The Court
finds itself in complete agreement with the NLRC that the disobedience attributed to Montallana
could not be justly characterized as “willful” within the contemplation of Article 296 of the Labor
Code, in the sense above-described.
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As culled from the records, aside from the administrative complaint filed by Juan against
Montallana for his serious misconduct, the former also filed a criminal complaint for grave oral
defamation for the utterances he made arising from the same incident before the Manila City
Prosecutor’s Office. In the honest belief that issuing a letter of apology would incriminate him in
the said criminal case – and upon the advice of his own lawyer at that – Montallana wrote to
respondents and voluntarily communicated that he was willing to issue the required apology, but
only had to defer the same in view of his legal predicament. As the Court sees it, the tenor of his
letters, and the circumstances under which they were taken, at the very least, exhibited
Montallana’s good faith in dealing with respondents. This, therefore, negates the theory that his
failure to abide by respondents’ directive to apologize was attended by a “wrong and perverse
mental attitude rendering the employee’s act inconsistent with proper subordination,” which would
warrant his termination from employment.
Besides, even on the assumption that there was willful disobedience, still, the Court finds
the penalty of dismissal too harsh. It bears to stress that not every case of insubordination or willful
disobedience by an employee reasonably deserves the penalty of dismissal. The penalty to be
imposed on an erring employee must be commensurate with the gravity of his offense. To the
Court’s mind, the case of an employee who is compelled to apologize for a previous infraction but
fails to do so is not one which would properly warrant his termination, absent any proof that the
refusal was made in brazen disrespect of his employer.
PROTECTIVE MAXIMUM SECURITY AGENCY, INC. vs. CELSO E. FUENTES

Abandonment is the deliberate and unjustified refusal of an employee to resume his

employment. It is a form of neglect of duty, hence, a just cause for termination of employment by the
employer. For a valid finding of abandonment, these two factors should be present: 1) the failure to
report for work or absence without valid or justifiable reason; and 2) a clear intention to sever
employer-employee relationship. There is no abandonment in this case. The intervening period when
Fuentes failed to report for work, from his prison release to the time he actually reported for work,
was justified. Since there was a justifiable reason for Fuentes's absence, the first element of
abandonment was not established.
Facts:
Celso E. Fuentes was hired as a security guard by Protective Maximum Security Agency, Inc.
(PMSAI), sometime in November 1999. At the time of Fuentes' employment they assigned him to
Picop Resources, Inc. and posted posted to a security checkpoint.
On July 2000, a group of armed persons ransacked the post and took five M-16 rifles, three
carbine rifles, and one Browning Automatic Rifle, all with live ammunition and magazines. Agency-
issued uniforms and personal items were also taken. These armed persons inflicted violence upon
Fuentes and the other security guards present at the post.
On the same day of the incident, Fuentes and his fellow security guards reported the raid
to the Philippine National Police (PNP). After its initial investigation, the PNP found reason to
believe that Fuentes conspired and acted in consort with the New People's Army (NPA). This was
based on the two affidavits executed by Lindo, Jr. and Cempron, who were both present in the raid.
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They then filed the Complaint for robbery committed by a band against Fuentes and others.
Alleging they were “cohort” with the NPA raid.
Immediately upon the filing of the Complaint, Fuentes was detained at the Mangagoy Police
Sub-Station. During his detention, he alleged that he was mauled and tied up by the security officers
of PMSAI. To preserve proof of these claims, Fuentes had pictures taken of his injuries while in
custody and acquired a medical certificate detailing his injuries. He was the transferred to Trento
Municipal Jail. Shortly, the prosecutor dismissed the charges against him for lack of probable cause.
Fuentes filed the Complaint for illegal dismissal and damages. He alleged that after the
charges against him, he was not allowed to return to work for he was an alleged member of the NPA
and a new employee has filed his position. PMSAI contains that Fuentes never informed any of the
officials of the agency about his predicament, which was said usual routine. The Arbiter found the
dismissal illegal as PMSAI failed to substantiate any evidence to support their claim.
Upon petition to the Court of Appeals, it denied PMSAI’s contention for they failed to
discharge its burden to prove a just cause for dismissal. Thus, the istant petition.
Issue:
Was there abandonment of work?
Ruling:
No, there was no such abandonment.
From PMSAI’s own submissions, that Fuentes last known address was given to the
investigating court by the Police Inspector in his report to that court. That report, incidentally, also
reveals the state of mind of Fuentes and explains why he could not report to the offices of PMSAI.
Fuentes, after having been charged with a crime on the strength of affidavits of PMSAI's other
security guards and beaten up by them, was so traumatized that he actually asked to remain in the
custody of the police because he feared for his life. The intensity of his fear is manifest by the fact
that he left the custody of the police only when his mother accompanied him. His fear, incongruous
as it may appear in a trained security guard, is nonetheless understandable in view of his allegations
of having been beaten up. At any rate, the whereabouts of Fuentes were available from official
records. The claim of PMSAI that Fuentes "simply vanished" has no evidentiary support.
In Agabon v. National Labor Relations Commission, this Court discussed the concept of
abandonment, Abandonment is the deliberate and unjustified refusal of an employee to resume his
employment. It is a form of neglect of duty, hence, a just cause for termination of employment by
the employer. For a valid finding of abandonment, these two factors should be present: 1) the failure
to report for work or absence without valid or justifiable reason; and 2) a clear intention to sever
employer-employee relationship, with the second as the more determinative factor which is
manifested by overt acts from which it may be deduced that the employees has no more intention
to work.
The intent to discontinue the employment must be shown by clear proof that it was
deliberate and unjustified. The burden to prove whether the employee abandoned his or her work
rests on the employer. Thus, it is incumbent upon the PMSAI to prove the two elements of
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abandonment. First, they must provide evidence that Fuentes failed to report to work for an
unjustifiable reason. Second, they must prove Fuentes' overt acts showing a clear intention to sever
his ties with PMSAI as his employer.
There is no abandonment in this case. The intervening period when Fuentes failed to report
for work, from his prison release to the time he actually reported for work, was justified. Since there
was a justifiable reason for Fuentes's absence, the first element of abandonment was not
established. Fuentes' act of reporting for work after being cleared of the charges against him showed
that he had no intention to sever ties with his employer. He attempted to return to work after the
dismissal of the Complaint so that PMSAI would not have any justifiable reason to deny his request
to resume his employment. Thus, Fuentes’s actions showed that he intended to resume working for
PMSAI. The second element of abandonment was not proven, as well.
MAERSK-FILIPINAS CREWING, INC., A.P. MOLLER SINGAPORE PTE.LIMITED, AND

JESUS AGBAYANI vs. TORIBIO C. AVESTRUZ
G.R. No. 207010, February 18, 2015, J. Perlas-Bernabe
It is well-settled that the burden of proving that the termination of an employee was for a just
or authorized cause lies with the employer. Maersk, A.P. Moller, and Agbayani maintain that Avestruz
was dismissed on the ground of insubordination, consisting of his repeated failure to obey his
superior’s order to maintain cleanliness in the galley of the vessel as well as his act of insulting a
superior officer by words or deeds. Insubordination, as a just cause for the dismissal of an employee,
necessitates the concurrence of at least two requisites: (1) the employee’s assailed conduct must have
been wilful, that is, characterized by a wrongful and perverse attitude; and (2) the order violated must
have been reasonable, lawful, made known to the employee, and must pertain to the duties which he
had been engaged to discharge. In this case, the contents of Captain Woodward’s e-mails do not
establish that Avestruz’s conduct had been wilful, or characterized by a wrongful and perverse
attitude. Conversely, apart from Captain Woodward’s e-mails, no other evidence was presented by the
petitioners to support their claims.
Facts:
On April 28, 2011, Maersk-Filipinas Crewing, Inc. on behalf of its foreign principal, A.P.
Moller Singapore Pte. Ltd. hired Avestruz as Chief Cook on board the vessel M/V Nedlloyd Drake for
a period of six (6) months, with a basic monthly salary of US$698.00.Avestruz boarded the vessel
on May 4, 2011. On June 22, 2011, in the course of the weekly inspection of the vessel’s galley, Captain
Charles C. Woodward noticed that the cover of the garbage bin in the kitchen near the washing
area was oily. As part of Avestruz’s job was to ensure the cleanliness of the galley, Captain
Woodward called Avestruz and asked him to stand near the garbage bin where the former took the
latter’s right hand and swiped it on the oily cover of the garbage bin, telling Avestruz to feel it.
Shocked, Avestruz remarked, “Sir if you are looking for dirt you can find it; the ship is big. Tell us if
you want to clean and we will clean it.” Captain Woodward replied by shoving Avestruz’s chest, to
which the latter complained and said, “Don’t touch me,” causing an argument to ensue between
them.
Later that afternoon, Captain Woodward summoned and required Avestruz to state in
writing what transpired in the galley that morning. Avestruz complied and submitted his written
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statement on that same day. Captain Woodward likewise asked Messman Jomilyn P. Kong to
submit his own written statement regarding the incident, to which the latter immediately complied.
On the very same day, Captain Woodward informed Avestruz that he would be dismissed from
service and be disembarked in India. On July 3, 2011, Avestruz was disembarked in Colombo, Sri
Lanka and arrived in the Philippines on July 4, 2011.
Subsequently, he filed a complaint for illegal dismissal, payment for the unexpired portion
of his contract, damages, and attorney’s fees against Maersk, A.P. Moller, and Jesus Agbayani, an
officer of Maersk. He alleged that no investigation or hearing was conducted nor was he given the
chance to defend himself before he was dismissed, and that Captain Woodward failed to observe
the provisions under Section 17 of the Philippine Overseas Employment Administration Standard
Employment Contracton disciplinary procedures. Also, he averred that he was not given any notice
stating the ground for his dismissal. Additionally, he claimed that the cost of his airfare in the
amount of US$606.15 was deducted from his wages.
In their defense, Maersk, A.P. Moller, and Agbayani claimed that during his stint on the
vessel, Avestruz failed to attend to his tasks, specifically to maintain the cleanliness of the galley,
which prompted Captain Woodward to issue weekly reminders. Unfortunately, despite the
reminders, Avestruz still failed to perform his duties properly. On June 22, 2011, when again asked
to comply with the aforesaid duty, Avestruz became angry and snapped, retorting that he did not
have time to do all the tasks required of him. As a result, Captain Woodward initiated disciplinary
proceedings and informed Avestruz during the hearing of the offenses he committed, i.e., his
repeated failure to follow directives pertaining to his duty to maintain the cleanliness of the galley,
as well as his act of insulting an officer. Thereafter, he was informed of his dismissal from service
due to insubordination. Relative thereto, Captain Woodward sent two (2) electronic mail
messagesto Maersk explaining the decision to terminate Avestruz’s employment and requesting for
Avestruz’s replacement. Avestruz was discharged from the vessel and arrived in the Philippines on
July 4, 2011.
In a Decision the Labor Arbiter dismissed Avestruz’s complaint for lack of merit. In a
Decision, the NLRC sustained the validity of Avestruz’s dismissal but found that petitioners failed
to observe the procedures laid down in Section 17 of the POEA-SEC. As the records are bereft of
evidence showing compliance with the foregoing rules, the NLRC held petitioners jointly and
severally liable to pay Avestruz the amount of P30,000.00 by way of nominal damages.Dissatisfied,
he elevated the matter to the CA via petition for certiorari. In a Decision, the CA reversed and set
aside the rulings of the NLRC and instead, found Avestruz to have been illegally dismissed. Hence
this petition.
Issue:
Whether or not the CA erred when it reversed and set aside the ruling of the NLRC finding
that Avestruz was legally dismissed and accordingly, dismissing the complaint, albeit with payment
of nominal damages for violation of procedural due process.
Ruling:
No, the CA did not err.
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It is well-settled that the burden of proving that the termination of an employee was for a
just or authorized cause lies with the employer. If the employer fails to meet this burden, the
conclusion would be that the dismissal was unjustified and, therefore, illegal. In order to discharge
this burden, the employer must present substantial evidence, which is defined as that amount of
relevant evidence which a reasonable mind might accept as adequate to justify a conclusion, and
not based on mere surmises or conjectures.
Maersk, A.P. Moller, and Agbayani maintain that Avestruz was dismissed on the ground of
insubordination, consisting of his “repeated failure to obey his superior’s order to maintain
cleanliness in the galley of the vessel” as well as his act of “insulting a superior officer by words or
deeds.”In support of this contention, Maersk, A.P. Moller, and Agbayani presented as evidence the
e-mails sent by Captain Woodward, both dated June 22, 2011, and time-stamped 10:07 a.m. and 11:40
a.m., respectively, which they claim chronicled the relevant circumstances that eventually led to
Avestruz’s dismissal.The Court, however, finds these e-mails to be uncorroborated and self-serving,
and therefore, do not satisfy the requirement of substantial evidence as would sufficiently discharge
the burden of proving that Avestruz was legally dismissed. On the contrary, Maersk, A.P. Moller,
and Agbayani failed to prove that he committed acts of insubordination which would warrant his
dismissal.
Insubordination, as a just cause for the dismissal of an employee, necessitates the

concurrence of at least two requisites: (1) the employee’s assailed conduct must have been willful,
that is, characterized by a wrongful and perverse attitude; and (2) the order violated must have
been reasonable, lawful, made known to the employee, and must pertain to the duties which he
had been engaged to discharge.
In this case, the contents of Captain Woodward’s e-mails do not establish that Avestruz’s
conduct had been willful, or characterized by a wrongful and perverse attitude. The Court concurs
with the CA’s observation that Avestruz’s statement regarding the incident in the galley deserves
more credence, being corroborated by Kong, a messman who witnessed the same. Conversely, apart
from Captain Woodward’s e-mails, no other evidence was presented by the petitioners to support
their claims.
As in this case, it was incumbent upon Maersk, A.P. Moller, and Agbayani to present other
substantial evidence to bolster their claim that Avestruz committed acts that constitute
insubordination as would warrant his dismissal. At the least, they could have offered in evidence
entries in the ship’s official logbook showing the infractions or acts of insubordination purportedly
committed by Avestruz, the ship’s logbook being the official repository of the day-to-day
transactions and occurrences on board the vessel. Having failed to do so, their position that
Avestruz was lawfully dismissed cannot be sustained.
Similarly, the Court affirms the finding of the CA that Avestruz was not accorded procedural
due process, there being no compliance with the provisions of Section 17 of the POEA-SEC as above-
cited, which requires the “two-notice rule.” In this case, there is dearth of evidence to show that
Avestruz had been given a written notice of the charge against him, or that he was given the
opportunity to explain or defend himself. The statement given by Captain Woodward requiring him
to explain in writing the events that transpired at the galley in the morning of June 22, 2011 hardly
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qualifies as a written notice of the charge against him, nor was it an opportunity for Avestruz to
explain or defend himself. While Captain Woodward claimed in his e-mail that he conducted a
“disciplinary hearing” informing Avestruz of his inefficiency, no evidence was presented to support
the same.
ZENAIDA PAZ vs. NORTHERN TOBACCO REDRYING CO., INC., AND/OR ANGELO ANG
Dismissals based on just causes contemplate acts or omissions attributable to the employee
while dismissals based on authorized causes involve grounds under the Labor Code which allow the
employer to terminate employees. A termination for an authorized cause requires payment of
separation pay. When the termination of employment is declared illegal, reinstatement and full
backwages are mandated under Article 279. If reinstatement is no longer possible where the dismissal
was unjust, separation pay may be granted.
Facts:
Northern Tobacco Redrying Co.,Inc (NTRCI) hired Zenaida Paz (Paz) in 1974 as a seasonal
sorter, paid 185.00 daily. NTRCI regularly re-hired her every tobacco season since then. She signed
a seasonal job contract at the start of her employment and a pro-forma application letter prepared
by NTRCI in order to qualify for the next season.
On May 18, 2003, Paz was 63 years old when NTRCI informed her that she was considered
retired under company policy. A year later, NTRCI told her she would receive 12,000.00 as
retirement pay.
Paz, with two other complainants, filed a Complaint for illegal dismissal against NTRCI. She
amended her Complaint into a Complaint for payment of retirement benefits, damages as 12,000.00
seemed inadequate for her 29 years of service.
NTRCI countered that no Collective Bargaining Agreement (CBA) existed between NTRCI
and its workers. Thus, it computed the retirement pay of its seasonal workers based on Article 287
of the Labor Code. NTRCI raised the requirement of at least six months of service a year for that
year to be considered in the retirement pay computation. It claimed that Paz only worked for at
least six months in 1995, 1999, and 2000 out of the 29 years she rendered service. Thus, Paz’s
retirement pay amounted to 12,487.50 after multiplying her 185.00 daily salary by 22½ working days
in a month, for three years.
The Labor Arbiter in his Decision confirmed that the correct retirement pay of Zenaida M.
Paz was 12,487.50.
The NLRC in its Decision modified the Labor Arbiter’s Decision. It likewise denied
reconsideration. Complainant Appellant Zenaida Paz’s retirement pay should be computed
pursuant to RA 7641 and that all the months she was engaged to work for respondent for the last
(28) years should be added and divided by six (for a fraction of six months is considered as one
year) to get the number of years for her retirement pay.
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The CA dismissed the Petition and modified the NLRC’s Decision in that “financial
assistance is awarded to Zenaida Paz in the amount of 60,356.25.
Paz comes before this court seeking to reinstate the NLRC's computation. Petitioner Paz
contends that respondent NTRCI failed to prove the alleged company policy on compulsory
retirement for employees who reached 60 years of age or who rendered 30 years of service,
whichever came first.
Article 287, as amended by Republic Act No. 7641, applies and entitles her to “retirement
pay equivalent to at least one-half month salary for every year of service, a fraction of at least six (6)
months being considered as one whole year.” She adds that she was then 63 years old, and while
one may opt to retire at 60 years old, the compulsory retirement age is 65 years old under Article
287, as amended.
Paz contends lack of legal basis that “an employee should have at least worked for six (6)
months for a particular season for that season to be included in the computation of retirement pay.”
She submits that regular seasonal employees are still considered employees during offseason, and
length of service determination should be applied in retiree’s favor.
Respondent NTRCI submits that the proviso “a fraction of at least six (6) months being
considered as one (1) whole year” appears in both Article 287 on retirement pay and Articles 283
and 284 on separation pay.
NTRCI argues that unlike regular employees, seasonal workers like petitioner Paz can offer
their services to other employers during off-season. Thus, the six-month rule avoids the situation
where seasonal workers receive retirement pay twice — an even more favorable position compared
with regular employees.
Issue:
Both parties appear to agree on petitioner Paz’s entitlement to retirement pay. The issue
before this court involves its proper computation. Also we resolve whether or not there was illegal
dismissal.
Ruling:
We affirm the Court of Appeals’ decision with modification.
Regular seasonal employees

Article 280 of the Labor Code and jurisprudence identified three types of employees, namely: “(1)
regular employees or those who have been engaged to perform activities which are usually
necessary or desirable in the usual business or trade of the employer;
(2) project employees or those whose employment has been fixed for a specific project or
undertaking, the completion or termination of which has been determined at the time of the
engagement of the employee or where the work or service to be performed is seasonal in nature
and the employment is for the duration of the season; and
(3) casual employees or those who are neither regular nor project employees.”
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Jurisprudence also recognizes the status of regular seasonal employees.
Art. 280. Regular and casual employment. The provisions of written agreement to the contrary
deemed to be regular where the employee has been engaged to perform activities which are usually
necessary or desirable in the usual business or trade of the employer, except where the employment
has been fixed for a specific project or undertaking the completion or termination of which has
been determined at the time of the engagement of the employee or where the work or service to be
performed is seasonal in nature and the employment is for the duration of the season.

is continuous or broken, shall be considered a regular employee with respect to the activity in which
he is employed and his employment shall continue while such activity exists.
The test of whether or not an employee is a regular employee has been laid down in De
Leon v. NLRC, in which this Court held:
The primary standard of determining regular employment is the reasonable connection

between the particular activity performed by the employee in relation to the usual trade or business
of the employer. The test is whether the former is usually necessary or desirable in the usual
business or trade of the employer. The connection can be determined by considering the nature of
the work performed and its relation to the scheme of the particular business or trade in its entirety.
Also if the employee has been performing the job for at least a year, even if the performance
is not continuous and merely intermittent, the law deems repeated and continuing need for its
performance as sufficient evidence of the necessity if not indispensability of that activity to the
business. Hence, the employment is considered regular, but only with respect to such activity, and
while such activity exists.
The nature of one’s employment does not depend solely on the will or word of the employer.
Nor on the procedure for hiring and the manner of designating the employee, but on the nature of
the activities to be performed by the employee, considering the employer's nature of business and
the duration and scope of work to be done.
Herein respondents, having performed the same tasks for petitioners every season for
several years, are considered the latter’s regular employees for their respective tasks. Petitioners’
eventual refusal to use their services even if they were ready, able and willing to perform their usual
duties whenever these were available and hiring of other workers to perform the tasks originally
assigned to respondents amounted to illegal dismissal of the latter.
Respondent NTRCI engaged the services of petitioner Paz as a seasonal sorter and had been
regularly rehired from 1974, until she was informed in 2003 that she was being retired under
company policy.
The services petitioner Paz performed as a sorter were necessary and indispensable to
respondent NTRCI’s business of flue-curing and redrying tobacco leaves. She was also regularly
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rehired as a sorter during the tobacco seasons for 29 years since 1974. These considerations taken
together allowed the conclusion that petitioner Paz was a regular seasonal employee, entitled to
rights under Article 279 of the Labor Code:
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.
Petitioner Paz initially filed a Complaint for illegal dismissal seeking separation pay, but
later amended her Complaint into one for payment of retirement pay. Despite the amendment, she
maintained in her subsequent pleadings that she had been made to retire even before she reached
the compulsory retirement age of 65 under Article 287, as amended.
Petitioner Paz alleged that respondent NTRCI required her to report on March 18, 2003 for
the 2003 tobacco season, but she suffered a mild stroke sometime in April. Respondent NTRCI
extended her employment contract until May 18, 2003 when she was informed that she was retired
under company policy.
Since petitioner Paz was “unlearned and not knowledgeable in law, she just accepted such
fact and waited to be paid her separation/retirement benefit as promised by NTRCI.”
Unfortunately, after a year of waiting, respondent NTRCI only offered her around 12,000.00 for all
her services since 1974.
The NLRC recognized that like the other complainants against respondent NTRCI,
petitioner Paz “was at a loss in what cause of action to take — whether illegal dismissal or payment
of retirement pay.” Petitioner Paz’s amendment of her Complaint was not fatal to her cause of
action for illegal dismissal.
First, petitioner Paz never abandoned her argument that she had not reached the
compulsory retirement age of 65 pursuant to Article 287, as amended, when respondent NTRCI
made her retire on May 18, 2003.
Second, the NLRC found that NTRCI failed to prove a valid company retirement policy, yet
it required its workers to retire after they had reached the age of 60. The CA also discussed that
while respondent NTRCI produced guidelines on its retirement policy for seasonal employees, it
never submitted a copy of its Collective Bargaining Agreement and even alleged in its Position
Paper that none existed.
Petitioner Paz was only 63 years old on May 18, 2003 with two more years remaining before she
would reach the compulsory retirement age of 65.
“Retirement is the result of a bilateral act of the parties, a voluntary agreement between the
employer and the employee whereby the latter, after reaching a certain age, agrees to sever his or
her employment with the former.” Article 287, allows for optional retirement at the age of at least
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60 years old. If “the intent to retire is not clearly established or if the retirement is involuntary, it
is to be treated as a discharge.”
The NLRC considered petitioner Paz’s amendment of her Complaint akin to an optional
retirement when it determined her as illegally dismissed from May 18, 2003 to April 27, 2004, thus
being entitled to full backwages from May 19, 2003 until April 26, 2004.
Petitioner Paz never abandoned her argument of illegal dismissal despite the amendment
of her Complaint. This implied lack of intent to retire until she reached the compulsory age of 65.
Thus, she should be considered as illegally dismissed from May 18, 2003 until she reached the
compulsory retirement age of 65 in 2005 and should be entitled to full backwages for this period.
An award of full backwages is “inclusive of allowances and other benefits or their monetary
equivalent, from the time their actual compensation was withheld. ”
Backwages, considered as actual damages, requires proof of the loss suffered. The Court of
Appeals found “no positive proof of the total number of months that she actually rendered work.”
Petitioner Paz’s daily pay of 185.00 was established. She also alleged that her employment
periods ranged from three to seven months.
Since the exact number of days petitioner Paz would have worked between May 18, 2003
until she would turn 65 in 2005 could not be determined with specificity, this court thus awards
full backwages in the amount of 22,200.00 computed by multiplying 185.00 by 20 days, then by
three months, then by two years.
Due process and nominal damages
The Labor Code requires employers to comply with both procedural and substantive due
process in dismissing employees. Agabon v. National Labor Relations Commission discussed these
rules and enumerated the four possible situations considering these rules:
Dismissals based on just causes contemplate acts or omissions attributable to the employee
while dismissals based on authorized causes involve grounds under the Labor Code which allow
the employer to terminate employees. A termination for an authorized cause requires payment of
separation pay. When the termination of employment is declared illegal, reinstatement and full
backwages are mandated under Article 279. If reinstatement is no longer possible where the
dismissal was unjust, separation pay may be granted.
Procedurally, (1) if the dismissal is based on a just cause under Article 282, the employer
must give the employee two written notices and a hearing or opportunity to be heard if requested
by the employee before terminating the employment: a notice specifying the grounds for which
dismissal is sought a hearing or an opportunity to be heard and after hearing or opportunity to be
heard, a notice of the decision to dismiss; and (2) if the dismissal is based on authorized causes
under Articles 283 and 284, the employer must give the employee and the Department of Labor
and Employment written notices 30 days prior to the effectivity of his separation.
From the foregoing rules four possible situations may be derived:
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(1) the dismissal is for a just cause under Article 282 of the Labor Code, for an authorized cause
under Article 283, or for health reasons under Article 284, and due process was observed;
(2) the dismissal is without just or authorized cause but due process was observed;
(3) the dismissal is without just or authorized cause and there was no due process; and
(4) the dismissal is for just or authorized cause but due process was not observed.
In the first situation, the dismissal is undoubtedly valid and the employer will not suffer any
liability.
In the second and third situations where the dismissals are illegal, Article 279 mandates that
the employee is entitled to reinstatement without loss of seniority rights and other privileges and
full backwages, inclusive of allowances, and other benefits or their monetary equivalent computed
from the time the compensation was not paid up to the time of actual reinstatement.
In the fourth situation, the dismissal should be upheld.
While the procedural infirmity cannot be cured, it should not invalidate the dismissal.
However, the employer should be held liable for noncompliance with the procedural requirements
of due process.
Petitioner Paz’s case does not fall under the fourth situation but under the third situation
on illegal dismissal for having no just or authorized cause and violation of due process. Respondent
NTRCI had considered petitioner Paz retired at the age of 63 before she reached the compulsory
age of 65. This does not fall under the just causes for termination in Article 282 of the Labor Code,
the authorized causes for termination in Article 283, or disease as a ground for termination in
Article 284.
As regards due process, the Omnibus Rules Implementing the Labor Code provides:
Section 2. Standard of due process: requirements of notice. – In all cases of termination of

employment, the following standards of due process shall be substantially observed.
I. For termination of employment based on just causes as defined

in Article 282 of the Code:
(a) A written notice served on the employee specifying the ground or grounds for termination,
and giving to said employee reasonable opportunity within which to explain his side;
(b) A hearing or conference during which the employee concerned, with the assistance of counsel
if the employee so desires, is given opportunity to respond to the charge, present his evidence
or rebut the evidence presented against him; and
(c) A written notice of termination served on the employee indicating that upon due consideration
of all the circumstance, grounds have been established to justify his termination.
There was no showing that respondent NTRCI complied with these due process requisites.
Thus, consistent with jurisprudence, petitioner Paz should be awarded 30,000.00 as nominal
damages.
Retirement pay
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An employer may provide for retirement benefits in an agreement with its employees such
as in a Collective Bargaining Agreement. Otherwise, Article 287 of the Labor Code, as amended,
governs.
Since respondent NTRCI failed to present a copy of a Collective Bargaining Agreement on

the alleged retirement policy, we apply Article 287 of the Labor Code, as amended by Republic Act
No. 7641. This provides for the proper computation of retirement benefits in the absence of a
retirement plan or agreement:
In the absence of a retirement plan or agreement providing for retirement benefits of employees in
the establishment, an employee upon reaching the age of sixty (60) years or more, but not beyond
sixty-five (65) years which is hereby declared the compulsory retirement age, who has served at
least five (5) years in the said establishment, may retire and shall be entitled to retirement pay
equivalent to at least one-half (1/2) month salary for every year of service, a fraction of at least six
(6) months being considered as one whole year.
Unless the parties provide for broader inclusions, the term ‘one-half (1/2) month salary’ shall mean
fifteen (15) days plus one-twelfth (1/12) of the 13th month pay and the cash equivalent of not more
than five (5) days of service incentive leaves.
Respondent NTRCI followed the formula in Article 287 and offered petitioner Paz the
amount of 12,487.50 as retirement pay based on the three years she worked for at least six months
in 1995, 1999, and 2000.
While the present case involves retirement pay and not separation pay, Article 287 of the
Labor Code on retirement pay similarly provides that “a fraction of at least six (6) months being
considered as one whole year.”
Thus, this court’s reading of this proviso in the Labor Code in Philippine Tobacco applies
in this case. An employee must have rendered at least six months in a year for said year to be
considered in the computation.
The Court of Appeals found “no positive proof on the total number of months petitioner
Paz actually rendered work for NTRCI.” On the other hand, both the Labor Arbiter and the Court
of Appeals established from the records that she rendered at least six months of service for 1995,
1999, and 2000 only. Based on these factual findings, retirement pay pursuant to Article 287 of the
Labor Code was correctly computed at 12,487.50 and was awarded to petitioner Paz.
Financial assistance
This court agrees with the Court of Appeals’ award of financial assistance in the amount of
60,356.25 by applying the following formula: one-half-month pay multiplied by 29 years in service
and then divided by 2.
The amount of 12,487.50 is indeed too meager to support petitioner Paz who has become
old, weak, and unable to find employment.
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Republic Act No. 7641 is a social legislation with the purpose of “providing for the retiree’s
sustenance and hopefully even comfort, when he or she no longer has the stamina to continue
earning his or her livelihood.”
The Court of Appeals recognized petitioner Paz’s three decades of hard work with
respondent NTRCI. However, it disagreed with the NLRC's retirement pay computation for lack of
factual basis:
Private respondent Paz rendered almost three decades of dedicated service to petitioner,
and to that, she gave away the prime of her life. In those long years of hard work, not a single
transgression or malfeasance of any company rule or regulation was ever reported against her. Old
age and infirmity now weaken her chances of employment. We can call upon the same “social and
compassionate justice” allowing financial assistance in special circumstances. These circumstances
indubitably merit equitable concessions, via the principle of “compassionate justice” for the
working class.
In awarding retirement benefits, the NLRC deemed it proper to add all the months of service
rendered by private respondent Paz, then divide it by six to arrive at the number of years of service.
We cannot subscribe to this computation because there is no positive proof of the total number of
months that she actually rendered work.
At most, the Petition alleges that “petitioner was regularly hired every season by
respondents, her employment periods ranging from three 3-7 months.” None of the lower courts,
not even the NLRC that proposed the formula, made a factual determination on the total number
of months petitioner Paz rendered actual service.
We agree with the Court of Appeals that petitioner Paz’s circumstances “indubitably merit
equitable concessions, via the principle of ‘compassionate justice’ for the working class.”
Petitioner Paz worked for respondent NTRCI for close to three decades. She had no record of any
malfeasance or violation of company rules in her long years of service. Her advanced age has
rendered her weak and lessened her employment opportunities.
Petitioner Paz was a seasonal employee who worked for periods ranging from three to seven
months a year. This court thus finds the following Court of Appeals formula for financial assistance
as equitable: one-half-month pay multiplied by 29 years in service and then divided by 2.
This court has discussed that “labor law determinations are not only secundum rationem
but also secundum caritatem.” The award of 60,356.25 as financial assistance will serve its purpose
in providing petitioner Paz sustenance and comfort after her long years of service.
Finally, legal interest of 6% per annum shall be imposed on the award of full backwages
beginning May 18, 2003 when petitioner Paz was deemed retired, until 2005 when she reached
compulsory retirement age, in the amount of 2,664.00 Legal interest of 6% per annum shall also be
imposed on the award of retirement pay beginning 2005 until full satisfaction.
ST. LUKE’S MEDICAL CENTER, INC. vs. MARIA THERESA V. SANCHEZ
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G.R. No. 212054, March 11, 2015, J. Perlas-Bernabe
Sanchez was dismissed due to theft. She alleged that she was illegally dismissed for there was
not intent to gain on her part. The court ruled that Court finds that Sanchez was validly dismissed by
SLMC for her willful disregard and disobedience of Section 1, Rule I of the SLMC Code of Discipline,
which reasonably punishes acts of dishonesty, i.e., “theft, pilferage of hospital or co-employee
property, x xx or its attempt in any form or manner from the hospital, co-employees, doctors, visitors,
[and] customers (external and internal)” with termination from employment. Such act is obviously
connected with Sanchez’s work, who, as a staff nurse, is tasked with the proper stewardship of medical
supplies
Facts:
Sanchez was hired by petitioner St. Luke’s Medical Center, Inc. (SLMC) as a Staff Nurse, and
was eventually assigned at SLMC, Quezon City’s Pediatric Unit until her termination on July 6, 2011
for her purported violation of SLMC’s Code of Discipline, particularly Section 1, Rule 1 on Acts of
Dishonesty, i.e., Robbery, Theft, Pilferage, and Misappropriation of Funds. Records reveal that at
the end of her shift on May 29, 2011, Sanchez passed through the SLMC Centralization Entrance/Exit
where she was subjected to the standard inspection procedure by the security personnel. In the
course thereof, the Security Guard on-duty, Jaime Manzanade (SG Manzanade), noticed a pouch in
her bag and asked her to open the same. When opened, said pouch contained assortment of medical
stocks. Sanchez maintained her innocence, claiming that she had no intention of bringing outside
the SLMC’s premises the questioned items since she merely inadvertently left the pouch containing
them in her bag as she got caught up in work that day. She further asserted that she could not be
found guilty of pilferage since the questioned items found in her possession were neither SLMC’s
nor its employees’ property. Sanchez was afterwards dismissed from service
Issue:
Whether or not Sanchez was illegally dismissed by SLlleMC
Ruling:
No, Sanchez was not illegally dismissed
Article 296.Termination by Employer. - An employer may terminate an employment for any

(a) Serious misconduct or willful disobedience by the employee of the lawful orders
of his employer or his representative in connection with his work;
Note that for an employee to be validly dismissed on this ground, the employer’s orders,
regulations, or instructions must be: (1) reasonable and lawful, (2) sufficiently known to the
employee, and (3) in connection with the duties which the employee has been engaged to
discharge.”
Tested against the foregoing, the Court finds that Sanchez was validly dismissed by SLMC
for her willful disregard and disobedience of Section 1, Rule I of the SLMC Code of Discipline, which
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reasonably punishes acts of dishonesty, i.e., “theft, pilferage of hospital or co-employee property, x
xx or its attempt in any form or manner from the hospital, co-employees, doctors, visitors, [and]
customers (external and internal)” with termination from employment. Such act is obviously
connected with Sanchez’s work, who, as a staff nurse, is tasked with the proper stewardship of
medical supplies. Significantly, records show that Sanchez made a categorical admissionin her
handwritten letter – i.e., “[k]ahit alam kong bawal ay nagawa kong [makapag-uwi] nggamit” – that
despite her knowledge of its express prohibition under the SLMC Code of Discipline, she still
knowingly brought out the subject medical items with her. It is apt to clarify that SLMC cannot be
faulted in construing the taking of the questioned items as an act of dishonesty (particularly, as
theft, pilferage, or its attempt in any form or manner) considering that the intent to gain may be
reasonably presumed from the furtive taking of useful property appertaining to another. Note that
Section 1, Rule 1 of the SLMC Code of Discipline is further supplemented by the company policy
requiring the turn-over of excess medical supplies/items for proper handling and providing a
restriction on taking and bringing such items out of the SLMC premises without the proper
authorization or “pass” from the official concerned, which Sanchez was equally aware thereof.
Nevertheless, Sanchez failed to turn-over the questioned items and, instead, “hoarded” them, as
purportedly practiced by the other staff members in the Pediatric Unit.
As it is clear that the company policies subject of this case are reasonable and lawful,
sufficiently known to the employee, and evidently connected with the latter’s work, the Court
concludes that SLMC dismissed Sanchez for a just cause.
THE COFFEE BEAN and TEA LEAF PHILIPPINES, INC. and WALDEN CHU vs. ROLLY P.
ARENAS
G.R. No. 208908, March 11, 2015, J. Brion
Based on the mystery guest shopper and duty manager’s reports, respondent was dismissed
from employment. The Court held that infractions which respondent committed do not justify the
severe penalty of termination from service. For willful disobedience to be a valid cause for dismissal,
the employee’s assailed conduct must have been willful, that is, characterized by a wrongful and
perverse attitude; and the order violated must have been reasonable, lawful, made known to the
employee, and must pertain to the duties which he had been engaged to discharge. The Court ruled
that alleged infractions do not amount to such a wrongful and perverse attitude.
Facts:
The Coffee Bean and Tea Leaf Philippines, Inc. (CBTL) hired Rolly P. Arenas to work as a
"barista.”Upon signing the employment contract, Arenas was informed of CBTL’s existing
employment policies.
To ensure the quality of its crew’s services, CBTL regularly employs a “mystery guest
shopper” who poses as a customer, for the purpose of covertly inspecting the baristas’ job
performance. A mystery guest shopper submitted a report stating that Arenas was seen eating non-
CBTL products at CBTL’s al fresco dining area while on duty. As a result, the counter was left empty
without anyone to take and prepare the customers’ orders.
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On another occasion, Katrina Basallo, the duty manager of CBTL, conducted a routine
inspection. While inspecting the store’s products, she noticed an iced tea bottle being chilled inside
the bin where the ice for the customers’ drinks is stored. She called the attention of the staff on
duty. When asked, Arenas muttered, “kaninong iced tea?” and immediately picked the bottle and
disposed it outside the store.
After inspection, Basallo prepared a store manager’s report which listed Arenas’ recent
infractions, as follows: 1. Leaving the counter unattended and eating chips in an unauthorized area
while on duty; 2. Reporting late for work on several occasions; and 3. Placing an iced tea bottle in
the ice bin despite having knowledge of company policy prohibiting the same.
Arenas was required to explain his alleged violations. CBTL found Arenas’ written
explanation unsatisfactory. Hence, CBTL terminated his employment.
Arenas filed a complaint for illegal dismissal. After due proceedings, the LA ruled in his
favor. The NLRC affirmed the LA’s decision. The CA also found that Arenas was illegally dismissed.
Issue:
Whether or not CBTL illegally dismissed Arenas from employment
Ruling:
Yes, the Court ruled that he was illegally dismissed. The infractions which Arenas
committed do not justify the application of the severe penalty of termination from service.
For willful disobedience to be a valid cause for dismissal, these two elements must concur:
(1) the employee’s assailed conduct must have been willful, that is, characterized by a wrongful and
perverse attitude; and (2) the order violated must have been reasonable, lawful, made known to the
employee, and must pertain to the duties which he had been engaged to discharge.
It is clear that Arenas’ alleged infractions do not amount to such a wrongful and perverse
attitude. Though Arenas may have admitted these wrongdoings, these do not amount to a wanton
disregard of CBTL’s company policies.
As Arenas mentioned in his written explanation, he was on a scheduled break when he was
caught eating at CBTL’s al fresco dining area. During that time, the other service crews were the
one in charge of manning the counter. CBTL’s employee handbook imposes only the penalty of
written warning for the offense of eating non-CBTL products inside the store’s premises.
CBTL also imputes gross and habitual neglect of duty to Arenas for coming in late in three
separate instances. Gross negligence implies a want or absence of, or failure to exercise even a slight
care or diligence, or the entire absence of care. There is habitual neglect if, based on the
circumstances, there is a repeated failure to perform one’s duties for a period of time.
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The Court ruled that Arenas’ three counts of tardiness cannot be considered as gross and
habitual neglect of duty. These late attendances were also broadly spaced out, negating the
complete absence of care on Arenas’ part in the performance of his duties.
To further justify Arenas’ dismissal, CBTL argues that he committed serious misconduct
when he lied about using the ice bin as cooler for his bottled iced tea. Under CBTL’s employee
handbook, dishonesty, even at the first instance, warrants the penalty of termination from service.
For misconduct or improper behavior to be a just cause for dismissal, (a) it must be serious;
(b) it must relate to the performance of the employee’s duties; and (c) it must show that the
employee has become unfit to continue working for the employer.
The facts on record reveal that there was no active dishonesty on the part of Arenas. When
questioned about who placed the bottled iced tea inside the ice bin, his immediate reaction was not
to deny his mistake, but to remove the bottle inside the bin and throw it outside. More importantly,
when he was asked to make a written explanation of his action, he admitted that the bottled iced
tea was his. Thus, Arenas’ subsequent act of owing to his mistake only shows the absence of a
deliberate intent to lie or deceive his CBTL superiors. The Court concluded that Arenas’ action did
not amount to serious misconduct.
HOCHENG PHILIPPINES CORPORATION vs. ANTONIO M. FARRALES

G.R. No. 211497, March 18, 2015, J. Reyes
Theft committed by an employee against a person other than his employer, if proven by
substantial evidence, is a cause analogous to serious misconduct. The misconduct to be serious must
be of such grave and aggravated character and not merely trivial or unimportant. Such misconduct,
however serious, must, nevertheless, be in connection with the employee’s work to constitute just
cause for his separation. But where there is no showing of a clear, valid and legal cause for
termination of employment, the law considers the case a matter of illegal dismissal.
Facts:
A report reached HPC management that a motorcycle helmet of an employee, Reymar Solas,
was stolen at the parking lot within its premises on November 27, 2009. On December 3, 2009, a
security officer confirmed a video sequence recorded on CCTV showing Farrales taking the missing
helmet from a parked motorcycle. Later that day, HPC sent Farrales a notice to explain his
involvement in the alleged theft. Farrales explains that, he borrowed a helmet from his co-worker
Eric Libutan since they reside in the same barangay. They agreed that Eric could get it at the house
of Farralesor the latter could return it the next time that they will see each other. Eric told him that
his motorcycle was black in color. As there were many motorcycles with helmets, he asked another
employee, Andy Lopega who was in the parking area where he could find Eric’s helmet. Andy
handed over to him the supposed helmet which he believed to be owned by Eric, then he went
home. In the morning of December 3, 2009, upon seeing Eric in the workplace, Farrales asked him
why he did not get the helmet from his house. Eric told him that, “Hindi po sa akin yung nakuha
nyong helmet.” Farrales was shocked and he immediately phoned the HPC’s guard to report the
situation that he mistook the helmet which he thought belonged to Eric. After several employees
were asked as to the ownership of the helmet, he finally found the owner thereof. Farrales promptly
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apologized to Jun and undertook to return the helmet the following day and explained that it was
an honest mistake.
A hearing was held. From Andy it was learned that at the time of the alleged incident, he
was already seated on his motorcycle and about to leave the company compound when Farrales
approached and asked him to hand to him a yellow helmet hanging from a motorcycle parked next
to him. But Eric had specifically told Farrales that his helmet was colored red and black and his
motorcycle was a black Honda XRM-125, parked near the perimeter fence away from the walkway
to the pedestrian gate. The CCTV showed Farrales instructing Andy to fetch a yellow helmet from
a blue Rossi 110 motorcycle with plate number 3653-DN parked in the middle of the parking lot,
opposite the location given by Eric. Farrales in his defense claimed he could no longer remember
the details of what transpired that time, nor could he explain why he missed Eric’s specific
directions.
The HPC issued a Notice of Terminationto Farrales dismissing him for violation of HPC
Code of Discipline, which provides that “stealing from the company, its employees and officials, or
from its contractors, visitors or clients,” is akin to serious misconduct and fraud or willful breach by
the employee of the trust reposed in him by his employer or duly authorized representative, which are
just causes for termination of employment under Article 282 of the Labor Code. Farrales filed a
complaint for illegal dismissal. The LA ruled in favor of Farrales. On appeal by HPC, the NLRC
reversed the LA. The appellate court agreed with the LA that Farrales’ act of taking Reymar’s helmet
did not amount to theft, holding that HPC failed to prove that Farrales’ conduct was induced by a
perverse and wrongful intent to gain, in light of the admission of Eric that he did let Farrales borrow
one of his two helmets, only that Farrales mistook Reymar’s helmet as the one belonging to him.
Issue:
Whether or not the dismissal is valid.
Ruling:
No, the dismissal is not valid.
The Court agrees with the CA that Farrales committed no serious or willful misconduct or
disobedience to warrant his dismissal. It is not disputed that Farrales lost no time in returning the
helmet to Reymar the moment he was apprised of his mistake by Eric, which proves, according to
the CA, that he was not possessed of a depravity of conduct as would justify HPC’s claimed loss of
trust in him. Farrales immediately admitted his error to the company guard and sought help to find
the owner of the yellow helmet, and this, the appellate court said, only shows that Farrales did
indeed mistakenly think that the helmet he took belonged to Eric.
It is not, then, difficult to surmise that when Farrales told Andy that the yellow helmet was
his, his intent was not to put up a pretence of ownership over it and thus betray his intent to gain,
as the NLRC held, but rather simply to assuage Andy’s reluctance to heed his passing request to
reach for the helmet for him; Andy, it will be recalled, was at that moment already seated in his
motorbike and about to drive out when Farrales made his request.
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Theft committed by an employee against a person other than his employer, if proven by
substantial evidence, is a cause analogous to serious misconduct. Misconduct is improper or wrong
conduct, it is the transgression of some established and definite rule of action, a forbidden act, a
dereliction of duty, willful in character, and implies wrongful intent and not mere error in
judgment. The misconduct to be serious must be of such grave and aggravated character and not
merely trivial or unimportant. Such misconduct, however serious, must, nevertheless, be in
connection with the employee’s work to constitute just cause for his separation. But where there is
no showing of a clear, valid and legal cause for termination of employment, the law considers the
case a matter of illegal dismissal. If doubts exist between the evidence presented by the employer
and that of the employee, the scales of justice must be tilted in favor of the latter. The employer
must affirmatively show rationally adequate evidence that the dismissal was for a justifiable cause.
AUTHORIZED CAUSES
PASIG AGRICULTURAL DEVELOPMENT AND INDUSTRIAL SUPPLY CORPORATION AND

CELESTINO E. DAMIAN v. WILSON NIEVAREZ, ALBERTO HALINA, GLORY VIC NUEVO,
RICKY TORRES AND CORNELIO BALLE
G.R. No. 197852, October 19, 2015, PERALTA, J.
Facts:
The suspension of business operations in a temporary lay-off situation must not exceed six months
Respondents were regular employees of PADISCOR hired as machinist, helper, welder and
maintenance worker. PADISCOR sent notices informing them that they were temporarily laid off
from employment for six months because it can no longer pay their wages and other benefits due
to financial losses and lack of capital. PADISCOR also cited undesirable personnel misconduct.
Respondents filed complaints for illegal suspension and illegal lay-off. They claimed that as regular
employees, they are entitled to security of tenure and cannot be laid off without just cause. They
also averred that the temporary lay-off by PADISCOR is equivalent to illegal dismissal. PADISCOR
maintained that the six months temporary lay-off of respondents was valid due to economic
reasons. It averred that there was no dismissal since the lay-off was merely temporary, thus,
respondents are not entitled to separation pay.
Issue:
Whether the temporary lay-off of respondents was legal
Ruling:
No. Lay-off is defined as the severance of employment, through no fault of and without prejudice
to the employee, resorted to by management during the periods of business recession, industrial
depression, or seasonal fluctuations, or during lulls caused by lack of orders, shortage of materials,
conversion of the plant to a new production program or the introduction of new methods or more
efficient machinery, or of automation. However, a layoff would be tantamount to a dismissal only
if it is permanent. Hence, when a lay-off is only temporary, the employment status of the employee
is not deemed terminated, but merely suspended. Pursuant to Article 286 (now Article 301), the
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suspension of the operation of business or undertaking in a temporary lay-off situation must not
exceed six months. Within this six-month period, the employee should either be recalled or
permanently retrenched.
PADISCOR asserts that respondents were temporarily laid-off for a period of six months since it
can no longer pay their wages and other benefits due to financial losses and lack of capital. To
support its claim, it presented the following pieces of evidence: (a) Notices of temporary layoff to
respondents and (b) Copies of Establishment Termination Report evidencing the respondents' lay-
off. Petitioners failed to substantiate their claim that PADISCOR was suffering from financial losses
and lack of capital. The employer should be able to prove that it is faced with a compelling economic
reason which reasonably forces it to temporarily shut down its business operations or a particular
undertaking, incidentally resulting to the temporary lay-off of its employees. PADISCOR failed to
establish the bona fide suspension of its business operations or undertaking that would have
resulted in the temporary lay-off of the respondents.
MAERSK-FILIPINAS CREWING, INC., A.P. MOLLER SINGAPORE PTE. LIMITED, and JESUS
AGBAYANI v. TORIBIO C. AVESTRUZ
The burden of proving that the termination of an employee was for a just or authorized
cause lies with the employer. In order to discharge this burden, the employer must present
substantial evidence, which is that amount of relevant evidence which a reasonable mind might
accept as adequate to justify a conclusion, and not based on mere surmises or conjectures.
Facts:
Maersk-Filipinas Crewing, Inc., on behalf of its foreign principal, A.P. Moller Singapore Pte.
Ltd., hired Toribio C. Avestruz as Chief Cook on board the vessel M/V Nedlloyd Drake for a
period of six months.
Captain Charles C. Woodward noticed that the cover of the garbage bin in the kitchen
near the washing area was oily. He called Avestruz and took the latter’s right hand and
swiped it on the oily cover of the garbage bin. Avestruz remarked, "Sir, if you are looking for
dirt, you can find it. The ship is big. Tell us if you want to clean and we will clean it." Captain
Woodward required Avestruz to state in writing what transpired in the galley that morning.
Avestruz submitted his written statement but on the very same day, he was dismissed from
service.
Avestruz filed a complaint for illegal dismissal against the petitioners alleging that
no investigation or hearing was conducted nor was he given the chance to defend himself
before he was dismissed. Petitioners claimed that Avestruz failed to attend to his
tasks prompting Captain Woodward to issue weekly reminders but despite the
reminders, Avestruz still failed to perform his duties. Thereafter, he was informed of his
dismissal from service due to insubordination.
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Issue:
Whether Avestruz was illegally dismissed
Ruling:
Yes. Petitioners maintain that Avestruz was dismissed on the ground of insubordination.
In support of this contention, petitioners presented as evidence the e-mails sent by
Captain Woodward which they claim chronicled the circumstances that led to
Avestruz’s dismissal. However, these e- mails are uncorroborated, self-serving, and do not
satisfy the requirement of substantial evidence.
Insubordination, as a just cause for the dismissal of an employee, necessitates the

concurrence of at least two requisites: (1) the employee’s assailed conduct must have
been willful, that is, characterized by a wrongful and perverse attitude; and (2) the order
violated must have been reasonable, lawful, made known to the employee, and must
pertain to the duties which he had been engaged to discharge. In this case, the contents
of Captain Woodward’s e-mails do not establish that Avestruz’s conduct had been willful,
or characterized by a wrongful and perverse attitude.
Conversely, apart from Captain Woodward’s e-mails, no other evidence was presented
by the petitioners to support their claims. While rules of evidence are not strictly
observed in proceedings before administrative bodies, petitioners should have offered
additional proof to corroborate the statements described therein. It was incumbent
upon the petitioners to present other substantial evidence to bolster their claim that
Avestruz committed acts that constitute insubordination as would warrant his
dismissal.
INDUSTRIAL PERSONNEL & MANAGEMENT SERVICES, INC. (IPAMS), SNC LAVALIN

ENGINEERS & CONTRACTORS, INC. AND ANGELITO C. HERNANDEZ, v. JOSE G. DE VERA
AND ALBERTO B. ARRIOLA
G.R. No. 205703, March 07, 2016
FACTS
Petitioner Industrial Personnel & Management Services, Inc. (IPAMS) is a local placement agency
duly organized and existing under Philippine laws, with petitioner Angelito C. Hernandez as its
president and managing director. Petitioner SNC Lavalin Engineers & Contractors, Inc. (SNC-
Lavalin) is the principal of IPAMS, a Canadian company with business interests in several countries.
On the other hand, respondent Alberto Arriola (Arriola) is a licensed general surgeon in the
Philippines.
Employee's Position
Arriola was offered by SNC-Lavalin, through its letter, dated May 1, 2008, the position of Safety
Officer in its Ambatovy Project site in Madagascar. The position offered had a rate of CA$32.00 per
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hour for forty (40) hours a week with overtime pay in excess of forty (40) hours. It was for a period
of nineteen (19) months starting from June 9, 2008 to December 31, 2009.
Arriola was then hired by SNC-Lavalin, through its local manning agency, IPAMS, and his overseas
employment contract was processed with the Philippine Overseas Employment Agency (POEA)6 In
a letter of understanding, dated June 5, 2008, SNC-Lavalin confirmed Arriola's assignment in the
Ambatovy Project. According to Arriola, he signed the contract of employment in the Philippines.
On June 9, 2008, Arriola started working in Madagascar.
After three months, Arriola received a notice of pre-termination of employment, dated September
9, 2009, from SNC-Lavalin. It stated that his employment would be pre-terminated effective
September 11, 2009 due to diminishing workload in the area of his expertise and the unavailability
of alternative assignments. Consequently, on September 15, 2009, Arriola was repatriated. SNC-
Lavalin deposited in Arriola's bank account his pay amounting to Two Thousand Six Hundred
Thirty Six Dollars and Eight Centavos (CA$2,636.80), based on Canadian labor law.
Aggrieved, Arriola filed a complaint against the petitioners for illegal dismissal and non-payment
of overtime pay, vacation leave and sick leave pay before the Labor Arbiter (LA). He claimed that
SNC-Lavalin still owed him unpaid salaries equivalent to the three-month unexpired portion of his
contract, amounting to, more or less, One Million Sixty-Two Thousand Nine Hundred Thirty-Six
Pesos (P1,062,936.00). He asserted that SNC-Lavalin never offered any valid reason for his early
termination and that he was not given sufficient notice regarding the same. Arriola also insisted
that the petitioners must prove the applicability of Canadian law before the same could be applied
to his employment contract.
Employer's Position
The petitioners denied the charge of illegal dismissal against them. They claimed that SNC-Lavalin
was greatly affected by the global financial crises during the latter part of 2008. The economy of
Madagascar, where SNC-Lavalin had business sites, also slowed down. As proof of its looming
financial standing, SNC-Lavalin presented a copy of a news item in the Financial Post, dated March
5, 2009, showing the decline of the value of its stocks. Thus, it had no choice but to minimize its
expenditures and operational expenses. It re-organized its Health and Safety Department at the
Ambatovy Project site and Arriola was one of those affected.
The petitioners also invoked EDI-Staffbuilders International, Inc. v. NLRC (EDI-Staffbuilders),

pointing out that particular labor laws of a foreign country incorporated in a contract freely entered
into between an OFW and a foreign employer through the latter's agent was valid. In the present
case, as all of Arriola's employment documents were processed in Canada, not to mention that SNC-
Lavalin's office was in Ontario, the principle of lex loci celebrationis was applicable. Thus, the
petitioners insisted that Canadian laws governed the contract.
The petitioners continued that the pre-termination of Arriola's contract was valid for being
consistent with the provisions of both the Expatriate Policy and laws of Canada. The said foreign
law did not require any ground for early termination of employment, and the only requirement was
the written notice of termination. Even assuming that Philippine laws should apply, Arriola would
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still be validly dismissed because domestic law recognized retrenchment and redundancy as legal
grounds for termination.
In their Rejoinder, the petitioners presented a copy of the Employment Standards Act (ESA) of
Ontario, which was duly authenticated by the Canadian authorities and certified by the Philippine
Embassy.
ISSUES
Whether or not the Philippine labor laws must govern the overseas employment contract of Arriola.
Whether or not the authorized cause for dismissal was proven.
RULING
Application of foreign laws with labor contracts
The general rule is that Philippine laws apply even to overseas employment contracts. This rule is
rooted in the constitutional provision of Section 3, Article XIII that the State shall afford full
protection to labor, whether local or overseas. Hence, even if the OFW has his employment abroad,
it does not strip him of his rights to security of tenure, humane conditions of work and a living
wage under our Constitution.
As an exception, the parties may agree that a foreign law shall govern the employment contract. A
synthesis of the existing laws and jurisprudence reveals that this exception is subject to the
following requisites.
5. That it is expressly stipulated in the overseas employment contract that a specific
foreign law shall govern;
6. That the foreign law invoked must be proven before the courts pursuant to the
Philippine rules on evidence;
7. That the foreign law stipulated in the overseas employment contract must not be
contrary to law, morals, good customs, public order, or public policy of the
Philippines; and
8. That the overseas employment contract must be processed through the POEA.
The Court is of the view that these four (4) requisites must be complied with before the employer
could invoke the applicability of a foreign law to an overseas employment contract. With these
requisites, the State would be able to abide by its constitutional obligation to ensure that the rights
and well-being of our OFWs are fully protected. These conditions would also invigorate the policy
under R.A. No. 8042 that the State shall, at all times, uphold the dignity of its citizens whether in
country or overseas, in general, and the Filipino migrant workers, in particular.40 Further, these
strict terms are pursuant to the jurisprudential doctrine that "parties may not contract away
applicable provisions of law especially peremptory provisions dealing with matters heavily
impressed with public interest," such as laws relating to labor. At the same time, foreign employers
are not at all helpless to apply their own laws to overseas employment contracts provided that they
faithfully comply with these requisites.
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If the first requisite is absent, or that no foreign law was expressly stipulated in the employment
contract which was executed in the Philippines, then the domestic labor laws shall apply in
accordance with the principle of lex loci contractus. This is based on the cases of Sameer Overseas
and PCL Shipping.
If the second requisite is lacking, or that the foreign law was not proven pursuant to Sections 24
and 25 of Rule 132 of the Revised Rules of Court, then the international law doctrine of processual
presumption operates. The said doctrine declares that "[w]here a foreign law is not pleaded or, even
if pleaded, is not proved, the presumption is that foreign law is the same as ours." This was observed
in the cases of EDI-Staffbuilders and ATCI Overseas.
If the third requisite is not met, or that the foreign law stipulated is contrary to law, morals, good
customs, public order or public policy, then Philippine laws govern. This finds legal bases in the
Civil Code, specifically: (1) Article 17, which provides that laws which have, for their object, public
order, public policy and good customs shall not be rendered ineffective by laws of a foreign country;
and (2) Article 1306, which states that the stipulations, clauses, terms and conditions in a contract
must not be contrary to law, morals, good customs, public order, or public policy. The said doctrine
was applied in the case of Pakistan International.
Finally, if the fourth requisite is missing, or that the overseas employment contract was not
processed through the POEA, then Article 18 of the Labor Code is violated. Article 18 provides that
no employer may hire a Filipino worker for overseas employment except through the boards and
entities authorized by the Secretary of Labor. In relation thereto, Section 4 of R.A. No. 8042, as
amended, declares that the State shall only allow the deployment of overseas Filipino workers in
countries where the rights of Filipino migrant workers are protected. Thus, the POEA, through the
assistance of the Department of Foreign Affairs, reviews and checks whether the countries have
existing labor and social laws protecting the rights of workers, including migrant workers.43 Unless
processed through the POEA, the State has no effective means of assessing the suitability of the
foreign laws to our migrant workers. Thus, an overseas employment contract that was not
scrutinized by the POEA definitely cannot be invoked as it is an unexamined foreign law.
In other words, lacking any one of the four requisites would invalidate the application of the foreign
law, and the Philippine law shall govern the overseas employment contract.
As the requisites of the applicability of foreign laws in overseas labor contract have been settled,
the Court can now discuss the merits of the case at bench.
A judicious scrutiny of the records of the case demonstrates that the petitioners were able to
observe the second requisite, or that the foreign law must be proven before the court pursuant to
the Philippine rules on evidence. The petitioners were able to present the ESA, duly authenticated
by the Canadian authorities and certified by the Philippine Embassy, before the LA. The fourth
requisite was also followed because Arriola's employment contract was processed through the
POEA.
Unfortunately for the petitioners, those were the only requisites that they complied with. As
correctly held by the CA, even though an authenticated copy of the ESA was submitted, it did not
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mean that said foreign law could be automatically applied to this case. The petitioners miserably
failed to adhere to the two other requisites, which shall be discussed in seratim.
The foreign law was not expressly specified in the employment contract
The petitioners failed to comply with the first requisite because no foreign law was expressly
stipulated in the overseas employment contract with Arriola. In its pleadings, the petitioners did
not directly cite any specific provision or stipulation in the said labor contract which indicated the
applicability of the Canadian labor laws or the ESA. They failed to show on the face of the contract
that a foreign law was agreed upon by the parties. Rather, they simply asserted that the terms and
conditions of Arriola's employment were embodied in the Expatriate Policy, Ambatovy Project -
Site, Long Term. Then, they emphasized provision 8.20 therein, regarding interpretation of the
contract, which provides that said policy would be governed and construed with the laws of the
country where the applicable SNC-Lavalin, Inc. office was located. Because of this provision, the
petitioners insisted that the laws of Canada, not of Madagascar or the Philippines, should apply.
Then, they finally referred to the ESA.
It is apparent that the petitioners were simply attempting to stretch the overseas employment
contract of Arriola, by implication, in order that the alleged foreign law would apply. To sustain
such argument would allow any foreign employer to improperly invoke a foreign law even if it is
not anymore reasonably contemplated by the parties to control the overseas employment. The
OFW, who is susceptible by his desire and desperation to work abroad, would blindly sign the labor
contract even though it is not clearly established on its face which state law shall apply. Thus, a
better rule would be to obligate the foreign employer to expressly declare at the onset of the labor
contract that a foreign law shall govern it. In that manner, the OFW would be informed of the
applicable law before signing the contract.
Further, it was shown that the overseas labor contract was executed by Arriola at his residence in
Batangas and it was processed at the POEA on May 26, 2008. Considering that no foreign law was
specified in the contract and the same was executed in the Philippines, the doctrine of lex loci
celebrationis applies and the Philippine laws shall govern the overseas employment of Arriola.
The foreign law invoked is contrary to the Constitution and the Labor Code
Granting arguendo that the labor contract expressly stipulated the applicability of Canadian law,
still, Arriola's employment cannot be governed by such foreign law because the third requisite is
not satisfied. A perusal of the ESA will show that some of its provisions are contrary to the
Constitution and the labor laws of the Philippines.
First, the ESA does not require any ground for the early termination of employment. Article 54
thereof only provides that no employer should terminate the employment of an employee unless a
written notice had been given in advance. Necessarily, the employer can dismiss any employee for
any ground it so desired. At its own pleasure, the foreign employer is endowed with the absolute
power to end the employment of an employee even on the most whimsical grounds.
Second, the ESA allows the employer to dispense with the prior notice of termination to an
employee. Article 65(4) thereof indicated that the employer could terminate the employment
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without notice by simply paying the employee a severance pay computed on the basis of the period
within which the notice should have been given. The employee under the ESA could be immediately
dismissed without giving him the opportunity to explain and defend himself.
The provisions of the ESA are patently inconsistent with the right to security of tenure. Both the
Constitution and the Labor Code provide that this right is available to any employee. In a host of
cases, the Court has upheld the employee's right to security of tenure in the face of oppressive
management behavior and management prerogative. Security of tenure is a right which cannot be
denied on mere speculation of any unclear and nebulous basis.
Not only do these provisions collide with the right to security of tenure, but they also deprive the
employee of his constitutional right to due process by denying him of any notice of termination
and the opportunity to be heard. Glaringly, these disadvantageous provisions under the ESA
produce the same evils which the Court vigorously sought to prevent in the cases of Pakistan
International and Sameer Overseas. Thus, the Court concurs with the CA that the ESA is not
applicable in this case as it is against our fundamental and statutory laws.
In fine, as the petitioners failed to meet all the four (4) requisites on the applicability of a foreign
law, then the Philippine labor laws must govern the overseas employment contract of Arriola.
No authorized cause for dismissal was proven
Here, the petitioners assert that the economy of Madagascar weakened due to the global financial
crisis. Consequently, SNC-Lavalin's business also slowed down. To prove its sagging financial
standing, SNC-Lavalin presented a copy of a news item in the Financial Post, dated March 5, 2009.
They insist that SNC-Lavalin had no choice but to minimize its expenditures and operational
expenses. In addition, the petitioners argued that the government of Madagascar prioritized the
employment of its citizens, and not foreigners. Thus, Arriola was terminated because there was no
more job available for him.
The Court finds that Arriola was not validly dismissed. The petitioners simply argued that they were
suffering from financial losses and Arriola had to be dismissed. It was not even clear what specific
authorized cause, whether retrenchment or redundancy, was used to justify Arriola's dismissal.
Worse, the petitioners did not even present a single credible evidence to support their claim of
financial loss. They simply offered an unreliable news article which deserves scant consideration as
it is undoubtedly hearsay. Time and again the Court has ruled that in illegal dismissal cases like the
present one, the onus of proving that the employee was dismissed and that the dismissal was not
illegal rests on the employer, and failure to discharge the same would mean that the dismissal is
not justified and, therefore, illegal.
As to the amount of backpay awarded, the Court finds that the computation of the CA was valid
and proper based on the employment contract of Arriola. Also, the issue of whether the petitioners
had made partial payments on the backpay is a matter best addressed during the execution process.
PHILIPPINE AIRLINES, INC. v. ENRIQUE LIGAN, ET AL.

G.R. No. 203932, June 08, 2016
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FACTS
PAL and Synergy Services Corporation (Synergy) entered into a station services agreement and a
janitorial services agreement whereby Synergy provided janitors and station attendants to PAL at
Mactan airport. Enrique Ligan, Eduardo Magdaraog, Jolito Oliveros, Richard Goncer, Emelito Soco,
Virgilio P. Campos, Jr., Lorenzo Butanas, Ramel Bernardes, Nelson M. Dulce, Clemente R. Lumayno,
Arthur M. Capin, Allan Bentuzal, and Jeffrey Llenes (respondents) were among the personnel of
Synergy posted at PAL to carry out the contracted tasks. Claiming to be performing duties directly
desirable and necessary to the business of PAL, the respondents, along with 12 other co-employees,
filed complaints in March 1992 against PAL and Synergy in the NLRC Region VII Office in Cebu
City for regularization of their status as employees of PAL, underpayment of salaries and non-
payment of premium pay for holidays, premium pay for rest days, service incentive leave pay, 13 th
month pay and allowances.
In the Decision dated August 29, 1994, the Labor Arbiter (LA) ruled that Synergy was an
independent contractor and dismissed the complaint for regularization, but granted the
complainants' money claims. On appeal, the NLRC, 4th Division, Cebu City on January 5, 1996
declared Synergy a labor-only contractor and ordered PAL to accept the complainants as regular
employees and as such, to pay their salaries, allowances and other benefits under the Collective
Bargaining Agreement subsisting during the period of their employment. PAL went to the SC on
certiorari, but pursuant to St. Martin Funeral Home v. NLRC, the case was referred to the CA. On
September 29, 2000, the CA, in CA-G.R. SP No. 52329, affirmed the NLRC in toto.
On petition for review, this Court, on February 29, 2008, affirmed but modified the NLRC decision
On motion for reconsideration by PAL, the Court on April 30, 2009 modified the aforementioned
decision.
Meanwhile, while the above regularization cases were pending in the CA, PAL terminated its service
agreements with Synergy effective June 30, 1998, alleging serious business losses. Consequently,
Synergy also terminated its employment contracts with the respondents, who forthwith filed
individual complaints for illegal dismissal against PAL. PAL in turn filed a third-party complaint
against Synergy.
In his Decision dated July 27, 1998, Executive LA Reynoso A. Belarmino declared that Synergy was
an independent contractor and the respondents were its regular employees, and therefore Synergy
was solely liable for the payment of their separation pay, wage differential, and attorney's fees. In
their appeal to the NLRC, docketed as NLRC Case No. V-000112-2000, the respondents cited seven
previous cases wherein the NLRC also declared that Synergy was a labor-only contractor. They
argued that Synergy and PAL dismissed them without just cause.
In the Decision dated August 27, 2004, the NLRC found that the functions performed by the
respondents under Synergy's service contracts with PAL indicated that they were directly related
to PAL's air transport business, that Synergy serviced PAL exclusively and had no other clients, that
its activities were carried out within PAL's premises and PAL shared supervision and control over
the respondents. After ruling that the respondents were dismissed without just cause and without
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observance of procedural due process, the NLRC ordered PAL to pay them separation pay,
backwages, and wage differential.
PAL moved for reconsideration arguing that as janitors, the respondents were hired under a
permissible job-contracting arrangement. In its Resolution dated April 25, 2005 denying the motion
for reconsideration, the NLRC pointed out that in fact most of the respondents worked as station
attendants or station loaders, not janitors, and that PAL could have submitted their contracts as
janitors, but did not. The NLRC also noted that in all seven previous cases appealed to it involving
the same parties, it invariably ruled that PAL was the employer of the respondents and Synergy was
a labor-only contractor.
On petition for review on certiorari to the CA, docketed as CA-G.R. CEB SP No. 00922, PAL's main
contention was that since only this Court's decisions form part of jurisprudence, the NLRC erred in
adopting the CA decision in CA-G.R. SP No. 50138 which held that Synergy was a labor-only
contractor, although it was still on review in this Court.
On February 15, 2012, the CA dismissed PAL's petition, and on September 27, 2012, it also denied its
motion for reconsideration.
Hence, the instant petition for review on certiorari was filed by PAL.
ISSUE
Whether or not the respondents were illegally dismissed.
RULING
In the illegal dismissal cases before the LA, the issue was whether the termination of the
respondents' employment by Synergy in June 1998 was without just cause and observance of due
process. In the instant petition, PAL argues in the main that in reversing the LA, the NLRC (in NLRC
Case No. V-000112-2000) cited for its factual and legal basis an inexistent CA decision, docketed as
CA-G.R. SP No. 50138. Culling from its own "Compliance" dated April 4, 2006 in CA-G.R. CEB SP
No. 00922, PAL tells the Court that CA-G.R. SP No. 50138 is actually entitled "Anita Danao, Owner
of Wonder Baker v. NLRC and Eufemio Famis" not "Philippine Airlines, Inc. v. NLRC" as mistakenly
mentioned by the NLRC, and that it was promulgated on December 31, 1999, not April 30, 1999; that
a verification with the CA docket section showed that another PAL case, CA-G.R. SP No. 50161, is
actually dated April 30, 1999 and involved the issue of payment of 13th month pay to PAL employees,
but had nothing to do with Synergy or its status as a labor-only contractor; and, that what was
actually elevated from the NLRC, 4th Division, to this Court, and then referred to the CA pursuant
to St. Martin Funeral Home, was CA-G.R. SP No. 52329, decided on September 29, 2000, not CA-
G.R. SP No. 50138.
In its assailed decision, the CA pointed out that both CA-G.R. SP No. 00922 and CA-G.R. SP No.
52329 involve the same facts and employer, PAL, and the herein respondents were among the
complainants in the regularization cases. Noting that this Court in GR. No. 146408 has ruled that
the respondents were regular employees of PAL, the CA ruled that they cannot be whimsically
terminated by PAL but it must show that: (1) their dismissal was for any of the causes authorized in
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Article 282 of the Labor Code; and (2) they were given opportunity to be heard and to defend their
selves.
According to the CA, PAL failed to show that the respondents were guilty of any of the causes
mentioned in Article 282. Neither was due process observed by PAL in dismissing them, who were
merely notified of their termination through a notice sent to them by Synergy.
Moreover, PAL cannot deny that all along it had always known of the ruling in CA-G.R. SP No.
52329, which as PAL itself also pointed out, was elevated for review to this Court in G.R. No. 146408.
PAL is aware that G.R. No. 146408 was decided on February 29, 2008, and its motion for
reconsideration was resolved on April 30, 2009, whereas the instant petition was filed only on
November 6, 2012. As the petitioner in CA-G.R. SP No. 52329, PAL even attached in Annex "E" of
this petition a copy of the decision in CA-G.R. SP No. 52329.35 PAL has thus always known that the
issue therein was whether Synergy was a labor-only contractor or a legitimate contractor; that the
respondents were adjudged as regular employees of PAL entitled to all the benefits of its regular
employees, that Synergy was a labor-only contractor and thus a mere agent of PAL.
As the petitioner in G.R. No. 146408, PAL certainly cannot pretend ignorance of the Court's decision
therein. Moreover, on April 28, 2008, the respondents had manifested in CA-G.R. CEB SP No. 00922
that a decision had been rendered in G.R. No. 146408, with a copy thereof attached; on May 26,
2008, PAL itself also manifested that it had filed a motion for reconsideration in G.R. No. 146408,
which then prompted the CA to suspend the resolution of CA-G.R. CEB SP No. 00922, since the
regularization cases are intimately connected to the illegal dismissal cases.
In Resolution dated April 30, 2009 in G.R. No. 146408, this Court mentioned that PAL had revealed
for the first time in its Motion for Reconsideration the matter of the lay-off of the respondents on
June 30, 1998 due to financial woes; that the respondents likewise disclosed that they were all
terminated in June 1998 in the guise of retrenchment. Except for the employees who had died, they
either accepted settlement earlier, or had been declared as employee of Synergy.
The Court further noted that PAL in its motion for reconsideration from the CA's decision in CA-
G.R. SP No. 52329 also invoked its financial difficulties, not by way of defense to a charge of illegal
dismissal but to manifest that supervening events had rendered it impossible to comply with the
order to accept the respondents as regular employees.
B.
In G.R. No. 146408, the Court noted that the termination of the respondents in June 1998 was in
disregard of a subsisting temporary restraining order which the Court issued in 1996 to preserve the
status quo, before the case was transferred to the CA in January 1999. The Court also held that PAL
failed to establish such economic losses which rendered impossible its compliance with the order
to accept the respondent as regular employees. Thus:
Other than its bare allegations, [PAL] presented nothing to substantiate its impossibility of
compliance. In fact, [PAL] waived this defense by failing to raise it in its Memorandum filed on June
14, 1999 before the [CA]. x x x. (Citation omitted)
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While retrenchment is a valid exercise of management prerogative, it is well settled that economic
losses as a ground for dismissing an employee is factual in nature, and in order for a retrenchment
scheme to be valid, all of the following elements under Article 283 of the Labor Code must concur
or be present, to wit:
(6) That retrenchment is reasonably necessary and likely to prevent business losses which, if
already incurred, are not merely de minimis, but substantial, serious, actual and real, or if
only expected, are reasonably imminent as perceived objectively and in good faith by the
employer;
(7) That the employer served written notice both to the employees and to the Department of
Labor and Employment at least one month prior to the intended date of retrenchment;
month pay or at least one-half QA) month pay for every year of service, whichever is higher
advancement of its interest and not to defeat or circumvent the employees' right to security
of tenure; and,
(10) That the employer uses fair and reasonable criteria in ascertaining who would be dismissed
and who would be retained among the employees, such as status, efficiency, seniority,
physical fitness, age, and financial hardship for certain workers.
The absence of one element renders the retrenchment scheme an irregular exercise of management
prerogative. The employer's obligation to exhaust all other means to avoid further losses without
retrenching its employees is a component of the first element enumerated above. To impart
operational meaning to the constitutional policy of providing full protection to labor, the
employer's prerogative to bring down labor costs by retrenching must be exercised essentially as a
measure of last resort, after less drastic means have been tried and found wanting.
PAL has insisted that the NLRC erroneously relied on an inexistent CA decision, and therefore its
decision is void, but the CA in its resolution of September 27, 2012 has concluded that "[a] perusal
of the Decision of the NLRC shows that it is not without basis," that the NLRC "made findings of
facts, analyzed the legal aspects of the case taking into consideration the evidence presented and
formed conclusions after noting the relevant facts of the case." But more importantly, the Court
cannot lose sight of the settled rule that in illegal dismissal cases, the onus to prove that the
employee was not dismissed, or if dismissed, that his dismissal was not illegal, rests on the
employer, and that its failure to discharge this burden signifies that the dismissal is not justified
and therefore illegal. Unfortunately, in this petition, PAL has advanced no such justification
whatsoever to dismiss or retrench the respondents. The Court is left with no conclusion: PAL's
petition is misleading and clearly baseless and dilatory.
NDC TAGUM FOUNDATION, INC., ET AL. v. EVELYN B. SUMAKOTE

G.R. No. 190644, June 13, 2016
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FACTS
Respondent was a full-time nursing instructor at the College of Nursing of the NDC Tagum
Foundation before she was appointed as its dean in 1996. Beginning 1999, she also operated a
nursing review and caregiver training center while simultaneously working at the NDC Tagum
Foundation.
While respondent was still under contract with the NDC Tagum Foundation, the University of
Mindanao (UM) engaged her services as consultant for the establishment of the UM's Nursing
Department. In February 2003, she was interviewed for deanship at the UM; and within that month,
her appointment as full-time program head was approved by the president of the university. She
was also listed as faculty member in the permit application it submitted to the Commission on
Higher Education (CHED).
In a letter dated 11 February 2003, Natavio advised respondent that her engagement with the UM
was in conflict with the interests of the NDC Tagum Foundation, and that it was an act of disloyalty.
Moreover, even her work attendance was already affected. She was then requested to formally
declare her plan to leave the NDC Tagum Foundation, so it could appoint a new dean.
Respondent did not respond to the letter. On April 2003, she declined the appointment at the UM,
as she had decided to stay with the NDC Tagum Foundation.
On 4 September 2003, respondent received another letter from Natavio requiring the former to
explain why she should not be dismissed on the ground of neglect of duty because of her
moonlighting activities. The letter also stated that respondent not only had poor work attendance,
but also neglected to update the school curriculum.
On the following day, respondent submitted a written explanation denying the charges of neglect.
She contended that she had not received any compensation from the UM; therefore, her work there
could not be considered as moonlighting. She also questioned the timing of the management's
objection to her review and training center, considering that it had been operational since 1999.
On 15 September 2003, petitioners placed respondent on preventive suspension for five days
pending the outcome of the management's investigation of her supposed moonlighting activities
and her reported attempts to pirate some of the school's instructors for transfer to the UM. In a
letter of even date, Somoso notified respondent of the latter's preventive suspension and directed
her to explain why she should not be dismissed based on the reports.
The next day, respondent submitted a letter denying the latest allegation and seeking a clarification
of her employment status. In addition, she prayed that the management's decision be made only
after a proper investigation. In a letter dated 17 September 2003, petitioners notified her of her
dismissal from employment effective 18 September 2003.
ISSUE
Whether the CA erred in holding that respondent was not given the opportunity to be heard and
to present her defense prior to her dismissal.
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RULING
In this case, it is not disputed that respondent was terminated from employment for just cause
under Article 282 of the Labor Code. The only question to be determined is whether the procedural
due process requirements for a valid dismissal were complied with.
Petitioners argue that respondent was given four notices, referring to the letters dated 11 February
2003, 4 September 2003, 15 September 2003, and 17 September 2003. They claim that all these letters
afforded her the opportunity to explain her side and, therefore, she was given ample opportunity
to be heard.
The first letter sent by petitioners did not ask respondent to submit an explanation. It appears,
rather, that they had already decided to find a replacement for her and that they were only waiting
for the confirmation of her transfer to the UM.
It is settled that a full adversarial hearing or conference is not required. All that is required is a fair
and reasonable opportunity for the employee to explain the controversy at hand. Yet, even if we
consider the letter dated 4 September 2003 as the first notice, there would still be a breach of the
procedural due process requirement. The breach occurred when petitioners did not call a hearing
or conference during which respondent could have presented her defense. Instead, they placed her
right away under preventive suspension for five (5) days. Then they dismissed her from employment
while she was still serving her preventive suspension.
Clearly, the alleged opportunities given for her to explain her side, through the letters dated 4 and
15 September 2003, fell short of the minimum standard of what constitutes an opportunity to be
heard in administrative proceedings, i.e., a fair and reasonable chance to defend oneself against the
bases cited for one's dismissal.
PUNCIA v. TOYOTA SHAW/PASIG, INC.,

G.R. No. 214399, June 28, 2016
FACTS
Puncia alleged that since 2004, he worked as a messenger/collector for Toyota and was later on
appointed on March 2, 2011 as a Marketing Professional tasked to sell seven (7) vehicles as monthly
quota. However, Puncia failed to comply and sold only one (1) vehicle for the month of July and
none for August, prompting Toyota to send him a Notice to Explain. In reply, Puncia stated that as
a trainee, he was only required to sell three (3) vehicles per month; that the month of May has
always been a lean month; and that he was able to sell four (4) vehicles in the month of September.
Thereafter, a hearing was conducted but Puncia failed to appear despite notice.
On October 18, 2011, Toyota sent Puncia a Notice of Termination, dismissing him on the ground of
insubordination for his failure to attend the scheduled hearing and justify his absence. This
prompted Puncia to file a complaint for illegal dismissal with prayer for reinstatement and payment
of backwages, unfair labor practice, damages, and attorney's fees against Toyota and its officers,
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claiming, inter alia, that Toyota dismissed him after discovering that he was a director of the
Toyota-Shaw Pasig Workers Union-Automotive Industry Worker's Alliance; and that he was
terminated on the ground of insubordination and not due to his failure to meet his quota as
contained in the Notice to Explain.
In its defense, Toyota denied the harassment charges and claimed that there was a valid cause to
dismiss Puncia, considering his failure to comply with the company's strict requirements on sales
quota. It likewise stated that Puncia has consistently violated the company rules on attendance and
timekeeping as several disciplinary actions were already issued against him.
ISSUE
Whether the Court of Appeals erred in upholding petitioner’s dismissal, considering that the
administrative proceeding against him was due to his failure to meet his monthly sales quota, but
he was dismissed on the ground of gross insubordination.
RULING
In the instant case, records reveal that as a Marketing Professional for Toyota, Puncia had a monthly
sales quota of seven (7) vehicles from March 2011 to June 2011. As he was having trouble complying
with said quota, Toyota even extended him a modicum of leniency by lowering his monthly sales
quota to just three (3) vehicles for the months of July and August 2011; but even then, he still failed
to comply. In that six (6)-month span, Puncia miserably failed in satisfying his monthly sales quota,
only selling a measly five (5) vehicles out of the 34 he was required to sell over the course of said
period. Verily, Puncia's repeated failure to perform his duties - i.e., reaching his monthly sales quota
- for such a period of time falls under the concept of gross inefficiency. In this regard, case law
instructs that "gross inefficiency" is analogous to "gross neglect of duty," a just cause of dismissal
under Article 297 of the Labor Code, for both involve specific acts of omission on the part of the
employee resulting in damage to the employer or to his business. In Aliling v. Feliciano, the Court
held that an employer is entitled to impose productivity standards for its employees, and the latter's
non-compliance therewith can lead to his termination from work.
[T]he practice of a company in laying off workers because they failed to make the
work quota has been recognized in this jurisdiction, x x x. In the case at bar, the
petitioners' failure to meet the sales quota assigned to each of them
constitute a just cause of their dismissal, regardless of the permanent or
probationary status of their employment. Failure to observe prescribed
standards of work, or to fulfill reasonable work assignments due to
inefficiency may constitute just cause for dismissal. Such inefficiency is
understood to mean failure to attain work goals or work quotas, either by
failing to complete the same within the allotted reasonable period, or by
producing unsatisfactory results. (Emphases and underscoring supplied)
Indisputably, Toyota complied with the substantive due process requirement as there was indeed
just cause for Puncia's termination.
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Anent the issue of procedural due process, in this case, at first glance it seemed like Toyota afforded
Puncia procedural due process, considering that: (a) Puncia was given a Notice to Explain; (b)
Toyota scheduled a hearing on October 17, 2011 regarding the charge stated in the Notice to Explain;
(c) on the date of the hearing, Puncia was able to submit a letter addressed to Toyota's vehicle sales
manager explaining his side, albeit he failed to attend said hearing; and (d) Toyota served a written
Notice of Termination informing Puncia of his dismissal from work. However, a closer look at the
records reveals that in the Notice to Explain, Puncia was being made to explain why no disciplinary
action should be imposed upon him for repeatedly failing to reach his monthly sales quota, which
act, as already adverted to earlier, constitutes gross inefficiency. On the other hand, a reading of
the Notice of Termination shows that Puncia was dismissed not for the ground stated in the Notice
to Explain, but for gross insubordination on account of his non-appearance in the scheduled
October 17, 2011 hearing without justifiable reason. In other words, while Toyota afforded Puncia
the opportunity to refute the charge of gross inefficiency against him, the latter was completely
deprived of the same when he was dismissed for gross insubordination - a completely different
ground from what was stated in the Notice to Explain. As such, Puncia's right to procedural due
process was violated.
Hence, considering that Toyota had dismissed Puncia for a just cause, albeit failed to comply with
the proper procedural requirements, the former should pay the latter nominal damages in the
amount of P30,000.00 in accordance with recent jurisprudence. aw
SPI TECHNOLOGIES INC., ET AL vs. VICTORIA MAPUA

The Court does not agree with the rationalization of the NLRC that if it were true that her
position was not redundant and indispensable, then the company must have already hired a new one
to replace her in order not to jeopardize its business operations. The fact that there is none only proves
that her position was not necessary and therefore superfluous. What the above reasoning of the NLRC
failed to perceive is that of primordial consideration is not the nomenclature or title given to the
employee, but the nature of his functions. It is not the job title but the actual work that the employee
performs. Also, change in the job title is not synonymous to a change in the functions. A position
cannot be abolished by a mere change of job title. In cases of redundancy, the management should
adduce evidence and prove that a position which was created in place of a previous one should pertain
to functions which are dissimilar and incongruous to the abolished office. For a valid implementation
of a redundancy program, the employer must comply with the following requisites: (1) written notice
served on both the employee and the DOLE at least one month prior to the intended date of
termination; (2) payment of separation pay equivalent to at least one month pay or at least one month
pay for every year of service, whichever is higher; (3) good faith in abolishing the redundant position;
and,(4) fair and reasonable criteria in ascertaining what positions are to be declared redundant.
Facts:
Victoria K. Mapua (Mapua) alleged that she was hired in 2003 by SPI Technologies, Inc.
(SPI) and was the Corporate Development’s Research/Business Intelligence Unit Head and
Manager of the company. Subsequently in August 2006, the then Vice President and Corporate
Development Head, Peter Maquera (Maquera) hired Elizabeth Nolan (Nolan) as Mapua’s
supervisor.
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Later, Mapua’s laptop crashed, causing her to lose files and data. Mapua informed Nolan
and her colleagues that she was working on recovering the lost data and asked for their patience
for any possible delay on her part in meeting deadlines. However, Nolan informed Mapua that she
was realigning Mapua’s position to become a subordinate of co-manager Sameer Raina (Raina) due
to her missing a work deadline. Later, Mapua noticed that her colleagues began to ostracize and
avoid her. Nolan and Raina started giving out majority of her research work and other duties under
Healthcare and Legal Division to the rank-and-file staff. Mapua lost about 95% of her work projects
and job responsibilities. Mapua allegedly saw the new table of organization of the Corporate
Development Division which would be renamed as the Marketing Division. The new structure
showed that Mapua’s level will be again downgraded because a new manager will be hired and
positioned between her rank and Raina’s.
March 21, 2007, Raina informed Mapua over the phone that her position was considered
redundant and that she is terminated from employment effective immediately. Villanueva notified
Mapuathat she should cease reporting for work the next day. Her laptop computer and company
mobile phone were taken right away and her office phone ceased to function. She was likewise given
later a second termination letter, the contents of which were similar to the first one. Mapua later
received through mail, a third Notice of Termination dated March 21, 2007 but the date of
effectivityofthe termination was changed from March 21 to April 21, 2007.
A recruitment advertisement of SPI was published in the Philippine Daily Inquirer (Inquirer
advertisement, for brevity). It listed all vacancies in SPI, including a position for Marketing
Communications Manager under Corporate Support —the same group where Mapua previously
belonged. In her affidavit, Mapua alleged that Prime Manpower Resources Development (Prime
Manpower) posted an advertisement on the website of Jobstreet Philippines for the employment of
a Corporate Development Manager in an unnamed Business Process Outsourcing (BPO) company
located in Parañaque City. She later feigned as applicant and on the day of her interview with Portia
Dimatulac (Dimatulac), the latter allegedly revealed to Mapua that SPI contracted Prime
Manpower’s services to search for applicants for the Corporate Development Manager position.
Mapua was convinced that her former position is not redundant. This prompted Mapua filed with
the Labor Arbiter (LA) complaint for illegal dismissal, claiming reinstatement or if deemed
impossible, for separation pay.
The LA rendered decision in favor of Mapua ruling that the redundancy of Mapua’s position
being in want of factual basis, her termination is therefore hereby declared illegal. Accordingly, she
should be paid her backwages, separation pay in lieu of reinstatement, moral and exemplary
damages and attorney’s fees. Unrelenting, SPI appealed the LA decision to the National Labor
Relations Commission (NLRC) which reversed the decision of the LA. NLRC held that the
determination of whether Mapua’s position as Corporate Development Manager is redundant is
not for her to decide. It essentially and necessarily lies within the sound business management. The
CA later, on appeal, reinstated the LA’s decision with modification. SPI asserted that an employer
has the unbridled right to conduct its own business in order to achieve the results it desires.
Issue:
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Whether or not Mapua’s position is redundant thus legally justifying SPI to terminate her
employment.
Ruling:
No. The decision of the CA is affirmed.
The position of Mapua was not redundant. For a valid implementation of a redundancy
program, the employer must comply with the following requisites: (1) written notice served on both
the employee and the DOLE at least one month prior to the intended date of termination; (2)
payment of separation pay equivalent to at least one month pay or at least one month pay for every
year of service, whichever is higher; (3) good faith in abolishing the redundant position; and,(4) fair
and reasonable criteria in ascertaining what positions are to be declared redundant.
Anent the first requirement which is written notice served on both the employee and the
DOLE at least one month prior to the intended date of termination, SPI had discharged the burden
of proving that it submitted a notice to the DOLE on March 21, 2007, stating therein that the
effective date of termination is on April 21, 2007. It is, however, quite peculiar that two kinds of
notices were served to Mapua. One termination letter stated that its date of effectivity is on the
same day, March 21, 2007. The other termination letter sent through mail to Mapua’s residence
stated that the effective date of her termination is on April 21, 2007. Our question is, after Mapua
initially refused to accept the letter, why did SPI make a new letter instead of just giving her the
first one — which the Court notes was already signed and witnessed by other employees? Curiously,
there was neither allegation nor proof that the original letter was misplaced or lost which would
necessitate the drafting of a new one. SPI did not even explain in the second letter that the same
was being sent in lieu of the one given to her. Hence, SPI must shoulder the consequence of causing
the confusion brought by the variations of termination letters given to Mapua.
In AMA Computer College, Inc. v. Garcia, et al., the Court held that the presentation of the
new table of the organization and the certification of the Human Resources Supervisor that the
positions occupied by the retrenched employees are redundant are inadequate as evidence to
support the college’s redundancy program. Even if we disregard Mapua’s affidavit as regards the
Prime Manpower advertisement, SPI admitted that it caused the Inquirer advertisement for a
Marketing Communications Manager position. Mapua alleged that this advertisement belied the
claim of SPI that her position is redundant because the Corporate Development division was only
renamed to Marketing division SPI, being the employer, has possession of valuable information
concerning the functions of the offices within its organization. Nevertheless, it did not even bother
to differentiate the two positions.
The Court does not agree with the rationalization of the NLRC that if it were true that her
position was not redundant and indispensable, then the company must have already hired a new
one to replace her in order not to jeopardize its business operations. The fact that there is none
only proves that her position was not necessary and therefore superfluous. What the above
reasoning of the NLRC failed to perceive is that of primordial consideration is not the nomenclature
or title givento the employee, but the nature of his functions. It is not the job title but the actual
work that the employee performs. Also, change in the job title is not synonymous to a change in
the functions. A position cannot be abolished by a mere change of job title. In cases of redundancy,
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the management should adduce evidence and prove that a position which was created in place of a
previous one should pertain to functions which are dissimilar and incongruous to the abolished
office.
Thus, in Caltex Phils., Inc. (now Chevron Phils., Inc.) v. NLRC, the Court dismissed the
employer’s claim of redundancy because it was shown that after declaring the employee’s position
of Senior Accounting Analyst as redundant, the company opened other accounting positions
(Terminal Accountant and Internal Auditor) for hiring. There was no showing that the private
respondent therein could not perform the functions demanded of the vacant positions, to which he
could be transferred to instead of being dismissed.
On the matter of separation pay, there is no question that SPI indeed offered separation pay
to Mapua, but the offer must be accompanied with good faith in the abolishment of the redundant
position and fair and reasonable criteria in ascertaining the redundant position. It is insignificant
that the amount offered to Mapua is higher than what the law requires because the Court has
previously noted that “a job is more than the salary that it carries”. There is a psychological effect
or a stigma in immediately finding one’s self laid off from.
EUGENE S. ARABIT, et al. vs. JARDINE PACIFIC FINANCE, INC. (FORMERLY MB FINANCE)
Redundancy does not need to be always triggered by a decline in the business. Primarily,
employers resort to redundancy when the functions of an employee have already become superfluous
or in excess of what the business requires. Thus, even if a business is doing well, an employer can still
validly dismiss an employee from the service due to redundancy if that employee’s position has already
become in excess of what the employer’s enterprise requires. From this perspective, it is illogical for
employer to terminate the petitioners’ employment and replace them with contractual employees. The
replacement effectively belies employer’s claim that the petitioners’ positions were abolished due to
superfluity. Redundancy could have been justified if the functions of the petitioners were transferred
to other existing employees of the company.
Facts:
Petitioners were former regular employees of respondent Jardine Pacific Finance, Inc.
(formerly MB Finance) (Jardine). The petitioners were also officers and members of MB Finance
Employees Association-FFW Chapter (the Union), a legitimate labor union and the sole exclusive
bargaining agent of the employees of Jardine. The petitioners’ total length of service with Jardine
before their dismissal from employment would range variably from 3- 20 years.On the claim of
financial losses, Jardine decided to reorganize and implement a redundancy program among its
employees. The petitioners were among those affected by the redundancy program. Jardine
thereafter hired contractual employees to undertake the functions these employees used to
perform.
The Union filed a notice of strike with the National Conciliation and Mediation Board
(NCMB), questioning the termination of employment of the petitioners who were also union
officers. The Union alleged unfair labor practice on the part of Jardine, as well as discrimination in
the dismissal of its officers and members.
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Subsequently, the petitioners and the Union filed a complaint against Jardine with the
NLRC for illegal dismissal.
Issue:
Whether or not petitioners are validly dismissed due to redundancy.
Ruling:
No.
Redundancy exists where the services of an employee are in excess of what is reasonably
demanded by the actual requirements of the enterprise. A position is redundant where it is
superfluous, and superfluity of a position or positions may be the outcome of a number of factors,
such as over hiring of workers, decreased volume of business, or dropping of a particular product
line or service activity previously manufactured or undertaken by the enterprise. Retrenchment, on
the other hand, is used interchangeably with the term "lay-off." It is an act of the employer of
dismissing employees because of losses in the operation of a business, lack of work, and
considerable reduction on the volume of his business, a right consistently recognized and affirmed
by this Court.
These appropriately clarify that redundancy does not need to be always triggered by a
decline in the business. Primarily, employers resort to redundancy when the functions of an
employee have already become superfluous or in excess of what the business requires. Thus, even
if a business is doing well, an employer can still validly dismiss an employee from the service due
to redundancy if that employee’s position has already become in excess of what the employer’s
enterprise requires.
From this perspective, it is illogical for Jardine to terminate the petitioners’ employment
and replace them with contractual employees. The replacement effectively belies Jardine’s claim
that the petitioners’ positions were abolished due to superfluity. Redundancy could have been
justified if the functions of the petitioners were transferred to other existing employees of the
company.
NPC DRIVERS AND MECHANICS ASSOCIATION (NPC DAMA), represented by its

President ROGER S. SAN JUAN, SR., NPC EMPLOYEES & WORKERS UNION (NEWU) -
NORTHERN LUZON, REGIONAL CENTER, ZOL D. MEDINA, NARCISO M. MAGANTE,
VICENTE B. CIRIO, JR., and NECITAS B. CAMAMA, in their individual capacities as
employees of National Power Corporation vs. THE NATIONAL POWER CORPORATION
(NPC), NATIONAL POWER BOARD OF DIRECTORS (NPB), JOSE ISIDRO N. CAMACHO as
Chairman of the National Power Board of Directors (NPB), ROLANDO S. QUILALA, as
President - Officer-in-charge/CEO of National Power Corporation and Member of
National Power Board, and VINCENT S. PEREZ, JR., EMILIA T. BONCODIN, MARIUS P.
CORPUS, RUBEN S. REINOSO, JR., GREGORY L. DOMINGO, NIEVES L. OSORIO and
POWER SECTOR ASSETS and LIABILITIES MANAGEMENT (PSALM)
G.R. No. 156208, June 30, 2014, J. Brion
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The separation of NPC employees affected by its reorganization and privatization was a
foregone conclusion. In recognition of this, the EPIRA gave the assurance that these employees shall
receive the separation pay and other benefits due them under existing laws, rules or regulations or be
able to avail of the privileges under a separation plan which shall be one and one-half month salary
for every year of service in the government. The employees’ separation being an unavoidable
consequence of the mandated restructuring and privatization of the NPC, the liability to pay for their
separation benefits should be deemed existing as of the EPIRA’s effectivity, and were thus transferred
to PSALM pursuant to Section 49 of the law.
Facts:
On 8 June 2001, Republic Act No. 9136, otherwise known as the "Electric Power Industry
Reform Act of 2001" (EPIRA Law), was approved and signed into law by President Gloria Macapagal-
Arroyo, and took effect on 26 June 2001. Section 2(i) and Section 3 of the EPIRA Law states:
Section 2. Declaration of Policy. – It is hereby declared the policy of the State:
x xxx
(i) To provide for an orderly and transparent privatization of the assets and
liabilities of the National Power Corporation (NPC);
x xxx
Section 3. Scope. – This Act shall provide a framework for the restructuring of the
electric power industry, including the privatization of the assets of NPC, the
transition to the desired competitive structure, and the definition of the
responsibilities of the various government agencies and private entities.
On 18 November 2002, pursuant to Section 634 of the EPIRA Law and Rule 335 of the IRR,
the NPB passed NPB Resolution No. 2002-124 which provided for the Guidelines on the Separation
Program of the NPC and the Selection and Placement of Personnel in the NPC Table of
Organization. Under said Resolution, all NPC personnel shall be legally terminated on 31 January
2003, and shall be entitled to separation benefits. On the same day, the NPB approved NPB
Resolution No. 2002-125, whereby a Transition Team was constituted to manage and implement
the NPC's Separation Program.
In a Memorandum dated 21 November 2002, the NPC OIC-President and CEO Rolando S.
Quilala circulated the assailed Resolutions and directed the concerned NPC officials to disseminate
and comply with said Resolutions and implement the same within the period provided for in the
timetable set in NPB Resolution No. 2002-125. As a result thereof, Mr. Paquito F. Garcia, Manager –
HRSD and Resources and Administration Coordinator of NPC, circulated a Memorandum dated 22
November 2002 to all NPC officials and employees providing for a checklist of the documents
required for securing clearances for the processing of separation benefits of all employees who shall
be terminated under the Restructuring Plan.
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Contending that the assailed NPB Resolutions are void and without force and effect,
petitioners, in their individual and representative capacities, filed a Petition for Injunction to
restrain respondents from implementing NPB Resolutions No. 2002-124 and No. 2002-125. In
support thereof, petitioners invoke Section 78 of the EPIRA Law, to wit:
Section 78. Injunction and Restraining Order. – The implementation of the

provisions of this Act shall not be restrained or enjoined except by an order issued
by the Supreme Court of the Philippines.
In assailing the validity of NPB Resolutions No. 2002-124 and No. 2002-125, petitioners
maintain that said Resolutions were not passed and issued by a majority of the members of the duly
constituted Board of Directors since only three of its members, as provided under Section 486 of
the EPIRA Law, were present. According to petitioners, the other four members who were present
at the meeting and signed the Resolutions were not the secretaries of their respective departments
but were merely representatives or designated alternates of the officials who were named under the
EPIRA Law to sit as members of the NPB. Petitioners claim that the acts of these representatives
are violative of the well-settled principle that "delegated power cannot be further delegated." Thus,
petitioners conclude that the questioned Resolutions have been illegally issued as it were not issued
by a duly constituted board since no quorum existed because only three of the nine members, as
provided under Section 48 of the EPIRA Law, were present and qualified to sit and vote.
It is petitioners' submission that even assuming arguendo that there was no undue
delegation of power to the four representatives who signed the assailed Resolutions, said
Resolutions cannot still be given legal effect because the same did not comply with the mandatory
requirement of endorsement by the Joint Congressional Power Commission and approval of the
President of the Philippines, as provided under Section 47 of the EPIRA Law which states that:
Section 47. NPC Privatization. – Except for the assets of SPUG, the generation assets,
real estate, and other disposable assets as well as IPP contracts of NPC shall be
privatized in accordance with this Act. Within six (6) months from effectivity of this
Act, the PSALM Corp. shall submit a plan for the endorsement by the Joint
Congressional Power Commission and the approval of the President of the
Philippines, on the total privatization of the generation assets, real estate, other
disposable assets as well as existing IPP contracts of NPC and thereafter, implement
the same, in accordance with the following guidelines, except as provided for in
paragraph (f) herein: x xx.
Petitioners insist that if ever there exists a valid wholesale abolition of their positions and
their concomitant separation form the service, such a process is an integral part of "privatization"
and "restructuring" as defined under the EPIRA Law and, therefore, must comply with the above-
quoted provision requiring the endorsement of the Joint Congressional Power Commission and the
approval of the President of the Philippines. Furthermore, petitioner highlight the fact that said
Resolutions will have an adverse effect on about 5,648 employees of the NPC and will result in the
displacement of some 2,370 employees, which, petitioners argue, is contrary to the mandate of the
Constitution to promote full employment and security of tenure.
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In the September 26, 2006 Decision, the Court declared null and without legal effect NPB
Resolution Nos. 2002-1248 and 2002-125. The Court thereafter enjoined the implementation of the
nullified NPB Resolution Nos. 2002-124 and No. 2002-125. The Court denied the motion for
reconsiderations filed.
In the September 17, 2008 Resolution, the Court partially granted the petitioners’ motion
for clarification and/or amplification by affirming that, as a logical and necessary consequence of
our September 26, 2006 Decision, the “petitioners have the right to reinstatement, or separation
pay in lieu of reinstatement, pursuant to a validly approved Separation Program; plus backwages,
wage adjustments, and other benefits accruing from 31 January 2003 to the date of their
reinstatement or payment of separation pay; but deducting therefrom the amount of separation
benefits which they previously received under the null NPB resolutions. On October 10, 2008, an
entry of judgment was made on the September 26, 2006 Decision and the September 17, 2008
Resolution.
On November 14, 2008, the petitioners moved for the execution of the September 26, 2006
Decision and the September 17, 2008 Resolution. Pursuant to the September 17, 2008 Resolution,
the Court ordered the RTC-QC to compute the actual amounts due the petitioners and to enforce
the payment thereof by execution. In a Resolution dated December 10, 2008, the Court, without
any opposition from the NPC, granted the petitioners’ urgent motion for execution.
In the December 2, 2009 Resolution, the Court ordered the respondents and their counsel
to show cause why they should not be held in contempt of court for their willful failure to comply
with the December 10, 2008 Resolution. The Court also ordered the the Chairperson, the Members
of the NPB and the President of the NPC to comply with the December 10, 2008 Resolution by
submitting within 10 days from notice to the Clerk of Court and Ex-Officio Sheriff of the RTC-QC
the list containing “the names of all, and not only 16, NPC personnel/employees affected by the
restructuring of the NPC,”31 with the computation of the amounts due them from their date of
illegal termination up to September 14, 2007.
In a January 13, 2010 Resolution, the Court set the case for oral argument on January 20, 2010
with the following issues.
(1) Who are the NPC personnel, officers and rank-and-file, that were actually separated from
the service as a result of the full implementation of the nullified National Power Board
(NPB) Resolution No. (Res.) 2002-124 and Res. 2002-125?
(2) Did the Resolution of this Court dated September 17, 2008, acting on the motion of
petitioners for clarification, in fact grant relief not sought or contemplated in our Decision
of September 26, 2006?
(3) Did the Resolution of the Court dated December 10, 2008 granting petitioners’ motion for
execution exceed the terms of the September 17, 2008 resolution sought to be executed?
(4) What was the effect, if any, of NPB Resolution No. 2007-55 on the nullified Res. 2002-124
and Res. 2002-125?
(5) To what extent is PSALM liable for the NPC’s liabilities?
Issues:
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In their respective memoranda, the parties stated their positions and arguments on the
above issues:
1. Who are the NPC personnel, officers and rank-and-file that were actually separated from
the service as a result of the full implementation of the nullified NPB Resolution Nos. 2002-
124 and 2002-125?
The NPC insists that only 16 employees (all belonging to the executive/VP levels and above)
were actually separated from their employment on January 31, 2003 pursuant to NPB Resolution
Nos. 2002-124 and 2002-125, which were nullified by the Court in its September 26, 2006 Decision.
The nullity of these NPB Resolutions, however, did not preclude the NPC from issuing subsequent
resolutions, such as NPB Resolution No. 2003-11, which effected the separation of all other NPC
employees beginning February 28, 2003. The petitioners, on the other hand, allege that around
8,018 NPC employees were illegally terminated from their employment pursuant to the nullified
NPB Resolution Nos. 2002-124 and 2002-125. The Court’s September 26, 2006 Decision and
September 17, 2008 Resolution were clear that the employment of all NPC employees illegally
terminated under the nullified NPB Resolutions were covered by the judgment, regardless of their
actual date of termination.
2. Did the September 17, 2008 Resolution grant a relief not sought or contemplated in the
September 26, 2006 Decision?
The NPC argues that the relief prayed for by the petitioners in their injunction petition
before the Court was only to enjoin and nullify NPB Resolution Nos. 2002-124 and 2002-125. The
petition did not pray for or cover reliefs founded on the resolution of the illegal dismissal issue, i.e.,
the propriety of reinstating the petitioners and the award of backwages and other monetary
benefits.
The illegal dismissal issue and the additional reliefs, however, were resolved and included
in the Court’s September 17, 2008 Resolution which granted the petitioners’ motion for clarification
and/or amplification. The NPC contends that it did not file an opposition to the petitioners’ motion
for clarification and/or amplification (which was granted in the September 17, 2008 Resolution)
since the Court did not require one.
At any rate, the NPC states that the 16 NPC employees who were dismissed pursuant to the
nullified NPB resolutions have already received separation benefits under the separation scheme
effected under NPB Resolution No. 2003-01. To give them additional separation benefits would
amount to their unjust enrichment.
3. Did the December 10, 2008 Resolution which granted the petitioners’ motion for execution
exceed the terms of the September 17, 2008 Resolution?
The NPC argues that the Court’s orders in the December 10, 2008 Resolution exceeded the
terms of its September 17, 2008 Resolution by: (1) requiring the submission of the list of covered
employees and the immediate payment of the benefits without conducting any proceedings; and
(2) awarding interests. NPC contends that the Court cannot include, as an issue in this case, the
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termination of the NPC employees affected by NPB Resolution No. 2003-11 in the guise of enforcing
the final September 26, 2006 Decision, which was limited to nullified NPB Resolution Nos. 2002-
124 and 2002-125. Thus, the NPC argues against the validity of the December 2, 2009 Resolution,
the terms of which deviated from the September 26, 2006 Decision.
4. What was the effect of NPB Resolution No. 2007-55 on the nullified NPB Resolution Nos.
2002-124 and 2002-125?
The petitioners claim that NPB Resolution No. 2007-55 dated September 14, 2007, ratifying
all previous board resolutions on the 2003 NPC Reorganization, has no retroactive effect on the
nullified NPB Resolution Nos. 2002-124 and 2002-125. The prospective application of NPB
Resolution No. 2007-55 means that the services of all NPC employees were legally terminated only
on September 14, 2007.
The NPC argues that NPB Resolution No. 2007-55 ratified all board resolutions that involved
the NPC re-organization, including NPB Resolution No. 2003-11 which amended the nullified NPB
resolutions. Contrary to the petitioners’ claim, NPB Resolution No. 2007-55 can be given retroactive
effect, as it was issued precisely to avoid future issues on the validity or legality of board resolutions
as a result of the September 26, 2006 Decision of the Court. The NPC further argues that the
nullified NPB Resolutions could be legally ratified, since these were not void but merely
unenforceable under Article 1403 of the Civil Code.
5. To what extent is PSALM liable for the NPC’s liabilities?
The petitioners contend that Sections 4960 and 5061 of the EPIRA, in relation with Section 19,
Rule 3 of the Rules of Court, make the PSALM a transferee-in-interest of the NPC and, thus,
solidarily liable for the NPC’s financial liabilities. There is nothing in the EPIRA that expressly
declares that the PSALM is liable only for the NPC obligations that were transferred to it as of the
effectivity of the EPIRA on June 26, 2001.
The petitioners also point out that under the Deed of Transfer executed between the NPC
and the PSALM in December 2001, the “assignment, transfer and conveyance of each of the Assets
as well as each of the obligations arising from the liabilities shall take effect only upon Transfer
Date.” The Deed of Transfer, however, imposed numerous conditions before its terms could become
effective. Indeed, it was only on October 1, 2008 that the transfer took effect, after the parties have
agreed to waive the conditions set forth in the Deed of Transfer. Thus, the transfer of the assets and
obligations from the NPC to the PSALM took place on October 1, 2008, after the petitioners have
already commenced the present action for injunction on December 8, 2002.
The PSALM argues that it cannot be made liable for the liabilities of the NPC outside of
those contemplated in the EPIRA. It contends that under Section 19, Rule 3 of the Rules of Court, it
cannot be considered as a transferee-in-interest. The established rule is that the transfer of interest
should occur during the pendency of the action in court, which clearly does not obtain in the
present case. The transfer to the PSALM preceded the circumstances leading to the filing of the
present action. The transfer of NPC’s assets and liabilities was made pursuant to the EPIRA, which
became effective on June 26, 2001; the present action, on the other hand, was instituted in
December 2002, after the assailed NPB resolutions were passed.
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The PSALM contends that it is the exclusive owner of the assets it acquired from the NPC,
and should not be treated as a mere successor-in-interest of the NPC. The PSALM and the NPC are
separate and distinct government-owned and -controlled corporations. The PSALM was created
with the objective of liquidating all the financial obligations and stranded contract costs of the NPC.
This objective notwithstanding, the PSALM should not be treated as a liquidator of the NPC; it does
not exist solely to wind up the NPC’s business. The PSALM conducts its business not for the benefit
of the NPC, but in pursuance of its own mandate. Neither is the PSALM acting as trustee of the
NPC. The PSALM does not hold the assets in trust for the NPC, but has acquired their full
ownership.
The PSALM further contends that the assailed NPB resolutions were solely the NPC’s acts,
and it had no participation whatsoever. The Court’s December 2, 2009 Resolution inequitably held
the PSALM responsible for the acts of the NPC, although the PSALM was never formally impleaded
as a party to the case. Assuming that the PSALM is an indispensable party to the case, the failure to
implead it renders the entire proceedings null and void for failure to afford it due process.
Section 63 of the EPIRA actually declares that the separation pay and other benefits to be
given to displaced or separated NPC employees shall be “in accordance with existing laws, rules or
regulations.” There is nothing in Section 63 of the EPIRA that made the PSALM liable to pay these
benefits. Section 4, Rule 13 of the IRR of the EPIRA has actually identified the source of funding for
the payment of the benefits, i.e., the Government Service Insurance System or the NPC.
Ruling:
1. The Court conclude that the final September 26, 2006 Decision and September 17, 2008
Resolution cover the separation from employment of all NPC employees. As explained in
the final September 17, 2008 Resolution, the logical and necessary consequence of the
nullification of NPB Resolution Nos. 2002-124 and 2002-125 was the illegality of the dismissal
of the NPC employees, since their separation from employment stemmed from these
nullified NPB resolutions. The final rulings could not have intended any other meaning. All
the pleadings filed prior to our final rulings indicate that the injunction case affected all
NPC employees.
The final September 26, 2006 Decision and the final September 17, 2008 Resolution were
based on the pleadings showing that all NPC employees were affected by the nullified NPB
resolutions. The records show that the petition was a class suit filed in behalf of three
thousand NPC employees, more or less, affected by the nullified NPB resolutions. The
records further show that the pleadings filed by the NPC bore its admission that the nullified
NPB resolutions covered the separation of all NPC personnel. If it had been otherwise, the
NPC would not have claimed a huge amount of monetary liability if the subject NPB
resolutions had to be nullified.
The NPC is estopped from claiming that not all NPC employees are covered by the Court’s
final rulings. The records additionally reveal the NPC’s obvious refusal to pay its obligation
under the final rulings. Pursuant to this intent, the NPC created a dilemma more imagined
than real to circumvent the clear terms of our final rulings. This dilemma caused serious
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and considerable delays in the execution of our final rulings, resulting in lost years that the
NPC employees could have used to enjoy the amounts due them. Under the circumstances,
The Court agreed with the petitioners that while the date of their actual termination from
employment was not by virtue of the nullified NPC resolutions, the amendment in the date
of their actual termination did not exclude them from the effect of our final rulings. It is an
absurd proposition to consider that the petitioners – as the parties who initiated the petition
– would be barred from reaping the rewards of a favorable judgment because of the NPC’s
clandestine act of withholding material information.
2. The Court finds no merit in NPC’s argument that the September 17, 2008 Resolution granted
additional reliefs not covered by the petition for injunction.
The resolution of the issue on the propriety of the separation of all NPC employees under
the nullified NPB Resolution Nos. 2002-124 and 2002-125 was included as part of the
petition’s prayer for general relief. The allegations in the petition undoubtedly questioned
the validity of the NPB resolutions, which contained a Restructuring Plan that included the
“measures and guidelines for the separation, termination and hiring of NPC employees and
officials.”
The petitioners emphasized that the nullified NPB resolutions “will have adverse effect to
about 5,684 employees and officials” of the NPC “and will result to the removal and
displacement of about 2,370 of such employees and officials most of whom will come from
the ranks of the herein petitioners.” A facial examination of the petition’s Allegations in
Support of Application for Issuance of a TRO and/or Writ of Preliminary Injunction also
reveals the effect of the implementation of the nullified NPB resolutions to the employment
of all NPC employees.
The above circumstances justify the modification of the Court’s final September 26, 2006
Decision, as the September 17, 2008 Resolution clarified the consequences of the Decision.
In the September 17, 2008 Resolution, the determination of the issue of illegal dismissal and
the propriety of the awards of reinstatement and/or payment of separation benefits are
logical and necessary consequences of our ruling declaring null and without effect the
assailed NPB Resolutions. The resolution of the validity of the separation from employment
of all NPC employees was allied to the resolution of the validity of the assailed NPB
resolutions, since the petitioners’ separation from employment depended on the validity of
the assailed resolutions.
3. The NPC’s argument that the December 10, 2008 Resolution exceeded the terms of the final
September 17, 2008 Resolution is similarly unavailing and clearly refuted by a comparison
of the dispositive portions of the two resolutions.
The Court has residual authority to ensure the proper enforcement and
implementation of its final judgment. In the exercise of this residual authority, it may
delegate to another court, as they have done in this case, the execution of our final rulings.
The Court does not surrender its authority to execute its final rulings by such delegation. In
other words, the Court maintains authority over all matters concerning the implementation
of our final rulings and issue such orders necessary for their implementation.
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In this case, the need exists to refer the enforcement of the judgment to the RTC-QC, as the
Court lacks the resources to implement the final judgment. Another reason for the referral
is the need to compute the amounts due the petitioners, which required the presentation
of factual proof and which the RTC-QC is in a better position to handle. What the Court
referred to the RTC-QC was the computation of the actual amounts due the petitioners.
The Court maintains its authority to issue orders to implement how our final rulings would
be executed.
Also pursuant to this residual authority, the Court gave the RTC-QC instructions on how
our final rulings should be executed to expedite the proceedings, taking into account the
period that had elapsed since the finality of our rulings. The resulting social and economic
burden brought about by the belated executions of our final rulings to the petitioners (and
all the illegally dismissed NPC employees) compelled the Court to expedite the execution
proper by seeing to it that the RTC-QC would have all the necessary documents and the
cooperation of all parties in the execution of our final rulings.
4. The arguments by the NPC that NPB Resolution No. 2007-55 has retroactive application and
the nullified NPB Resolution Nos. 2002-124 and 2002-125 can be ratified for being
unenforceable (not void) rest on specious grounds.
NPB Resolution No. 2007-55 has prospective application. The contents of NPB
Resolution No. 2007-55 show its intention to have prospective application. This intent may
be inferred from the last portion of the first Whereas clause stating that “there is need to
ratify other Board resolutions on the 2003 NPC Reorganization to avoid future issues on its
validity of illegality.”122 Simply put, NPB Resolution No. 2007-55 was a safety measure
adopted by the NPC to protect its interest arising from future litigations involving the
implementation of the NPB resolutions issued pursuant to the 2003 NPC reorganization.
The nullified NPB Resolutions are void (not simply unenforceable) resolutions. In the first
place, the previous final rulings declared the nullified NPB resolution Nos. 2002-124 and
2002-125 as void and without legal effect for having contravened Section 48 of the EPIRA.
In light of this final declaration, the NPC can no longer insist on a different conclusion. As
the nullified NPB resolutions are null and void (and not merely unenforceable), they cannot
be revived or ratified. Besides, the nullified NPB resolutions are not unenforceable contracts
according to the enumeration in Article 1403 of the Civil Code, since they are not, in the
first place, contracts defined and contemplated under Article 1305 of the Civil Code.
Assuming that the nullified NPB resolutions may be deemed as contracts, we declared in
our September 26, 2006 Decision that the infirmity in the nullified NPB resolutions did
not stem from the absence of consent or authority, which would have made them
unenforceable contracts under Article 1401(1) of the Civil Code. The infirmity comes from
the failure of the NPC to comply with the requirements set forth in the EPIRA.
5. The PSALM assumed NPC’s liabilities existing at the time of the EPIRA’s effectivity, and
these include the separation benefits due the petitioners.
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As may be gathered from Sections 47, 49, 50 and 55 of the EPIRA law, the properties and
liabilities of the NPC existing at the time of the EPIRA’s effectivity were transferred to the
PSALM. These liabilities include the separation benefits due the petitioners whose
termination from employment is acknowledged by the EPIRA as part of its mandated
restructuring and privatization of the NPC. For this reason, the PSALM is considered as a
necessary party and is impleaded in the case in order that complete relief may be accorded
the parties.
AM-PHIL FOOD CONCEPTS, INC. vs. PAOLO JESUS T. PADILLA

G.R. No. 188753, October 1, 2014, J. Leonen
Padilla was a regular employee of Am-Phil. However, due to business condition Am-Phil
resorted to retrenchment and thus Padilla was dismissed from service. He contended that he was illegally
dismissed. The court ruled that retrenchment was not valid for Am-Phil did not follow the procedures for
retrenchment. Retrenchment is used interchangeably with the term "lay-off." It is the termination of
employment initiated by the employer through no fault of the employee's and without prejudice to the
latter, resorted to by management during periods of business recession, industrial depression, or seasonal
fluctuations, or during lulls occasioned by lack of orders, shortage of materials, conversion of the plant
for a new production program or the introduction of new methods or more efficient machinery, or of
automation.
Facts:
Padilla was a Marketing Associate by Am-Phil, a corporation engaged in the restaurant

business. On September 29, 2002, Am-Phil sent Padilla a letter confirming his regular employment.
Sometime in the first week of March 2004, three (3) of Am-Phil’s officers (Marketing Supervisor Elaine
de Jesus, Area Director Art Latinazo, and Human Resources Officer Eunice Tugab) informed Padilla
that Am-Phil would be implementing a retrenchment program that would be affecting three (3) of its
employees, Padilla being one of them. The retrenchment program was allegedly on account of serious
and adverse business conditions, i.e., lack of demand in the market, stiffer competition, devaluation of
the Philippine peso, and escalating operation costs. Padilla questioned Am-Phil’s choice to retrench
him. He noted that Am-Phil had six (6) contractual employees, while he was a regular employee who
had a good evaluation record. He pointed out that Am-Phil was actually then still hiring new
employees. He also noted that Am-Phil's sales have not been lower relative to the previous year. In
response, Am-Phil's three (3) officers gave him two options: (1) be retrenched with severance pay or (2)
be transferred as a waiter in Am-Phil’s restaurant, a move that entailed his demotion. On March 17,
2004, Am-Phil sent Padilla a memorandum notifying him of his retrenchment. Padilla was paid
separation pay in the amount of P26,245.38. On April 20, 2004, Padilla executed a quitclaim and release
in favor of Am-Phil. On July 28, 2004, Padilla filed the complaint for illegal dismissal (with claims for
backwages, damages, and attorney’s fees
Issue:
Whether or not Padilla was illegally dismissed
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Ruling:
Yes, Padilla was illegally dismissed from service
Under Article 283 of the Labor Code recognizes retrenchment as an authorized cause for terminating
employment.
Retrenchment is used interchangeably with the term "lay-off." It is the termination of

employment initiated by the employer through no fault of the employee's and without prejudice to the
latter, resorted to by management during periods of business recession, industrial depression, or
seasonal fluctuations, or during lulls occasioned by lack of orders, shortage of materials, conversion of
the plant for a new production program or the introduction of new methods or more efficient
machinery, or of automation. Simply put, it is an act of the employer of dismissing employees because
of losses in the operation of a business, lack of work, and considerable reduction on the volume of his
business, a right consistently recognized and affirmed by this Court. Retrenchment is an exercise of
management’s prerogative to terminate the employment of its employees en masse, to either minimize
or prevent losses, or when the company is about to close or cease operations for causes not due to
business losses. Retrenchment has been described as “a measure of last resort when other less drastic
means have been tried and found to be inadequate.”
Retrenchment is, therefore, not a tool to be wielded and used nonchalantly. To justify
retrenchment, it “must be due to business losses or reverses which are serious, actual and real.”
There are substantive requirements relating to the losses or reverses that must underlie a
retrenchment. That these losses are serious relates to their gravity and that they are actual and real
relates to their veracity and verifiability. Likewise, that a retrenchment is anchored on serious, actual,
and real losses or reverses is to say that the retrenchment is done in good faith and not merely as a
veneer to disguise the illicit termination of employees. Equally significant is an employer’s basis for
determining who among its employees shall be retrenched. Apart from these substantive requirements
are the procedural requirements imposed by Article 283 of the Labor Code.
Thus, the court has outlined the requirements for a valid retrenchment, each of which must
be shown by clear and convincing evidence, as follows:
(1) that the retrenchment is reasonably necessary and likely to prevent business losses which, if
already incurred, are not merely de minimis, but substantial, serious, actual and real, or if only
expected, are reasonably imminent as perceived objectively and in good faith by the employer;
(2) that the employer served written notice both to the employees and to the Department of Labor
and Employment at least one month prior to the intended date of retrenchment;
(3) that the employer pays the retrenched employees separation pay equivalent to one month pay or
at least ½ month pay for every year of service, whichever is higher;
(4) that the employer exercises its prerogative to retrench employees in good faith for the
advancement of its interest and not to defeat or circumvent the employees’ right to security of
tenure; and
(5) that the employer used fair and reasonable criteria in ascertaining who would be dismissed and
who would be retained among the employees, such as status (i.e., whether they are temporary,
casual, regular or managerial employees), efficiency, seniority, physical fitness, age, and financial
hardship for certain workers.
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Am-Phil’s 2001 to 2004 audited financial statements, the sole proof upon which Am-Phil relies
on to establish its claim that it suffered business losses, have been deemed unworthy of
consideration. These audited financial statements were mere annexes to the motion for leave to admit
supplemental rejoinder which Labor Arbiter Chuanico validly disregarded. No credible explanation
was offered as to why these statements were not presented when the evidence-in-chief was being
considered by the labor arbiter. It follows that there is no clear and convincing evidence to sustain the
substantive ground on which the supposed validity of Padilla’s retrenchment rests. Moreover, it is
admitted that Am-Phil did not serve a written notice to the Department of Labor and Employment one
(1) month before the intended date of Padilla’s retrenchment, as required by Article 283 of the Labor
Code.While it is true that Am-Phil gave Padilla separation pay, compliance with none but one (1) of the
many requisites for a valid retrenchment does not absolve Am-Phil of liability.
MOUNT CARMEL COLLEGE EMPLOYEES UNION (MCCEU), et al. vs.MOUNT CARMEL

COLLEGE, INCORPORATED
G.R. No. 187621, September 24, 2014, J. Reyes
The burden of proving that the termination of services is for a valid or authorized cause rests
upon the employer. In termination by retrenchment, not every loss incurred or expected to be incurred
by an employer can justify retrenchment. The employer must prove, among others, that the losses are
substantial and that the retrenchment is reasonably necessary to avert such losses. In this case, while
[MCCI] may have presented its Financial Statements, [MCCI], nevertheless, failed to establish with
reasonable certainty that the proportion of its revenues are largely expended for its elementary and
high school personnel salaries, wages and other benefits.
Facts:
The petitioners were academic and non-academic personnel employed by Mount Carmel
College, Inc. (MCCI). In April 1999, they were informed of their retrenchment due to the closure of
the elementary and high school departments of MCCI. The petitioners contend this closure was
merely a subterfuge of their termination due to their union activities and as they were in fact in the
process of negotiating with MCCI as regards the CBA when it decided to retrench. The petitioners
were claiming for their remaining separation pay differentials since what they received was only
computed at 15 days for every year of service when they were retrenched.
MCCI counters that it did not commit any act of ULP and alleged that the retrenchment
was valid since it was reeling from financial headwinds brought about by declining enrolment.
Consequently, in the labor case filed by the petitioners, the Labor Arbiter (LA) declared that
they were illegally dismissed, among others, because the alleged losses of MCCI were not serious as
its financial statements showed otherwise. The LA ordered MCCI to pay the petitio-ners separation
pay in lieu of reinstatement, plus attorney’s fees.
Before the NLRC, the petitioners questioned the appeal bond posted by MCCI. Nonethe-
less, the NLRC reversed the LA decision, and in particular held that petitioners’ retrenchment was
an exercise by MCCI of its management prerogative and such action was justified by its then
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declining financial health. In affirming this decision, the CA found no factual basis for the alleged
union busting and the financial standing of MCCI called for the retrenchment to avert total closure.
Issue:
Whether or not the CA and the NLRC are both correct in finding that the retrenchment
carried out by MCCI as proper.
Ruling:
NO, the courts a quo erred in construing the retrenchment herein complained of as valid.
Retrenchment, as an authorized cause for the dismissal of employees, finds basis in Art. 283
of the Labor Code, and standards therefor have been established in order to prevent its abuse by an
employer, to wit:
1) That retrenchment is reasonably necessary and likely to prevent business losses which, if
already incurred, are not merely de minimis, but substantial, serious, actual and real, or
if only expected, are reasonably imminent as perceived objectively and in good faith by the
employer;
2) That the employer served written notice both to the employees and to the [DOLE] at least
one month prior to the intended date of retrenchment;
3) That the employer pays the retrenched employees separation pay equivalent to one (1)
month pay or at least one-half (½) month pay for every year of service, whichever is higher;
4) That the employer exercises its prerogative to retrench employees in good faith for the
advancement of its interest and not to defeat or circumvent the employees’ right to
security of tenure; and
5) That the employer used fair and reasonable criteria in ascertaining who would be
The burden of proving that the termination of services is for a valid or authorized cause
rests upon the employer. In termination by retrenchment, not every loss incurred or expected to
be incurred by an employer can justify retrenchment. The employer must prove, among others, that
the losses are substantial and that the retrenchment is reasonably necessary to avert such losses. In
this case, while [MCCI] may have presented its Financial Statements, [MCCI], nevertheless, failed
to establish with reasonable certainty that the proportion of its revenues are largely expended for
its elementary and high school personnel salaries, wages and other benefits. Its Financial
Statements showed the following figures, among others:
Financial Statement 1997 1998 1999

Gross Revenues 10,529,810.39 12,603,283.12 12,438,060.00
Personnel Expenses 6,273,646.00 7,199,859.58 6,688,710.32
Net Surplus 405,091.76 769,460.93 130,681.44
The Financial Statements pertain to its assets, liabilities, gross revenues and expenses for
the entire college system, that is, from elementary, high school to the college department. The
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expenses for the elementary and high school departments were not set out in detail ... Such detail
becomes material in the light of [MCCI’s] claim that the personnel expenses for the elementary and
high school departments were “eating into” the portion of its budget allocated for other purposes.
There could be no practical basis from which the [MCCI’s] claim finds support. Aside from this,
[MCCI’s] failed to present any proof establishing how the continued operations of the elementary
and high school departments has become impracticable. [MCCI] merely assumed, which the NLRC
and CA improperly sustained, that “[f]aced with the intractable demands of complainant Union for
additional increases in salaries and economic benefits, with the steady decline in enrolment and the
increase in overhead expenses, [it] had no choice but to close down the two departments and make do
with the College Department xxx.” There is nothing on record showing how [it] came up with such
conclusion, save for the alleged decline in its elementary and high school enrolment, and no
feasibility studies, analysis, or at the very least, an academic projection was presented to validate
its “forecast.” Note that the Financial Statements show that [MCCI] was not operating at a loss but
actually had surplus, albeit at a minimum. Thus, it has been held that –
Not every loss incurred or expected to be incurred by a company will justify retrenchment.
The losses must be substantial and the retrenchment must be reasonably necessary to avert
such losses. The employer bears the burden of proving the existence or the imminence of
substantial losses with clear and satisfactory evidence that there are legitimate business
reasons justifying a retrenchment. Should the employer fail to do so, the dismissal shall be
deemed unjustified.
[MCCI], likewise, cannot rely on the alleged condition in the Tuition Fee Law that “70% of
tuition incremental proceeds should be allocated for the payment of salaries, wages and other
benefits of the school’s academic and non-academic personnel.” In the first place, the Tuition Fee
Law alluded to by [MCCI] refers to R.A. No. 6728, as amended or the “Government Assistance to
Students and Teachers in Private Education Act.” Sec. 5 of R.A. No. 6728 allows the increase in tuition
fees in private educational institutions and provides for the allocation of the increment, to wit:
(2) Assistance under paragraph (1), subparagraphs (a) and (b) shall be granted and tuition
fees under subparagraph (c) may be increased, on the condition that seventy percent (70%)
of the amount subsidized allotted for tuition fee or of the tuition fee increases shall go to
the payment of salaries, wages, allowances and other benefits of teaching and non-teaching
personnel xxxx and may be used to cover increases as provided for in the collective
bargaining agreements existing or in force at the time when this Act is approved and made
effective: xxxx At least twenty percent (20%) shall go to the improvement or modernization
of buildings, equipment, libraries, laboratories, gymnasia and similar facilities and to the
payment of other costs of operation. xxxx.
The 70% allocation presupposes an increase in a school’s tuition fee, which was not
established in this case. Moreover, the Court has already ruled that the 70% allocation set by law is
only the minimum, and not the maximum percentage, and there is actually a 10% portion the
disposition of which the law does not regulate. Even assuming that the allocation provided by law
is applicable in the [MCCI’s] situation, the bare fact that the expenses allotted for the salaries, wages
and benefits of [MCCI’s] personnel exceeded the minimum allocation, without more, does not
constitute reasonable justification for the closure of its elementary and high school departments,
and the retrenchment of the petitioners. [MCCI] must establish by substantial and convincing
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evidence that the impending losses it expected to incur, based on such allocation, were imminent
and that the retrenchment it conducted was necessary to prevent such losses. Another factor that
militates against [MCCI’s] reason was that it re-opened after two years, due to the “clamor” for its
re-opening. This is contrary to [its] “perceived” impending loss considering that there was actually
a demand for its educational services. While enrolment may have declined, the Court is not
convinced that the closure of the elementary and high school departments was a reasonable
necessity, especially in the absence of any showing on the part of [MCCI] that it explored other less
drastic and/or cost-saving measures to avoid serious financial or economic problems.
MOUNT CARMEL COLLEGE EMPLOYEES UNION (MCCEU)/RUMOLO S. BASCAR,

MARIBEL TESALUNA, ROLANDO TESALUNA, KENNETH BENIGNOS, MARILYN
MANGULABNAN, EMELINA I. NACIONAL, JODELYN REBOTON, EVERSITA S. BASCAR,
MAE BAYLEN, ERNA E. MAHILUM, EVELYN R. ANTONESvs. MOUNT CARMEL COLLEGE,
INCORPORATED
The burden of proving that the termination of services is for a valid or authorized cause rests
upon the employer. In termination by retrenchment, not every loss incurred or expected to be incurred
by an employer can justify retrenchment. The employer must prove, among others, that the losses are
substantial and that the retrenchment is reasonably necessary to avert such losses. In this case, while
the respondent may have presented its Financial Statements, the respondent, nevertheless, failed to
establish with reasonable certainty that the proportion of its revenues are largely expended for its
elementary and high school personnel salaries, wages and other benefits.
Facts:
The petitioners were elementary and high school academic and non-academic personnel
employed by Mount Carmel. In April 1999, the petitioners were informed of their retrenchment by
the respondent due to the closure of the elementary and high school departments of the
school. The petitioners contend that such closure was merely a subterfuge of their termination due
to their union activities. According to the petitioners, they organized a union in 1997 (Mount
Carmel College Employees Union [MCCEU]), and were in the process of negotiating with the
respondent as regards their collective bargaining agreement when the respondent decided to close
the two departments in June 1999.The petitioners alleged that such closure was motivated by ill-
will just to get rid of the petitioners who were all union members because in June 2001, the school
re-opened its elementary and high school departments with newly-hired teachers. They claimed
for the remaining separation pay differentials since what they received was only computed at 15
days for every year of service when they were retrenched.
The respondent, on the other hand, denied committing any act of unfair labor practice and
alleged that their retrenchment was valid as it was due to the financial losses it suffered as result of
a decline in its enrolment. The respondent claimed that as it was, the expenses for its academic
and non-academic personnel were already eating into its budget portion allocated for capital and
administrative development, and that the teachers’ demand for increased salaries and benefits,
coupled with the decline in the enrolment, left the school with no choice but to close down its
grade school and high school departments.
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TheLabor Arbiter declared the petitioners to have been illegally dismissed, among
others. According to the LA, the respondent’s alleged losses were not serious as its financial
statements even showed a net surplus.The NLRC reversed the LA decision, ruling thatthe
petitioners’ retrenchment is an exercise by the respondent of its management prerogative and the
latter’s state of finances justifies the same. On appeal, the CA affirmed the decision of the NLRC.
The CA found no factual basis for the petitioners’ allegation that the school closed down for
purposes of union busting, and that the school cannot be compelled to operate at a loss, as shown
by its financial statements. The CA also ruled that the respondent cannot be compelled to re-hire
the petitioners when it later re-opened as it has the discretion in the hiring of its employees.
Issue:
Whether or not the alleged retrenchment was valid.
Ruling:
The Court still finds that the CA committed an error when it ruled that the NLRC did not
commit grave abuse of discretion in finding that the petitioners’ retrenchment was valid under the
circumstances of the case.
In the present case, the respondent’s justification for implementing the retrenchment of the
petitioners was due to the alleged closure or cessation of its elementary and high school
departments. According to them, the continued operations of these departments was an exercise
of management prerogative to protect its business and it was no longer viable to maintain the two
departments as it was already being subsidized by the college department. As proof thereof, the
respondent submitted its audited Financial Statements for the years 1997, 1998 and
1999. Respondent claimed that in its case, personnel benefits are already “eating into” the portion
of the budget allocated for capital and administrative development, and faced further with the
demands of the employees of additional increase in salaries and benefits, it had “no choice” but to
close down.
The respondent, nevertheless, failed to establish with reasonable certainty that the
proportion of its revenues are largely expended for its elementary and high school personnel
salaries, wages and other benefits. The expenses for the elementary and high school departments
were not set out in detail and instead, were lumped together with the college department. Such
detail becomes material in the light of the respondent’s claim that the personnel expenses for the
elementary and high school departments were “eating into” the portion of its budget allocated for
other purposes. There could be no practical basis from which the respondent’s claim finds
support. Aside from this, the respondent failed to present any proof establishing how the continued
operations of the elementary and high school departments has become impracticable. There is
nothing on record showing how the respondent came up with such conclusion, save for the alleged
decline in its elementary and high school enrolment, and no feasibility studies, analysis, or at the
very least, an academic projection was presented to validate its “forecast.”
On the petitioners’ allegation that the closure and their retrenchment amounted to unfair
labor practice, suffice it to say that the petitioners failed to discharge its burden of proving that the
retrenchment was motivated by ill will, bad faith or malice, or that it was aimed at interfering with
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their right to self-organize. While the confluence of the circumstances make it suspect, the Court
is not convinced that the
respondent’s acts affected, in whatever manner, the petitioners’ right to self-organization.
ESSENCIA Q. MANARPIIS vs. TEXAN PHILIPPINES, INC., RICHARD TAN and

CATHERINE P. RIALUBIN-TAN
G.R. No. 197011, January 28, 2015 J. Villarama, Jr.
It is well-settled that the filing by an employee of a complaint, such as the petitioner

Manarpiis, for illegal dismissal with a prayer for reinstatement is proof enough of his desire to return
to work, thus, negating the employer’s charge of abandonment. An employee who takes steps to
protest his dismissal cannot logically be said to have abandoned his work. In this case, petitioner did
not abandon her work but was told not to report for work anymore after being served a written notice
of termination of company closure on July 27, 2000. Further, if the business closure is due to serious
losses or financial reverses, the employer must present sufficient proof of its actual or imminent
losses; it must show proof that the cessation of or withdrawal from business operations was bona fide
in character. A written notice to the DOLE thirty days before the intended date of closure is also
required and must be served upon each and every employee of the company one month before the date
of effectively to give them sufficient time to make the necessary arrangement. Such requirements were
not complied with by the respondent company thereby proving that the petitioner was illegally
dismissed.
Facts:
Texan Philippines, Inc. (TPI) is a domestic corporation engaged in the importation,

distribution and marketing of imported fragrances and aroma and other specialized products and
services. In July 1999, respondents hired Essencia Q. Manarpiis (petitioner) as Sales and Marketing
Manager of the company's Aroma Division with a monthly salary of P33,800.00. Claiming
insurmountable losses, respondents served a written notice (July 27, 2000) addressed to all their
employees that TPI will cease operations by August 31, 2000.7 On August 7, 2000, petitioner filed a
complaint for illegal dismissal, non-payment of overtime pay, holiday pay, service incentive leave
pay, unexpired vacation leave and 13th month pay and with prayer for moral and actual damages.
Believing that her dismissal was without just cause, petitioner prayed for reinstatement if still
viable, and if not, award of separation pay with back wages from August 1, 2000, and payment of
her monetary claims. On September 18, 2000, petitioner received a memorandum requiring her to
explain why she should not be terminated based on her AWOL. Petitioner petitioner’s counsel sent
a reply stating that there was no point in the investigation because respondents already dismissed
petitioner purportedly on the ground of cessation of business due to insurmountable losses.
Respondents denied the charge of illegal dismissal and explained that TPI’s closure was
averted by a new financing package obtained by respondent Richard Tan. On June 28, 2001, LA
Melquiades Sol D. Del Rosario rendered a Decision declaring the dismissal of petitioner as illegal.
Respondents appealed to the NLRC which affirmed the LA’s decision. By Decision dated March 24,
2010, the CA reversed the NLRC and ruled that petitioner was validly dismissed.
Issues:
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1. Whether Manarpiis was illegally dismissed
2. Whether abandonment of work is a ground for dismissal
Ruling:
1. Yes. Both the LA and NLRC found no just or authorized cause for the termination of
petitioner’s employment. There was no compliance with the legal requisites of the said grounds
for dismissal under Article 283 (business closure) such as the lack of termination report sent to the
Department of Labor and Employment (DOLE), financial documents which are audited and signed
by an independent auditor, and the two-notice requirement sent to the last known address of the
employee alleged to have abandoned work under Book V, Rule XIV, Section 2 of the Omnibus Rules
Implementing the Labor Code. It was noted that while TPI’s financial documents have BIR stamp
mark, they were not shown to have been prepared by an independent auditor.
Closure or cessation of business is the complete or partial cessation of the operations and/or
shut-down of the establishment of the employer. It is carried out to either stave off the financial
ruin or promote the business interest of the employer. Closure of business as an authorized cause
for termination of employment is governed by Article 283 of the Labor Code, as amended. If the
business closure is due to serious losses or financial reverses, the employer must present sufficient
proof of its actual or imminent losses; it must show proof that the cessation of or withdrawal from
business operations was bona fide in character. A written notice to the DOLE thirty days before
the intended date of closure is also required, the purpose of which is to inform the employees of
the specific date of termination or closure of business operations, and which must be served upon
each and every employee of the company one month before the date of effectivity to give them
sufficient time to make the necessary arrangement. The ultimate test of the validity of closure or
cessation of establishment or undertaking is that it must be bona fide in character. And the burden
of proving such falls upon the employer.
After evaluating the evidence on record, the Court upholds the factual findings and
conclusions of the labor tribunals that petitioner was dismissed without just or authorized cause,
and that the announced cessation of business operations was a subterfuge for getting rid of
petitioner. The CA’s finding of serious business losses is not borne by the evidence on record. The
financial statements supposedly bearing the stamp mark of BIR were not signed by an independent
auditor. Besides, the non-compliance with the requirements under Article 283 of the Labor Code,
as amended, gains relevance in this case not for the purpose of proving the illegality of the company
closure or cessation of business, which did not materialize, but as an indication of bad faith on the
part of respondents in hastily terminating petitioner’s employment.
2. The Court has laid down the two elements which must concur for a valid abandonment,
viz: (1) the failure to report to work or absence without valid or justifiable reason, and (2) a clear
intention to sever the employer-employee relationship, with the second element as the more
determinative factor being manifested by some overt acts. Abandonment as a just ground for
dismissal requires the deliberate, unjustified refusal of the employee to perform his employment
responsibilities. Mere absence or failure to work, even after notice to return, is not tantamount to
abandonment.
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Furthermore, it is well-settled that the filing by an employee of a complaint for illegal
dismissal with a prayer for reinstatement is proof enough of his desire to return to work, thus,
negating the employer’s charge of abandonment. An employee who takes steps to protest his
dismissal cannot logically be said to have abandoned his work. Abandonment in this case was a
trumped up charge, apparently to make it appear that petitioner was not yet terminated when she
filed the illegal dismissal complaint and to give a semblance of truth to the belated investigation
against the petitioner. Petitioner did not abandon her work but was told not to report for work
anymore after being served a written notice of termination of company closure on July 27, 2000 and
turning over company properties to respondent Rialubin-Tan.
PURISIMO M. CABAOBAS, et al.vs. PEPSI-COLA PRODUCTS, PHILIPPINES, INC.

G.R. No. 176908, March 25, 2015, J. Peralta
The notice requirement was also complied with by PEPSI-COLA when it served notice of the
corporate rightsizing program to the DOLE and to the fourteen (14) employees who will be affected
thereby at least one (1) month prior to the date of retrenchment.
Facts:
Respondent Pepsi-Cola Products Philippines, Inc. (PCPPI) is a domestic corporation

engaged in the manufacturing, bottling and distribution of soft drink products, which operates
plants all over the country, one of which is the Tanauan Plant in Tanauan, Leyte.
In 1999, PCPPI’s Tanauan Plant allegedly incurred business losses. To avert further losses,
PCPPI implemented a company-wide retrenchment program denominated as Corporate-wide
Rightsizing Program (CRP) from 1999 to 2000, and retrenched forty-seven (47) employees of its
Tanauan Plant. Said employees filed complaints for illegal dismissal before the NLRC. Petitioners
alleged that PCPPI was not facing serious financial losses because after their termination, it
regularized four (4) employees and hired replacements for the forty-seven (47) previously dismissed
employees. They also alleged that PCPPI's CRP was just designed to prevent their union, Leyte
Pepsi-Cola Employees Union-Associated Labor Union (LEPCEU-ALU), from becoming the certified
bargaining agent of PCPPI's rank-and-file employees. PCPPI countered that petitioners were
dismissed pursuant to its CRP to save the company from total bankruptcy and collapse.
The Labor Arbiter found the dismissal of petitioners as illegal. The NLRC dismissed the
complaints for illegal dismissal and declared the retrenchment program of Pepsi PCPPI a valid
exercise of management prerogatives. The CA affirmed the NLRC Decision.
Issue:
Whether or not the retrenchment of the petitioners' former co-employees was in accord
with law
Ruling:
Yes. Essentially, the prerogative of an employer to retrench its employees must be exercised
only as a last resort, considering that it will lead to the loss of the employees' livelihood. It is justified
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only when all other less drastic means have been tried and found insufficient or inadequate.
Corollary thereto, the employer must prove the requirements for a valid retrenchment by clear and
convincing evidence; otherwise, said ground for termination would be susceptible to abuse by
scheming employers who might be merely feigning losses or reverses in their business ventures in
order to ease out employees. These requirements are:
(1) That retrenchment is reasonably necessary and likely to prevent business losses which,
if already incurred, are not merely de minimis, but substantial, serious, actual and real, or if
only expected, are reasonably imminent as perceived objectively and in good faith by the
employer;
(2) That the employer served written notice both to the employees and to the Department
of Labor and Employment at least one month prior to the intended date of retrenchment;
month pay or at least one-half (½) month pay for every year of service, whichever is higher;
advancement of its interest and not to defeat or circumvent the employees’ right to security
of tenure; and
(5) That the employer used fair and reasonable criteria in ascertaining who would be
In due regard of these requisites, the Court observes that Pepsi had validly implemented its
retrenchment program:
(1) Records disclose that both the CA and the NLRC had already determined that Pepsi
complied with the requirements of substantial loss and due notice to both the DOLE and the
workers to be retrenched. The pertinent portion of the CA’s March 31, 2006 Decision reads:
In the present action, the NLRC held that PEPSI-COLA’s financial statements are
substantial evidence which carry great credibility and reliability viewed in light of the financial crisis
that hit the country which saw multinational corporations closing shops and walking away, or
adapting [sic] their own corporate rightsizing program. Since these findings are supported by
evidence submitted before the NLRC, the Court resolves to respect the same. The notice
requirement was also complied with by PEPSI-COLA when it served notice of the corporate
rightsizing program to the DOLE and to the fourteen (14) employees who will be affected thereby
at least one (1) month prior to the date of retrenchment.
(2) Records also show that the respondents had already been paid the requisite separation
pay as evidenced by the September 1999 quitclaims signed by them. Effectively, the said
quitclaims serve inter alia the purpose of acknowledging receipt of their respective
separation pays. Appositely, respondents never questioned that separation pay arising from
their retrenchment was indeed paid by Pepsi to them. As such, the foregoing fact is now
deemed conclusive.
(3) Contrary to the CA’s observation that Pepsi had singled out members of the LEPCEU-
ALU in implementing its retrenchment program, records reveal that the members of the
company union (i.e., LEPCEU-UOEF#49) were likewise among those retrenched.
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Also, as aptly pointed out by the NLRC, Pepsi’s Corporate Rightsizing Program was a
company-wide program which had already been implemented in its other plants in Bacolod, Iloilo,
Davao, General Santos and Zamboanga. Consequently, given the general applicability of its
retrenchment program, Pepsi could not have intended to decimate LEPCEU-ALU’s membership,
much less impinge upon its right to self-organization, when it employed the same.
In fact, it is apropos to mention that Pepsi and its employees entered into a collective
bargaining agreement on October 17, 1995 which contained a union shop clause requiring
membership in LEPCEU-UOEF#49, the incumbent bargaining union, as a condition for continued
employment. In this regard, Pepsi had all the reasons to assume that all employees in the bargaining
unit were all members of LEPCEU-UOEF#49; otherwise, the latter would have already lost their
employment. In other words, Pepsi need not implement a retrenchment program just to get rid of
LEPCEU-ALU members considering that the union shop clause already gave it ample justification
to terminate them. It is then hardly believable that union affiliations were even considered by Pepsi
in the selection of the employees to be retrenched.
Moreover, it must be underscored that Pepsi’s management exerted conscious efforts to

incorporate employee participation during the implementation of its retrenchment program.
Records indicate that Pepsi had initiated sit-downs with its employees to review the criteria on
which the selection of who to be retrenched would be based. This is evidenced by the report of
NCMB Region VIII Director which states that “Pepsi’s management conceded on the proposal to
review the criteria and to sit down for more positive steps to resolve the issue.”
DUE PROCESS
REYNALDO NOBLADO, JIMMY ARAGON, ARTURO MALAYO, MARCIANO VICTORIA, ELINO

DALANON, JOSE ESTRIL, DOMINGO MALUPENG, ALFREDIE RAYTA, ROMULO RECOMES,
ADRIAN VERCELES, RUEL MAD RON A, RUBEN MIRAFUENTES,* ARNULFO MALAYO, JAIME
REMIAS, JELMER BEROLLA, EDIL CASTILLO, FELICIDAD ROSIMA, MITCHEL VICTORIA,
DANIEL MALUPENG, ZOSIMO RANAS, ROSIETA RAYTA, RAFAEL TUMIMBANG, FLORENCIO
VICTORIA, ERNESTO VICTORIA, CERIA ORTIZ, RAUL ADRA, AND VICENTE CUACHIN,**
SUBSTITUTED BY HIS LEGAL HEIRS,*** NAMELY: LILIA LORENO CUACHIN, NILO L. CUACHIN,
LEONARDO L. CUACHIN, JUDITH L. CUACHIN, VILMA CUACHIN LLANZANA, ELVIE CUACHIN
MANTES,
CRISTINA CUACHIN SARCIA, LILIBETH CUACHIN BELORIA, AIDA CUACHIN MIRANDILLA, JULIET
CUACHIN AWA v. PRINCESITA K. ALFONSO,
G.R. No. 189229, November 23, 2015, PERALTA, J.
For a dismissal to be valid, the employer must comply with both substantive and
procedural due process.
Facts:
Alfonso is an independent contractor engaged in landscaping and the

operation and maintenance of a plant nursery under the business name "Cherry
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Alfonso Plant Nursery." Petitioners were employees of Alfonso, having been hired on
various dates as gardeners, landscaper/designer, "leadman," "laborer," and driver.
Petitioners and the other complainants alleged that Alfonso abruptly terminated
their employment without valid cause and without due process. Alfonso
contended that petitioners and the other complainants committed deliberate and
malicious stoppage of work-related services, serious misconduct and willful
disobedience of a lawful order, gross neglect of their duties which resulted in great
damage and prejudice to Sta. Lucia; as a result, Sta. Lucia canceled its contract with
Alfonso; since respondent's contract with Sta. Lucia has been terminated due to the
fault of petitioners and the other complainants, the untimely termination of their
employment cannot be construed as illegal.
Issue:
Whether the petitioners were illegally dismissed
Ruling:
Yes. Substantive due process requires that the dismissal must be pursuant to
either a just or an authorized cause. Procedural due process consists of the twin
requirements of notice and hearing. The employer must furnish the employee with
two written notices: (1) the first notice apprises the employee of the particular acts or
omissions for which his dismissal is sought; and (2) the second notice informs the
employee of the employer's decision to dismiss him. Before the issuance of the second
notice, the worker must be given an opportunity to be heard. It is not necessary that an
actual hearing be conducted.
The sample letters submitted by Alfonso cannot be a fair and accurate assessment
of petitioners' reputed gross neglect of duties considering that they refer to incidents
after the fact of their dismissal. Even assuming that petitioners were indeed negligent,
their inaction could only be regarded as an isolated act of negligence that cannot be
categorized as habitual and gross, and, hence, not a just cause for their dismissal.
Furthermore, records show that the only effort to comply with procedural due process
in dismissing petitioners were the sample letters written by Alfonso, which
unfortunately, were not even sufficiently shown to have been sent to petitioners. In
fact, respondent's self-serving sample letters as well as the letters of Sta. Lucia were only
made known to petitioners when said documents were attached to respondent's
Position Paper at the arbitral stage of the proceedings. Neither was there any showing
that petitioners were given the chance to explain their side or to respond to the charges
against them and present evidence in their defense.
UNITED TOURIST PROMOTIONS (UTP) and ARIEL D. JERSEY vs. HARLAND B. KEMPLIN
G.R. No. 205453, February 5, 2014
J. Reyes
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An employment after the expiration of a fixed term employment is already regular. Therefore,
an employee is guaranteed security of tenure and can only be removed from service for cause and after
compliance with due process.
Facts:
In 1995, Ariel Jersey, with the help of two American expatriates, Kemplin and the late Mike Dunne,
formed UTP. In 2002, UTP employed Kemplin to be its President for a period of five years, to
commence on March 1, 2002 and to end on March 1, 2007, “renewable for the same period, subject
to new terms and conditions”. He continued to render his service to UTP even after his fixed term
contract of employment expired. Records show that on May 12, 2009, Kemplin, signing as President
of UTP, entered into advertisement agreements with Pizza Hut and M. Lhuillier. On July 30, 2009,
UTP’s legal counsel sent Kemplin a letter stating that because of his past services to the company
despite the fact that his service is no longer needed, he was tolerated to come in the office and were
given monthly commissions with allowances. However, because of his inhuman treatment of the
rank and file employees which caused great damage and prejudices to the company as evidenced
by many cases filed against him, the company was left with no other recourse but to cease and
desist from entering the premises of the main office. On August 10, 2009, Kemplin filed against UTP
and its officers a complaint for illegal dismissal. He argued that even after the expiration of his
employment contract on March 1, 2007, he rendered his services as President and General Manager
of UTP wherein he began examining the company’s finances, with the end in mind of collecting
from delinquent accounts of UTP’s distributors. It was on this pretext that he received a notice from
the UTP’s counsel. The company, on the other hand, contended that the termination letter sent to
Kemplin was based on (a) expiration of the fixed term of employment contract they had entered
into, and (b) an employer’s prerogative to terminate an employee, who commits criminal and illegal
acts prejudicial to business.
Issue:
Whether or not Kemplin has been illegally terminated due to the failure of the company to afford
him due process of law
Ruling:
His termination has been invalidated due to the failure of UTP to afford him due process of law.
Considering that he continued working as President for UTP for about one (1) year and five (5)
months and since it is not covered by another fixed term employment contract, his employment
after the expiration of his fixed term employment is already regular. Therefore, he is guaranteed
security of tenure and can only be removed from service for cause and after compliance with due
process. This is notwithstanding the company’s insistence that they merely tolerated his
“consultancy” for humanitarian reasons.
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It has been settled that the employer bears the burden of proving that the dismissal of the employee
is for a just or an unauthorized cause. Failure to dispose of the burden would imply that the
dismissal is not lawful, and that the employee is entitled to reinstatement, backwages and accruing
benefits. Clearly, the twin notice requirement and hearing mandated by law has not been observed
by UTP. Its letter sent to Kemplin is a lame attempt to comply with such requirement. The charges
against him were not clearly specified. While it stated that his employment contract had expired,
it likewise made general references to alleged criminal suits filed against him. One who reads the
letter is inevitably bound to ask if he is being terminated due to the expiration of his contract, or
by reason of the pendency of suits filed against him. Besides, an employee’s guilt or innocence in a
criminal case is not determinative of the existence of a just or authorized cause for his dismissal.
The pendency of a criminal suit against an employee, does not, by itself, sufficiently establish a
ground for an employer to terminate the former. Furthermore, the said letter failed to categorically
indicate which of the policies of UTP he violated to warrant his dismissal from service. He was also
never given the chance to refute the charges against him as no hearing and investigation were
conducted. Thus, in the absence of a hearing and investigation, the existence of just cause to
terminate Kemplin could not have been sufficiently established. He should have been promptly
apprised of the issue of loss of trust and confidence in him before and not after he was already
dismissed.
MARIO A. DEFERIO vs. INTEL TECHNOLOGY PHILIPPINES, INC. and/or MIKE

WENTLING
G.R. No. 202996, June 18, 2014, J. Brion
The Labor Code and its IRR are silent on the procedural due process required in terminations
due to disease. Despite the seeming gap in the law, Section 2, Rule 1, Book VI of the IRR expressly
states that the employee should be afforded procedural due process in all cases of dismissals.
Facts:
On February 1, 1996, respondent Intel Technology Philippines, Inc. employed Deoferio as a

product quality and reliability engineer with a monthly salary of P9,000.00. In July2001, Intel
assigned him to the United States as a validation engineer for an agreed period of two years and
with a monthly salary of US$3,000.00. On January 27, 2002, Deoferio was repatriated to the
Philippines after being confined at Providence St. Vincent Medical Center for major depression
with psychosis. In the Philippines, he worked as a product engineer with a monthly salary of
P23,000.00.After several consultations, Dr. Lee issued a psychiatric report dated January 17,2006
concluding and stating that Deoferio’s psychotic symptoms are not curable within a period of six
months and "will negatively affect his work and social relation with his co-workers.” Pursuant to
these findings, Intel issued Deoferio a notice of termination on March 10, 2006.
Deoferio responded to his termination of employment by filing a complaint for illegal

dismissal with prayer for money claims against respondents Intel and Mike Wentling. He denied
that he ever had mental illness and insisted that he satisfactorily performed his duties as a product
engineer.
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In defense, the Intel argued that Deoferio’s dismissal was based on Dr. Lee’s certification
that: (1) his schizophrenia was not curable within a period of six months even with proper medical
treatment; and (2) his continued employment would be prejudicial to his and to the other
employees’ health. Intel further asserted that the twin-notice requirement in dismissals does not
apply to terminations under Article 284 of the Labor Code.
Issue:
Whether the Labor Code exempts the employer from complying with the twin-notice
requirement in terminations due to disease.
Ruling:
No, it does not.
Concomitant to the employer’s right to freely select and engage an employee is the
employer’s right to discharge the employee for just and/or authorized causes. To validly effect
terminations of employment, the discharge must be for a valid cause in the manner required by
law. The purpose of these two-pronged qualifications is to protect the working class from the
employer’s arbitrary and unreasonable exercise of its right to dismiss. Thus, in termination cases,
the law places the burden of proof upon the employer to show by substantial evidence that the
termination was for a lawful cause and in the manner required by law.In concrete terms, these
qualifications embody the due process requirement in labor cases - substantive and procedural due
process. Substantive due process means that the termination must be based on just and/or
authorized causes of dismissal. On the other hand, procedural due process requires the employer
to effect the dismissal in a manner specified in the Labor Code and its IRR.
The twin-notice requirement applies to terminations under Article 284 of the Labor Code.
The Labor Code and its IRR are silent on the procedural due process required in terminations due
to disease. Despite the seeming gap in the law, Section 2, Rule 1, Book VI of the IRR expressly states
that the employee should be afforded procedural due process in all cases of dismissals.
LIBCAP MARKETING CORP., JOHANNA J. CELIZ, and MA. LUCIA G. MONDRAGON

vs. LANNY JEAN B. BAQUIAL
By pre-judging Baquial’s case, petitioners clearly violated her right to due process from the
very beginning, and from then on it could not be expected that she would obtain a fair resolution of
her case. In a democratic system, the infliction of punishment before trial is fundamentally abhorred.
What petitioners did was clearly illegal and improper.
Facts:
Petitioner Libcap Marketing Corporation (Libcap) is engaged in the freight forwarding

business with offices in Iloilo City. Respondent Baquial was employed by Libcap as accounting clerk
for Libcap’s Super Express branch in Cagayan de Oro City. Her functions included depositing
Libcap’s daily sales and collections in Libcap’s bank account with Global Bank (now PSBank).
Sometime in March 2003, an audit of Libcap’s Super Express branch in Cagayan de Oro City was
conducted, report showed that respondent made a double reporting of a single deposit made on
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April 2, 2001. Celiz required respondent to explain in writing within 24 hours. Baquial claimed that
on April 2, 2001, she deposited with the bank two separate amounts of P1,437.00 each, but that it
appears that both separate deposits were covered by a single bank validation, which defect should
not be blamed on her but on the bank.
Libcap discovered that only one deposit was made on April 2, 2001. Libcap’s bank account
passbook showed that only one deposit for P1,437.00 was made on April 2, 2001.Meanwhile, the
amount of P1,437.00 was deducted from Baquial’s salary each payday on a staggered basis. Baquial
received a Notice of Administrative Investigation requiring her to attend an investigation at
Libcap’s Iloilo office. She was unable to attend due to lack of financial resources. Baquial was placed
on preventive suspension from July 29, 2003 to August 12, 2003.On August 16, 2003, Baquial received
a Notice of Termination stating that she was terminated from employment dishonesty,
embezzlement, inefficiency, and for commission of acts inconsistent with Libcap’s work standards.
Baquial filed a labor complaint for illegal dismissal against petitioners. The Labor Arbiter
held that Baquial was dismissed for just cause, but the dismissal was ineffectual as she was deprived
of procedural due process. On appeal the NLRC affirmed the Labor Arbiter’s finding that
respondent was deprived of due process. The CA later affirmed the decision of NLRC. The CA held
further that Baquial was nevertheless entitled to nominal damages in the amount of P100,000.00
considering that she was required to work beyond her scheduled or assigned hours of work without
overtime pay, from date of hiring until she was terminated on August 12, 2003– or for a period of
four years. Petitioners claim that Baquial is not entitled to financial assistance given that she is
guilty of theft or embezzlement.
Issues:
1. Whether or not there’s a violation of due process in dismissing the Baquial.

2. Whether or not the award of nominal damages is valid.
Ruling:
1. The CA, the NLRC and the Labor Arbiter are correct in concluding that Baquial was
denied due process, but their reasons for arriving at such conclusion are erroneous. What they seem
to have overlooked is that Baquial’s case has been pre-judged even prior to the start of the
investigation. This is evident from the fact that the amount of P1,437.00 – or the amount which
Baquial claim was embezzled – was peremptorily deducted each payday from Baquial’s salary on a
staggered basis, culminating on June 30, 2003, or nearly one month prior to the scheduled
investigation on July 28, 2003. In doing so, petitioners have made it clear that they considered
respondent as the individual responsible for the embezzlement; thus, in petitioners’ eyes, Baquial
was adjudged guilty even before she could be tried – the payroll deductions being her penalty and
recompense. By pre-judging Baquial’s case, petitioners clearly violated her right to due process from
the very beginning, and from then on it could not be expected that she would obtain a fair
resolution of her case.
2. The Court finds that it necessary to reduce the amount of nominal damages the CA
awarded from P100,000.00 to P30,000.00. It cannot subscribe to the CA’s ratiocination that since
Baquial rendered overtime work for four years without receiving any overtime pay, she is entitled
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to P100,000.00 nominal damages. Nominal damages are awarded for the purpose of vindicating or
recognizing a right and not for indemnifying a loss. Hence, the CA should have limited the
justification of the award of nominal damages to petitioners’ violation of Baquial’s right to due
process in effecting her termination. It should not have considered the claimed unpaid overtime
pay.
SAMEER OVERSEAS PLACEMENT AGENCY, INC. vs. JOY C. CABILES

G.R. No. 170139, August 5, 2014, J. Leonen
The Sameer alleges that the respondent was not illegally dismissed. The Supreme Court ruled
that a valid dismissal requires both a valid cause and adherence to the valid procedure of dismissal.
The employer is required to give the charged employee at least two written notices before termination.
One of the written notices must inform the employee of the particular acts that may cause his or her
dismissal. The other notice must "[inform] the employee of the employer’s decision." Aside from the
notice requirement, the employee must also be given "an opportunity to be heard.
Facts:
Respondent Joy Cabiles was hired by Wacoal Taiwan, Inc., through petitioner agency
Sameer Overseas Placement Agency as a cutter. Subsequently, Cabiles was informed that her
services are already terminated and that she must report to their head office for her immediate
repatriation. Because of this, Cabiles filed a complaint for illegal dismissal against Sameer and
Wacoal.
The Labor Arbiter ruled in favor of Sameer and held that there was no illegal dismissal that
took place because the termination of the services of Cabiles was for a just cause. It gave credence
to the contention of Sameer that Cabiles was terminated from service because of her inefficiency.
On appeal, the NLRC ruled in favor of Cabiles and held that she is illegally dismissed. The Court of
Appeals affirmed the ruling of NLRC. Hence, the current petition.
Sameer reiterates that there was just cause for termination because there was a finding of
Wacoal that respondent was inefficient in her work. Therefore, it claims that respondent’s dismissal
was valid.
Issue:
Whether or not respondent Cabiles was illegally dismissed.
Ruling:
Yes. The Supreme Court affirmed the decision of the Court of Appeals and ruled that the
respondent was illegally dismissed. Sameer Overseas Placement Agency failed to show that there
was just cause for causing Joy’s dismissal. The employer, Wacoal, also failed to accord her due
process of law.
Indeed, employers have the prerogative to impose productivity and quality standards at
work. They may also impose reasonable rules to ensure that the employees comply with these
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standards. Failure to comply may be a just cause for their dismissal. Certainly, employers cannot be
compelled to retain the services of an employee who is guilty of acts that are inimical to the interest
of the employer. While the law acknowledges the plight and vulnerability of workers, it does not
"authorize the oppression or self-destruction of the employer." Management prerogative is
recognized in law and in our jurisprudence.
This prerogative, however, should not be abused. It is "tempered with the employee’s right
to security of tenure." Workers are entitled to substantive and procedural due process before
termination. They may not be removed from employment without a valid or just cause as
determined by law and without going through the proper procedure.
Security of tenure for labor is guaranteed by our Constitution. Employees are not stripped
of their security of tenure when they move to work in a different jurisdiction. With respect to the
rights of overseas Filipino workers, we follow the principle of lex loci contractus. First, established
is the rule that lex loci contractus (the law of the place where the contract is made) governs in this
jurisdiction. There is no question that the contract of employment in this case was perfected here
in the Philippines. Therefore, the Labor Code, its implementing rules and regulations, and other
laws affecting labor apply in this case. Furthermore, settled is the rule that the courts of the forum
will not enforce any foreign claim obnoxious to the forum’s public policy. Herein the Philippines,
employment agreements are more than contractual in nature.
Sameer’s allegation that respondent was inefficient in her work and negligent in her duties
may, therefore, constitute a just cause for termination under Article 282(b), but only if petitioner
was able to prove it.
The burden of proving that there is just cause for termination is on the employer. "The
employer must affirmatively show rationally adequate evidence that the dismissal was for a
justifiable cause." Failure to show that there was valid or just cause for termination would
necessarily mean that the dismissal was illegal.
To show that dismissal resulting from inefficiency in work is valid, it must be shown that:
1) the employer has set standards of conduct and workmanship against which the employee will be
judged; 2) the standards of conduct and workmanship must have been communicated tothe
employee; and 3) the communication was made at a reasonable time prior to the employee’s
performance assessment.
In this case, Sameer merely alleged that Cabiles failed to comply with her foreign employer’s
work requirements and was inefficient in her work. No evidence was shown to support such
allegations. Sameer did not even bother to specify what requirements were not met, what efficiency
standards were violated, or what particular acts of respondent constituted inefficiency.
There was also no showing that Cabiles was sufficiently informed of the standards against
which her work efficiency and performance were judged. The parties’ conflict as to the position
held by respondent showed that even the matter as basic as the job title was not clear.The bare
allegations of petitioner are not sufficient to support a claim that there is just cause for termination.
There is no proof that respondent was legally terminated.
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A valid dismissal requires both a valid cause and adherence to the valid procedure of
dismissal. The employer is required to give the charged employee at least two written notices before
termination. One of the written notices must inform the employee of the particular acts that may
cause his or her dismissal. The other notice must "[inform] the employee of the employer’s
decision." Aside from the notice requirement, the employee must also be given "an opportunity to
be heard."
Sameer failed to comply with the twin notices and hearing requirements. Respondent
started working on June 26, 1997. She was told that she was terminated on July 14, 1997 effective on
the same day and barely a month from her first workday. She was also repatriated on the same day
that she was informed of her termination. The abruptness of the termination negated any finding
that she was properly notified and given the opportunity to be heard. Her constitutional right to
due process of law was violated.
NANCY S. MONTINOLA vs. PHILIPPINE AIRLINES

G.R. No. 198656, September 8, 2014, J. Leonen
Illegally suspended employees, similar to illegally dismissed employees, are entitled to moral
damages when their suspension was attended by bad faith or fraud, oppressive to labor, or done in a
manner contrary to morals, good customs, or public policy.
In this case, PAL complied with procedural due process as laid out in Article 277, paragraph
(b) of the Labor Code. PAL issued a written notice of administrative charge, conducted a clarificatory
hearing, and rendered a written decision suspending Montinola. However, we emphasize that the
written notice of administrative charge did not serve the purpose required under due process. PAL did
not deny her allegation that there would be a waiver of the clarificatory hearing if she insisted on a
specific notice of administrative charge. With Montinola unable to clarify the contents of the notice
of administrative charge, there were irregularities in the procedural due process accorded to her.
Moreover, PAL denied Montinola substantial due process.
Facts:
Nancy S. Montinola (Montinola) was employed as a flight attendant of Philippine Airlines

(PAL) since 1996. On January 29, 2008, Montinola and other flight crew members were subjected
to custom searches in Honolulu, Hawaii, USA. Items from the airline were recovered from the flight
crew by customs officials. Nancy Graham (Graham), US Customs and Border Protection Supervisor,
sent an email to PAL regarding the search. The email contained a list of PAL flight crew members
involved in the search. PAL conducted an investigation. Montinola was among those implicated
because she was mentioned in Graham’s email. PAL’s Cabin Services Sub-Department required
Montinola to comment on the incident. She gave a handwritten explanation three days after,
stating that she did not take anything from the aircraft. She also committed to give her full
cooperation should there be any further inquiries on the matter.
PAL’s International Cabin Crew Division Manager, Jaime Roberto Narciso (Narciso),
furnished Montinola the emails from the Honolulu customs official. This was followed by a notice
of administrative charge which Narciso gave Montinola.
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During the hearing, Montinola admitted that in Honolulu, US customs personnel
conducted a search of her person. At that time, she had in her possession only the following food
items: cooked camote, 3-in-1 coffee packs, and Cadbury hot chocolate. PAL, through Senior
Assistant Vice President for Cabin Services Sub- Department Sylvia C.Hermosisima, found
Montinola guilty of 11 Violations of the company’s Code of Discipline and Government Regulation.
She was meted with suspension for one year without pay. Montinola asked for
reconsideration. Hermosisima, however, denied her motion for reconsideration a month after.
Montinola brought the matter before the Labor Arbiter (LA). LA found her suspension
illegal, finding that PAL never presented evidence that showed Montinola as the one responsible
for any of the illegally taken airline items. The Labor Arbiter ordered Montinola’s reinstatement
with backwages inclusive of allowances and benefits. In addition, the LA awarded moral damages
in the amount of P100,000.00 and exemplary damages amounting to P100,000.00 and attorney’s
fees. The La found that the circumstances leading to Montinola’s one-year suspension without pay
are characterized by arbitrariness and bad fait on the part of PAL.
PAL appealed the Labor Arbiter’s decision to the National Labor Relations Commission
(NLRC). During the pendency of the appeal, PAL submitted new evidence consisting of an affidavit
enumerating the names of the flight crew members searched by the Honolulu customs officials
executed by Nancy Graham, the Customs and Border Protection Supervisor who witnessed the
January 29, 2008 search in Honolulu.
However, the NLRC observed that "it was categorically admitted in the said declaration that
Ms. Graham did not know which items were attributable to each of the seven crew members whom
she identified and there was no individual inventories. NLRC affirmed the decision of the Labor
Arbiter. PAL appealed the Commission’s decision to the Court of Appeals through a petition for
certiorari.
CA affirmed the decisions of the Labor Arbiter and National Labor Relations Commission
in finding the suspension illegal. However, the Court of Appeals modified the monetary award. The
Court of Appeals deleted the moral and exemplary damages and attorney’s fees stating that not
every employee who is illegally dismissed or suspended is entitled to damages. Montinola filed a
partial motion for reconsideration praying that the award of moral and exemplary damages and
attorney’s fees be reintegrated into the decision. CA denied it.
Issue:
Whether Montinola’s illegal suspension entitled her to an award of moral and exemplary
damages and attorney’s fees.
Ruling:
Montinola is entitled to moral and exemplary damages. She is also entitled to attorney’s
fees.
The Labor Code provides:
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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 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.
Security of tenure of workers is not only statutorily protected, it is also a constitutionally

guaranteed right. Thus, any deprivation of this right must be attended by due process of law. This
means that any disciplinary action which affects employment must pass due process scrutiny in
both its substantive and procedural aspects.
The constitutional protection for workers elevates their work to the status of a vested right.
It is a vested right protected not only against state action but against the arbitrary acts of the
employers as well. The court in Philippine Movie Pictures Workers’ Association v. Premier
Productions, Inc. categorically stated that "the rightof a person to his labor is deemed to be property
within the meaning of constitutional guarantees." Moreover, it is of that species of vested
constitutional right that also affects an employee’s liberty and quality of life. Work not only
contributes to defining the individual, it also assists in determining one’spurpose. Work provides
for the material basis of human dignity.
Suspension from work is prima facie a deprivation of this right. Thus, termination and
suspension from work must be reasonable to meet the constitutional requirement of due process
of law. It will be reasonable if it is based on just or authorized causes enumerated in the Labor Code.
On the other hand, articulation of procedural due process in labor cases is found in Article
277(b) of the Labor Code, which states:
(b) Subject to the constitutional right of workers to security of tenure and their right
to be protected against dismissal except for a just and authorized cause and without
prejudice to the requirement of notice under Article 283 of this Code, the employer
shall furnish the worker whose employment is sought to be terminated a written
notice containing a statement of the causes for termination and shall afford the
latter ample opportunity to be heard and to defend himself with the assistance of
his representative if he so desires in accordance with the company rules and
regulations promulgated pursuant to guidelines set by the Department of Labor and
Employment. Any decision taken bythe employer shall be without prejudice to the
right of the worker to consent the validity or legality of his dismissal by filing a
complaint with the regional branch of the National Labor Relations Commission.
The burden of proving that the termination was for a valid or authorized cause shall
rest on the employer.
Just cause has to be supported by substantial evidence. Substantial evidence, or "such

relevant evidence as a reasonable mind might accept as adequate to support a conclusion,” is the
quantum of evidence required in administrative bodies such as the National Labor Relations
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Commission. It is reasonable to expect the employer to consider substantial evidence in disciplinary
proceedings against its employees.
The employer has the burden of proof in showing that disciplinary action was made for
lawful cause. Bad faith "implies a conscious and intentional design to do a wrongful act for a
dishonest purpose or moral obliquity.” PAL’s actions in implicating Montinola and penalizing her
for no clear reason show bad faith. PAL’s denial of her request to clarify the charges against her
shows its intent to do a wrongful act for moral obliquity.
JURISDICTIONS, REMEDIES, ACTIONS AND PROCEEDINGS
HIJO RESOURCES CORPORATION vs. EPIFANIO P. MEJARES, REMEGIO C. BAL URAN,

JR., DANTE SAYCON, and CECILIO CUCHARO, represented by NAMABDJERA-HRC
G.R. No. 208986, January 13, 2016
Facts
Respondents Epifanio P. Mejares, Remegio C. Baluran, Jr., Dante Saycon, and Cecilio Cucharo
(respondents) were among the complainants, represented by their labor union named
"Nagkahiusang Mamumuo ng Bit, Djevon, at Raquilla Farms sa Hijo Resources Corporation"
(NAMABDJERA-HRC), who filed with the NLRC an illegal dismissal case against petitioner Hijo
Resources Corporation (HRC).
Complainants (which include the respondents herein) alleged that petitioner HRC, formerly known
as Hijo Plantation Incorporated (HPI), is the owner of agricultural lands in Madum, Tagum, Davao
del Norte, which were planted primarily with Cavendish bananas. In 2000, HPI was renamed as
HRC. In December 2003, HRC’s application for the conversion of its agricultural lands into agri-
industrial use was approved. The machineries and equipment formerly used by HPI continued to
be utilized by HRC.
Complainants claimed that they were employed by HPI as farm workers in HPI’s plantations
occupying various positions as area harvesters, packing house workers, loaders, or labelers. In 2001,
complainants were absorbed by HRC, but they were working under the contractor-growers:
Buenaventura Tano (Bit Farm); Djerame Pausa (Djevon Farm); and Ramon Q. Laurente (Raquilla
Farm). Complainants asserted that these contractor-growers received compensation from HRC and
were under the control of HRC. They further alleged that the contractor-growers did not have their
own capitalization, farm machineries, and equipment.
On 1 July 2007, complainants formed their union NAMABDJERA-HRC, which was later registered
with the Department of Labor and Employment (DOLE). On 24 August 2007, NAMABDJERA-HRC
filed a petition for certification election before the DOLE.
When HRC learned that complainants formed a union, the three contractor-growers filed with the
DOLE a notice of cessation of business operations. In September 2007, complainants were
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terminated from their employment on the ground of cessation of business operations by the
contractor-growers of HRC. On 19 September 2007, complainants, represented by NAMABDJERA-
HRC, filed a case for unfair labor practices, illegal dismissal, and illegal deductions with prayer for
moral and exemplary damages and attorney’s fees before the NLRC.
On 19 November 2007, DOLE Med-Arbiter Lito A. Jasa issued an Order, dismissing NAMABDJERA-
HRC’s petition for certification election on the ground that there was no employer-employee
relationship between complainants (members of NAMABDJERA-HRC) and HRC. Complainants did
not appeal the Order of Med-Arbiter Jasa but pursued the illegal dismissal case they filed.
On 4 January 2008, HRC moved to dismiss the complaint for illegal dismissal. The motion to dismiss
was anchored on the following arguments: (1) Lack of jurisdiction under the principle of res
judicata; and (2) The Order of the Med-Arbiter finding that complainants were not employees of
HRC, which complainants did not appeal, had become final and executory.
Issue
Whether or not the Labor Arbiter, in the illegal dismissal case, is bound by the ruling of the Med-
Arbiter regarding the existence or non-existence of employer-employee relationship between the
parties in the certification election case
Ruling
There is no question that the Med-Arbiter has the authority to determine the existence of an
employer-employee relationship between the parties in a petition for certification election. As held
in M.Y. San Biscuits, Inc. v. Acting Sec. Laguesma:
Under Article 226 of the Labor Code, as amended, the Bureau of Labor Relations (BLR), of which
the med-arbiter is an officer, has the following jurisdiction –
"ART. 226. Bureau of Labor Relations. – The Bureau of Labor Relations and the Labor Relations
Division[s] in the regional offices of the Department of Labor shall have original and exclusive
authority to act, at their own initiative or upon request of either or both parties, on all inter-union
and intra-union conflicts, and all disputes, grievances or problems arising from or affecting labor-
management relations in all workplaces whether agricultural or non-agricultural, except those
arising from the implementation or interpretation of collective bargaining agreements which shall
be the subject of grievance procedure and/or voluntary arbitration.
The Bureau shall have fifteen (15) working days to act on labor cases before it, subject to extension
by agreement of the parties." (Italics supplied)
From the foregoing, the BLR has the original and exclusive jurisdiction to inter alia, decide all
disputes, grievances or problems arising from or affecting labor-management relations in all
workplaces whether agricultural or non-agricultural. Necessarily, in the exercise of this jurisdiction
over labor-management relations, the med-arbiter has the authority, original and exclusive, to
determine the existence of an employer-employee relationship between the parties.
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Apropos to the present case, once there is a determination as to the existence of such a relationship,
the med-arbiter can then decide the certification election case. As the authority to determine the
employer-employee relationship is necessary and indispensable in the exercise of jurisdiction by
the med-arbiter, his finding thereon may only be reviewed and reversed by the Secretary of Labor
who exercises appellate jurisdiction under Article 259 of the Labor Code, as amended, which
provides –
"ART. 259. Appeal from certification election orders. – Any party to an election may appeal the order
or results of the election as determined by the Med-Arbiter directly to the Secretary of Labor and
Employment on the ground that the rules and regulations or parts thereof established by the
Secretary of Labor and Employment for the conduct of the election have been violated. Such appeal
shall be decided within fifteen (15) calendar days."
In this case, the Med-Arbiter issued an Order dated 19 November 2007, dismissing the certification
election case because of lack of employer-employee relationship between HRC and the members of
the respondent union. The order dismissing the petition was issued after the members of the
respondent union were terminated from their employment in September 2007, which led to the
filing of the illegal dismissal case before the NLRC on 19 September 2007. Considering their
termination from work, it would have been futile for the members of the respondent union to
appeal the Med-Arbiter’s order in the certification election case to the DOLE Secretary. Instead,
they pursued the illegal dismissal case filed before the NLRC.
The Court is tasked to resolve the issue of whether the Labor Arbiter, in the illegal dismissal case,
is bound by the ruling of the Med-Arbiter regarding the existence or non-existence of employer-
employee relationship between the parties in the certification election case.
The Court rules in the negative. As found by the Court of Appeals, the facts in this case are very
similar to those in the Sandoval case, which also involved the issue of whether the ruling in a
certification election case on the existence or non-existence of an employer-employee relationship
operates as res judicata in the illegal dismissal case filed before the NLRC. In Sandoval, the DOLE
Undersecretary reversed the finding of the Med-Arbiter in a certification election case and ruled
that there was no employer-employee relationship between the members of the petitioner union
and Sandoval Shipyards, Inc. (SSI), since the former were employees of the subcontractors.
Subsequently, several illegal dismissal cases were filed by some members of the petitioner union
against SSI. Both the Labor Arbiter and the NLRC ruled that there was no employer-employee
relationship between the parties, citing the resolution of the DOLE Undersecretary in the
certification election case. The Court of Appeals reversed the NLRC ruling and held that the
members of the petitioner union were employees of SSI. On appeal, this Court affirmed the
appellate court’s decision and ruled that the Labor Arbiter and the NLRC erred in relying on the
pronouncement of the DOLE Undersecretary that there was no employer-employee relationship
between the parties. The Court cited the ruling in the Manila Golf case that the decision in a
certification election case, by the very nature of that proceeding, does not foreclose all further
dispute between the parties as to the existence or non-existence of an employer-employee
relationship between them.
This case is different from the Chris Garments case cited by the NLRC where the Court held that
the matter of employer-employee relationship has been resolved with finality by the DOLE
40 | P a g e
Secretary, whose factual findings were not appealed by the losing party. As mentioned earlier, the
Med-Arbiter’s order in this case dismissing the petition for certification election on the
basis of non-existence of employer-employee relationship was issued after the members of
the respondent union were dismissed from their employment. The purpose of a petition for
certification election is to determine which organization will represent the employees in their
collective bargaining with the employer. The respondent union, without its member-
employees, was thus stripped of its personality to challenge the Med-Arbiter’s decision in
the certification election case. Thus, the members of the respondent union were left with
no option but to pursue their illegal dismissal case filed before the Labor Arbiter. To dismiss
the illegal dismissal case filed before the Labor Arbiter on the basis of the pronouncement of the
Med-Arbiter in the certification election case that there was no employer-employee relationship
between the parties, which the respondent union could not even appeal to the DOLE Secretary
because of the dismissal of its members, would be tantamount to denying due process to the
complainants in the illegal dismissal case. This, we cannot allow.
JOSE EMMANUEL P. GUILLERMO v. CRISANTO P. USON

G.R. No. 198967, March 07, 2016
Facts:
On March 11, 1996, respondent Crisanto P. Uson (Uson) began his employment with Royal Class
Venture Phils., Inc. (Royal Class Venture) as an accounting clerk. Eventually, he was promoted to
the position of accounting supervisor, with a salary of Php13,000.00 a month, until he was allegedly
dismissed from employment on December 20, 2000.
On March 2, 2001, Uson filed with the Sub-Regional Arbitration . Branch No. 1, Dagupan City, of
the NLRC a Complaint for Illegal Dismissal, with prayers for backwages, reinstatement, salaries and
13th month pay, moral and exemplary damages and attorney's fees against Royal Class Venture.
Royal Class Venture did not make an appearance in the case despite its receipt of summons.
On May 15, 2001, Uson filed his Position Paper as complainant.
On October 22, 2001, Labor Arbiter Jose G. De Vera rendered a Decision in favor of the complainant
Uson and ordering therein respondent Royal Class Venture to reinstate him to his former position
and pay his backwages, 13th month pay as well as moral and exemplary damages and attorney's fees.
Royal Class Venture, as the losing party, did not file an appeal of the decision. Consequently, upon
Uson's motion, a Writ of Execution dated February 15, 2002 was issued to implement the Labor
Arbiter's decision.
On May 17, 2002, an Alias Writ of Executionwas issued. But with the judgment still unsatisfied, a
Second Alias Writ of Execution was issued on September 11, 2002.
Again, it was reported in the Sheriff's Return that the Second Alias Writ of Execution dated
September 11, 2002 remained "unsatisfied." Thus, on November 14, 2002, Uson filed a Motion for
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Alias Writ of Execution and to Hold Directors and Officers of Respondent Liable for Satisfaction of
the Decision.
On December 26, 2002, Labor Arbiter Irenarco R. Rimando issued an Order granting the motion
filed by Uson. The order held that officers of a corporation are jointly and severally liable for the
obligations of the corporation to the employees and there is no denial of due process in holding
them so even if the said officers were not parties to the case when the judgment in favor of the
employees was rendered. Thus, the Labor Arbiter pierced the veil of corporate fiction of Royal Class
Venture and held herein petitioner Jose Emmanuel Guillermo (Guillermo), in his personal capacity,
jointly and severally liable with the corporation for the enforcement of the claims of Uson.
Guillermo filed, by way of special appearance, a Motion for Reconsideration/To Set Aside the Order
of December 26, 2002. The same, however, was not granted as, this time, in an Order dated
November 24, 2003, Labor Arbiter Niña Fe S. Lazaga-Rafols sustained the findings of the labor
arbiters before her and even castigated Guillenno for his unexplained absence in the prior
proceedings despite notice, effectively putting responsibility on Guillermo for the case's outcome
against him.
On January 5, 2004, Guillermo filed a Motion for Reconsideration of the above Order, but the same
was promptly denied by the Labor Arbiter in an Order dated January 7, 2004.
On January 26, 2004, Uson filed a Motion for Alias Writ of Execution, to which Guillermo filed a
Comment and Opposition on April 2, 2004.
On May 18, 2004, the Labor Arbiter issued an Order granting Uson's Motion for the Issuance of an
Alias Writ of Execution and rejecting Guillermo's arguments posed in his Comment and
Opposition.
Guillermo elevated the matter to the NLRC by filing a Memorandum of Appeal with Prayer for a
(Writ of) Preliminary Injunction dated June 10, 2004.crawred
In a Decision dated May 11, 2010, the NLRC dismissed Guillermo's appeal and denied his prayers for
injunction.
On August 20, 2010, Guillermo filed a Petition for Certiorari before the Court of Appeals, assailing
the NLRC decision.
On June 8, 2011, the Court of Appeals rendered its assailed Decision which denied Guillermo's
petition and upheld all the findings of the NLRC.
Issue
Whether an officer of a corporation may be included as judgment obligor in a labor case for the
first time only after the decision of the Labor Arbiter had become final and executory, and whether
the twin doctrines of "piercing the veil of corporate fiction" and personal liability of company
officers in labor cases apply.
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Ruling
In the earlier labor cases of Claparols v. Court of Industrial Relations and A.C. Ransom Labor Union-
CCLU v. NLRC, persons who were not originally impleaded in the case were, even during execution,
held to be solidarity liable with the employer corporation for the latter's unpaid obligations to
complainant-employees. These included a newly-formed corporation which was considered a mere
conduit or alter ego of the originally impleaded corporation, and/or the officers or stockholders of
the latter corporation. Liability attached, especially to the responsible officers, even after final
judgment and during execution, when there was a failure to collect from the employer corporation
the judgment debt awarded to its workers. In Naguiat v. NLRC, the president of the corporation
was found, for the first time on appeal, to be solidarily liable to the dismissed employees. Then, in
Reynoso v. Court of Appeals, the veil of corporate fiction was pierced at the stage of execution,
against a corporation not previously impleaded, when it was established that such corporation had
dominant control of the original party corporation, which was a smaller company, in such a manner
that the latter's closure was done by the former in order to defraud its creditors, including a former
worker.
The rulings of this Court in A.C. Ransom, Naguiat, and Reynoso, however, have since been
tempered, at least in the aspects of the lifting of the corporate veil and the assignment of personal
liability to directors, trustees and officers in labor cases. The subsequent cases of McLeod v.
NLRC,Spouses Santos v. NLRC and Carag v. NLRC, have all established, save for certain exceptions,
the primacy of Section 31 of the Corporation Code in the matter of assigning such liability for a
corporation's debts, including judgment obligations in labor cases. According to these cases, a
corporation is still an artificial being invested by law with a personality separate and distinct from
that of its stockholders and from that of other corporations to which it may be connected. It is not
in every instance of inability to collect from a corporation that the veil of corporate fiction is
pierced, and the responsible officials are made liable. Personal liability attaches only when, as
enumerated by the said Section 31 of the Corporation Code, there is a wilfull and knowing assent to
patently unlawful acts of the corporation, there is gross negligence or bad faith in directing the
affairs of the corporation, or there is a conflict of interest resulting in damages to the corporation.
Further, in another labor case, Pantranco Employees Association (PEA-PTGWO), et al. v. NLRC, et
al., the doctrine of piercing the corporate veil is held to apply only in three (3) basic areas, namely:
( 1) defeat of public convenience as when the corporate fiction is used as a vehicle for the evasion
of an existing obligation; (2) fraud cases or when the corporate entity is used to justify a wrong,
protect fraud, or defend a crime; or (3) alter ego cases, where a corporation is merely a farce since
it is a mere alter ego or business conduit of a person, or where the corporation is so organized and
controlled and its affairs are so conducted as to make it merely an instrumentality, agency, conduit
or adjunct of another corporation. In the absence of malice, bad faith, or a specific provision of law
making a corporate officer liable, such corporate officer cannot be made personally liable for
corporate liabilities. Indeed, in Reahs Corporation v. NLRC, the conferment of liability on officers
for a corporation's obligations to labor is held to be an exception to the general doctrine of separate
personality of a corporation.
It also bears emphasis that in cases where personal liability attaches, not even all officers are made
accountable. Rather, only the "responsible officer," i.e., the person directly responsible for and who
"acted in bad faith" in committing the illegal dismissal or any act violative of the Labor Code, is held
solidarily liable, in cases wherein the corporate veil is pierced. In other instances, such as cases of
40 | P a g e
so-called corporate tort of a close corporation, it is the person "actively engaged" in the
management of the corporation who is held liable. In the absence of a clearly identifiable officer(s)
directly responsible for the legal infraction, the Court considers the president of the corporation as
such officer.
The common thread running among the aforementioned cases, however, is that the veil of
corporate fiction can be pierced, and responsible corporate directors and officers or even a separate
but related corporation, may be impleaded and held answerable solidarily in a labor case, even after
final judgment and on execution, so long as it is established that such persons have deliberately
used the corporate vehicle to unjustly evade the judgment obligation, or have resorted to fraud, bad
faith or malice in doing so. When the shield of a separate corporate identity is used to commit
wrongdoing and opprobriously elude responsibility, the courts and the legal authorities in a labor
case have not hesitated to step in and shatter the said shield and deny the usual protections to the
offending party, even after final judgment. The key element is the presence of fraud, malice or bad
faith. Bad faith, in this instance, does not connote bad judgment or negligence but imports a
dishonest purpose or some moral obliquity and conscious doing of wrong; it means breach of a
known duty through some motive or interest or ill will; it partakes of the nature of fraud.
As the foregoing implies, there is no hard and fast rule on when corporate fiction may be
disregarded; instead, each case must be evaluated according to its peculiar circumstances. For the
case at bar, applying the above criteria, a finding of personal and solidary liability against a
corporate officer like Guillermo must be rooted on a satisfactory showing of fraud, bad faith or
malice, or the presence of any of the justifications for disregarding the corporate fiction. As stated
in McLeod, bad faith is a question of fact and is evidentiary, so that the records must first bear
evidence of malice before a finding of such may be made.
It is our finding that such evidence exists in the record. Like the A. C. Ransom, and Naguiat cases,
the case at bar involves an apparent family corporation. As in those two cases, the records of the
present case bear allegations and evidence that Guillermo, the officer being held liable, is the person
responsible in the actual running of the company and for the malicious and illegal dismissal of the
complainant; he, likewise, was shown to have a role in dissolving the original obligor company in
an obvious "scheme to avoid liability" which jurisprudence has always looked upon with a
suspicious eye in order to protect the rights of labor.
Part of the evidence on record is the second page of the verified Position Paper of complainant
(herein respondent) Crisanto P. Uson, where it was clearly alleged that Uson was "illegally
dismissed by the President/General Manager of respondent corporation (herein petitioner) Jose
Emmanuel P. Guillermo when Uson exposed the practice of the said President/General Manager of
dictating and undervaluing the shares of stock of the corporation." The statement is proof that
Guillermo was the responsible officer in charge of running the company as well as the one who
dismissed Uson from employment. As this sworn allegation is uncontroverted - as neither the
company nor Guillermo appeared before the Labor Arbiter despite the service of summons and
notices - such stands as a fact of the case, and now functions as clear evidence of Guillermo's bad
faith in his dismissal of Uson from employment, with the motive apparently being anger at the
latter's reporting of unlawful activities.
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Then, it is also clearly reflected in the records that it was Guillermo himself, as President and
General Manager of the company, who received the summons to the case, and who also
subsequently and without justifiable cause refused to receive all notices and orders of the Labor
Arbiter that followed. This makes Guillermo responsible for his and his company's failure to
participate in the entire proceedings before the said office. The fact is clearly narrated in the
Decision and Orders of the Labor Arbiter, Uson's Motions for the Issuance of Alias Writs of
Execution, as well as in the Decision of the NLRC and the assailed Decision of the Court of Appeals,
which Guillermo did not dispute in any of his belated motions or pleadings, including in his petition
for certiorari before the Court of Appeals and even in the petition currently before this Court. Thus,
again, the same now stands as a finding of fact of the said lower tribunals which binds this Court
and which it has no power to alter or revisit. Guillermo's knowledge of the case's filing and existence
and his unexplained refusal to participate in it as the responsible official of his company, again is
an indicia of his bad faith and malicious intent to evade the judgment of the labor tribunals.
Finally, the records likewise bear that Guillermo dissolved Royal Class Venture and helped
incorporate a new firm, located in the same address as the former, wherein he is again a
stockl1older. This is borne by the Sherif11s Return which reported: that at Royal Class Venture's
business address at Minien East, Sta. Barbara, Pangasinan, there is a new establishment named "Joel
and Sons Corporation," a family corporation owned by the Guillermos in which Jose Emmanuel F.
Guillermo is again one of the stockholders; that Guillermo received the writ of execution but used
the nickname "Joey" and denied being Jose Emmanuel F. Guillermo and, instead, pretended to be
Jose's brother; that the guard on duty confirmed that Jose and Joey are one and the same person;
and that the respondent corporation Royal Class Venture had been dissolved. Again, the facts
contained in the Sheriffs Return were not disputed nor controverted by Guillermo, either in the
hearings of Uson's Motions for Issuance of Alias Writs of Execution, in subsequent motions or
pleadings, or even in the petition before this Court. Essentially, then, the facts form part of the
records and now stand as further proof of Guillermo's bad faith and malicious intent to evade the
judgment obligation.
The foregoing clearly indicate a pattern or scheme to avoid the obligations to Uson and frustrate
the execution of the judgment award, which this Court, in the interest of justice, will not
countenance.
As for Guillermo's assertion that the case is an intra-corporate controversy, the Court sustains the
finding of the appellate court that the nature of an action and the jurisdiction of a tribunal are
determined by the allegations of the complaint at the time of its filing, irrespective of whether or
not the plaintiff is entitled to recover upon all or some of the claims asserted therein. Although
Uson is also a stockholder and director of Royal Class Venture, it is settled in jurisprudence that
not all conflicts between a stockholder and the corporation are intra-corporate; an examination of
the complaint must be made on whether the complainant is involved in his capacity as a
stockholder or director, or as an employee.72 If the latter is found and the dispute does not meet
the test of what qualities as an intra-corporate controversy, then the case is a labor case cognizable
by the NLRC and is not within the jurisdiction of any other tribunal. In the case at bar, Uson's
allegation was that he was maliciously and illegally dismissed as an Accounting Supervisor by
Guillermo, the Company President and General Manager, an allegation that was not even disputed
40 | P a g e
by the latter nor by Royal Class Venture. It raised no intra-corporate relationship issues between
him and the corporation or Guillermo; neither did it raise any issue regarding the regulation of the
corporation. As correctly found by the appellate court, Uson's complaint and redress sought were
centered alone on his dismissal as an employee, and not upon any other relationship he had with
the company or with Guillermo. Thus, the matter is clearly a labor dispute cognizable by the labor
tribunals.c
FRANCIS C. CERVANTES vs.CITY SERVICE CORPORATION

and VALENTIN PRIETO, JR.,
G.R. No. 191616, April 18, 2016
Facts
The instant petition stemmed from a Complaint for illegal dismissal dated December 19, 2007 filed
before the National Labor Relations Commission (NLRC) by petitioner Francis C. Cervantes against
respondents City Service Corporation and/or Valentin Prieto, Jr. for illegal dismissal, underpayment
of salaries/wages, overtime pay, holiday pay, holiday premium, rest day premium, service incentive
leave, separation pay, ECOLA, moral and exemplary damages, and attorney's fees.
On June 30, 2008, the Labor Arbiter, in NLRC-NCR-12-14080-07, dismissed the complaint for lack
of merit. It found that it was Cervantes who refused to work after he was transferred to another
client of City Service. The Labor Arbiter stressed that employees of local manpower agencies, which
are assigned to clients, do not become employees of the client.
Cervantes appealed the Labor Arbiter's decision, but was denied in a Resolution dated February 5,
2008. Undaunted, Cervantes moved for reconsideration, but was denied anew in a Resolution dated
July 22, 2009.
Thus, on October 6, 2009, Cervantes, through counsel Atty. Angelito R. Villarin, filed before the CA
a Petition for Certiorari under Rules 65 of the Rules of Court, alleging grave abuse of discretion
amounting to lack or excess of jurisdiction on the part of the NLRC in affirming the assailed
Resolutions dated February 9, 2009 and July 22, 2009 which dismissed Cervantes' complaint for
illegal dismissal and denied his motion for reconsideration, respectively.
In the assailed Resolution dated October 30, 2009, the CA dismissed Cervantes' petition for
certiorari for having been filed out of time. The appellate court argued that, by petitioner's
admission, his mother received the assailed Resolution of the NLRC denying his motion for
reconsideration on July 30, 2009. Thus, counting sixty (60) days therefrom, petitioner had only until
September 28, 2009 within which to file the petition. However, the petition for certiorari was filed
only on October 7, 2009, or nine (9) days late.
Cervantes moved for reconsideration, but was denied in Resolution dated March 11, 2010.
Issues
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Whether the CA erred in reckoning the period for filing a petition for certiorari from the date of
receipt by petitioner’s mother of the assailed resolution of the NLRC.
Whether petitioner was illegally dismissed.
Ruling
In practice, service means the delivery or communication of a pleading, notice or some other paper
in a case, to the opposite party so as to charge him with receipt of it and subject him to its legal
effect. The purpose of the rules on service is to make sure that the party being served with the
pleading, order or judgment is duly informed of the same so that he can take steps to protect his
interests; i.e., enable a party to file an appeal or apply for other appropriate reliefs before the
decision becomes final.
The rule is – where a party appears by attorney in an action or proceeding in a court of record, all
notices required to be given therein must be given to the attorney of record; and service of the
court's order upon any person otherthan the counsel of record is not legally effective and binding
upon the party, nor may it start the corresponding reglementary period for the subsequent
procedural steps that may be taken by the attorney. Notice should be made upon the counsel of
record at his exact given address, to which notice of all kinds emanating from the court should be
sent in the absence of a proper and adequate notice to the court of a change of address.
When a party is represented by counsel of record, service of orders and notices must be made upon
said attorney; and notice to the client and to any other lawyer, not the counsel of record, is not
notice in law.
The NLRC Rules governing the issuance and service of notices and resolutions is, likewise, no
different:
SECTION 4. SERVICE OF NOTICES, RESOLUTIONS, ORDERS AND DECISIONS. - a) Notices

and copies of resolutions or orders, shall be served personally upon the parties by the bailiff or
duly authorized public officer within three (3) days from his/her receipt thereof or by registered
mail or by private courier;
b) In case of decisions and final awards, copies thereof shall be served on both parties
and their counsel or representative by registered mail or by private courier; Provided
that, in cases where a party to a caseor his/her counsel on record personally seeks service of
the decision uponinquiry thereon, service to said party shall be deemed effected as
hereinprovided. Where parties are numerous, service shall be made on counseland upon
such number of complainants, as may be practicable and shall beconsidered substantial
compliance with Article 224 (a) of the Labor Code,as amended. For purposes of appeal,
the period shall be counted from receipt of such decisions, resolutions, or orders by
the counsel or representative of record.
c) The bailiff or officer serving the notice, order, or resolution shall submit his/her return
within two (2) days from date of service thereof, stating legibly in his/her return his/her
name, the names of the persons served and the date of receipt, which return shall be
immediately attached and shall form part of the records of the case. In case of service by
40 | P a g e
registered mail or by private courier, the name of the addressee and the date of receipt of
the notice, order or resolution shall be written in the return card or in the proof of service
issued by the private courier. If no service was effected, the reason thereof shall be so stated.
Also, in Ginete v. Sunrise Manning Agency, et al., the Court held that "the period for filing a petition
for certiorari should be reckoned from the time the counsel of record received a copy of the
Resolution denying the motion for reconsideration." The Court further clarified that the period or
manner of "appeal" from the NLRC to the Court of Appeals is governed by Rule 65, pursuant to the
ruling of the Court in the case of St. Martin Funeral
Homes v. NLRC in light of Section 4 of Rule 65, as amended, which states that the "petition may be
filed not later than sixty (60) days from notice of the judgment, or resolution sought to be assailed."
The Court further expounded therein, to wit:
Corollarily, Section 4, Rule III of the New Rules of Procedure of the NLRC expressly
mandates that "(F)or the purpose(s) of computing the period of appeal, the same
shall be counted from receipt of such decisions, awards, or orders by the counsel of
record. "Although this rule explicitlycontemplates an appeal before tile Labor Arbiter
and tile NLRC, we donot see any cogent reason why tile same rule should not apply
topetitions for certiorari filed with the Court of Appeals from decisions ofthe NLRC.
This procedure is in line with the established rule that notice to counsel is notice to
party and when a party is represented by counsel, notices should be made upon the
counsel of record at his given address to which notices of all kinds emanating from the
court should be sent. Itis to be noted also that Section 7 of the NLRC Rules of
Procedureprovides that "(A)ttorneys and other representatives of parties shall
haveauthority to bind their clients in all matters of procedure"' a provisionwhich is
similar to Section 23, Rule 138 of the Rules of Court. Moreimportantly, Section 2,
Rule 13 of the 1997 Rules of Civil Procedureanalogously provides that if any party has
appeared by counsel, serviceupon him shall be made upon his counsel.
In Bello v. NLRC, citing anew Ginete v. Sunrise Manning Agency, et al., the Court held that "the
period for filing a petition for certiorari shouldbe reckoned from the time the counsel of record
received a copy of the Resolution denying the motion for reconsideration."
Thus, based on the foregoing, while in cases of decisions and final awards, copies thereof shall be
served on both parties and their counsel/representative by registered mail, for purposes of appeal,
however, the period shall be counted from receipt of such decisions, resolutions, or orders by the
counsel or representative of record.
In the instant case, it is not disputed that during the NLRC proceedings, petitioner was represented
by counsel, Atty. Romeo S. Occena, as in fact the NLRC albeit belated, furnished a copy of its July
29, 2009 Resolution to Atty. Occena on November 19, 2009. Petitioner's several motions during the
proceedings before the NLRC were likewise all signed by Atty. Occena as counsel. Consequently,
following the policy that the period to appeal shall be counted from receipt of resolution by the
counsel of record, considering that petitioner is represented by a counsel, the latter is considered
to have received notice of the NLRC Resolution dated July 22, 2009 on November 19, 2009, the date
40 | P a g e
when his representative and counsel, Atty. Occena was served notice thereof and not on July 30,
2009, or the date when petitioner's mother received the same decision.
Accordingly, the 60-day period for filing the petition for certiorari with the CA should be counted
from the receipt by the petitioner's counsel of a copy of the NLRC Decision dated July 22, 2009 on
November 19, 2009. It should be stressed that the NLRC sent the notice of Resolution to petitioner's
counsel only on November 19, 2009. While there was a notice of Resolution dated July 22, 2009,
said notice was not served upon petitioner's counsel. Thus, strictly speaking, the running of the 60-
day period to appeal should be counted from November 19, 2009 when the notice of Resolution
dated July 22, 2009 was served on petitioner's counsel. Considering that petitioner filed his petition
for certiorari on October 7, 2009, the same was well within the prescribed period to appeal. The
petition for certiorari was filed on time.
However, the foregoing discussion notwithstanding, we have reviewed the records of the case at
bar and find no reversible error committed by the NLRC concerning the merits of the present
petition. While the petition for certiorari was timely filed with the CA, the instant petition would
still suffer the same verdict of dismissal in view of the identical findings of the Labor Arbiter and
the NLRC. The findings of fact made by Labor Arbiters and affirmed by the NLRC are not only
entitled to great respect, but even finality, and are considered binding if the same are supported by
substantial evidence.
We find that the NLRC correctly upheld petitioner's dismissal to be valid. Records show that
petitioner was relieved from his post in UST due to his poor work performance and attitude.
However, while petitioner was removed from UST, private respondent immediately reassigned him
to Mercury Drug Fairview which he refused to accept. Despite notices requiring him to report back
to work, petitioner refused to heed. Considering that it was petitioner who went on absence without
official leave (AWOL), the same negates the allegation of illegal dismissal.
PHILIPPINE SAVINGS BANKv.MANUEL P. BARRERA

G.R. No. 197393, June 15, 2016
Facts:
Petitioner is a banking institution organized and existing under the laws of the
Philippines.Respondent worked for petitioner for seven years in various capacities. In 2004, he was
assigned to the Bacolod branch as a marketing officer and was put in command of the loans
department.
During a quality assurance review, it was discovered that respondent had allowed a contractual
employee to use the former's user ID for account booking and approval in the bank's Integrated
Loans System. The unauthorized disclosure of system ID and password was a violation of bank
policy.
Respondent admitted that he had disclosed his user ID and password, but only to a Ms. Mary Ann
Cacal - a regular employee who had to go on maternity leave. He explained that he did so for the
continuity of transactions in instances when he had to go out of the bank to coordinate with dealers
or interview clients. He insisted that he was merely following a precedent set by the branch head,
Mr. Loubert Sajo.y
40 | P a g e
While the investigation of this matter was pending, the bank discovered another infraction
committed by respondent - the unauthorized issuance of bank certifications. The internal audit
group found that he, along with other officers, was involved in lending the account of Spouses
Armando and Grace Ong (Sps. Ong) to different individuals in order to generate bank certifications
in favor of the latter.Bank policy explicitly stated that "no account shall be allowed to be opened for
certification purposes only."
As a result of the investigation, it was discovered that a Request for Change was accomplished on 2
June 2004 to change the account name of Sps. Ong to that of Spouses Orville and Lolita Bautista
(Sps. Bautista). The account number remained the same. Respondent was shown to be a signatory
to the Certification that there existed a deposit with the bank of a sum of money as of 1 June 2004
in the name of Sps. Bautista. After two days, another Request for Change was processed to revert
the account name to that of Sps. Ong. On 7 June 2004, respondent again signed and approved a
bank certification in favor of a certain Karen Galoyo using the same account number. Documents
showed deficiencies in the signature cards and other requirements for the processing of a request
for change of account name. Virtualawlibrary
On 15 February 2005, an administrative hearing was conducted. On 15 March 2005, petitioner served
on respondent a Notice of Termination for grave violation of bank policies, code of conduct, and
On 4 April 2005, respondent filed a Complaint for illegal dismissal.
The labor arbiter ruled in favor of respondent and ordered his immediate reinstatement, as well as
the payment of P476,137.39 representing back wages, 13th month pay, moral and exemplary
damages, attorney's fees, quarterly bonus, and refund for travel expenses and other benefits.
Petitioner appealed to the NLRC.Respondent filed a Motion to Dismiss on the ground of lack of
authority to file appeal memorandum and non-perfection thereof. He pointed out that the
supersedeas bond was irregular, because the Certification of Accreditation and Authority issued by
the Office of the Court Administrator (OCA) stated that the Philippine Charter Insurance
Corporation (PCIC) was only authorized to issue bonds for civil cases.
Nevertheless, the NLRC gave due course to the appeal and reversed the Decision of the labor arbiter.
It found that the complainant had been dismissed for cause and afforded due process.
The NLRC Decision, however, did not address the argument raised in the Motion to Dismiss
regarding the irregularity of the appeal bond. Respondent therefore filed a Petition for Certiorari
with the CA.
The CA held that the NLRC had committed grave abuse of discretion amounting to lack or excess
of jurisdiction when the latter gave due course to the bank's appeal even if it was apparent that the
appeal had not been perfected owing to a defective and irregular appeal bond.libraryThe CA
observed that the certification and accreditation issued by the OCA did not state that the PCIC was
allowed to issue bonds relative to labor cases filed before the NLRC. The appellate court further
held that the appeal should not have been given due course because of its non-perfection within
the reglementary period.
40 | P a g e
Issues
Whether or not the CA properly found that the appeal before the NLRC had not been perfected;
hence, the Decision of the labor arbiter has become final and executory.
Whether or not the respondent was illegally dismissed.
Ruling
The Court was confronted with a similar question in U-Bix Corp. v. Hollero. In that case, both the
NLRC and the CA held that the supersedeas bond posted by petitioners had no force and effect,
because a perusal of the bond revealed that the Certification of Accreditation and Authority issued
by the OCA covers an authority to transact surety business in relation to "civil/special proceedings
cases only" and does not include labor cases filed before the NLRC. The Court therein ruled that
the bonds may also be used for labor cases.
In the present case, the CA overlooked the fact that it is within the province of the NLRC to accredit
surety companies for cases it hears. The Supreme Court only accredits surety companies for judicial
courts:
II. ACCREDITATION OF SURETY COMPANIES: In order to preclude spurious and delinquent

surety companies from transacting business with the courts, no surety company or its authorized
agents shall be allowed to transact business involving surety bonds with the Supreme Court, Court
of Appeals, the Court of Tax Appeals, the Sandiganbayan, Regional Trial Courts, Shari'a District
Courts, Metropolitan Trial Courts, Municipal Trial Courts in Cities, Municipal Trial Courts,
Municipal Circuit Trial Courts, Shari'a Circuit Courts and other courts which may thereafter be
created, unless accredited and authorized by the Office of the Court Administrator.
This fact explains why labor cases were not enumerated in the Certification of Accreditation and
Authority issued to the PC1C. This is not to say that the certification issued by the OCA is worthless
before the NLRC. On the contrary, the 2005 Revised Rules of Procedure of the NLRC expressly
provided that bonds issued by a reputable bonding company duly accredited by the Supreme Court
are acceptable.
In addition, the Court has relaxed the requirement of posting a supersedeas bond for the perfection
of an appeal when there has been substantial compliance with the rule. For example, in Del Rosario
v. Philippine Journalists, Inc., the Court allowed the appeal to proceed despite the subsequent
revocation of the authority of a bonding company, because "technical rules of procedure should not
hamper the quest for justice and truth."
We find that the purpose of the appeal bond - to ensure, during the period of appeal, against any
occurrence that would defeat or diminish recovery by the aggrieved employees under the judgment
if subsequently affirmed - has been met. Records show that as of 22 January 2011, the supersedeas
bond in the amount of P476,137.39 was still in existence. Wlibrary
We uphold the finding of the NLRC that respondent was validly dismissed.
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The unauthorized disclosure of username and
password exposed the bank to incalculable losses.
The loss of confidence had sufficient basis. As an account and marketing officer, respondent was
tasked with the approval of loans, which is an element of a core banking function. Without a doubt,
he was entrusted with delicate matters, including the custody, handling, care and protection of the
bank's assets. Given the sensitive functions of his position, he was expected to strictly observe and
comply with the bank's standard operating procedures.
This he failed to do.
The bank has an existing policy on user IDs and passwords: BOPD Code 003-01 -04.244 dated 6
August 2002, obligating designated branch personnel to keep their passwords confidential at all
times. The purpose was to establish accountabilities and limit control over transactions and/or
functions. Respondent, who was one of those branch personnel so designated, disclosed his
password to another employee, who later disclosed it to a contractual employee.
Respondent tried to excuse his action by pointing out that the branch head was also guilty of the
same offense. (After investigation, this allegation proved to be false.) Although respondent later
attempted to seek understanding on account of his heavy workload, we cannot force the employer
to accept these excuses. We understand that the failure of respondent to report irregularities being
committed in the branch, coupled with his disregard of the control procedure, allowed
unauthorized access into the bank system. To a great degree, it exposed the bank to unauthorized
transactions that would have been difficult to trace and determine.
Aside from breaking the trust of his employer, respondent also demonstrated gross and habitual
negligence when he delegated a function that had been specifically reposed in him. His thoughtless
disregard of the consequences of allowing an unauthorized person to have unbridled access to the
bank's system and his repeated failure to perform his duties for a period of time justified his
dismissal.
Respondent's complicity in the issuance

of fraudulent bank
certifications justifies the loss of
confidence.
On 19 October 2001, the bank released IOL No. OPS 01-023 regarding the issuance of bank
certifications for deposits and loans, the relevant portions of which state:
All concerned Department/Branches are hereby reminded to be careful in issuing bank

certification by observing necessary procedures such as but not limited to the following:
1. The branch/department shall restrict the issuance of Bank Certificate to bonafide Bank clients
who:
- must have opened their accounts legitimately, complete with the usual identity requirements,
and
40 | P a g e
- has written a request for bank certifications on deposits and loans, signed by him, signature
verified and approved by the concerned Operating/Department Hea.
x x x x.
3. No account shall be allowed to be opened for certification purposes only.

x x x x.
Issuance of false certification shall be dealt with in accordance with the Bank's
Officers/Employees Code of Ethics and Behavior.
Respondent claimed that he was merely prevailed upon by the branch head to sign the bank
certifications, and that the signing was ministerial upon the presentation of a letter-request and a
printout of the client's name and account number.
First, We cannot fault petitioner for dismissing a bank officer who has failed to grasp the
significance of bank certifications despite his employment with the bank for seven years. In his
reply to petitioner's Memorandum dated 29 December 2004, respondent explained that he had
signed the Bank Certification dated 4 June 2004, because there were only two bank officers at that
time - he and the branch head - and "the client was getting impatient waiting for his document."
ualawlibrInSajo v. Philippine Saving's Bank involving the very same branch head and including the
very same bank certifications referred to in this case, the Court did not find reversible error on the
part of the CA in ruling that the termination was valid. Indeed, the question of whether the
employee received monetary consideration for the issuance of fraudulent bank certificates was
immaterial; what was reprehensible was that the employee allowed himself to be a conduit for
defrauding persons and/or institutions that relied on the certificates.
In Rivera v. Allied Banking Corp., the dismissed employee explained that the arrangement with the
client regarding the opening of joint accounts for her foreign currency check deposits used for
rediscounting transactions was merely an accommodation service, which was done in good faith
and in accordance with the bank's policies. The Court, nonetheless, upheld the validity of his
termination.
Second, respondent was guilty of gross and habitual negligence when he failed to exercise the
requisite amount of care or diligence in signing the bank certifications. Bank policy clearly required
that certifications be issued only to clients who had opened their accounts legitimately with the
usual identity requirements. Even if it were true that he had no access to the information,
respondent should have been alerted of the irregularity by the fact that at least three requests for
change of account name had been submitted in the course of a week. However, respondent
proceeded to sign the certifications without question, evincing a thoughtless disregard of the
consequences of his actions.
Third, respondent cannot hide behind his designation as an account officer in charge of loans to
claim ignorance of branch operations. It must be emphasized that he admitted to having been
40 | P a g e
appointed as branch head of PSB-Bacolod from 1 June 1998 to 30 June 2001; and assistant branch
head of PSB-Cebu City and PSB-General Santos from 1 July 2001 to 31 August 2002 and from 1 August
2002 to 30 June 2003, respectively. He cannot deny that for at least five years, he should have had
an in-depth knowledge and understanding of bank operations and policies.
Fourth, respondent had the discretion to refuse to sign the document. Even if he was under
compulsion from the branch head to sign, the act would still have been inexcusable. In fact, the
Court has upheld the dismissal of employees who claimed that they only committed illegal acts
upon the instructions of their superior.blesVi
Petitioner properly exercised its

management prerogative in
terminating the services of respondent.
Because of its status as a business affected with public interest, a bank is expected to exercise the
highest degree of diligence in the selection and supervision of its employees.
RoblesVirtualawlibrary
We cannot coerce petitioner to retain an employee whom it cannot trust to perform duties of the
highest fiduciary nature. As a general rule, employers are allowed wider latitude of discretion in
terminating the employment of managerial employees, as the latter perform functions that require
the employers' full trust and confidence.y
SUGARSTEEL INDUSTRIAL, INC. AND MR. BEN YAPJOCOv.VICTOR ALBINA, VICENTE UY

AND ALEX VELASQUEZ
G.R. No. 168749, June 06, 2016
Facts:
Respondents Victor Albina, Vicente Uy and Alex Velasquez charged the petitioners in the Regional
Arbitration Branch of the National Labor Relations Commission (NLRC) in Cebu City with having
illegally dismissed them as kettleman, assistant kettleman, and inspector, respectively.
At around 4:00 a.m. of August 16, 1996, a clog-up occurred at the kettle sheet guide. At that time,
the petitioners were on duty working in their assigned areas. As a consequence, twenty (20) GI
sheets were clogged-up inside the kettle, causing damage to the private respondent. On the same
day, a memorandum was issued by Mr. Ben S. Yapjoco, manager of the private respondent,
requiring all the petitioners to submit written explanation on the aforesaid incident and why no
action shall be taken against them for gross negligence. In response to the memorandum, the
petitioners submitted their respective explanations.
Subsequently, in a memorandum dated August 20, 1996, Mr. Yapjoco informed all the petitioners
to attend a conference in connection with the aforesaid incident. On August 26, 1996, individual
notices of suspension were sent to the petitioners pending final decision relative to the incident.
On August 29, 1996, Mr. Yapjoco again sent individual notices of termination of employment to all
40 | P a g e
petitioners, stating that after the management conducted an investigation on the circumstances
surrounding the incident, the petitioners were found guilty of gross neglect of duty and by reason
thereof, they were terminated from their employment.
In the decision rendered on April 27, 1998,the Labor Arbiter (LA) ruled that although the dismissal
of the respondents was justified because of their being guilty of gross negligence, the petitioners
should pay them their separation pay at the rate of 1/2 month per year of service.
On appeal, the NLRC, observing that the ground stated in support of the respondents' appeal - that
"the decision with all due respect, is not supported by evidence and is contrary to the facts
obtaining" - was not among those expressly enumerated under Article 223 of the Labor Code, upheld
the LA's decision on December 23, 1998.
On May 8, 2000, the NLRC denied the respondents’ motion for reconsideration.
In the judgment promulgated on January 9, 2004, the CA granted the petition for certiorari. It ruled
that the NLRC's affirmance of the LA's decision did not accord with the evidence on record and the
applicable law and jurisprudence; that the dismissal of the respondents' appeal constituted grave
abuse of discretion amounting to lack or excess of jurisdiction; and that based on its review the
respondents had been illegally dismissed considering that the petitioners did not establish that the
respondents were guilty of gross and habitual neglect.
Issue
The crux of this appeal is the extent of the authority of the Court of Appeals (CA) to review in a
special civil action for certiorari the findings of fact contained in the rulings of the National Labor
Relations Commission (NLRC). The petitioners insist that the CA's review is limited to the
determination of whether or not the NLRC committed grave abuse of discretion amounting to lack
or excess of jurisdiction; hence, it cannot disregard the findings of fact of the NLRC to resolve the
issue of illegal dismissal. The respondents maintain the contrary.
Ruling
The CA did not exceed its jurisdiction by reviewing the evidence and deciding the case on the merits
despite the judgment of the NLRC already being final. We have frequently expounded on the
competence of the CA in a special civil action for certiorari to review the factual findings of the
NLRC. In Univac Development, Inc. v. Soriano, for instance, we have pronounced that the CA is
"given the power to pass upon the evidence, if and when necessary, to resolve factual issues,"
without contravening the doctrine of the immutability of judgments. The power of the CA to pass
upon the evidence flows from its original jurisdiction over the special civil action for certiorari, by
which it can grant the writ of certiorari to correct errors of jurisdiction on the part of the NLRC
should the latter's factual findings be not supported by the evidence on record; or when the granting
of the writ of certiorari is necessary to do substantial justice or to prevent a substantial wrong; or
when the findings of the NLRC contradict those of the LA; or when the granting of the writ of
certiorari is necessary to arrive at a just decision in the case. The premise is that any decision by the
NLRC that is not supported by substantial evidence is a decision definitely tainted with grave abuse
40 | P a g e
of discretion. Should the CA annul the decision of the NLRC upon its finding of jurisdictional error
on the part of the latter, then it has the power to fully lay down whatever the latter ought to have
decreed instead as the records warranted. The judicial function of the CA in the exercise of its
certiorari jurisdiction over the NLRC extends to the careful review of the NLRC's evaluation of the
evidence because the factual findings of the NLRC are accorded great respect and finality only when
they rest on substantial evidence. Accordingly, the CA is not to be restrained from revising or
correcting such factual findings whenever warranted by the circumstances simply because the
NLRC is not infallible. Indeed, to deny to the CA this power is to diminish its corrective jurisdiction
through the writ of certiorari.
The policy of practicing comity towards the factual findings of the labor tribunals does not preclude
the CA from reviewing the findings, and from disregarding the findings upon a clear showing of the
NLRC's capricious, whimsical or arbitrary disregard of the evidence or of circumstances of
considerable importance crucial or decisive of the controversy.In such eventuality, the writ of
certiorari should issue, and the CA, being also a court of equity, then enjoys the leeway to make its
own independent evaluation of the evidence of the parties as well as to ascertain whether or not
substantial evidence supported the NLRC's ruling.
We uphold the CA's setting aside of the decision of the NLRC.
To start with, the NLRC affirmed the decision of the LA based on its observation that the alleged
ground for the respondents' appeal - that "the decision with all due respect, is not supported by
evidence and is contrary to the facts obtaining" - was not one of those expressly enumerated under
Article 223 of the Labor Code.
We cannot sustain the NLRC's basis for its affirmance of the LA's decision. Article 223 of the Labor
Code pertinently states:
Art. 223. Appeal - Decisions, awards, or orders of the Labor Arbiter are final and
executory unless appealed to the Commission by any or both parties within ten (10)
calendar days from receipt of such decisions, awards, or orders. Such appeal may be
entertained only on any of the following grounds:
(a) If there is prima facie evidence of abuse of discretion on the part of the Labor
Arbiter;
(b) If the decision, order or award was secured through fraud or coercion, including
graft and corruption;
(c) If made purely on questions of law; and
(d) If serious errors in the findings of facts are raised which would cause grave or
irreparable damage or injury to the appellant.
x x x x.
In our view, the CA acted judiciously in undoing the too literal interpretation of Article 223 of the
Labor Code by the NLRC. The enumeration in the provision of the grounds for an appeal actually
encompassed the ground relied upon by the respondents in their appeal. Their phrasing of the
ground, albeit not hewing closely (or literally) to that of Article 223, related to the first and the last
40 | P a g e
grounds under the provision. In dismissing the appeal on that basis, the NLRC seemed to prefer
form and technicality to substance and justice. Thereby, the NLRC acted arbitrarily, for its dismissal
of the appeal became entirely inconsistent with the constitutional mandate for the protection to
labor.
Secondly, the CA's overturning of the NLRC's ruling was based on its finding that the petitioners
did not sufficiently establish the just and valid cause to dismiss the respondents from their
employment. As the assailed judgment indicates, the CA's review was thorough and its ruling
judicious. The CA thereby enforced against the petitioners the respected proposition that it was the
employer who bore the burden to show that the dismissal was for just and valid cause. The failure
of the petitioners to discharge their burden of proof as the employers necessarily meant that the
dismissal was illegal. The outcome could not be any other way.
In order to warrant the dismissal of the employee for just cause, Article 282 (b) of the Labor Code
requires the negligence to be gross and habitual. Gross negligence is the want of even slight care,
acting or omitting to act in a situation where there is duty to act, not inadvertently but willfully and
intentionally, with a conscious indifference to consequences insofar as other persons may be
affected. Habitual neglect connotes repeated failure to perform one's duties for a period of time,
depending upon the circumstances.Obviously, a single or isolated act of negligence does not
constitute a just cause for the dismissal of the employee.
The ground for dismissal, according to the LA, was gross negligence. Considering, however, that
the petitioners did not refute the respondents' claim that the incident was their first offense, and
that the petitioners did not present any evidence to establish the supposed habitual neglect on the
part of the respondents, like employment or other records indicative of the service and personnel
histories of the respondents during the period of their employment, the CA reasonably found and
concluded that the just cause to dismiss them was not established by substantial evidence.
RELIEF FOR ILLEGAL DISMISSAL
THE COFFEE BEAN AND TEA LEAF PHILIPPINES,

INC. AND WALDEN CHU v. ROLLY P. ARENAS
G.R. No. 208908, March 11, 2015, BRION, J.
For misconduct or improper behavior to be a just cause for dismissal, (a) it must be
serious; (b) it must relate to the performance of the employee’s duties; and (c) it must show
that the employee has become unfit to continue working for the employer.
Facts:
Coffee Bean and Tea Leaf Philippines, Inc. (CBTL) hired Rolly P. Arenas to work
as a barista. Upon signing the employment contract, Arenas was informed of CBTL’s
employment policies. The duty manager of CBTL prepared a report which listed
Arenas’ recent infractions, as follows: a) Leaving the counter unattended and eating
chips in an unauthorized area while on duty; b) reporting late for work on several
occasions and c) placing an iced tea bottle in the ice bin despite having knowledge
of company policy prohibiting the same. CBTL found Arenas’ written explanation
unsatisfactory and terminated his employment. Arenas filed a complaint for illegal
40 | P a g e
dismissal.
Issue:
Whether CBTL illegally dismissed Arenas
Ruling:
Yes. The infractions which Arenas committed do not justify the application of
the severe penalty of termination from service. For willful disobedience to be a valid
cause for dismissal, these two elements must concur: (1) the employee’s assailed
conduct must have been willful, that is, characterized by a wrongful and perverse
attitude; and (2) the order violated must have been reasonable, lawful, made known
to the employee, and must pertain to the duties which he had been engaged to
discharge.
Arenas’ alleged infractions do not amount to a wanton disregard of CBTL’s

company policies. Arenas was on a scheduled break when he was caught eating at CBTL’s
al fresco dining area. During that time, the other service crews were the ones in charge
of manning the counter. Notably, CBTL’s employee handbook imposes only the penalty
of written warning for the offense of eating non-CBTL products inside the store’s
premises.
Also, Arenas’ three counts of tardiness cannot be considered as gross and habitual
neglect of duty. The infrequency of his tardiness already removes the character of
habitualness. These late attendances were also broadly spaced out, negating the
complete absence of care on Arenas’ part in the performance of his duties. Even CBTL
admitted in its notice to explain that this violation does not merit a disciplinary action
and is only an aggravating circumstance to Arenas’ other violations.
To further justify Arenas’ dismissal, CBTL argues that he committed serious

misconduct when he lied about using the ice bin as cooler for his bottled iced tea.
However, there was no active dishonesty on the part of Arenas. When questioned about
who placed the bottled iced tea inside the ice bin, his immediate reaction was not to
deny his mistake, but to remove the bottle inside the bin and throw it outside. More
importantly, when he was asked to make a written explanation of his action, he
admitted that the bottled iced tea was his.
Moreover, the imputed violations of Arenas, whether taken singly or as a

whole, do not necessitate the imposition of the harsh penalty of dismissal from service.
The LA, NLRC and the CA all consistently ruled that these offenses are not grave enough
to qualify as just causes for dismissal. Factual findings of the labor tribunals especially if
affirmed by the CA must be given great weight, and merit the Court’s respect.
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VENUS B. CASTILLO, ET AL. vs. PRUDENTIALLIFE PLANS, INC. ET AL.
G.R. No. 196142. March 26, 2014
J. Del Castillo
In a labor case, the written statements of co-employees admitting their participation in a

scheme to defraud the employer are admissible in evidence. The argument by an employee that the
said statements constitute hearsay because the authors thereof were not presented for their cross-
examination does not persuade, because the rules of evidence are not strictly observed in proceedings
before the National Labor Relations Commission(NLRC), which are summary in nature and decisions
may be made on the basis of position papers.
Facts:
Petitioners were regular employees of respondent Prudentialife Plans, Inc. (Prudentialife).

Prudential Plans Employees Union – FFW (PPEU-FFW), on the other hand, is a local chapter of the
Federation of Free Workers and is the authorized bargaining agent of Prudentialife’s rank-and-file
employees. The individual petitioners are members of PPEU-FFW.
Under Section 4, Article X of the parties’ Collective Bargaining Agreement (CBA), Prudentialife
employees were granted an optical benefit allowance of P2,500.00 to subsidize prescription
eyeglasses for those who have developed vision problems in the course of employment.
Many Prudentialife employees – petitioners included – availed thereof and Prudentialife was
flooded with requests for reimbursement for eyeglasses the employees supposedly purchased from
a single outfit/supplier, Alavera Optical. Suspecting fraud, Prudentialife began an investigation into
the matter. After the investigation, Prudentialife concluded that petitioners and other employees
knowingly availed of the optical benefit allowance to obtain a refund of the maximum P2,500.00
benefit even though they did not have vision problems, or that their eyeglasses were worth less than
P2,500.00. Thereafter, Prudentialife terminated the petitioners and other employees.
Petitioners filed a Complaint for illegal dismissal, money claims and damages against respondents.
The LA dismissed the complaint for lack of merit. The NLRC reversed the decision of the LA. The
CA reversed and set aside the decision of the NLRC. The CA found that there was indeed cause
to dismiss petitioners. Hence, this petition.
Issue:
Whether or not petitioners were illegally dismissed
Ruling:
The evidence on record suggests that, with the aim in view of availing the optical benefit provision
under the CBA, Prudentialife employee Elvie Villaviaje initiated a company-wide scheme with
Alavera Optical whereby the latter, through its optometrists, conducted eye examinations within
company premises and issued prescriptions on January 27, 2006, and subsequently prepared and
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released eyeglasses to the participating Prudentialife employees. In turn, these employees claimed
reimbursement for the cost of their eyeglasses through the optical benefit provision, to the
allowable extent of P2,500.00. The evidence shows that even before they could pay for the cost of
their eyeglasses, Alavera Optical offered to issue, as it did issue, official receipts in advance to the
availing employees, which they used to secure reimbursements from Prudentialife ahead of the
actual payment of the eyeglasses; the petitioners acknowledged this fact in their individual and
respective written explanations. Likewise, some of the availing employees – except petitioners –
admitted that they knew that the true cost of their respective eyeglasses ranged from only P1,200.00
– P1,800.00; that Alavera Optical deliberately issued official receipts for a greater amount ranging
from P2,500.00 – P2,600.00 with their full knowledge and consent; that they used these official
receipts to claim reimbursement; and that Prudentialife actually reimbursed them to the extent of
P2,500.00.
From the above, it appears that there was a conspiracy to defraud Prudentialife using the optical
benefit provision in the CBA to unduly enrich the availing employee, and possibly Alavera Optical,
through overpricing of the latter’s eyeglasses and appropriation of the difference between the
bloated price and the actual cost.
For their dishonesty, the penalty of dismissal is justified pursuant to Section 2.6 (i) of the
Prudentialife Personnel Manual which prescribes the penalty of dismissal for acts of padding
receipts for reimbursement or liquidation of advances or expenses. Dishonesty is a serious offense,
and “no employer will take to its bosom a dishonest employee.” Dishonesty implies a “disposition
to lie, cheat, deceive, or defraud; untrustworthiness; lack of integrity; lack of honesty, probity or
integrity in principle; lack of fairness and straightforwardness; disposition to defraud, deceive or
betray.” Acts of dishonesty have been held to be sufficient grounds for dismissal as a measure of
self-protection on the part of the employer.
The written statements of petitioners’ co-employees admitting their participation in the scheme
are admissible to establish the plan or scheme to defraud Prudentialife; the latter had the right to
rely on them for such purpose. The argument that the said statements are hearsay because the
authors thereof were not presented for cross-examination does not persuade; 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. Besides, these written declarations do not
bear directly on petitioners’ participation in the scheme; their guilt has been established by
evidence other than these statements.
INTERNATIONAL SCHOOL MANILA AND/OR BRIAN McCAULEY, vs. INTERNATIONAL

SCHOOL ALLIANCE OF EDUCATORS (ISAE) AND MEMBERS REPRESENTED BY RAQUEL
DAVID CHING, PRESIDENT, EVANGELINE SANTOS, JOSELYN RUCIO AND METHELYN
FILLER
G.R. No. 167286 February 5, 2014
J. Leonardo-De Castro
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Gross inefficiency falls within the purview of “other cause analogous to the foregoing,” and
constitutes therefore, just cause to terminate an employee under Article 282 of the Labor Code. It is
closely related to “gross neglect”, for both involve specific acts of omissions on the part of the employee
resulting in damage to the employer or to his business. It has been settled that failure to prescribe
standards of work, or to fulfill reasonable work assignment due to inefficiency may constitute just
cause for dismissal.
Facts:
Santos was hired by the School in 1978 as a full-time Spanish language teacher. Upon her return
after her leave of absence for the school year 1992-1993, only one class of Spanish was available for
her to teach. Thus, for the next school year, she agreed to teach one class of Spanish and four other
classes of Filipino that were left behind by a retired teacher. Since it was her first time to teach
Filipino, the school administrators observed the way she conducted her classes and the results of
which were summarized in Classroom Standards Evaluation Forms. Specifying certain aspects with
which she needs improvement, she was required to undergo the remediation phase of the
evaluation process through a Professional Growth Plan. However, notwithstanding the one-year
remediation period wherein school administrators met with her no less than thirty times to check
on her, clarify and discuss her planning process, and help her improve her performance, she
repeatedly failed to meet the standards required by the school from 1993 to 1997. She was later on
directed, through a letter sent to her, to explain in writing why her employment from the School
should not be terminated due to her substandard performance as a teacher. Her letter-reply blamed
the school for her predicament stating that she had been forced to teach Filipino, a subject which
she had no preparation for. A formal administrative investigation was then set by the School giving
her opportunity to explain her side. Charged with gross inefficiency or negligence in the
performance of her assigned work, her employment with the school was terminated on June 7, 1997.
Issues:
(1) Whether or not Santos has been illegally dismissed.
(2) Whether or not she is entitled to reinstatement or separation pay with backwages.
Ruling:
(1) We find that the petitioners had sufficiently proved the charge of gross inefficiency, which
warranted the dismissal of Santos from the school.
In Pena v NLRC, it has been ruled that “it is the prerogative of the school to set high standards of
efficiency for its teachers since quality education is a mandate of the Constitution. As long as the
standards fixed are reasonable and not arbitrary, courts are not at liberty to set them aside.”
Moreover, the prerogative of a school to provide standards for its teachers and to determine
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whether these standards have been met is in accordance with academic freedom, which gives the
educational institution the right to choose who should teach.
Contrary to the ruling of the Labor Arbiter, it is not accurate to state that Santos was dismissed by
the School for inefficiency on account of the fact that she was caught only once without a lesson
plan. There had been numerous instances when Santos failed to observe the prescribed standards
of performance set by the School despite all the efforts exerted by the school administrators to
improve her performance. Thus, the School was left with no choice but to terminate her
employment.
Furthermore, there is a need to stress that Santos voluntarily agreed to teach Filipino classes. No
force was applied upon her, in fact, she was given the option to teach only one Spanish class and
not have any Filipino teaching loads. However, she said that if she took that option she would have
been underpaid and her salary would not have been the same. She even made it known to the school
that for the school years 1994-1995 and 1995-1196, she did not prefer a change in her teaching
assignment. Thus, when she consented to take on the Filipino classes, it was her responsibility to
teach them well within the standards of teaching required by the School, as she had done previously
as a teacher of Spanish. Falling in this, she must answer for the consequences.
(2) In view of the finding that Santos was validly dismissed from employment, she would not
ordinarily be entitled to separation pay. However, applying the principle of social justice, separation
pay shall be allowed as a measure of social justice only in those instances where the employee is
validly dismissed for causes other than serious misconduct or those reflecting on his moral
character.
The Court finds equitable and proper the award of separation pay in favor of Santos in view of the
length of her service with the school prior to the events that led to the termination of her
employment. She was first employed by the School in 1978 and during this time, the records of this
case are silent as to the fact of any infraction that she committed and/or any other administrative
case against her that was filed by the School. Thus, an award of separation pay equivalent to one-
half (1/2) month pay for every year of service is awarded in favor of Santos on grounds of equity and
social justice.
JONAS MICHAEL R. GARZA vs. COCA-COLA BOTILERS PHILIPPINES, INC. and CHRISTINE
BANAL/CALIXTO MANAIG
G.R. No. 180972, January 20, 2014
J. DEL CASTILLO
Where the accused was dismissed for alleged unliquidated collection and cash shortage, the
SC ruled that the petitioner could not be accused of embezzlement or failure to remit as defined and
punished under CCBPI’s November 18, 2002 Inter-Office Memorandum, because he received no cash
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or check from Asanza. Without receiving anything from her, there was nothing for petitioner to
embezzle or remit, and thus CCBPI had no basis to charge him for violation of the November 18, 2002
Inter-Office Memorandum which punished embezzlement and failure/delay in remitting collections.
Facts:
Petitioner Jonas Michael R. Garza (petitioner) became a regular employee of CCBPI on December
16, 1997, designated as its Salesman in Iriga City. In 2001, he was promoted to the position of Dealer
Development Coordinator and assigned at Tabaco City. In 2003, due to changes in CCBPI’s
structure and operating systems, the position of Dealer Development Coordinator was abolished,
and petitioner was designated as Account Specialist and assigned to the CCBPI Naga City Plant and
at Iriga City. He was then dismissed by CCBPI for alleged past unliquidated collections and cash
shortage. Thus, petitioner filed for illegal dismissal.
Labor Arbiter (LA) ruled in favor of the petitioner declaring his termination from employment as
illegal. NLRC affirmed LA’s ruling with modification. The NLRC reversed the Labor Arbiter’s order
of reinstatement, finding that relations between the petitioner and CCBPI have been strained. CA
ruled that petitioner’s dismissal was proper.
Issue:
Whether the petitioner was illegally dismissed.
Ruling:
The petitioner was illegally dismissed.
One of CCBPI’s policies requires that, on a daily basis, CCBPI Salesmen/ Account Specialists must
account for their sales/collections and obtain clearance from the company Cashier before they are
allowed to leave company premises at the end of their shift and report for work the next day. If
there is a shortage/failure to account, the concerned Salesmen/Account Specialist is not allowed to
leave the company premises until he settles the same. In addition, shortages are deducted from the
employee’s salaries. Petitioner made repeated reiterations of this company policy all throughout
the proceedings, and not once did respondents deny or dispute its existence and implementation.
In fact, respondents confirmed existence of this policy when they stated in their Position Paper,
that "[a]s a matter of policy, salesmen in respondent’s company are obliged to remit all cash sales
and credit cash collections to the company office on the same day that said payments are made by
various customers, dealers and outlets."
It is altogether reasonable to suppose that this policy actually exists, because undeniably, such
policy insured a fool-proof system of accountability within CCBPI, where shortages are immediately
detected, presumably through the reconciliation of daily orders and deliveries to customers with
the daily collections of CCBPI’s salesmen, and simultaneously accounted for. With such a policy,
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no transaction is left unnoticed, and erring salesmen are instantaneously made to account for their
shortages before they can even leave the premises and come back to work the following day.
Within the context of said policy, it can be said that since petitioner continued to work for CCBPI
until June 2004, this should necessarily mean that he was clear of daily cash and check
accountabilities, including those transactions covered by the charges against him. If not, the
company cashier would not have issued the required clearance and petitioner would have been
required to settle these shortages as soon as they were incurred. Indeed, he would not have been
allowed to leave company premises until they were settled in accordance with company policy. And
he would not have been allowed to report for work the following day.
The irregularity attributed to petitioner with regard to the Asanza account should fail as well. To
be sure, Asanza herself confirmed that she did not make any payment in cash or check of P8,160.00
covering the October 15, 2003 delivery for which petitioner is being held to account. This being the
case, petitioner could not be charged with embezzlement/failure to remit for the simple reason that
as regards such October 15, 2003 delivery, there was nothing to embezzle or remit because no
payment thereon has as yet been made by the customer Asanza. It may appear from Official Receipt
No. 303203 issued to Asanza that the October 15 delivery of products to her has been paid; but as
admitted by her, she has not paid for the said delivered products. The reason for petitioner’s
issuance of said official receipt to Asanza is the latter’s concurrent promise that she would
immediately issue the check covering the said amount, which she nevertheless failed to do.
Although petitioner may be faulted for this act – issuing an official receipt without receiving the
corresponding payment – he could not be accused of embezzlement or failure to remit as defined
and punished under CCBPI’s November 18, 2002 Inter-Office Memorandum, because he received
no cash or check from Asanza. Without receiving anything from her, there was nothing for
petitioner to embezzle or remit, and thus CCBPI had no basis to charge him for violation of the
November 18, 2002 Inter-Office Memorandum which punished embezzlement and failure/delay in
remitting collections.
The Court likewise finds convincing petitioner’s arguments that it was impossible for him to
embezzle/not remit the other customers’ cash and check payments, not only because of the
existence of the abovementioned policy, but likewise due to the sworn avowals of these customers
that all their check payments have been issued in CCBPI’s name and have been duly debited from
their accounts. Certainly, petitioner could not have encashed check payments because they were
issued in the name of CCBPI; for the same reason, he could not have engaged in kiting operations.
Quite certainly, he would have easily been found out.
OLYMPIA HOUSING, INC., vs. ALLAN LAPASTORA and IRENE UBALUBAO

G.R. No.187691, January 13, 2016
FACTS
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The instant case stemmed from a complaint for illegal dismissal, payment of backwages and other
benefits, and regularization of employment filed by Allan Lapastora (Lapastora) and Irene
Ubalubao (Ubalubao) against Olympic Housing, Inc. (OHI), the entity engaged in the management
of the Olympia Executive Residences (OER), a condominium hotel building situated in Makati City,
owned by a Philippine-registered corporation known as the Olympia Condominium Corporation
(OCC). The complaint, which was docketed as NLRC NCR Case No. 30-03-00976-00 (NLRC NCR
CA No. 032043-02), likewise impleaded as defendants the part owner of OHI, Felix Limcaoco
(Limcaoco), and Fast Manpower and Allied Services Company, Inc. (Fast Manpower). Lapastora
and Ubalubao alleged that they worked as room attendants of OHI from March 1995 and June 1997,
respectively, until they were placed on floating status on February 24, 2000, through a
memorandum sent by Fast Manpower.
To establish employer-employee relationship with OHI, Lapastora and Ubalubao alleged that they
were directly hired by the company and received salaries directly from its operations clerk, Myrna
Jaylo (Jaylo). They also claimed that OHI exercised control over them as they were issued time
cards, disciplinary action reports and checklists of room assignments. It was also OHI which
terminated their employment after they petitioned for regularization. Prior to their dismissal, they
were subjected to investigations for their alleged involvement in the theft of personal items and
cash belonging to hotel guests and were summarily dismissed by OHI despite lack of evidence.
For their part, OHI and Limcaoco alleged that Lapastora and Ubalubao were not employees of the
company but of Fast Manpower, with which it had a contract of services, particularly, for the
provision of room attendants. They claimed that Fast Manpower is an independent contractor as it
(1) renders janitorial services to various establishments in Metro Manila, with 500 janitors under its
employ; (2) maintains an office where janitors assemble before they are dispatched to their
assignments; (3) exercises the right to select, refuse or change personnel assigned to OHI; and (4)
supervises and pays the wages of its employees.
Reinforcing OHI’s claims, Fast Manpower reiterated that it is a legitimate manpower agency and
that it had a valid contract of services with OHI, pursuant to which Lapastora and Ubalubao were
deployed as room attendants. Lapastora and Ubalubao were, however, found to have violated house
rules and regulations and were reprimanded accordingly. It denied the employees’ claim that they
were dismissed and maintained they were only placed on floating status for lack of available work
assignments.
Subsequently, on August 22, 2000, a memorandum of agreement was executed, stipulating the
transfer of management of the OER from OHI to HSAI-Raintree, Inc. (HSAI-Raintree). Thereafter,
OHI informed the Department of Labor and Employment (DOLE) of its cessation of operations due
to the said change of management and issued notices of termination to all its employees. This
occurrence prompted some union officers and members to file a separate complaint for illegal
dismissal and unfair labor practice against OHI, OCC and HSAI-Raintree, docketed as NLRC NCR
CN 30-11-04400-00 (CA No. 032193-02), entitled Malonie D. Ocampo, et al. v. Olympia Housing, Inc.,
et al. (Ocampo v. OHI). This complaint was, however, dismissed for lack of merit. The complainants
therein appealed the said ruling to the NLRC.
Meanwhile, on May 10, 2002, the Labor Arbiter (LA) rendered a Decision in the instant case, holding
that Lapastora and Ubalubao were regular employees of OHI and that they were illegally dismissed.
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In ruling for the existence of employer-employee relationship, the LA held that OHI exercised
control and supervision over Lapastora and Ubalubao through its supervisor, Anamie Lat. The LA
likewise noted that documentary evidence consisting of time cards, medical cards and medical
examination reports all indicated OHI as employer of the said employees.
Moreover, the affidavit of OHI’s housekeeping coordinator, Jaylo, attested to the fact that OHI is
the one responsible for the selection of employees for its housekeeping department. OHI also paid
the salaries of the housekeeping staff by depositing them to their respective ATM accounts. That
there is a contract of services between OHI and Fast Manpower did not rule out the existence of
employer-employee relationship between the former and Lapastora and Ubalubao as it appears that
the said contract was a mere ploy to circumvent the application of pertinent labor laws particularly
those relating to security of tenure. The LA pointed out that the business of OHI necessarily
requires the services of housekeeping aides, room boys, chambermaids, janitors and gardeners in
its daily operations, which is precisely the line of work being rendered by Lapastora and Ubalubao.
Both parties appealed to the NLRC. OHI asseverated that the reinstatement of Lapastora and
Ubalubao was no longer possible in view of the transfer of the management of the OER to HSAI-
Raintree.
On December 28, 2007, the NLRC rendered a decision, dismissing the appeal for lack of merit.
The NLRC held that OHI is the employer of Lapastora and Ubalubao since Fast Manpower failed to
establish the fact that it is an independent contractor. Further, it ruled that the memorandum of
agreement between OCC and HSAI-Raintree did not render the reinstatement of Lapastora and
Ubalubao impossible since a change in the management does not automatically result in a change
of personnel especially when the memorandum itself did not include a provision on that matter.
In the meantime, in Ocampo v. OHI, the NLRC rendered a Decision dated November 22, 2002,
upholding the validity of the cessation of OHI’s operations and the consequent termination of all
its employees. It stressed that the cessation of business springs from the management’s prerogative
to do what is necessary for the protection of its investment, notwithstanding adverse effect on the
employees. The discharge of employees for economic reasons does not amount to unfair labor
practice. The said ruling of the NLRC was elevated on petition for certiorari to the CA, which
dismissed the same in Resolutions dated November 28, 2003and June 23, 2004. The mentioned
resolutions were appealed to this Court and were docketed as G.R. No. 164160, which was, however,
denied in the Resolution dated July 26, 2004 for failure to comply with procedural rules and lack of
reversible error on the part of the CA.
ISSUE
Whether or not Lapastora was illegally dismissed.

Whether or not the principle of stare decisis is applicable.
RULING
Lapastora was illegally dismissed
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Indisputably, Lapastora was a regular employee of OHI. As found by the LA, he has been under the
continuous employ of OHI since March 3, 1995 until he was placed on floating status in February
2000. His uninterrupted employment by OHI, lasting for more than a year, manifests the
continuing need and desirability of his services, which characterize regular employment. Article
280 of the Labor Code provides as follows:
Art. 280. Regular and casual employment. The provisions of written agreement to the contrary
deemed to be regular where the employee has been engaged to perform activities which are usually
necessary or desirable in the usual business or trade of the employer, except where the employment
has been fixed for a specific project or undertaking, the completion or termination of which has
been determined at the time of the engagement of the employee or where the work or services to
be performed is seasonal in nature and the employment is for the duration of the season.

Provided, That, any employee who has rendered at least one year of service, whether such service is
continuous or broken, shall be considered a regular employee with respect to the activity in which
he is employed and his employment shall continue while such activity exists.
Based on records, OHI is engaged in the business of managing residential and commercial
condominium units at the OER. By the nature of its business, it is imperative that it maintains a
pool of housekeeping staff to ensure that the premises remain an uncluttered place of comfort for
the occupants. It is no wonder why Lapastora, among several others, was continuously employed
by OHI precisely because of the indispensability of their services to its business. The fact alone that
Lapastora was allowed to work for an unbroken period of almost five years is all the same a reason
to consider him a regular employee.
The attainment of a regular status of employment guarantees the employee’s security of tenure that
he cannot be unceremoniously terminated from employment. "To justify fully the dismissal of an
employee, the employer must, as a rule, prove that the dismissal was for a just cause and that the
employee was afforded due process prior to dismissal. As a complementary principle, the employer
has the onus of proving with clear, accurate, consistent, and convincing evidence the validity of the
dismissal."
OHI miserably failed to discharge its burdens thus making Lapastora’s termination illegal.
On the substantive aspect, it appears that OHI failed to prove that Lapastora’s dismissal was
grounded on a just or authorized cause. While it claims that it had called Lapastora’s attention
several times for tardiness, unexplained absences and loitering, it does not appear from the records
that the latter had been notified of the company’s dissatisfaction over his performance and that he
was made to explain his supposed infractions. It does not even show from the records that Lapastora
was ever disciplined because of his alleged tardiness. In the same manner, allegations regarding
Lapastora’s involvement in the theft of personal items and cash belonging to hotel guests remained
unfounded suspicions as they were not proven despite OHI’s probe into the incidents.
On the procedural aspect, OHI admittedly failed to observe the twin notice rule in termination
cases. As a rule, the employer is required to furnish the concerned employee two written notices:
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(1) a written notice served on the employee specifying the ground or grounds for termination, and
giving to said employee reasonable opportunity within which to explain his side; and (2) a written
notice of termination served on the employee indicating that upon due consideration of all the
circumstances, grounds have been established to justify his termination. In the present case,
Lapastora was not informed of the charges against him and was denied the opportunity to disprove
the same. He was summarily terminated from employment.
OHI argues that no formal notices of investigation, notice of charges or termination was issued to
Lapastora since he was not an employee of the company but of Fast Manpower.
The issue of employer-employee relationship between OHI and Lapastora had been deliberated and
ruled upon by the LA and the NLRC in the affirmative on the basis of the evidence presented by the
parties. The LA ruled that Lapastora was under the effective control and supervision of OHI through
the company supervisor. She gave credence to the pertinent records of Lapastora’s employment,
i.e., timecards, medical records and medical examinations, which all indicated OHI as his employer.
She likewise noted Fast Manpower’s failure to establish its capacity as independent contractor
based on the standards provided by law.
That there is an existing contract of services between OHI and Fast Manpower where both parties
acknowledged the latter as the employer of the housekeeping staff, including Lapastora, did not
alter established facts proving the contrary. The parties cannot evade the application of labor laws
by mere expedient of a contract considering that labor and employment are matters imbued with
public interest. It cannot be subjected to the agreement of the parties but rather on existing laws
designed specifically for the protection of labor. Thus, it had been repeatedly stressed in a number
of jurisprudence that "[a] party cannot dictate, by the mere expedient of a unilateral declaration in
a contract, the character of its business, i.e., whether as labor-only contractor or as job contractor,
it being crucial that its character be measured in terms of and determined by the criteria set by
statute."
The Court finds no compelling reason to deviate from the findings of the LA and NLRC, especially
in this case when the same was affirmed by the CA. It is settled that findings of fact made by LAs,
when affirmed by the NLRC, are entitled not only to great respect but even finality and are binding
on this Court especially when they are supported by substantial evidence.
The principle of stare decisis is not applicable
Still, OHI argues that the legality of the closure of its business had been the subject of the separate
case of Ocampo v. OHI, where the NLRC upheld the validity of the termination of all the employees
of OHI due to cessation of operations. It asserts that since the ruling was affirmed by the CA and,
eventually by this Court, the principle of stare decisis becomes applicable. Considering the closure
of its business, Lapastora can no longer be reinstated and should instead be awarded backwages up
to the last day of operations of the company only, specifically on October 1, 2000.
The CA correctly ruled that the principle of stare decisis finds no relevance in the present case. To
begin with, there is no doctrine of law that is similarly applicable in both the present case and in
Ocampo v. OHI. While both are illegal dismissal cases, they are based on completely different sets
of facts and involved distinct issues. In the instant case, Lapastora cries illegal dismissal after he
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was arbitrarily placed on a floating status on mere suspicion that he was involved in theft incidents
within the company premises without being given the opportunity to explain his side or any formal
investigation of his participation. On the other hand, in Ocampo v. OHI, the petitioners therein
questioned the validity of OHI’s closure of business and the eventual termination of all the
employees. Thus, the NLRC ruled upon both cases differently.
Nonetheless, the Court finds the recognition of the validity of OHI’s cessation of business in the
Decision dated November 22, 2002 of the NLRC, which was affirmed by the CA and this Court, a
supervening event which inevitably alters the judgment award in favor of Lapastora. The NLRC
noted that OHI complied with all the statutory requirements, including the filing of a notice of
closure with the DOLE and furnishing written notices of termination to all employees effective 30
days from receipt. OHI likewise presented financial statements substantiating its claim that it is
operating at a loss and that the closure of business is necessary to avert further losses. The action
of the OHI, the NLRC held, is a valid exercise of management prerogative.
Thus, while the finding of illegal dismissal in favor of Lapastora subsists, his reinstatement was
rendered a legal impossibility with OHI’s closure of business. In Galindez v. Rural Bank of Llanera,
Inc., the Court noted:
Reinstatement presupposes that the previous position from which one had been removed still exists
or there is an unfilled position more or less of similar nature as the one previously occupied by the
employee. Admittedly, no such position is available. Reinstatement therefore becomes a legal
impossibility. The law cannot exact compliance with what is impossible.
Considering the impossibility of Lapastora’s reinstatement, the payment of separation pay, in lieu
thereof, is proper. The amount of separation pay to be given to Lapastora must be computed from
March 1995, the time he commenced employment with OHI, until the time when the company
ceased operations in October 2000. As a twin relief, Lapastora is likewise entitled to the payment
of backwages, computed from the time he was unjustly dismissed, or from February 24, 2000 until
October 1, 2000 when his reinstatement was rendered impossible without fault on his part.
JOSE EMMANUEL P. GUILLERMO v. CRISANTO P. USON

G.R. No. 198967, March 07, 2016
FACTS:
On March 11, 1996, respondent Crisanto P. Uson (Uson) began his employment with Royal Class
Venture Phils., Inc. (Royal Class Venture) as an accounting clerk. Eventually, he was promoted to
the position of accounting supervisor, with a salary of Php13,000.00 a month, until he was allegedly
dismissed from employment on December 20, 2000.
On March 2, 2001, Uson filed with the Sub-Regional Arbitration . Branch No. 1, Dagupan City, of
the NLRC a Complaint for Illegal Dismissal, with prayers for backwages, reinstatement, salaries and
13th month pay, moral and exemplary damages and attorney's fees against Royal Class Venture.
Royal Class Venture did not make an appearance in the case despite its receipt of summons.
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On May 15, 2001, Uson filed his Position Paper as complainant.
On October 22, 2001, Labor Arbiter Jose G. De Vera rendered a Decision in favor of the complainant
Uson and ordering therein respondent Royal Class Venture to reinstate him to his former position
and pay his backwages, 13th month pay as well as moral and exemplary damages and attorney's fees.
Royal Class Venture, as the losing party, did not file an appeal of the decision. Consequently, upon
Uson's motion, a Writ of Execution dated February 15, 2002 was issued to implement the Labor
Arbiter's decision.
On May 17, 2002, an Alias Writ of Execution was issued. But with the judgment still unsatisfied, a
Second Alias Writ of Execution was issued on September 11, 2002.
Again, it was reported in the Sheriff's Return that the Second Alias Writ of Execution dated
September 11, 2002 remained "unsatisfied." Thus, on November 14, 2002, Uson filed a Motion for
Alias Writ of Execution and to Hold Directors and Officers of Respondent Liable for Satisfaction of
the Decision.
On December 26, 2002, Labor Arbiter Irenarco R. Rimando issued an Order granting the motion
filed by Uson. The order held that officers of a corporation are jointly and severally liable for the
obligations of the corporation to the employees and there is no denial of due process in holding
them so even if the said officers were not parties to the case when the judgment in favor of the
employees was rendered. Thus, the Labor Arbiter pierced the veil of corporate fiction of Royal Class
Venture and held herein petitioner Jose Emmanuel Guillermo (Guillermo), in his personal capacity,
jointly and severally liable with the corporation for the enforcement of the claims of Uson.
Guillermo filed, by way of special appearance, a Motion for Reconsideration/To Set Aside the Order
of December 26, 2002. The same, however, was not granted as, this time, in an Order dated
November 24, 2003, Labor Arbiter Niña Fe S. Lazaga-Rafols sustained the findings of the labor
arbiters before her and even castigated Guillenno for his unexplained absence in the prior
proceedings despite notice, effectively putting responsibility on Guillermo for the case's outcome
against him.
On January 5, 2004, Guillermo filed a Motion for Reconsideration of the above Order, but the same
was promptly denied by the Labor Arbiter in an Order dated January 7, 2004.
On January 26, 2004, Uson filed a Motion for Alias Writ of Execution, to which Guillermo filed a
Comment and Opposition on April 2, 2004.
On May 18, 2004, the Labor Arbiter issued an Order granting Uson's Motion for the Issuance of an
Alias Writ of Execution and rejecting Guillermo's arguments posed in his Comment and
Opposition.
Guillermo elevated the matter to the NLRC by filing a Memorandum of Appeal with Prayer for a
(Writ of) Preliminary Injunction dated June 10, 2004.crawred
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In a Decision dated May 11, 2010, the NLRC dismissed Guillermo's appeal and denied his prayers for
injunction.
On August 20, 2010, Guillermo filed a Petition for Certiorari before the Court of Appeals, assailing
the NLRC decision.
On June 8, 2011, the Court of Appeals rendered its assailed Decision which denied Guillermo's
petition and upheld all the findings of the NLRC.
ISSUE
Whether an officer of a corporation may be included as judgment obligor in a labor case for the
first time only after the decision of the Labor Arbiter had become final and executory, and whether
the twin doctrines of "piercing the veil of corporate fiction" and personal liability of company
officers in labor cases apply.
RULING
In the earlier labor cases of Claparols v. Court of Industrial Relations and A.C. Ransom Labor Union-
CCLU v. NLRC, persons who were not originally impleaded in the case were, even during execution,
held to be solidarity liable with the employer corporation for the latter's unpaid obligations to
complainant-employees. These included a newly-formed corporation which was considered a mere
conduit or alter ego of the originally impleaded corporation, and/or the officers or stockholders of
the latter corporation. Liability attached, especially to the responsible officers, even after final
judgment and during execution, when there was a failure to collect from the employer corporation
the judgment debt awarded to its workers. In Naguiat v. NLRC, the president of the corporation
was found, for the first time on appeal, to be solidarily liable to the dismissed employees. Then, in
Reynoso v. Court of Appeals, the veil of corporate fiction was pierced at the stage of execution,
against a corporation not previously impleaded, when it was established that such corporation had
dominant control of the original party corporation, which was a smaller company, in such a manner
that the latter's closure was done by the former in order to defraud its creditors, including a former
worker.
The rulings of this Court in A.C. Ransom, Naguiat, and Reynoso, however, have since been
tempered, at least in the aspects of the lifting of the corporate veil and the assignment of personal
liability to directors, trustees and officers in labor cases. The subsequent cases of McLeod v. NLRC,
Spouses Santos v. NLRC and Carag v. NLRC, have all established, save for certain exceptions, the
primacy of Section 31 of the Corporation Code in the matter of assigning such liability for a
corporation's debts, including judgment obligations in labor cases. According to these cases, a
corporation is still an artificial being invested by law with a personality separate and distinct from
that of its stockholders and from that of other corporations to which it may be connected. It is not
in every instance of inability to collect from a corporation that the veil of corporate fiction is
pierced, and the responsible officials are made liable. Personal liability attaches only when, as
enumerated by the said Section 31 of the Corporation Code, there is a wilfull and knowing assent to
patently unlawful acts of the corporation, there is gross negligence or bad faith in directing the
affairs of the corporation, or there is a conflict of interest resulting in damages to the corporation.
Further, in another labor case, Pantranco Employees Association (PEA-PTGWO), et al. v. NLRC, et
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al., the doctrine of piercing the corporate veil is held to apply only in three (3) basic areas, namely:
( 1) defeat of public convenience as when the corporate fiction is used as a vehicle for the evasion
of an existing obligation; (2) fraud cases or when the corporate entity is used to justify a wrong,
protect fraud, or defend a crime; or (3) alter ego cases, where a corporation is merely a farce since
it is a mere alter ego or business conduit of a person, or where the corporation is so organized and
controlled and its affairs are so conducted as to make it merely an instrumentality, agency, conduit
or adjunct of another corporation. In the absence of malice, bad faith, or a specific provision of law
making a corporate officer liable, such corporate officer cannot be made personally liable for
corporate liabilities. Indeed, in Reahs Corporation v. NLRC, the conferment of liability on officers
for a corporation's obligations to labor is held to be an exception to the general doctrine of separate
personality of a corporation.
It also bears emphasis that in cases where personal liability attaches, not even all officers are made
accountable. Rather, only the "responsible officer," i.e., the person directly responsible for and who
"acted in bad faith" in committing the illegal dismissal or any act violative of the Labor Code, is held
solidarily liable, in cases wherein the corporate veil is pierced. In other instances, such as cases of
so-called corporate tort of a close corporation, it is the person "actively engaged" in the
management of the corporation who is held liable. In the absence of a clearly identifiable officer(s)
directly responsible for the legal infraction, the Court considers the president of the corporation as
such officer.
The common thread running among the aforementioned cases, however, is that the veil of
corporate fiction can be pierced, and responsible corporate directors and officers or even a separate
but related corporation, may be impleaded and held answerable solidarily in a labor case, even after
final judgment and on execution, so long as it is established that such persons have deliberately
used the corporate vehicle to unjustly evade the judgment obligation, or have resorted to fraud, bad
faith or malice in doing so. When the shield of a separate corporate identity is used to commit
wrongdoing and opprobriously elude responsibility, the courts and the legal authorities in a labor
case have not hesitated to step in and shatter the said shield and deny the usual protections to the
offending party, even after final judgment. The key element is the presence of fraud, malice or bad
faith. Bad faith, in this instance, does not connote bad judgment or negligence but imports a
dishonest purpose or some moral obliquity and conscious doing of wrong; it means breach of a
known duty through some motive or interest or ill will; it partakes of the nature of fraud.
As the foregoing implies, there is no hard and fast rule on when corporate fiction may be
disregarded; instead, each case must be evaluated according to its peculiar circumstances. For the
case at bar, applying the above criteria, a finding of personal and solidary liability against a
corporate officer like Guillermo must be rooted on a satisfactory showing of fraud, bad faith or
malice, or the presence of any of the justifications for disregarding the corporate fiction. As stated
in McLeod, bad faith is a question of fact and is evidentiary, so that the records must first bear
evidence of malice before a finding of such may be made.
It is our finding that such evidence exists in the record. Like the A. C. Ransom, and Naguiat cases,
the case at bar involves an apparent family corporation. As in those two cases, the records of the
present case bear allegations and evidence that Guillermo, the officer being held liable, is the person
responsible in the actual running of the company and for the malicious and illegal dismissal of the
complainant; he, likewise, was shown to have a role in dissolving the original obligor company in
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an obvious "scheme to avoid liability" which jurisprudence has always looked upon with a
suspicious eye in order to protect the rights of labor.
Part of the evidence on record is the second page of the verified Position Paper of complainant
(herein respondent) Crisanto P. Uson, where it was clearly alleged that Uson was "illegally
dismissed by the President/General Manager of respondent corporation (herein petitioner) Jose
Emmanuel P. Guillermo when Uson exposed the practice of the said President/General Manager of
dictating and undervaluing the shares of stock of the corporation." The statement is proof that
Guillermo was the responsible officer in charge of running the company as well as the one who
dismissed Uson from employment. As this sworn allegation is uncontroverted - as neither the
company nor Guillermo appeared before the Labor Arbiter despite the service of summons and
notices - such stands as a fact of the case, and now functions as clear evidence of Guillermo's bad
faith in his dismissal of Uson from employment, with the motive apparently being anger at the
latter's reporting of unlawful activities.
Then, it is also clearly reflected in the records that it was Guillermo himself, as President and
General Manager of the company, who received the summons to the case, and who also
subsequently and without justifiable cause refused to receive all notices and orders of the Labor
Arbiter that followed. This makes Guillermo responsible for his and his company's failure to
participate in the entire proceedings before the said office. The fact is clearly narrated in the
Decision and Orders of the Labor Arbiter, Uson's Motions for the Issuance of Alias Writs of
Execution, as well as in the Decision of the NLRC and the assailed Decision of the Court of Appeals,
which Guillermo did not dispute in any of his belated motions or pleadings, including in his petition
for certiorari before the Court of Appeals and even in the petition currently before this Court. Thus,
again, the same now stands as a finding of fact of the said lower tribunals which binds this Court
and which it has no power to alter or revisit. Guillermo's knowledge of the case's filing and existence
and his unexplained refusal to participate in it as the responsible official of his company, again is
an indicia of his bad faith and malicious intent to evade the judgment of the labor tribunals.
Finally, the records likewise bear that Guillermo dissolved Royal Class Venture and helped
incorporate a new firm, located in the same address as the former, wherein he is again a
stockl1older. This is borne by the Sherif11s Return which reported: that at Royal Class Venture's
business address at Minien East, Sta. Barbara, Pangasinan, there is a new establishment named "Joel
and Sons Corporation," a family corporation owned by the Guillermos in which Jose Emmanuel F.
Guillermo is again one of the stockholders; that Guillermo received the writ of execution but used
the nickname "Joey" and denied being Jose Emmanuel F. Guillermo and, instead, pretended to be
Jose's brother; that the guard on duty confirmed that Jose and Joey are one and the same person;
and that the respondent corporation Royal Class Venture had been dissolved. Again, the facts
contained in the Sheriffs Return were not disputed nor controverted by Guillermo, either in the
hearings of Uson's Motions for Issuance of Alias Writs of Execution, in subsequent motions or
pleadings, or even in the petition before this Court. Essentially, then, the facts form part of the
records and now stand as further proof of Guillermo's bad faith and malicious intent to evade the
judgment obligation.
The foregoing clearly indicate a pattern or scheme to avoid the obligations to Uson and frustrate
the execution of the judgment award, which this Court, in the interest of justice, will not
countenance.
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As for Guillermo's assertion that the case is an intra-corporate controversy, the Court sustains the
finding of the appellate court that the nature of an action and the jurisdiction of a tribunal are
determined by the allegations of the complaint at the time of its filing, irrespective of whether or
not the plaintiff is entitled to recover upon all or some of the claims asserted therein. Although
Uson is also a stockholder and director of Royal Class Venture, it is settled in jurisprudence that
not all conflicts between a stockholder and the corporation are intra-corporate; an examination of
the complaint must be made on whether the complainant is involved in his capacity as a
stockholder or director, or as an employee.72 If the latter is found and the dispute does not meet
the test of what qualities as an intra-corporate controversy, then the case is a labor case cognizable
by the NLRC and is not within the jurisdiction of any other tribunal. In the case at bar, Uson's
allegation was that he was maliciously and illegally dismissed as an Accounting Supervisor by
Guillermo, the Company President and General Manager, an allegation that was not even disputed
by the latter nor by Royal Class Venture. It raised no intra-corporate relationship issues between
him and the corporation or Guillermo; neither did it raise any issue regarding the regulation of the
corporation. As correctly found by the appellate court, Uson's complaint and redress sought were
centered alone on his dismissal as an employee, and not upon any other relationship he had with
the company or with Guillermo. Thus, the matter is clearly a labor dispute cognizable by the labor
tribunals.c
WENPHIL CORPORATIONvs. ALMER R. ABING and ANABELLE M. TUAZON

Since the decision is immediately executory, it is the duty of the employer to comply with the
order of reinstatement, which can be done either actually or through payroll reinstatement. As
provided under Article 223 of the Labor Code, this immediately executory nature of an order of
reinstatement is not affected by the existence of an ongoing appeal. The employer has the duty to
reinstate the employee in the interim period until a reversal is decreed by a higher court or tribunal.
The Court points out that reinstatement and backwages are two separate reliefs available to
an illegally dismissed employee. The normal consequences of a finding that an employee has been
illegally dismissed are: first, that the employee becomes entitled to reinstatement to his former
position without loss of seniority rights; and second, the payment of backwages covers the period
running from his illegal dismissal up to his actual reinstatement. These two reliefs are not inconsistent
with one another and the labor arbiter can award both simultaneously.
In the instant case, the grant of separation pay was a substitute for immediate and continued
re-employment with the private respondent Bank. The grant of separation pay did not redress the
injury that is intended to be relieved by the second remedy of backwages, that is, the loss of earnings
that would have accrued to the dismissed employee during the period between dismissal and
reinstatement. Put a little differently, payment of backwages is a form of relief that restores the
income that was lost by reason of unlawful dismissal; separation pay, in contrast, is oriented towards
the immediate future, the transitional period the dismissed employee must undergo before locating a
replacement job.
Facts:
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Wenphil and the Respondents entered into a compromise agreement before LA. They
agreed to the respondents’ payroll reinstatement while Wenphil’s appeal with the NLRC was
ongoing. Wenphil also agreed to pay the accumulated salaries of the respondents for the payroll
period from April 5, 2001 until October 15, 2001.
As for the remaining payroll period starting October 16, 2001, Wenphil committed itself to
credit the respective salaries of the respondents to their ATM payroll accounts. NLRC issued a
resolution affirming LA’s decision with modifications. Instead of ordering the respondents’
reinstatement, the NLRC directed Wenphil to pay the respondents their respective separation pay
at the rate of one (1) month salary for every year of service.
Wenphil thereafter went up to the CA via a petition for certiorari. CA rendered its
decision reversing the NLRC’s finding that the respondents had been illegally dismissed since there
was no enough evidence to show that the respondents had been guilty of serious misconduct; thus,
their dismissal was for a valid cause.On appeal to the Supreme Court (SC) via Rule 45, the SC denied
the respondents petition for review on certiorari and affirmed the CA. Thus, the decision became
final and executory.
Sometime after the SC’s decision became final and executory, the respondents filed with LA
a motion for computation and issuance of writ of execution. The respondents asserted in this
motion that although the CA’s ruling on the absence of illegal dismissal (as affirmed by the SC) was
adverse to them, under the law and settled jurisprudence, they were still entitled to backwages from
the time of their dismissal until the NLRC’s decision finding them to be illegally dismissed was
reversed with finality.
Wenphil argued that the respondents were no longer entitled to payment of backwages in
view of the compromise agreement they executed, but LA granted the respondents’ motion which
was affirmed by NLRC. However, CA reversed the NLRC rulings and prescribed a different
computation period. Hence, this petition.
Issue:
Whether or not Respondents herein are entitled to backwages and reinstatement.
Ruling:
Yes, respondents herein are entitled to backwages and reinstatement
An order of reinstatement is immediately executory even pending appeal. The employer has
the obligation to reinstate and pay the wages of the dismissed employee during the period of appeal
until reversal by the higher court.
Under Article 223 of the Labor Code, "the decision of the Labor Arbiter reinstating a
dismissed or separated employee, insofar as the reinstatement aspect is concerned, shall
immediately be executory, even pending appeal. The employee shall either be admitted back to
work under the same terms and conditions prevailing prior to his dismissal or separation, or at the
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option of the employer, merely reinstated in the payroll. The posting of a bond by the employer
shall not stay the execution for reinstatement."
Since the decision is immediately executory, it is the duty of the employer to comply with
the order of reinstatement, which can be done either actually or through payroll reinstatement. As
provided under Article 223 of the Labor Code, this immediately executory nature of an order of
reinstatement is not affected by the existence of an ongoing appeal. The employer has the duty to
reinstate the employee in the interim period until a reversal is decreed by a higher court or tribunal.
In the case of payroll reinstatement, even if the employer’s appeal turns the tide in its favor,
the reinstated employee has no duty to return or reimburse the salary he received during the period
that the lower court or tribunal’s governing decision was for the employee’s illegal dismissal.
Otherwise, the situation would run counter to the immediately executory nature of an order of
reinstatement.
While Wenphil’s appeal with the NLRC was pending, it entered into a compromise
agreement with the respondents. In this agreement, Wenphil committed to reinstate the
respondents in its payroll. However, the commitment came with a condition: Wenphil stipulated
that its obligation to pay the wages due to the respondents would cease if the decision of the LA
would be "modified, amended or reversed" by the NLRC.
Thus, when the NLRC rendered its decision on the appeal affirming the LA’s finding that
the respondents were illegally dismissed, but modifying the award of reinstatement to payment of
separation pay, Wenphil stopped paying the respondents’ wages.
The reinstatement salaries due to the respondents were, by their nature, payment of
unworked backwages. These were salaries due to the respondents because they had been prevented
from working despite the LA and the NLRC findings that they had been illegally dismissed.
The Court points out that reinstatement and backwages are two separate reliefs available to
an illegally dismissed employee. The normal consequences of a finding that an employee has been
illegally dismissed are: first, that the employee becomes entitled to reinstatement to his former
position without loss of seniority rights; and second, the payment of backwages covers the period
running from his illegal dismissal up to his actual reinstatement. These two reliefs are not
inconsistent with one another and the labor arbiter can award both simultaneously.
Moreover, the relief of separation pay may be granted in lieu of reinstatement but it cannot
be a substitute for the payment of backwages. In instances where reinstatement is no longer feasible
because of strained relations between the employee and the employer, separation pay should be
granted. In effect, an illegally dismissed employee should be entitled to either reinstatement – if
viable, or separation pay if reinstatement is no longer be viable, plus backwages in either instance.
In the instant case, the grant of separation pay was a substitute for immediate and
continued re-employment with the private respondent. The grant of separation pay did not redress
the injury that is intended to be relieved by the second remedy of backwages, that is, the loss of
earnings that would have accrued to the dismissed employee during the period between dismissal
and reinstatement. Put a little differently, payment of backwages is a form of relief that restores the
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income that was lost by reason of unlawful dismissal; separation pay, in contrast, is oriented
towards the immediate future, the transitional period the dismissed employee must undergo before
locating a replacement job.
The grant of separation pay was a proper substitute only for reinstatement; it could not be
an adequate substitute both for reinstatement and for backwages.
Apparently, when the NLRC changed the LA’s decision (specifically, the order to award
separation pay in lieu of reinstatement), Wenphil read this to mean to be the "modification"
envisioned in the compromise agreement, Wenphil likewise effectively concluded that separation
pay and backwages are the same or are interchangeable reliefs. This conclusion can be deduced
from Wenphil’s insistence not to pay the respondent’s remaining backwages under its erroneous
reasoning that this was the effect of the NLRC’s order to Wenphil to pay separation pay in lieu of
reinstatement.
It is emphasized that the basis for the payment of backwages is different from that of the
award of separation pay. Separation pay is granted where reinstatement is no longer advisable
because of strained relations between the employee and the employer. Backwages represent
compensation that should have been earned but were not collected because of the unjust dismissal.
The basis for computing separation pay is usually the length of the employee’s past service, while
that for backwages is the actual period when the employee was unlawfully prevented from working.
A compromise agreement should not be contrary to law, morals, good customs and public
policy. While it is true that a compromise agreement is binding between the parties and becomes
the law between them, it is also a rule that to be valid, a compromise agreement must not be
contrary to law, morals, good customs and public policy.
The Court reaffirms the prevailing principle that even if the order of reinstatement of the
Labor Arbiter is reversed on appeal, it is obligatory on the part of the employer to reinstate and pay
the wages of the dismissed employee during the period of appeal until reversal by the higher court.
It settles the view that the Labor Arbiter's order of reinstatement is immediately executory and the
employer has to either re-admit them to work under the same terms and conditions prevailing prior
to their dismissal, or to reinstate them in the payroll, and that failing to exercise the options in the
alternative, employer must pay the employee’s salaries.
RUBEN C. JORDAN vs. GRANDEUR SECURITY & SERVICES, INC.

G.R. No. 206716, June 18, 2014, J. Brion
An employee refusing a valid management prerogative cannot file a complaint for illegal
dismissal and shall not be entitled to monetary awards.
Facts:
On May 23, 2007, Jordan, together with his co-employees, filed individual complaints for
money claims against Nicolas Pablo and respondent Grandeur Security and Services Corp.
(Grandeur Security). They alleged that Grandeur Security did not pay them minimum wages,
holiday, premium, service incentive leave, and thirteenth month pays as well as the cost of living
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allowance. Subsequently, Jordan amended his complaint and included illegal dismissal as his
additional cause of action.
In defense, Grandeur Security denied that it terminated Jordan from employment. It

claimed that it merely reassigned him from Quezon City to Taguig City. It further insisted that
Jordan abandoned his work and opted to file an illegal dismissal case against it instead of complying
with the memorandum. Grandeur Security also denied non-payment of money claims to the
complainants.
The Labor Arbiter held that Jordan had merely been transferred to another workplace. The
LA also ruled that Jordan’s immediate filing of illegal dismissal case after the issuance of the subject
memorandum belied Grandeur Security’s claim of abandonment. Thus, the LA ordered Grandeur
Security to "reinstate" Jordan in employment. Grandeur Security partially appealed the decision
before the NLRC with respect to the grant of monetary awards. However, it did not contest the
"reinstatement order" as it allegedly mailed Jordan a return to work order.
The NLRC denied Grandeur Security’s partial appeal and the subsequent motion for
reconsideration and the decision of the LA regarding reinstatement became final and executory.
After the NLRC issued a writ of execution, Grandeur Security paid Jordan who executed a quitclaim
on his money claims. Notably, the quitclaim states that "the issue on reinstatement is still pending
for [the] determination by the Labor Arbiter.
The LA closed and terminated the case in view of: (1) the complainant’s individual
quitclaims; and (2) Jordan’s waiver of his right to be reinstated. The LA found that Jordan did not
report for work despite his receipt of Grandeur Security’s letter. Jordan appealed before the NLRC
and insisted that he did not receive the letter. The NLRC set aside the decision and gave weight to
Jordan and his wife’s specimen signatures in finding that Jordan did not receive the subject letter.
The CA nullified the NLRC ruling concluding that Jordan’s claim of non-receipt was merely a ploy
to demand from Grandeur Security additional monetary awards when he clearly did not desire to
be reinstated. It observed that Jordan repeatedly and categorically prayed in his pleadings the
payment of backwages and separation pay in lieu of reinstatement. Even assuming that Jordan did
not waive his right to reinstatement, the CA ruled that his denial of the receipt of the letter would
not prevail over the presumption that the postman had regularly delivered the mail to its recipient.
Moreover, the registry receipt and the registry return card substantially proved that the letter was
delivered to Jordan. Hence, the present petition.
Issue:
Whether or not Jordan is entitled to backwages and separation pay in lieu of reinstatement
Ruling:
No. Indeed, the records clearly show that Grandeur Security never dismissed complainant
Jordan from the service neither did they intend to do so in the first place for in spite of the serious
offenses said complainant had committed in the early years of his employment with respondent
such as sleeping while on duty, said respondents never attempted to rid themselves of said
complainant’s services. It appears on record that complainant Jordan was merely relieved of his
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duty and was being transferred on 24 May 2007, to another client of Grandeur Security, the Cacho
Construction located at Taguig City for guarding duties. Nothing on the memorandum sent him on
23 May 2007 indicated his termination of employment. Instead of reporting to Grandeur Security’s
office to effect his transfer of assignment he filed the instant complaint. Thus, Grandeur Security’s
intimation that complainant had abandoned his job has been rendered untenable under this
circumstance, a charge of abandonment is totally inconsistent with the immediate filing for illegal
dismissal.
The records thus lead us to the conclusion that complainant Jordan resented his relief and
subsequent re-assignment to another post for guarding duty. The Court finds no illegal dismissal
extant in this case nor abandonment of job to speak of. The Court likewise finds no justification
whatsoever for complainant Jordan’s allegation of strained relations between him and respondents
to warrant the grant of separation pay as prayed for by him.
It clearly appears from the entirety of the May 27, 2008 decision that Grandeur Security did
not dismiss Jordan from employment. The LA in fact stated that Grandeur Security "never
attempted" to terminate his services. Rather, Grandeur Security merely transferred him to another
workplace, a valid exercise of management prerogative. That Jordan remained in Grandeur
Security’s employ is further supported by the LA’s finding that Jordan did not abandon his work.
Too, the dispositive part of the May 27, 2008 decision contains a categorical dismissal of the illegal
dismissal case for lack of merit.
This interpretation, however, leaves the Court the question of the import of the words
"reinstate" and "reinstatement" in the dispositive part of the May 27, 2008 decision. A close reading
of the entire decision shows that the LA meant "physically return to work" – a grossly erroneous yet
literal concept of reinstatement in the context of this case. The Court also discerns the correctness
of this interpretation in light of the LA’s two crucial factual findings: first, Jordan remained in
Grandeur Security’s employ; and second, Jordan did not abandon his work despite his continuous
absence from work.
CRISANTO F. CASTRO, JR. vs. ATENEO DE NAGA UNIVERSITY, FR. JOEL TABORA, and
MR. EDWIN BERNAL
G.R. NO. 175293, July 23, 2014, J. Bersamin
The employer is obliged to reinstate and to pay the wages of the dismissed employee during
the period of appeal until its reversal by the higher Court; and that because he was not reinstated
either actually or by payroll, he should be held entitled to the accrued salaries. Hence, petitioner is
entitled for accrued salaries from the time of the issuance of the order of reinstatement by LA
Quinones until such order was reversed.
Facts:
The petitioner started his employment with respondent Ateneo de Naga University
(University) in the first semester of school year 1960-1961. At the time of his dismissal, he was a
regular and full-time faculty member of the University's Accountancy Department in the College
of Commerce with a monthly salary of P29,846.20.3 Allegedly, he received on February 22, 2000 a
letter from respondent Fr. Joel Tabora, SJ., the University President, informing him that his contract
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(which was set to expire on May 31, 2000) would no longer be renewed.4 After several attempts to
discuss the matter with Fr. Tabora in person, and not having been given any teaching load or other
assignments effective June 2000, he brought his complaint for illegal dismissal.
The University denied the allegation of illegal dismissal, and maintained that the petitioner
was a participant and regular contributor to the Ateneo de Naga Employees Retirement Plan (Plan);
that upon reaching the age of 60 years on June 26, 1999, he was deemed automatically retired under
the Plan; and that he had been allowed to teach after his retirement only on contractual basis.
On September 3, 2001, Labor Arbiter (LA) Jesus Orlando M. Quinones ruled in favor of the
petitioner, Aggrieved, the respondents appealed to the NLRC. On July 12, 2002, the petitioner, citing
the executory nature of the order for his reinstatement, filed his motion to order the respondents
to pay his salaries and benefits accruing in the period from September 3, 2001 until July 3, 2002.
In his order dated October 10, 2002, 11 LA Quinones gave respondents 10 days to exercise
their option of whether complainant is to be actually reinstated, or be reinstated in the payroll. In
the interim, on June 26, 2004, the petitioner executed a receipt of retirement benefits and quitclaim
in favor of the University respecting his claim for the benefits under the Plan. A few days later, the
petitioner sent the following letter to Fr. Tabora that he was forced to sign the quitclaim and that
he received his retirement benefits under protest and without prejudice to the case that he filed.
Meanwhile, the NLRC rendered its decision dismissing the case for lack of merit. In
justifying its reversal of its decision, the NLRC held that his execution of the receipt and quitclaim
respecting his benefits under the Plan estopped the petitioner from pursuing other claims arising
from his employer-employee relationship with the University. On May 31, 2006, the CA dismissed
the petitioner's petition for certiorari.
Issue:
1. Whether the execution of the receipt and quitclaim was a settlement of the petitioner's
claim for accrued salaries.
2. Whether the claim for accrued benefits should be sustained despite dismissal of the
petitioner's complaint.
Ruling:
1. No. The NLRC held that the petitioner was estopped from pursuing his complaint for
illegal dismissal upon his receipt of the benefits and his execution of the receipt and quitclaim. He
insists, however, that the payment he had received in protest pertained only to his retirement
benefits.
The Court agreed with the petitioner.
The text of the receipt and quitclaim was clear and straightforward, and it was to the effect
that the sum received by the petitioner represented ''full payment of benefits ... pursuant to the
Employee's retirement plan." As such, both the NLRC and the CA should have easily seen that the
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quitclaim related only to the settlement of the retirement benefits, which benefits could not be
confused with the reliefs related to the complaint for illegal dismissal.
Worthy to stress is that retirement is of a different species from the reliefs awarded to an
illegally dismissed employee. Retirement is a form of reward for an employee's loyalty and service
to the employer, and is intended to help the employee enjoy the remaining years of his life, and to
lessen the burden of worrying about his financial support or upkeep. In contrast, the reliefs awarded
to an illegally dismissed employee are in recognition of the continuing employer-employee
relationship that has been severed by the employer without just or authorized cause, or without
compliance with due process.
2. Yes. The petitioner argues that according to Roquero v. Philippine Airlines, Inc. the
employer is obliged to reinstate and to pay the wages of the dismissed employee during the period
of appeal until its reversal by the higher Court; and that because he was not reinstated either
actually or by payroll, he should be held entitled to the accrued salaries.
The argument of the petitioner is correct.
Article 279 of the Labor Code, as amended, entitles an illegally dismissed employee to
reinstatement. Article 223 of the Labor Code requires the reinstatement to be immediately
executory even pending appeal. With its intent being ostensibly to promote the benefit of the
employee, Article 223 cannot be the source of any right of the employer to remove the employee
should he fail to immediately comply with the order of reinstatement. In Roquero, the Comi ruled
that the unjustified refusal of the employer to reinstate the dismissed employee would entitle the
latter to the payment of his salaries effective from the time when the employer failed to reinstate
him; thus, it became the ministerial duty of the LA to implement the order of reinstatement. The
provision of Article 223 is clear that an award for reinstatement shall be immediately executory even
pending appeal and the posting of a bond by the employer shall not stay the execution for
reinstatement.
Hence, for as long as the employer continuously fails to actually implement the
reinstatement aspect of the decision of the LA, the employer's obligation to the employee for his
accrued backwages and other benefits continues to accumulate.
RADIO MINDANAO NETWORK, INC. vs.MICHAEL MAXIMO R. AMURAO III

G.R. No. 167225, October 22, 2014, J. Bersamin
Not all quitclaims are per se in valid or against public policy. A quitclaim is invalid or contrary
to public policy only: (1) where there is clear proof that the waiver was wrangled from an unsuspecting
or gullible person; or (2) where the terms of settlement are unconscionable on their face. In instances
of invalid quitclaims, the law steps in to annul the questionable waiver.
Indeed, there are legitimate waivers that represent the voluntary and reasonable settlements
of laborers’ claims that should be respected by the Court as the law between the parties. Where the
party has voluntarily made the waiver, with a full understanding of its terms as well as its
consequences, and the consideration for the quitclaim is credible and reasonable, the transaction
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must be recognized as a valid and binding undertaking, and may not later be disowned simply because
of a change of mind. A waiver is essentially contractual.
In the Court’s view, the requisites for the validity of Michael’s quitclaim were satisfied. Firstly,
Michael acknowledged in his quitclaim that he had read and thoroughly understood the terms of his
quitclaim and signed it of his own volition. Secondly, the settlement pay was credible and reasonable
considering that Michael did not even assail such amount as unconscionably low, or even state that
he was entitled to a higher amount. Thirdly, that he was required to sign the quitclaim as a condition
to the release of the settlement pay did not prove that its execution was coerced. And, lastly, that he
signed the quitclaim out of fear of not being able to provide for the needs of his family and for the
schooling of his children did not immediately indicate that he had been forced to sign the same.
Facts:
Petitioner Radio Mindanao Network, Inc. (RMN) hired respondent Michael Maximo R.
Amurao III (Michael) as a radio broadcaster for its DWKC-FM station and production manager for
its metropolitan radio operations. Years later, RMN decided to reformat and restructure the
programming of its DWKC-FM station to meet the demands of the broadcasting industry. The
president of RMN met with Michael and other personnel of the station to inform them of the
management's decision, advising them that the reformatting and restructuring of the station's
programs would necessarily affect their employment; but assuring that they would be paid their
retirement pay and other benefits.
However, Michael and the other personnel refused to sign in receipt when the letters were
served on them containing such information. Not long after, however, they accepted the offer of
RMN and executed affidavits relinquishing all their claims against the employer
Five months after receiving his benefits and his execution of the quitclaim, Michael filed a
complaint against RMN for illegal dismissal with money claims with LA. Latter rendered a
decision declaring the dismissal of Michael as illegal on the ground that the reformatting and
restructuring of RMN’s radio programming did not fall under any of the just or authorized causes
specified under Article 282, Article 283 and Article 284 of the Labor which was unheld by NLRC and
CA.
RMN does not dispute that Michael was illegally dismissed. Its only submission now is that
it was discharged from whatever claims Michael had against it arising from his employment by
virtue of the Affidavit of Release/Quitclaim he signed in its favor.
Issue:
Whether or not the quitclaim was valid and binding.
Ruling:
Yes, the quitclaim was valid and binding.
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RMN consistently contended that a series of negotiations between Michael and the
management preceded the giving of the settlement pay that they had considered as reasonable. Not
once did Michael refute this contention. Worth noting is that Michael signed the quitclaim to
release RMN from any and all claims that could be due to him by reason of his employment after
he receiving the agreed settlement pay.
Not all quitclaims are per se in valid or against public policy. A quitclaim is invalid or
contrary to public policy only: (1) where there is clear proof that the waiver was wrangled from an
unsuspecting or gullible person; or (2) where the terms of settlement are unconscionable on their
face. In instances of invalid quitclaims, the law steps in to annul the questionable waiver. Indeed,
there are legitimate waivers that represent the voluntary and reasonable settlements of laborers’
claims that should be respected by the Court as the law between the parties. Where the party has
voluntarily made the waiver, with a full understanding of its terms as well as its consequences, and
the consideration for the quitclaim is credible and reasonable, the transaction must be recognized
as a valid and binding undertaking, and may not later be disowned simply because of a change of
mind. A waiver is essentially contractual.
In the Court’s view, the requisites for the validity of Michael’s quitclaim were satisfied.
Firstly, Michael acknowledged in his quitclaim that he had read and thoroughly understood the
terms of his quitclaim and signed it of his own volition. Being a radio broadcaster and production
manager, he occupied a highly responsible position in the company. It would be implausible to
hold, therefore, that he could be easily duped into simply signing away his rights. Besides, the
language and content of the quitclaim were clear and uncomplicated such that he could not claim
that he did not understand what he was signing.
Secondly, the settlement pay was credible and reasonable considering that Michael did not
even assail such amount as unconscionably low, or even state that he was entitled to a higher
amount.
Thirdly, that he was required to sign the quitclaim as a condition to the release of the
settlement pay did not prove that its execution was coerced. Having agreed to part with a
substantial amount of money, RMN took steps to protect its interest and obtain its release from all
obligations once it paid Michael his settlement pay, which it did in this case.
And, lastly, that he signed the quitclaim out of fear of not being able to provide for the needs
of his family and for the schooling of his children did not immediately indicate that he had been
forced to sign the same. Dire necessity should not necessarily be an acceptable ground for annulling
the quitclaim, especially because it was not at all shown that he had been forced to execute it. Nor
was it even proven that the consideration for the quitclaim was unconscionably low, and that he
had been tricked into accepting the consideration.
With the quitclaim having been freely and voluntarily signed, RMN was released and
absolved from any liability in favor of Michael. Suffice it to say that the quitclaim is ineffective in
barring recovery of the full measure of an employee's rights only when the transaction is shown to
be questionable and the consideration is scandalously low and inequitable. Such is not true here.
PHILIPPINE AIRLINES, INC. vs. REYNALDO V. PAZ
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Paragraph 3, Article 223 of the Labor Code provides that in any event, the decision of the Labor
Arbiter reinstating a dismissed or separated employee, insofar as the reinstatement aspect is
concerned, shall immediately be executory, pending appeal. The employee shall either be admitted
back to work under the same terms and conditions prevailing prior to his dismissal or separation or,
at the option of theemployer, merely reinstated in the payroll. The posting of a bond by the employer
shall not stay the execution for reinstatement provided herein.
Case law recognizes that unless there is a restraining order, the implementation of the order
of reinstatement is ministerial and mandatory.
In the instant case, Paz obtained a favorable ruling from the LA in the complaint for illegal
dismissal case he filed against PAL but the same was reversed on appeal by the NLRC. Also, PAL was
under rehabilitation receivership during the entire period that the illegal dismissal case was being
heard. A similar question is now being raised, i.e., whether the Paz may collect reinstatement salaries
which he is supposed to have received from the time PAL received the LA decision, ordering his
reinstatement, until the same was overturned by the NLRC. It is clear from the records that PAL failed
to reinstate the Paz pending appeal of the LA decision to the NLRC. A scrutiny of the circumstances,
however, will show that the delay in reinstating the Paz was not due to the unjustified refusal of PAL
to abide by the order but because of the constraints of corporate rehabilitation.
Facts:
Reynaldo V. Paz (Paz) was a former commercial pilot of PAL and a member of the Airlines
Pilots Association of the Philippines (ALPAP), the sole and exclusive bargaining representative of
all the pilots in PAL.
On December 9, 1997, ALPAP filed a notice of strike with the National Conciliation and
Mediation Board of the Department of Labor and Employment (DOLE). Pursuant to Article 263(g)
of the Labor Code, the DOLE Secretary assumed jurisdiction over the labor dispute and enjoined
the parties from committing acts which will further exacerbate the situation.
On June 5, 1998, notwithstanding the directive of the DOLE Secretary, the ALPAP officers
and members staged a strike and picketed at the PAL’s premises. To control the situation, the DOLE
Secretary issued a return-to-work order on June 7, 1998, directing all the striking officers and
members of ALPAP to return to work within 24 hours from notice of the order. The said order was
served upon the officers of ALPAP on June 8, 1998 by the DOLE Secretary himself. Even then, the
striking members of ALPAP did not report for work.
When the striking members of the ALPAP reported for work on the following day, the
security guards of PAL denied them entry. DOLE Secretary issued a resolution on the case from
which both parties filed a motion for reconsideration. Pending the resolution of the motions, PAL
filed a petition for approval of rehabilitation plan and for appointment of a rehabilitation receiver
with the Securities and Exchange Commission (SEC), claiming serious financial distress brought
about by the strike.
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Then the DOLE Secretary resolved the motions for reconsideration filed by both parties and
declared the strike staged by ALPAP illegal and that the participants thereof are deemed to have
lost their employment.
Paz filed a complaint for illegal dismissal against PAL for not accepting him back to work,
claiming non-participation in the illegal strike. In his position paper, he alleged that on the day the
ALPAP staged a strike on June 5, 1998, he was off-duty from work and was in Iligan City. However,
when he reported back to work on June 12, 1998, after a week-long break, he was no longer allowed
to enter PAL’s premises in Nichols, Pasay City.
Paz further alleged that on June 25, 1998, he learned that the DOLE Secretary issued a
return-to-work order and notwithstanding his non-participation in the strike, he signed the
logbook at the entrance of PAL’s office on the following day. When he tried to report for work,
however, he was denied entry by the PAL’s security guards.
For its part, PAL claimed that the respondent was among the participants of the strike
staged by ALPAP on June 5, 1998 who did not heed to the return-to-work order issued on June 7,
1998 by the DOLE Secretary. Subsequently, the DOLE Secretary issued the Resolution declaring
that the striking pilots have lost their employment for defying the return-to-work order. Thus, PAL
argued that the Paz’s charge of illegal dismissal is utterly without merit.
Labor Arbiter (LA) rendered a Decision holding that the respondent was illegally dismissed
and ordered that he be reinstated to his former position without loss of seniority rights and other
privileges and paid his full backwages inclusive of allowances and other benefits computed from
June 12, 1998 up to his actual reinstatement.
PAL appealed the foregoing decision to the National Labor Relations Commission (NLRC).
NLRC reversed LA decision and ruled that the pieces of evidence presented by PAL proved that the
Paz participated in the strike and defied the return-to-work order of the DOLE Secretary; hence,
he is deemed to have lost his employment.
Unperturbed, PAL filed a petition for certiorari with the CA, questioning the NLRC
Resolution dated June 28, 2002. CA affirmed with modification the NLRC Resolution. CA ruled that
while the respondent is entitled to reinstatement, the prevailing circumstances rendered the same
difficult if not impossible to execute. It noted that at the time the reinstatement was ordered, there
was no vacant B747-400 pilot position available for the respondent.
PAL filed a motion for reconsideration of the CA decision and held that the compliance with
the reinstatement order is not affected by the fact that private respondent’s previous position had
been filled-up. Hence, public respondent did not err when it upheld the LA that private respondent
is entitled to reinstatement salaries during the period of appeal. Hence, the instant petition is filed
by PAL.
Issue:
Whether or not the CA acted in a manner contrary to law and jurisprudence when it upheld
the award of reinstatement salaries to the Paz.
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Ruling:
Yes. The petition of PAL is meritorious.
The same issue had been raised and addressed by the Court in the case of Garcia v. Philippine
Airlines, Inc. In the said case, the Court deliberated on the application of Paragraph 3, Article 223
of the Labor Code in light of the apparent divergence in its interpretation, specifically on the
contemplation of the reinstatement aspect of the LA decision. The pertinent portion of the
provision reads, thus:
In any event, the decision of the Labor Arbiter reinstating a dismissed or separated
employee, insofar as the reinstatement aspect is concerned, shall immediately
be executory, pending appeal. The employee shall either be admitted back to
work under the same terms and conditions prevailing prior to his dismissal or
separation or, at the option of theemployer, merely reinstated in the payroll. The
posting of a bond by the employer shall not stay the execution for reinstatement
provided herein.
The rule is that the employee is entitled to reinstatement salaries notwithstanding the
reversal of the LA decision granting him said relief. The rule is that the employee is entitled to
reinstatement salaries notwithstanding the reversal of the LA decision granting him said relief.
In Roquero v. Philippine Airlines, the Court underscored that it is obligatory on the part of the
employer to reinstate and pay the wages of the dismissed employee during the period of appeal
until reversal by the higher court. This is so because the order of reinstatement is immediately
executory. Unless there is a restraining order issued, it is ministerial upon the LA to implement the
order of reinstatement. The unjustified refusal of the employer to reinstate a dismissed employee
entitles him to payment of his salaries effective from the time the employer failed to reinstate him.
In Garcia, however, the Court somehow relaxed the rule by taking into consideration the cause of
delay in executing the order of reinstatement of the LA.
After the labor arbiter’s decision is reversed by a higher tribunal, the employee may be
barred from collecting the accrued wages, if it is shown that the delay in enforcing the
reinstatement pending appeal was without fault on the part of the employer.
The test is two-fold: (1) there must be actual delay or the fact that the order of reinstatement
pending appeal was not executed prior to its reversal; and (2) the delay must not be due to the
employer’s unjustified act or omission. If the delay is due to the employer’s unjustified refusal, the
employer may still be required to pay the salaries notwithstanding the reversal of the Labor
Arbiter’s decision.
It is clear from the records that PAL failed to reinstate the Paz pending appeal of the LA
decision to the NLRC. It can be recalled that the LA rendered the decision ordering the
reinstatement of the respondent on March 5, 2001. And, despite the self-executory nature of the
order of reinstatement, Paz nonetheless secured a partial writ of execution on May 25, 2001. Even
then, Paz was not reinstated to his former position or even through payroll.
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A scrutiny of the circumstances, however, will show that the delay in reinstating the Paz
was not due to the unjustified refusal of PAL to abide by the order but because of the constraints
of corporate rehabilitation. It bears noting that a year before Paz filed his complaint for illegal
dismissal on June 25, 1999, PAL filed a petition for approval of rehabilitation plan and for
appointment of a rehabilitation receiver with the SEC. On June 23, 1998, the SEC appointed an
Interim Rehabilitation Receiver. Thereafter, the SEC issued an Order, suspending all claims for
payment against PAL.
Case law recognizes that unless there is a restraining order, the implementation of the order
of reinstatement is ministerial and mandatory. This injunction or suspension of claims by legislative
fiat partakes of the nature of a restraining order that constitutes a legal justification for respondent’s
non-compliance with the reinstatement order. Respondent’s failure to exercise the alternative
options of actual reinstatement and payroll reinstatement was thus justified. Such being the case,
respondent’s obligation to pay the salaries pending appeal, as the normal effect of the non-exercise
of the options, did not attach.
METROGUARDS SECURITY AGENCY CORPORATION (FORMERLY KNOWN AS

BEEGUARDS CORPORATION) AND MS. MILAGROS T. CHAN vs. ALBERTO N. HILONGO
G.R. No. 215630, March 09, 2015, J. Villarama, Jr.
The re-computation of the consequences of illegal dismissal upon execution of the decision
does not constitute an alteration or amendment of the final decision being implemented. The illegal
dismissal ruling stands; only the computation of monetary consequences of this dismissal is affected,
and this is not a violation of the principle of immutability of final judgments.
However, in this case, the CA incorrectly concluded that the April 30, 2010 Decision of the
Labor Arbiter became final on June 11, 2013, contrary to its own finding that it became final and
executory on April 26, 2013. This led to its erroneous computation of the additional back wages and
separation pay of Hilongo, as well as reckoning the date of the 12% legal interest. Following the
teaching of Nacar v. Gallery Frames that the computation of the monetary consequences (back wages
and separation pay) of the illegal dismissal decision should be reckoned from its finality, the additional
back wages and separation pay of Hilongo should be computed from May 1, 2010 to April 26, 2013.
Further, the payment of legal interest of 12% per annum should also be from April 26, 2013 up to June
30, 2013. Thereafter, in accordance with Bangko Sentral ng Pilipinas Monetary Board’s Circular No.
799, series of 2013, the legal interest computed from July 1, 2013 until the monetary awards were fully
satisfied will be 6% per annum.
Facts:
In his Decision in NLRC NCR-10-14411-09, entitled Alberto Hilongo v. Bee Guards

Corp./Milagros Chan, the Labor Arbiter ruled that herein respondent Alberto N. Hilongo was
illegally dismissed and ordered the respondents [herein petitioners] to pay complainant Hilongo
his backwages from the date of dismissal to the date of this decision and separation pay of one
month pay per year of service, plus 10% thereof as attorney’s fees.
After the corresponding entry of judgment was issued on June 11, 2013, the case was
remanded to the Labor Arbiter. Respondent Hilongo filed a motion for issuance of writ of execution
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alleging that the June 11, 2013 CA Resolution had confirmed that the amount of P170,520.31 awarded
by the Labor Arbiter is not sufficient, and that there is a need to compute additional monetary
awards reckoned from May 1, 2010 up to April 26, 2013 or the date Hilongo presumed as the date of
finality of the decision.
Labor Arbiter directed the issuance of a writ of execution and ruled that the award of
P170,520.31 as stated in the Labor Arbiter’s Decision dated April 30, 2010 prevails. Hilongo filed a
petition for extraordinary remedy before the NLRC which dismissed the petition. Hence, Hilongo
filed a petition for certiorari before the CA. CA ordered the Labor Arbiter to re-compute Hilongo’s
monetary awards.
On appeal, the National Labor Relations Commission (NLRC) reversed the ruling of the
Labor Arbiter. Aggrieved, Hilongo filed a petition for certiorari before the CA.
The CA held that when an appellate court affirms the Labor Arbiter’s ruling, it is understood
that awards due to the illegally dismissed employee shall be recomputed in order to account for the
period of time that has lapsed from the rendition of the Labor Arbiter’s decision up to its finality.
It also ruled that it is already settled that the computation of the monetary awards due to the
illegally dismissed employee must continue to run until the final termination of the case on appeal.
The CA ruled that the Labor Arbiter should have been guided by the CA Resolution dated June 11,
2013 which had clarified that a re-computation of Hilongo’s award is necessary.Hence, this petition.
Issue:
Whether or not the CA erred in ordering the re-computation of Hilongo’s monetary awards.
Ruling:
The Court rules in the negative.
The Court cannot agree with petitioners’ contention that a decision that has acquired
finality becomes immutable and unalterable. The re-computation of the consequences of illegal
dismissal upon execution of the decision does not constitute an alteration or amendment of the
final decision being implemented. The illegal dismissal ruling stands; only the computation of
monetary consequences of this dismissal is affected, and this is not a violation of the principle of
immutability of final judgments.
In Nacar v. Gallery Frames, the Court has held that no essential change is made by a
recomputation as this step is a necessary consequence that flows from the nature of the illegality of
dismissal declared by the Labor Arbiter in that decision. A recomputation (or an original
computation, if no previous computation has been made) is a part of the law – specifically, Article
279 of the Labor Code and the established jurisprudence on this provision – that is read into the
decision. By the nature of an illegal dismissal case, the reliefs continue to add up until full
satisfaction, as expressed under Article 279 of the Labor Code. The recomputation of the
consequences of illegal dismissal upon execution of the decision does not constitute an alteration
or amendment of the final decision being implemented. The illegal dismissal ruling stands; only
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the computation of monetary consequences of this dismissal is affected, and this is not a violation
of the principle of immutability of final judgments.
Likewise without merit is petitioners’ contention that “it may very well be argued that the
NLRC’s final decision reversing the Labor Arbiter is in fact the final decision that effectively
declared the employment relationship between Hilongo and petitioners as ended on which date
the computation of the separation pay and backwages awarded by the Labor Arbiter ultimately
ceased.”
Said CA Decision dated September 7, 2012 became final and executory on April 26,
2013.Thus, the April 30, 2010 Decision of the Labor Arbiter which ordered the payment of separation
pay in lieu of reinstatement, effectively ended the employment relationship of the parties on April
26, 2013, the date the CA decision became final. Since the Labor Arbiter’s computation of Hilongo’s
monetary award was up to the date of his April 30, 2010 Decision only, the CA properly decreed the
computation of additional back wages and separation pay.
However, the CA incorrectly concluded that the April 30, 2010 Decision of the Labor Arbiter
became final on June 11, 2013, contrary to its own finding that it became final and executory on April
26, 2013.This led to its erroneous computation of the additional back wages and separation pay of
Hilongo, as well as reckoning the date of the 12% legal interest. Following the teaching of Nacar v.
Gallery Frames that the computation of the monetary consequences (back wages and separation
pay) of the illegal dismissal decision should be reckoned from its finality, the additional back wages
and separation pay of Hilongo should be computed from May 1, 2010 to April 26, 2013. Further, the
payment of legal interest of 12% per annum should also be from April 26, 2013 up to June 30, 2013.
Thereafter, in accordance with Bangko Sentral ng Pilipinas Monetary Board’s Circular No.
799, series of 2013, the legal interest computed from July 1, 2013 until the monetary awards were
fully satisfied will be 6% per annum.
BACKWAGES
METROGUARDS SECURITY AGENCY CORPORATION (FORMERLY KNOWN AS

BEEGUARDS CORPORATION) AND MS. MILAGROS T. CHAN v. ALBERTO N. HILONGO
G.R. No. 215630, March 9, 2015, VILLARAMA, JR., J.
No essential change is made on a judgment by a recomputation, as this step is a

necessary consequence that flows from the nature of the illegality of dismissal. By the nature
of an illegal dismissal case, the reliefs continue to add up until full satisfaction.
Facts:
On April 30, 2010 the LA ruled that Alberto Hilongo was illegally dismissed. On
appeal, the NLRC reversed the LA decision. Aggrieved, Hilongo filed a petition for
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certiorari before the CA. The CA reversed the NLRC decision and reinstated the LA’s
decision. Petitioner filed a motion for reconsideration but was denied on March 26,
2013. Petitioner no longer appealed. Hilongo then filed a motion for entry of judgment
praying that additional award in terms of backwages and separation pay must be
computed from May 2010 to March 26, 2013. The CA granted the motion and remanded
the case to the LA for recomputation. The LA directed the issuance of writ of
execution but stated that the amount stated in April 30, 2010 will prevail. Hilongo
filed a petition for extraordinary remedy with the NLRC but the same was denied; so
as the motion for reconsideration. Hilongo filed a petition for certiorari with the CA
which granted the petition and ordered the LA to recompute the monetary awards. It
predicates its ruling on the theory that the computation of the monetary awards due
to the illegally dismissed employee must continue to run until the final termination of
the case on appeal; separation pay and back wages must be computed up to that point
to account for the time the illegally dismissed employee should have been paid his salary
and benefit entitlements.
Issue:
Whether the CA erred in ordering the LA to recompute the monetary awards

Ruling:
No. The recomputation of the consequences of illegal dismissal upon execution

of the decision does not constitute an alteration or amendment of the final decision
being implemented. The illegal dismissal ruling stands; only the computation of
monetary consequences of this dismissal is affected, and this is not a violation of the
principle of immutability of final judgments.
NAVOTAS SHIPYARD CORPORATION AND JESUS VILLAFLOR vs. INNOCENCIO

MONTALLANA, ET AL.
G.R. No. 190053. March 24, 2014
J. Brion
The term “backwages” presupposes illegal termination of employment. It is restitution of

earnings unduly withheld from the employee because of illegal termination. Hence, where there is no
illegal termination, there is no basis for claim or award of backwages.
If the dismissal is by virtue of a just or authorized cause, but without due process, the
dismissed workers are entitled to an indemnity in the form of nominal damages.
Facts:
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The case arose when respondents filed a complaint for illegal (constructive) dismissal, with money
claims, against the petitioners, Navotas Shipyard Corporation (company) and its President/General
Manager, Jesus Villaflor. The respondents alleged that on October 20, 2003, the company’s
employees (about 100) were called to a meeting where Villaflor told them: “Magsasara na ako ng
negosyo, babayaran ko na lang kayo ng separation pay dahil wala na akong pangsweldo sa inyo.
Marami akong mga utang sa krudo, yelo, at iba pa.” Since then, they were not allowed to report for
work but Villaflor’s promise to give them separation pay never materialized despite their persistent
demands and follow-ups.
The petitioners, on the other hand, claimed that due to the “seasonal lack of fish caught and
uncollected receivables,” the company suffered financial reverses. It was thus constrained to
temporarily cease operations. They projected that the company could resume operations before
the end of six months or on April 22, 2004. It reported the temporary shutdown to the Department
of Labor and Employment, National Capital Region (DOLE-NCR) and filed an Establishment
Termination Report.
The LA dismissed the complaint for lack of merit, but awarded the respondents 13th month pay and
service incentive leave pay. The NLRC dismissed the appeal for lack of merit and affirmed LA
Bartolabac’s decision in toto. The CA set aside the challenged NLRC decision and granted the
respondents’ claims for service incentive leave pay, 13th month pay, separation pay and backwages.
Issue:
Whether the respondents illegally dismissed and entitled to the CA award
Ruling:
Under the circumstances, we cannot say that the company’s employees were illegally dismissed;
rather, they lost their employment because the company ceased operations after failing to recover
from their financial reverses. The CA itself recognized what happened to the company when it
observed: “The temporary shutdown has ripened into a closure or cessation of operations. In this
situation, private respondents are definitely entitled to the corresponding benefits of separation.”
Even the respondents had an inkling of the company’s fate when they claimed before the LA that
on October 20, 2003, they were called, together with all the other employees of the company, by
Villaflor; the latter allegedly told them that he would be closing the company, but would give them
their separation pay. He also disclosed to them the reason – he could no longer pay their salaries
due to the company’s unsettled financial obligations on fuel and ice and other indebtedness.
The CA misappreciated the facts when it opined that the respondents were illegally dismissed
because they were not reinstated by the petitioners after the lapse of the company’s temporary
shutdown. It lost sight of the fact that the company did not resume operations anymore, a situation
the CA itself recognized. The respondents, therefore, had no more jobs to go back to; hence, their
non-reinstatement.
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In these lights, the CA was not only incorrect from the point of law; it likewise disregarded, or at
the very least, grossly misappreciated the evidence on record – that the petitioner was in distress
and had temporarily suspended its operations, and duly reflected these circumstances to the DOLE.
From this perspective, there was no grave abuse of discretion to justify the CA’s reversal of the
NLRC’s findings and conclusions.
Since there was no illegal dismissal, the respondents are not entitled to backwages. The term
“backwages” presupposes illegal termination of employment. It is restitution of earnings unduly
withheld from the employee because of illegal termination. Hence, where there is no illegal
termination, there is no basis for claim or award of backwages.
Pursuant to existing jurisprudence, if the dismissal is by virtue of a just or authorized cause, but
without due process, the dismissed workers are entitled to an indemnity in the form of nominal
damages. In the present case, the evidence on hand substantially shows that the company closed
down due to serious business reverses, an authorized cause for termination of employment. The
failure to notify the respondents in writing of the closure of the company will not invalidate the
termination of their employment, but the company has to pay them nominal damages for the
violation of their right to procedural due process.
CONRADO A. LIM vs. HMR PHILIPPINES, INC., TERESA SANTOS-CASTRO, HENRY

BUNAG AND NELSON CAMILLER
G.R. No. 201483, August 4, 2014, J. Mendoza
The re-computation of the consequences of illegal dismissal upon execution of the decision
does not constitute an alteration or amendment of the final decision being implemented. The illegal
dismissal ruling stands; only the computation of monetary consequences of this dismissal is affected
and this is not a violation of the principle of immutability of final judgments. Thus, in the present
case, a re- computation of backwages until actual reinstatement is not a violation of the principle of
immutability of final judgments.
Facts:
Petitioner Conrado A. Lim filed a case for illegal dismissal and money claims against
respondents, HMR Philippines, Inc. (HMR) and its officers, Teresa G. Santos-Castro, Henry G.
Bunag and Nelson S. Camiller. The Labor Arbiter (LA) dismissed the complaint for lack of merit but
later on the NLRC reversed the LA and declared Lim to have been illegally dismissed. The
dispositive portion of the NLRC decision reads among others that the “HMR is hereby ordered to
pay the complainant-appellant his full backwages, reckoned from his dismissal on February 3, 2001 up
to the promulgation of this Decision. The Computation and Research Unit (CRU) of this Commission
is hereby directed to compute the backwages and the 10% annual increase from 1998 to 2000.”
Both Lim and HMR filed their respective petitions for certiorari before the CA which were
consolidated. On November 15, 2005, the CA affirmed the NLRC decision with modification. On
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February 7, 2007, the Supreme Court dismissed the petition for certiorari filed by HMR assailing
the November 15, 2005 CA decision. Entry of judgment was ordered on July 27, 2007. Subsequently,
Lim moved for execution and the Computation and Research Unit (CRU) of the NLRC computed
the total award to amount to P2,020,053.46, which computed the backwages from February 3, 2001,
the date of the illegal dismissal, up to October 31, 2007, the date of actual reinstatement.
HMR opposed the computation arguing that the backwages should be computed until April
11, 2003 only, the date of promulgation of the NLRC decision, as stated in the dispositive portion of
the NLRC decision. It also noted that the 10% annual increase was computed from 1998 to 2007,
instead of only from 1998 to 2000 as decreed.
Issue:
Whether or not the computation of backwages should be reckoned until the promulgation
of the NLRC Decision on April 11, 2003.
Ruling:
No. The computation of backwages should be reckoned until actual reinstatement.
Article 279 of the Labor Code is clear in providing that an illegally dismissed employee is
entitled to his full backwages computed from the time his compensation was withheld up to the
time of his actual reinstatement. However, the fallo of the said NLRC decision limited the
computation of the backwages up to its promulgation on April 11, 2003.
Considering that the judgment decreeing the computation of backwages up to the

promulgation of the NLRC decision has long become final and executory, the key question is
whether a recomputation of backwages up to the date of the actual reinstatement of Lim would
violate the principle of immutability of judgments which we should answer in the negative.
Consistent with what we discussed above, the Court holds that under the terms of the
decision under execution, no essential change is made by a re-computation as this step is a
necessary consequence that flows from the nature of the illegality of dismissal declared. A re-
computation (or an original computation, if no previous computation has been made) is a part of
the law – specifically, Article 279 of the Labor Code and the established jurisprudence on this
provision – that is read into the decision. By the nature of an illegal dismissal case, the reliefs
continue to add on until full satisfaction, as expressed under Article 279 of the Labor Code. The re-
computation of the consequences of illegal dismissal upon execution of the decision does not
constitute an alteration or amendment of the final decision being implemented. The illegal
dismissal ruling stands; only the computation of monetary consequences of this dismissal is
affected and this is not a violation of the principle of immutability of final judgments. Finally, the
nature of an illegal dismissal case requires that backwages continue to add on until full satisfaction.
The computation required to reflect full satisfaction does not constitute an alteration or
amendment of the final decision being implemented as the illegal dismissal ruling stands. Thus, in
the present case, a computation of backwages until actual reinstatement is not a violation of the
principle of immutability of final judgments.
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UNIVERSITY OF PANGASINAN, INC., CESAR DUQUE/JUAN LLAMAS AMOR/DOMINADOR
REYES vs. FLORENTINO FERNANDEZ AND HEIRS OF NILDA FERNANDEZ
The Labor Arbiter, finding that illegal dismissal has been committed by the petitioner (the
decision being affirmed by the Supreme Court), ordered the re-computation of the award in favor of
the respondents. The Supreme Court ruled that re-computation of awards issued by the Labor Arbiter
is only a necessary consequence of illegal dismissal cases and it does not violate the principle of
immutability of judgement. The illegal dismissal ruling stands; only the computation of monetary
consequences of this dismissal is affected and this is not a violation of the principle of immutability of
final judgments.
Facts:
The respondents led by Florentino Fernandez are college instructors in the University of
Pangasinan. The University, however, dismissed them from service. Because of this, the
respondents filed a complaint for illegal dismissal against UPI (University of Pangasinan, Inc.). The
Labor Arbiter ruled in favor of the respondents and declared that they have been dismissed without
just and valid causes. This decision of the Labor Arbiter was the affirmed by no other than the
Supreme Court. The decision of the Supreme Court became final and executory.
Because of this, the respondents filed a motion for execution of the judgment with the Labor
Arbiter. The LA then promulgated an Order for the re-computation of the award to the
respondents. The NLRC reversed ad set aside the Order of the Labor Arbiter. On appeal, the Court
of Appeals reversed and set aside the decision of NLRC. The Court of Appeals held that we hold
that under the terms of the decision under execution, no essential change is made by a re-
computation as this step is a necessary consequence that flows from the nature of the illegality of
dismissal declared in that decision. A re-computation (or an original computation, if no previous
computation has been made) is a part of the law - specifically, Article 279 of the Labor Code and
the established jurisprudence on this provision - that is read into the decision. By the nature of an
illegal dismissal case, the reliefs continue to add on until full satisfaction, as expressed under Article
279 of the Labor Code. The re-computation of the consequences of illegal dismissal upon execution
of the decision does not constitute an alteration or amendment of the final decision being
implemented. The illegal dismissal ruling stands; only the computation of monetary consequences
of this dismissal is affected and this is not a violation of the principle of immutability of final
judgments. Hence, the current petition.
Issue:
Whether or not the re-computation ordered by the Court of Appeals violates the principle
of immutability of judgements established by law and jurisprudence.
Ruling:
The re-computation ordered by the Labor Arbiter, as affirmed by the Court of Appeals does
not violate the principle of immutability of judgements. The Supreme Court, thus, affirmed the
decision of the Court of Appeals.
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[N]o essential change is made by a re-computation as this step is a necessary consequence
that flows from the nature of the illegality of dismissal declared in that decision. A re-computation
(or an original computation, if no previous computation has been made) is a part of the law—
specifically, Article 279 of the Labor Code and the established jurisprudence on this provision—
that is read into the decision. By the nature of an illegal dismissal case, the reliefs continue to add
on until full satisfaction, as expressed under Article 279 of the Labor Code. The re-computation of
the consequences of illegal dismissal upon execution of the decision does not constitute an
alteration or amendment of the final decision being implemented. The illegal dismissal ruling
stands; only the computation of monetary consequences of this dismissal is affected and this is not
a violation of the principle of immutability of final judgments.
That the amount the UPI shall now pay has greatly increased is a consequence that it cannot
avoid as it is the risk that it ran when it continued to seek recourses against the labor arbiter's
decision. Article 279 provides for the consequences of illegal dismissal in no uncertain terms,
qualified only by jurisprudence in its interpretation of when separation pay in lieu of reinstatement
is allowed. When that happens, the finality of the illegal dismissal decision becomes the reckoning
point instead of the reinstatement that the law decrees. In allowing separation pay, the final
decision effectively declares that the employment relationship ended so that separation pay and
backwages are to be computed up to that point.
In addition, one of the natural consequences of a finding that an employee has been illegally
dismissed is the payment of backwages corresponding to the period from his dismissal up to actual
reinstatement. The statutory intent of this matter is clearly discernible. The payment of backwages
allows the employee to recover from the employer that which he has lost by way of wages as a result
of his dismissal. Logically, it must be computed from the date of petitioner's illegal dismissal up to
the time of actual reinstatement. There can be no gap or interruption, lest the Court defeat the very
reason of the law in granting the same.
CONSTRUCTIVE DISMISSAL
JOVITA S. MANALO v. ATENEO DE NAGA UNIVERSITY, FR. JOEL TABORA AND MR.
EDWIN BERNAL
G.R. No. 185058, November 09, 2015, LEONEN, J.
When professionals and educators violate the ethical standards of the profession to
which they belong and for which they train students, educational institutions employing
them are justified in relieving them of their teaching posts and in taking other precautionary
or punitive measures.
Facts:
Manalo was a regular and permanent full-time faculty member of the
Accountancy Department of Ateneo de Naga University’s College of Commerce. She was
also a part-time Manager of the Ateneo de Naga Multi-Purpose Cooperative. Later,
Bernal, the Dean of College of Commerce wrote to Fr. Tabora, the university’s president,
recommending Manalo’s dismissal for fraud in issuance of official receipts, collection of
cash without documented remittance to the cooperative, use of inappropriate forms of
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documents cash receipts, 16 instances of bouncing checks issued by the cooperative . .
. fraud in the issuance of an official receipt, unauthorized cash advances. Fr. Tabora
instead opted to transfer Manalo to teach Economics. Alleging that her transfer
constituted constructive dismissal, Manalo filed a Complaint. The LA found that
Manalo was constructively dismissed; that the action taken on Manalo's case was
anchored on private affairs which clearly has no bearing on the employment relationship
between her and the University.
Issue:
Whether a transfer for violation of professional ethics constitutes constructive
dismissal
Ruling:
No. Not every inconvenience, disruption, difficulty, or disadvantage that an
employee must endure sustains a finding of constructive dismissal. At the core of the
issue of constructive dismissal is the matter of whether an employer's action is
warranted. There is ample basis not only for the transfer of the petitioner, but even for
other heavier penalties that could have been imposed on her.
Petitioner's indiscretions reflect her fitness as an educator for the accountancy

profession and her employment with respondent Ateneo de Naga University. They
show clear transgressions of the Code of Ethics of Accountants, which rendered her
disqualified to teach Accounting. Worse, they indicate that petitioner failed to
demonstrate to students and to live by her own example the ideals of the accountancy
profession.
RAFAEL B. QUILLOPA v. QUALITY GUARDS SERVICES AND INVESTIGATION AGENCY

AND ISMAEL BASABICA, JR.
Temporary off-detail or the period of time security guards are made to wait until
they are transferred or assigned to a new post or client does not constitute constructive
dismissal, so long as such status does not continue beyond six months. The onus of proving
that there is no post available to which the security guard can be assigned rests on the
employer
Facts:
Quality Guards Services and Investigation Agency (QGSIA) hired Rafael Quillopa as
a security guard and was given various assignments. Thereafter, QGSIA informed
Quillopa that he would be placed on a floating status but was assured that he would
be given a new assignment. Quillopa on November 11, 2010, filed a complaint for money
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claims, overtime pay, premium pay for holidays and rest days, night shift differentials,
13th month pay and service incentive leave pay against QGSIA. However, the parties
were able to amicably settle the controversy. A Waiver/Quitclaim and Release was
executed providing that Quillopa is withdrawing his complaint against QGSIA and
that he received a total of P10,000.00 from QGSIA for and in consideration of the
settlement of all Quillopa’s claims which might have arisen as consequence of
employment. On September 14, 2011, Quillopa filed a second complaint this time for
illegal dismissal. Quillopa alleged that despite the prior Waiver, QGSIA failed to reinstate
him to his previous assignment or to give him a new one. QSGIA averred that the Waiver
already terminated the employer-employee relationship between QSGIA and Quillopa,
and thus Quillopa had no more ground to file the second complaint against QSGIA.
Issue:
Whether Quillopa was illegally dismissed by QSGIA
Ruling:
Yes. From September 28, 2010 until he filed the Second Complaint on September
14, 2011, or a total of more than 11 months, petitioner was placed on a temporary "off-
detail" or "floating status" without any salary or benefits whatsoever. Despite repeated
follow-ups at the QGSIA Office, he failed to get a new post or assignment from
respondents purportedly for lack of vacancy. However, records are bereft of any
indication or proof that there were no posts available to which petitioner may be
assigned. In view of their unjustified failure to place petitioner back in active duty
within the allowable six-month period and to discharge the burden placed upon it
by prevailing jurisprudence, the Court holds respondents liable for petitioner's
constructive dismissal.
VICENTE C. TATEL v. JLFP INVESTIGATION SECURITY AGENCY, INC., JOSE LUIS M.

PAMINTUAN, AND PAOLO C. TURNO
When an employee is placed under "floating status" for more than six months, he is
considered to have been constructively dismissed.
Facts:
JLFP Investigation Security Agency, Inc. hired Vicente Tatel as one of its security
guards. After Tatel’s last assignment, he was placed on floating status. After the lapse
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of six months, he filed a complaint for illegal dismissal. In its defense, JLFP contended
that after his last assignment, they sent a memorandum to Tatel to report back to work
for reassignment however, the latter failed to report to work. In his answer, Tatel
admitted having received the memorandum however when he went to JLFP he was
advised to wait for possible posting. He repeatedly went back to JLFP for reassignment
but to no avail. JLFP maintained that Tatel abandoned his work.
Issue:
Whether Vicente Tatel was illegally dismissed
Ruling:
Yes. Tatel was constructively dismissed after having been placed on "floating status"
for more than six months, reckoned from the day following his removal from his last
assignment. "Floating status" is the period of time when security guards 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. Placing an employee on “floating status” is
not equivalent to dismissal provided that such temporary inactivity should continue
only for a period of six months.
JLFP failed to establish that Tatel abandoned his work. To constitute abandonment,
two elements must concur: (a) the failure to report for work or absence without
valid or justifiable reason, and (b) a clear intention to sever the employer-employee
relationship. The employer has the burden of proof to show a deliberate and unjustified
refusal of the employee to resume his employment without any intention of returning;
this JLFP failed to do. Further, abandonment is incompatible with constructive
dismissal. An employee who takes steps to protest his layoff cannot be said to have
abandoned his work, and the filing of the complaint is proof enough of his desire to
return to work.
DREAMLAND HOTEL RESORT AND WESTLEY PRENTICE vs. STEPHEN JOHNSON

G.R. No. 191455. March 12, 2014
J. Reyes
There is constructive dismissal if an act of clear discrimination, insensibility, or disdain by an

employer becomes so unbearable on the part of the employee that it would foreclose any choice by
him except to forego his continued employment. It exists where there is cessation of work because
continued employment is rendered impossible, unreasonable or unlikely, as an offer involving a
demotion in rank and a diminution in pay.
Facts:
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Dreamland is a corporation engaged in hotel, restaurant and allied businesses. Prentice is its
current President and Chief Executive Officer. Prentice offered employment and convinced
Johnson to give out a loan, purportedly so the resort can be completed and operational by August
2007. Believing the representations of petitioner Prentice, private respondent Johnson accepted
the employment as Resort Manager and loaned money to petitioners in the amount of One
Hundred Thousand US Dollars (USD 100,000.00) to finish construction of the resort.
For a number of months, Johnson did his work but was not paid a salary. He was also denied the
benefits promised him as part of his compensation such as service vehicles, meals and insurance.
He was often berated and embarrassed in front of other personnel and guests, for which reason he
tendered his resignation, effective after three months thereafter.
Johnson filed a Complaint for illegal dismissal and non-payment of salaries, among others, against
the petitioners. The Labor Arbiter (LA) rendered a Decision dismissing Johnson’s complaint for lack
of merit with the finding that he voluntarily resigned from his employment and was not illegally
dismissed. The NLRC reversed the decision of the LA. On appeal, the CA affirmed the decision of
the NlRC.
Issue:
Whether or not the respondent was constructively dismissed and did not abandoned his work
Ruling:
As regards the NLRC findings that Johnson was constructively dismissed and did not abandon his
work, the Court is in consonance with this conclusion with the following basis:
Even the most reasonable employee would consider quitting his job after working
for three months and receiving only an insignificant fraction of his salaries. There
was, therefore, not an abandonment of employment nor a resignation in the real
sense, but a constructive dismissal, which is defined as an involuntary resignation
resorted to when continued employment is rendered impossible, unreasonable or
unlikely x x x
The petitioners aver that considering that Johnson tendered his resignation and abandoned his
work, it is his burden to prove that his resignation was not voluntary on his part.
With this, the Court brings to mind its earlier ruling in the case of SHS Perforated Materials, Inc.v.
Diaz where it held that:
“There is constructive dismissal if an act of clear discrimination, insensibility, or

disdain by an employer becomes so unbearable on the part of the employee that it
would foreclose any choice by him except to forego his continued employment. It
exists where there is cessation of work because continued employment is rendered
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impossible, unreasonable or unlikely, as an offer involving a demotion in rank and
a diminution in pay.”
It is impossible, unreasonable or unlikely that any employee, such as Johnson would continue
working for an employer who does not pay him his salaries. Applying the Court’s pronouncement
in Duldulao v. CA, the Court construes that the act of the petitioners in not paying Johnson his
salaries for three months has become unbearable on the latter’s part that he had no choice but to
cede his employment with them.
Since Johnson was constructively dismissed, he was illegally dismissed. As to the reliefs granted to
an employee who is illegally dismissed, Golden Ace Builders v. Talde referring to Macasero v.
Southern Industrial Gases Philippines is instructive:
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 case of Golden Ace further provides:
“The accepted doctrine is that separation pay may avail in lieu of reinstatement if reinstatement is
no longer practical or in the best interest of the parties. Separation pay in lieu of reinstatement
may likewise be awarded if the employee decides not to be reinstated.” x x x
Under the doctrine of strained relations, the payment of separation pay is considered an acceptable
alternative to reinstatement when the latter option is no longer desirable or viable. On one hand,
such payment liberates the employee from what could be a highly oppressive work environment.
On the other hand, it releases the employer from the grossly unpalatable obligation of maintaining
in its employ a worker it could no longer trust.
RAUL C. COSARE vs. BROADCOM ASIA, INC. and DANTE AREVALO

G.R. No. 201298, February 5, 2014
J. Reyes
Constructive dismissal occurs when there is cessation of work because continued employment
is rendered impossible, unreasonable or unlikely as when there is demotion in rank or dimunition in
pay or when a clear discrimination, insensibility, or disdain by an employer becomes unbearable to
the employee leaving the latter with no option but to quit.
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The 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. It is an act amounting to
dismissal but is made to appear as if it were not. Constructive dismissal is therefore a dismissal in
disguise. The law recognizes and resolves the situation in favor of employees in order to protect their
rights and interests from the coercive acts of the employer.
Facts:
In April 1993, Raul Cosare was employed as a salesman by Arevalo in the latter’s business of selling
broadcast equipment needed by television networks and production houses. Continuing his line of
business, in December 2000, he set up the company Broadcom. The former was named as an
incorporator having been assigned 100 shares of stock with par value of P1.00 per share. Later on he
was promoted to the position of Assistant Vice President for Sales and Head of the Technical
Coordination. In 2003, Alex Abiog was appointed as Broadcom’s Vice President for Sales and thus,
became Cosare’s immediate superior. On March 23, 2009, Cosare sent a confidential memo to
Arevalo informing him of the anomalies allegedly committed by Abiog against the company.
Apparently, Arevalo failed to act on his accusations. Instead, he was called for a meeting wherein
he was asked to tender his resignation in exchange for “financial assistance” in the amount of
P300,000.00. When he refused to comply with the directive, he later on received a memo charging
him of serious misconduct and willful breach of trust. The accusation was anchored on the
following acts: first, that he had directed, or at the very least tried to persuade, a customer to
purchase a camera from another supplier; second, the assigned vehicle to him has been abandoned
in another place outside of their office and was found to be inoperable; third, that he had failed to
submit regular sales reports despite repeated reminders and has been frequently absent and/or
tardy without proper information to the office or to his direct supervisor; and fourth, that he has
remiss in the performance of his duties as a Sales officer as evidenced by the fact that he has not
recorded any sales for the past immediate twelve months. He was given forty-eight hours from the
date of the memo within which to present his explanation on the charges. He was also “suspended
from having access to any and all company files/records and use of company assets effective
immediately.” He claimed that he was precluded from reporting for work on March 31, 2009 and
was even prevented from retrieving his personal belongings from the office. On April 1, 2009, he
was barred from entering the company premises. On April 2, 2009, he attempted to furnish the
company with a Memo by which he addressed and denied the accusations against him. The
respondents refused to receive the memo on the ground of late filing, prompting him to serve a
copy thereof by registered mail. The following day, he filed the subject labor complaint, claiming
that he was constructively dismissed from employment and was illegally suspended as he placed
no serious and imminent threat to the life or property of his employer and co-employees. In refuting
Cosare’s complaint, the respondents used the same allegations as stated in the Memo sent to him
and contended that Cosare abandoned his job by continually failing to report for work beginning
April 1, 2009, prompting them to issue on April 14, 2009 a memorandum accusing Cosare of absence
of work without leave beginning April 1, 2009.
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Issues:
(1) Whether or not the case instituted by Cosare was an intra-corporate dispute that was within the
original jurisdiction of the RTC, and not of the Las
(2) Whether or not Cosare was constructively and illegally dismissed from employment by the
respondents
Ruling:
(1) The Court has determined that contrary to the ruling of the CA, it is the LA, and not the regular
courts, which has the original jurisdiction over the subject controversy. The mere fact that Cosare
was a stockholder and an officer of Broadcom at the time the subject controversy developed failed
to necessarily make the case an intra-corporate dispute. Although he is an officer of Broadcom for
being its AVP for Sales, he was not a “corporate officer” as the term is defined by law. There are two
circumstances which must concur in order for an individual to be considered as such, namely: (1)
the creation of the position is under the corporation’s charter or by-laws; and (2) the election of the
officer is by the directors or stockholders. Furthermore, following the “controversy test” which
enunciates that the status or relationship of the parties and the nature of the question that is the
subject of the controversy must be taken into account, the instance case cannot be deemed intra-
corporate. Clearly, the pending dispute particularly relates to Cosare’s rights and obligations as a
regular officer of Broadcom, instead of as a stockholder of the corporation.
(2) Cosare was constructively and illegally dismissed by respondents.
The fact that no further investigation and final disposition appeared to have been made by the
respondents on his case only negated the claim that they actually intended to first look into the
matter before making a final determination as to the guilt or innocence of their employee. This was
also manifested from the fact that even before he was required to present his side on the charges of
serious misconduct and willful breach of trust, he was summoned to Arevalo’s office and was asked
to tender his immediate resignation in exchange for financial assistance.
Respondents’ discrimination, disdain and insensibility towards Cosare was also signified in their
refusal to accept his explanation as it was filed beyond the mere 48-hour period which they granted
to him. The Court emphasized in King of Kings Transport Inc v. Mamac the standards to be
observed by employers in complying with the service of notices prior to termination:
The first written notice to be served on the employees should contain specific causes or grounds
for termination against them, and a directive that the employees are given the opportunity to
submit their written explanation within a reasonable period. “Reasonable opportunity” under the
Omnibus Rules means every kind of assistance that management must accord to the employees to
enable them to prepare adequately for their defense. This should be construed as a period of at least
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five calendar days from receipt of the notice to give the employees an opportunity to study the
accusation against them, consult a union official or lawyer, gather data and evidence, and decide
on the defenses they will raise against the complaint. Moreover, in order to enable the employees
to intelligently prepare their explanation and defenses, the notice should contain a detailed
narration of the facts and circumstances that will serve as basis for the charge against the
employees. A general description of the charge will not suffice. Lastly, the notice should specifically
mention which company rules, if any, are violated and/or which among the grounds under Art. 282
is being charged against the employees.”
Moreover, the charge of abandonment allegedly signified by his failure to report to work or file a
leave of absence beginning April 1, 2009 was inconsistent with the imposed sanction effective March
30, 2009. Abandonment is the deliberate and unjustified refusal of an employee to resume his
employment. 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. His failure to work was neither voluntary nor
indicative of an intention to sever his employment with Broadcom. It was illogical to be requiring
him to report for work, and imputing fault when he failed to do so after he was specifically denied
access to all of the company’s assets.
DIVINE WORD COLLEGE OF LAOAG vs. SHIRLEY B. MINA,

as heir-substitute of the late DELFIN A. MINA
G.R. No. 195155, April 13, 2016
FACTS
DWCL is a non-stock educational institution offering catholic education to the public. It is run by
the Society of Divine Word (SVD), a congregation of Catholic priests that maintains several other
member educational institutions throughout the country.
On July 1, 1969, the Society of Divine Word Educational Association (DWEA) established a
Retirement Plan to provide retirement benefits for qualified employees of DWEA’s member
institutions, offices and congregations. The DWEA Retirement Plan contains a clause about the
portability of benefits, to wit:
When a member who resigns or is separated from employment from one Participating
Employer and who is employed by another Participating Employer, the member will carry
the credit he earned under his former Participating Employer to his new Employer and the
length of service in both will be taken into consideration in determining his total years of
continuous service on the following conditions:
a. The transfer is approved by both the Participating Employer whose service he is leaving
and the new Participating Employer;
b. The Retirement Board is notified of the transfer; and
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c. The member is employed by another Participating Employer on the next working
day after his resignation.
Mina was first employed in 1971 as a high school teacher, and later on a high school principal, at the
Academy of St. Joseph (ASJ), a school run by the SVD. On June 1, 1979, he transferred to DWCL and
was accorded a permanent status after a year of probationary status. He was subsequently
transferred in 2002 to DWCL’s college department as an Associate Professor III. Thereafter, on June
1, 2003, Mina was assigned as the College Laboratory Custodian of the School of Nursing and was
divested of his teaching load, effective June 1, 2003 until May 31, 2004, subject to automatic
termination and without need for any further notification. He was the only one among several
teachers transferred to the college department who was divested of teaching load.
In early June 2004, Mina was offered early retirement by Professor Noreen dela Rosa, Officer-in-
Charge of DWCL’s School of Nursing. He initially declined the offer because of his family’s
dependence on him for support. He later received a Memorandum dated July 27, 2004 from the
Office of the Dean enumerating specific acts of gross or habitual negligence, insubordination, and
reporting for work under the influence of alcohol. He answered the allegations against him; sensing,
however, that it was pointless to continue employment with DWCL, he requested that his
retirement date be adjusted to September 2004 to enable him to avail of the 25-year benefits. He
also requested for the inclusion of his eight years of service in ASJ, to make his total years of service
to 33 years pursuant to the portability clause of the retirement plan, which was denied by DWCL.
Instead, he was paid ₱275,513.10 as retirement pay. It was made to appear that his services were
terminated by reason of redundancy to avoid any tax implications. Mina was also made to sign a
deed of waiver and quitclaim stating that he no longer has any claim against DWCL with respect to
any matter arising from his employment in the school.
On September 21, 2004, he filed a case for illegal dismissal and recovery of separation pay and other
monetary claims. Pending resolution of his case, Mina passed away on June 18, 2005.
ISSUES
Whether or not Mina’s transfer amounted to a constructive dismissal.

Whether or not Mina is entitled to backwages, separation pay and damages.
Whether or not the years of service rendered by Mina in ASJ shall be included in the computation
of his retirement benefits.
RULING
Constructive dismissal is a dismissal in disguise. There is cessation of work in constructive dismissal

because ‘"continued employment is rendered impossible, unreasonable or unlikely, as an offer
involving a demotion in rank or a diminution in pay’ and other benefits." To be considered as such,
an act must be a display of utter discrimination or insensibility on the part of the employer so
intense that it becomes unbearable for the employee to continue with his employment. The law
recognizes and resolves this situation in favor of employees in order to protect their rights and
interests from the coercive acts of the employer.
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In this case, Mina’s transfer clearly amounted to a constructive dismissal. For almost 22 years, he
was a high school teacher enjoying a permanent status in DWCL’s high school department. In 2002,
he was appointed as an associate professor at the college department but shortly thereafter, or on
June 1, 2003, he was appointed as a college laboratory custodian, which is a clear relegation from
his previous position. Not only that. He was also divested of his teaching load. His appointment
even became contractual in nature and was subject to automatic termination after one year
"without any further notification." Aside from this, Mina was the only one among the high school
teachers transferred to the college department who was divested of teaching load. More
importantly, DWCL failed to show any reason for Mina’s transfer and that it was not unreasonable,
inconvenient, or prejudicial to him.
Also, the CA correctly ruled that Mina’s appointment as laboratory custodian was a demotion.
There is demotion when an employee occupying a highly technical position requiring the use of
one’s mental faculty is transferred to another position, where the employee performed mere
mechanical work – virtually a transfer from a position of dignity to a servile or menial job. The
assessment whether Mina’s transfer amounted to a demotion must be done in relation to his
previous position, that is, from an associate college professor, he was made a keeper and inventory-
taker of laboratory materials. Clearly, Mina’s new duties as laboratory custodian were merely
perfunctory and a far cry from his previous teaching job, which involved the use of his mental
faculties. And while there was no proof adduced showing that his salaries and benefits were
diminished, there was clearly a demotion in rank. As was stated in Blue Dairy Corporation v. NLRC,
"[i]t was virtually a transfer from a position of dignity to a servile or menial job."
Given the finding of constructive dismissal, Mina, therefore, is entitled to reinstatement without
loss of seniority rights, and payment of backwages computed from the time compensation was
withheld up to the date of actual reinstatement. The Court notes that aside from full compulsory
retirement pay, the NLRC awarded full backwages and separation pay, in lieu of reinstatement. The
CA, however, computed the amount to be awarded as backwages from the time of Mina’s hiring on
June 1, 1979 until the time of his death on June 18, 2005, apparently interchanging backwages and
separation pay. Aside from this, the CA omitted to include a separate award of separation pay.
The Court has repeatedly stressed that the basis for the payment of backwages is different from that
of the award of separation pay. "The basis for computing separation pay is usually the length of the
employee’s past service, while that for backwages is the actual period when the employee was
unlawfully prevented from working." Thus, the Court explained in Bani Rural Bank, Inc. v. De
Guzman that:
[U]nder Article 279 of the Labor Code and as held in a catena of cases, an employee who is dismissed
without just cause and without due process is entitled to backwages and reinstatement or payment
of separation pay in lieu thereof:
xxxx
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.
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The payment of separation pay is in addition to payment of backwages. (Emphasis and
underscoring deleted, and italics ours)
Thus, the computation of Mina’s backwages should be from the time he was constructively
dismissed on June 1, 2003.
Aside from the foregoing, the CA should have also awarded separation pay since reinstatement is
no longer viable due to Mina’s death in 2005. As stated before, the award of separation pay is distinct
from the award of backwages. The award of separation pay is also distinct from the grant of
retirement benefits. These benefits are not mutually exclusive as "[r]etirement benefits are a form
of reward for an employee’s loyalty and service to an employer and are earned under existing laws,
[Collective Bargaining Agreements], employment contracts and company policies." Separation pay,
on the other hand, 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. In the computation of separation pay, the Court stresses that it
should not go beyond the date an employee was deemed to have been actually separated
from employment, or beyond the date when reinstatement was rendered impossible. The
period for the computation of separation pay Mina is entitled to shall therefore begin to run from
June 1, 1979, when he was transferred to DWCL from ASJ, until his death on June 18, 2005, or for a
period of 26 years.
The award of damages was also justified given the CA and NLRC’s finding that DWCL acted in a
manner wherein Mina was not treated with utmost good faith. The intention of the school to erase
him out of employment is too apparent. The Court upholds the CA’s finding that when DWCL’s act
of unceremoniously demoting and giving Mina contractual employment for one year and citing
him for numerous violations of school regulations when he rejected the school’s offer to voluntarily
retire is constitutive of bad faith.
Lastly, the Court affirms the NLRC’s findings that the eight years of service rendered by Mina in
ASJ shall not be included in the computation of his retirement benefits. No adequate proof is shown
that he has complied with the portability clause of the DWEA Retirement Plan. The employee has
the burden of proof to show compliance with the requirements set forth in retirement plans, being
in the nature of privileges granted to employees. Failure to overcome the burden of proof would
necessarily result in the employee’s disqualification to receive the benefits.
EMILIO S. AGCOLICOL, JR. v. JERWIN CASIÑO

G.R. No. 217732, June 15, 2016
FACTS
Respondent Jerwin Casiño (Casiño) was hired by petitioner in 2009 as Stock Custodian and Cook
in the latter's Kubong Sawali Restaurant. Upon discovery of theft involving company property
where respondent was allegedly a conspirator, a criminal complaint for qualified theft against him
and his co-employees was filed on November 26, 2012 before the Office of the City Prosecutor of
Baguio City. Additionally, he and his co-employees were preventively suspended indefinitely
pending investigation. He was informed of the suspension through a Memorandum Order dated
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November 27, 2012, effective November 28, 2012, by the restaurant's Human Resource Manager,
Henry Revilla.
Meanwhile, the criminal complaint for qualified theft was later dismissed for lack of basis.
According to respondent, sometime thereafter, he received a letter-dated January 10, 2013 where he
was made to explain why his services should not be terminated. While the letter was addressed only
to his co-employee, Rosendo Lomboy (suspected to be involved in the incident), it appears from
respondent's allegations in his complaint that he considered said letter as a directive for him to give
said explanation.
On May 17, 2013, respondent filed with the NLRC a complaint for illegal dismissal, illegal
suspension, and non-payment of monetary benefits.
For his part, petitioner denies having dismissed respondent, arguing that they were prevented from
completing the investigation because respondent stopped reporting for work after Reynante
Camba, his co-employee, was arrested. This, according to petitioner, prevented him from
complying with the twin-notice rule. Nevertheless, petitioner insists, respondent was never
dismissed from work notwithstanding the audit team's finding that his participation in the scam
was extensive. Furthermore, petitioner contends that respondent's monetary claims were
speculative.
ISSUE
Whether or not respondent was constructively dismissed.
RULING
An employee is considered to be constructively dismissed from service if an act of clear

discrimination, insensibility or disdain by an employer has become so unbearable to the employee
as to leave him or her with no option but to forego with his or her continued employment.
From said definition, it can be gathered that various situations, whereby the employee is
intentionally placed by the employer in a situation which will result in the former's being coerced
into severing his ties with the latter, can result in constructive dismissal. One such situation is
where an employee is preventively suspended pending investigation for an indefinite period of time.
At this point it is well to note that not all preventive suspensions are tantamount to constructive
dismissal. The employer's right to place an employee under preventive suspension is recognized in
Rule XXIII, Implementing Book V of the Omnibus Rules Implementing the Labor Code. Section 8
of said Rule provides:
SEC. 8. Preventive suspension. The employer may place the worker concerned under preventive
suspension if his continued employment poses a serious and imminent threat to the life or property
of the employer or of his co-workers.
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To be valid, however, not only must the preventive suspension be imposed pursuant to Section 8,
it must also follow the 30-day limit exacted under the succeeding Section 9 of the Rule. Thus:
SEC. 9. Period of suspension. No preventive suspension shall last longer than thirty (30) days.
The employer shall thereafter reinstate the worker in his former or in a substantially equivalent
position or the employer may extend the period of suspension provided that during the period of
extension, he pays the wages and other benefits due to the worker. In such case, the worker shall
not be bound to reimburse the amount paid to him during the extension if the employer decides,
alter completion of the healing, to dismiss the worker.
Here, there is no inquiry on the propriety of petitioner's resort to the imposition of a preventive
suspension. What is now in question is the fact that respondent was preventively suspended by
petitioner for an indefinite period of time and whether the imposition of indefinite preventive
suspension is tantamount to constructive dismissal.
On the 30-day limit on the duration of an employee's preventive suspension, We have previously
ruled that "when preventive suspension exceeds the maximum period allowed without reinstating
the employee either by actual or payroll reinstatement or when preventive suspension is for [an]
indefinite period, only then will constructive dismissal set in."
In Pido, upon which case the NLRC Second Division hinged its ruling in Casiño's case, We
considered the employee's "prolonged suspension, owing to [the employer's] neglect to conclude
the investigation, had ripened to constructive dismissal." There, the employee was placed under
preventive suspension for an indefinite period of time pending the investigation of a complaint
against him. After the imposition of said suspension, however, the employer "merely chose to
dawdle with the investigation in absolute disregard of [the employee's] welfare." In that case, the
employer did not inform the employee that it was extending its investigation, nor was the latter
paid his wages and other benefits after the lapse of the 30-day period of suspension. Neither did the
employer issue an order lifting the suspension or any official communication for the employee to
assume his post or another post. Having resulted in the employee's nine (9)-month preventive
suspension, this Court considered such to have ripened into constructive dismissal.
Moreover, in C. Alcantara & Sons, Inc. v. NLRC, We considered the employer's imposition of a
preventive suspension pending final investigation of the employee's case, coupled with the former's
lack of intention to conduct said final investigation, as tantamount to constructive dismissal.
In another case, Premiere Development Bank, et al. v. NLRC, We agreed with the NLRC that the
employee having been placed on preventive suspension in excess of the 30-day limit was a
predetermined effort of dismissing the latter from the service in the guise of preventive suspension.
There, the NLRC found that the prolonged suspension was the result of the employer's desire to
force the employee to submit to an inquiry.
Similarly, in Hyatt Taxi Services, Inc. v. Catinoy, this Court held that the employer's actions were
tantamount to constructive dismissal when it failed to recall the employee to work after the
expiration of the suspension, taken together with the former's precondition that the employee
withdraw the complaints against it. In said case, the employee involved reported for work after the
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lapse of his suspension but was told that he would not be able to resume his employment if he will
not withdraw the cases that he filed against them.
In the case at hand, there is no question that what was meted was an indefinite preventive
suspension pending investigation as clearly stated in the Memorandum Order dated November 27,
2012. This, in itself, is already a clear violation of the proscription against indefinite or prolonged
preventive suspensions, making the suspension tantamount to constructive dismissal as repeatedly
held by this Court in a long line of cases.
What further strengthens Our finding against petitioner is the fact that after the imposition of the
indefinite preventive suspension on November 28, 2012 and despite the City Prosecutor's dismissal
of the case for qualified theft against respondent on December 28, 2012, petitioner never issued a
return-to-work order to respondent or any similar correspondence. The only communication
received by respondent after the November 27, 2012 Memorandum Order is the January 10, 2013
Letter, which letter was addressed to Lomboy.
Additionally, the fact that the Letter was addressed to Lomboy is, to Us, an indication of petitioner's
lack of intention to obtain an explanation from respondent for his absences. This is so because,
obviously, said Letter was intended for Lomboy.
As in the above-cited cases, petitioner's actuations and omissions after the imposition of the
indefinite preventive suspension, coupled with the contents of the Letter and the circumstances
surrounding its issuance, are proof of petitioner's lack of desire to have respondent continue in his
employment at Kubong Sawali. It does not cure petitioner's violation of the 30-day limit. On the
contrary, it strengthens the finding that respondent was indeed constructively dismissed. There is,
therefore, no reason for Us to disturb the ruling of the CA affirming that of the NLRC Second
Division.
EMERITUS SECURITY AND MAINTENANCE SYSTEMS, INC. vs. JANRIE C. DAILIG

G.R. No. 204761, April 2, 2014, J. Carpio
The temporary inactivity or “floating status” of security guards should continue only for six
months. Otherwise, the security agency concerned could be liable for constructive dismissal. The
failure of the security agency to give the security guard a work assignment beyond the reasonable six-
month period makes it liable for constructive dismissal. Moreover, Article 279 of the Labor Code
mandates the reinstatement of an illegally dismissed employee. Reinstatement is the general rule,
while the award of separation pay is the exception.
Facts:
In August 2000, Emeritus Security and Maintenance Systems, Inc. (Emeritus) hired Janrie
C. Dailig (Dailig) as one of its security guards. During his employment, Dailig was assigned to
Emeritus’s various clients.
On 10 December 2005, Dailig was relieved from his post. On 16 June 2006, Dailig filed a
complaint for illegal dismissal and payment of separation pay against Emeritus before the
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Conciliation and Mediation Center of the NLRC.On 14 July 2006, Dailig filed another complaint for
illegal dismissal, underpayment of salaries and nonpayment of full backwages before the NLRC.
Dailig claimed that on various dates in December2005 and from January to May 2006, he
went to Emeritus’s office to follow-up his next assignment. After more than six months since his
last assignment, still Dailig was not given a new assignment. Dailig argued that if an employee is
on floating status for more than six months, such employee is deemed illegally dismissed.
Emeritus denied dismissing Dailig. Emeritus admitted that it relieved Dailig from his last
assignment on 10 December 2005; However, Emeritus required Dailig to report to the head office
within 48 hours from receipt of the order of relief. Dailig allegedly failed to comply. Emeritus
claimed that on 27January 2006 it sent Dailig a notice to his last known address requiring him to
report to the head office within 72 hours from receipt of the said notice. Emeritus further alleged
that it had informed Dailig that he had been absent without official leave for the month of
January2006, and that his failure to report within 72 hours from receipt of the notice would mean
that he was no longer interested to continue his employment.
Emeritus also claimed that there was no showing that Dailig was prevented from returning
to his work and that it had consistently manifested its willingness to reinstate him to his former
position. In addition, the fact that there was no termination letter sent to Dailig purportedly proved
that Dailig was not dismissed.
The Labor Arbiter rendered a decision declaring Dailig to have been illegally dismissed, and
ordering Emeritus to reinstate Dailig and to pay him backwages from the time his compensation
was withheld by reason of his illegal dismissal until actual reinstatement.
Emeritus appealed before the NLRC, which dismissed the appeal for lack of merit.
The Court of Appeals affirmed the finding of the LaborArbiter and the NLRC that Dailig was
illegally dismissed by Emeritus. However, the Court of Appeals set aside the Labor Arbiter and the
NLRC’s reinstatement order. Instead, the Court of Appeals ordered the payment of separation pay,
invoking the doctrine of strained relations between the parties.
Issues:
1. Whether Dailig was illegally dismissed by Emeritus; and

2. If he was, whether Dailig is entitled to separation pay, instead of reinstatement.
Ruling:
1. Yes. Dailig was illegally dismissed by Emeritus.
Emeritus admits relieving Dailig from his post as security guard on 10 December 2005. There
is also no dispute that Dailig remained on floating status at thetime he filed his complaint for illegal
dismissal on 16 June2006. In other words, Dailig was on floating status from 10 December 2005 to
16 June 2006 or more than six months. Emeritus’s allegation of sending Dailig a notice sometime in
January 2006, requiring him to report for work, is unsubstantiated, and thus, self-serving.
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The temporary inactivity or “floating status” of security guards should continue only for six
months. Otherwise, the security agency concerned could be liable for constructive dismissal. The
failure of Emeritus to give Dailig a work assignment beyond the reasonable six-month period makes
it liable for constructive dismissal.
2. No, Dailig is entitled to reinstatement, and not to separation pay.
Article 279 of the Labor Code of the Philippines mandates the reinstatement of an illegally
dismissed employee. Thus, reinstatement is the general rule, while the award of separation pay is
the exception. The circumstances warranting the grant of separation pay, in lieu of reinstatement,
are laid down by the Court in Globe-MackayCable and Radio Corporation v. National Labor
Relations Commission, thus:
Over time, the following reasons have been advanced by the Court for
denying reinstatement under the facts of the case and the law applicable thereto;
That reinstatement can no longer be effected in view of the long passage of time (22
years of litigation) or because of the realities of the situation; or that it would be
‘inimical to the employer’s interest’; Or that reinstatement may no longer be
feasible; or that it will not serve the best interests of the parties involved; Or that
the company would be prejudiced by the workers’ continued employment; or that
it will not serve any prudent purpose as when supervening facts have transpired
which make execution on that score unjust or inequitable or, to an increasing extent,
due to the resultant atmosphere of ‘antipathy and antagonism’ or ‘strained relations’
or ‘irretrievable estrangement’ between the employer and the employee.
In this case, Emeritus claims that it complied with the reinstatement order of the Labor
Arbiter. On 23 January2008, Emeritus sent Dailig a notice informing him of the Labor Arbiter’s
decision to reinstate him. Accordingly, in February 2008, Dailig was assigned by Emeritus to
Canlubang Sugar Estate, Inc. in Canlubang, Laguna, and to various posts thereafter. At the time of
the filing of the petition, Dailig was assigned by Emeritus to MD Distripark Manila, Inc. in Biñan,
Laguna.
Contrary to the Court of Appeals’ ruling, there is nothing in the records showing any
strained relations between the parties to warrant the award of separation pay. There is neither
allegation nor proof that such animosity existed between Emeritus and Dailig. In fact, Emeritus
complied with the Labor Arbiter’s reinstatement order.
Considering that (1) Emeritus reinstated Dailig incompliance with the Labor Arbiter’s
decision, and (2) there is no ground, particularly strained relations between the parties, to justify
the grant of separation pay, the Court of Appeals erred in ordering the payment thereof, in lieu of
reinstatement.
CHIANG KAI SHEK COLLEGE and CARMELITA ESPINO vs. ROSALINDA M. TORRES
G.R. No. 189456, April 2, 2014, J. Perez
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Respondent Torres was employed by Chiang Kai Shek College as a grade school teacher. She
was found guilty of leaking a copy of a quiz given to Grade 5 students. As a result, the school
terminated her employment. Torres then pleaded that she instead be suspended and allowed to finish
the school year and thereafter she will voluntarily resign. The school acceded to her request. After the
school year, however, Torres filed a case of illegal dismissal against the school. She argues that the
situation she was put through amounts to constructive dismissal. In ruling in favor of the school, the
Supreme Court held that academic dishonesty is the worst offense a teacher can make because
teachers caught committing academic dishonesty lose their credibility as educators and cease to be
role models for their students. More so that under Chiang Kai Shek College Faculty Manual, leaking
and selling of test questions is classified as a grave offense punishable by dismissal/termination. The
school gave due investigation and Torres was given a chance to defend herself, hence her termination
is proper. The school should not be punished for being compassionate and granting Torres’s request
for a lower penalty
Facts:
Petitioner Chiang Kai Shek College is a private educational institution that offers
elementary to college education to the public. Respondent Rosalinda Torres had been employed as
a grade school teacher of the school from July 1970 until 31 May 2003. The manner of her severance
from employment is the matter at hand.
Torres was accused of leaking a copy of a special quiz given to Grade 5 students of HEKASI
(HEKASI 5). Petitioners came to know about the leakage from one of the teachers of HEKASI 5,
Aileen Benabese (Ms. Benabese). Ms. Benabese narrated that after giving a special quiz, she
borrowed the book of one of her students, Aileen Regine M. Anduyan (Aileen), for the purpose of
making an answer key. When she opened Aileen’s book, a piece of paper fell. Said paper turned out
to be a copy of the same quiz she had just given and the same already contained answers.
An administrative hearing was conducted on 28 August 2002 wherein Torres and Mrs.
Anduyan, her co-respondent, were asked questions by the Investigating Committee relative to the
leakage of test paper. On 30 August 2002, the Investigating Committee held a meeting and found
Torres and Mrs. Anduyan guilty of committing a grave offense of the school policies by leaking a
special quiz. As shown in the Minutes of the Meeting on 30 August 2002, the Committee decided
to impose the penalty of one month suspension without pay on Torres and forfeiture of all the
benefits scheduled to be given on Teacher’s Day.
According to the school, the Investigating Committee had actually decided to terminate
Torres and had in fact prepared a memorandum of termination, but Torres allegedly pleaded for a
change of punishment in a short letter dated 5 September 2002. Petitioners acceded to the request
and suspended Torres and Mrs. Anduyan effective 16 September to October 2002. The duo was
directed to report to work on 4 November 2002. Torres continued her employment from 4
November 2002 until the end of the school year on 26 March 2003.
On 10 June 2003, Torres filed a complaint for constructive dismissal and illegal suspension
with the Labor Arbiter. In her Position Paper, Torres alleged that she was forced and pressured to
submit the written request for a change of penalty and commitment to resign at the end of the
school year. She was threatened by the school management with immediate dismissal from service
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if she did not submit the written statement. She claimed that she was not formally charged with
any offense and she was not served a copy of the notice of the school’s decision to terminate her
services. The school insisted that Torres voluntarily resigned. It averred that Torres was accorded
her right to due process prior to her termination. A formal investigation was conducted during
which Torres was given the opportunity to defend herself and confront her accusers.
On 3 February 2004, the Labor Arbiter dismissed Torres’s complaint for lack of merit. On
appeal, the Second Division of the NLRC rendered a Decision affirming the Labor Arbiter’s findings
but ordering petitioners to pay Torres separation pay equivalent to one half (1/2) month salary for
every year of service on the grounds of equity and social justice. Torres elevated the case to the
Court of Appeals, which reversed the NLRC Decision and Resolution. The Court of Appeals ruled
that petitioner did not voluntarily resign but was constructively dismissed.
Issue:
Whether Torres was constructively dismissed.
Ruling:
No.
Torres admitted to leaking a copy of the HEKASI 5 special quiz. She reluctantly made the
admission and apologized to Mrs. Koo when the latter confronted her. She admitted during the 28
August 2002 hearing that she executed two (2) contradictory statements. On 30 August 2002, the
Investigating Committee found Torres guilty of leaking a copy of the special quiz. Based on this
infraction alone, Chiang Kai Shek College would have been justified in terminating Torres from the
service. As Associate Justice Antonio T. Carpio emphasized, academic dishonesty is the worst
offense a teacher can make because teachers caught committing academic dishonesty lose their
credibility as educators and cease to be role models for their students. More so that under Chiang
Kai Shek College Faculty Manual, leaking and selling of test questions is classified as a grave offense
punishable by dismissal/termination.
Torres’s profession, the gravity of her infraction, and the fact that she waited until the close
of the school year to challenge her impending resignation demonstrate that Torres had bargained
for a graceful exit and is now trying to renege on her obligation. Associate Justice Antonio T. Carpio
accordingly noted that petitioners should not be punished for being compassionate and granting
Torres’s request for a lower penalty. Put differently, Torres should not be rewarded for reneging on
her promise to resign at the end of the school year. Otherwise, employers placed in similar
situations would no longer extend compassion to employees. Compromise agreements, like that in
the instant case, which lean towards desired liberality that favor labor, would be discouraged.
MCMER CORPORATION, INC., MACARIO D. ROQUE, JR. AND CECILIA R. ALVESTIR vs.
NATIONAL LABOR RELATIONS COMMISSION and FELICIANO C. LIBUNAO, JR.
G.R. No. 193421, June 4, 2014, J. Peralta
Petitioners questioned the decision of the CA holding that private respondent Libunao was
constructively dismissed. The SC however ruled that constructive dismissal have been defined as a
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cessation of work because continued employment is rendered impossible, unreasonable or unlikely;
when there is a demotion in rank or diminution in pay or both; or when a clear discrimination,
insensibility, or disdain by an employer becomes unbearable to the employee. The 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. It is an act amounting to dismissal but made to appear as if
it were not. Constructive dismissal is, therefore, a dismissal in disguise.
As may gleaned from the records, what transpired on July 20, 2007 was not merely an isolated
outburst on the part of petitioners. The latter’s behaviour towards his employees shows a clear
insensibility rendering the working condition of private respondent unbearable. Libunao had reason
to dawdle and refuse to comply with the summon of petitioners out of severe fear that he will be
physically harmed. In fact, the same was clearly manifested by his immediate reaction to the situation
by going to the Valenzuela Police to report the incident.
Facts:
Private Respondent Libunao was the Officer-in-Charge of petitioner McMer’s Legal and
Administrative Department. According to him, for quite some time, he and petitioners, specifically
Roque and Alvestir, McMer’s General Manager and President, have been on a cold war brought
often by the disagreement in the design and implementation of company policies and procedures.
However, the subsisting rift between him and petitioners heightened on July 10, 2007 when
petitioner McMer imputed against one Ms.Guiao and one Ms.Rebulado, officers of the Logistics
Department, certain unfounded score of inefficient performance of duty.
At around noon the same day, petitioner Roquegave an immediate summon upon Libunao
to proceed to his office to discuss the alleged tardiness of Libunao. The latter, sensing some unusual
development in the attitude of petitioner Roque, instead of responding to the summon, went to
petitioner Alvestir, and informed her of petitioner Roque’s disposition and his fear of a perceived
danger to his person. He then requested for petitioner Alvestir to go to petitioner Roque’s office
instead, of which petitioner Alvestir conceded. Moments later, petitioner Roque, at the height of
anger, confronted Libunao and commanded him to proceed to his office. At this juncture, Libunao
was too scared to confront Roque as the latter may inflict physical harm on him.
As a consequence of the foregoing, Libunao elected to discontinue work that afternoon and
immediately proceeded to the Valenzuela Police Headquarters to report on the incident in the
police blotter. Libunao did not report for work from July 21, 2007 up to July 30, 2007. Thereafter,
Libunao filed a complaint for unfair labor practices, constructive illegal dismissal and non-payment
of certain monetary benefits against petitioners.
Subsequently, a meeting was held to discuss the possibility of an amicable settlement. In

the end, however, Libunao was informed verbally by petitioner Alvestir that on account of strained
relationship brought about by the institution of a labor case against petitioners, the latter is inclined
to dismiss him from office.
In its decision, the Labor Arbiter ruled that there was no constructive dismissal and that it
was private respondent Libunao who voluntarily stopped reporting for work. On appeal, the NLRC
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reversed the Labor Arbiter’s decision and ruled that private respondent Libunao was constructively
dismissed from work. The CA affirmed the decision of the NLRC. Hence, this petition.
Issue:
Whether or not Libunao was constructively dismissed from work.
Ruling:
Yes, private respondent Libunao was constructively dismissed from work.
In a plethora of cases, the Court has defined constructive dismissal as a cessation of work
because continued employment is rendered impossible, unreasonable or unlikely; when there is a
demotion in rank or diminution in pay or both; or when a clear discrimination, insensibility, or
disdain by an employer becomes unbearable to the employee.
The 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. It is an act amounting
to dismissal but made to appear as if it were not. Constructive dismissal is, therefore, a dismissal in
disguise. As such, the law recognizes and resolves this situation in favor of employees in order to
protect their rights and interests from the coercive acts of the employer. In fact, the employee who
is constructively dismissed may be allowed to keep on coming to work.
Indeed, the CA’s Decision was not decided only on what transpired on July 20, 2007. Various
factors were considered in determining the working environment of petitioner McMer, to
determine whether or not Libunao was in a position wherein he would have felt compelled to give
up his position under the circumstances because continued employment was just impossible,
unreasonable or unlikely.
As may gleaned from the records, what transpired on July 20, 2007 was not merely an
isolated outburst on the part of petitioner Roque. The latter’s behaviour towards his employees
shows a clear insensibility rendering the working condition of Libunao unbearable. Libunao had
reason to dawdle and refuse to comply with the summon of petitioner Roque out of severe fear that
he will be physically harmed. In fact, the same was clearly manifested by his immediate reaction to
the situation by going to the Valenzuela Police to report the incident.
Moreover, after a judicious scrutiny of the records, the Court finds that private respondent
Libunao has exhibited a strong opposition to some company practices resulting in a severe marginal
distance between him and petitioners Roque and Alvestir at the workplace. This, together with the
harassment and intimidation displayed by petitioner Roque to his employees, became so
unbearable for private respondent to continue his employment with petitioner McMer. The fact
that none of the employees complained or brought this to the attention of the appropriate authority
does not validate petitioners’ actions. For private respondent Libunao, retaining the employment
despite his despair was a matter of principle. Libunao reasoned that it was difficult for him to look
for another employment, considering that at the time he filed his Position Paper, he was already 58
years old. His eventual decision to leave petitioners due to the agonizing situation at the workplace
cannot, therefore, be discounted.
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The NLRC and the CA, therefore, correctly appreciated the foregoing events as badges of
constructive dismissal, since private respondent Libunao could not have given up a job he has
engaged in for eight years unless it has become so unbearable for him to stay therein. Indeed,
Libunao felt compelled to give up his employment.
GIRLY G. ICO vs. SYSTEMS TECHNOLOGY INSTITUTE, INC., MONICO V. JACOB and
PETER K. FERNANDEZ
When another employee is soon after appointed to a position which the employer claims has
been abolished, while the employee who had to vacate the same is transferred against her will to a
position which does not exist in the corporate structure, there is evidently a case of illegal constructive
dismissal.
Facts:
Systems Technology Institute, Inc. (STI) is an educational institution duly incorporated,

organized, and existing under Philippine laws. Monico V. Jacob (Jacob) and Peter K. Fernandez
(Fernandez) are STI officers, the former being the President and Chief Executive Officer (CEO) and
the latter Senior Vice-President. STI offers pre-school, elementary, secondary and tertiary
education, as well as post-graduate courses either through franchisees or STI wholly-owned
schools.
Girly G. Ico (Ico), a masteral degree holder with doctorate units earned, was hired as Faculty
Member by STI College Makati (Inc.), which operates STI College-Makati (STI-Makati). STI College
Makati (Inc.) is a wholly-owned subsidiary of STI. Ico was subsequent promoted as Dean of STI
College- Parañaque and, thereafter, as Chief Operating Officer (COO) of STI-Makati.
However, after the merger between STI and STI College Makati (Inc.), Ico received a
memorandum cancelling her COO assignment at STI-Makati, citing management’s decision to
undertake an "organizational restructuring" in line with the merger of STI and STI-Makati. Further
ordering Ico to report to turn over her work to one Victoria Luz (Luz), who shall function as STI-
Makati’s School Administrator. According to STI, the "organizational re-structuring" was
undertaken "in order to streamline operations. In the process, the positions of Chief Executive
Officer and Chief Operating Officer of STI Makati were abolished."
Furthermore, the STI’s Corporate Auditor/Audit Advisory Group conducted an audit of STI-
Makati covering the whole period of Ico’s stint as COO/School Administrator therein. In a report
(Audit Report) later submitted to Fernandez, the auditors claim to have discovered several
irregularities. In another memorandum, it was recommended that an investigation committee be
formed to investigate Ico for grave abuse of authority, falsification, gross dishonesty, maligning and
causing intrigues, and other charges. Fernandez recommended that Ico be placed under preventive
suspension pending investigation. Hence, pursuant to said recommendation, Ico was placed under
preventive suspension and banning her entry to any of STI’s premises.
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Labor Arbiter (LA) found Ico to have been illegally constructively and in bad faith dismissed
by respondents in her legally acquired status as regular employee thus, ordering respondents
Sytems Technology Institute, Inc. and/or Monico V. Jacob, Peter K. Fernandez in solido to reinstate
her to her former position and pay Ico’s full back wages plus damages. On appeal, NLRC reversed
the ruling of the LA. On petition for certiorari by Ico before the CA, CA affirmed the ruling of the
NLRC, hence, this petition.
Issue:
Whether or not Ico was illegally dismissed.
Ruling:
Constructive dismissal exists where there is cessation of work because ‘continued

employment is rendered impossible, unreasonable or unlikely, as an offer involving a demotion in
rank or a diminution in pay’ and other benefits. Aptly called a dismissal in disguise or anact
amounting to dismissal but made to appear as if it were not, constructive dismissal may, likewise,
exist if an act of clear discrimination, insensibility, or disdain by an employer becomes so
unbearable on the part of the employee that it could foreclose any choice by him except to forego
his continued employment. In cases of a transfer of an employee, the rule is settled that the
employer is charged with the burden of proving that its conduct and action are for valid and
legitimate grounds such as genuine business necessity and that the transfer is not unreasonable,
inconvenient or prejudicial to the employee. If the employer cannot overcome this burden of proof,
the employee’s transfer shall be tantamount to unlawful constructive dismissal.
There is no doubt that Ico was subjected to indignities and humiliated by the respondents.
As correctly observed by the LA, she was bullied, threatened, shouted at, and treated insolently by
Fernandez on May 18, 2004 inside the latter’s own office. She was shamed when, on her very first
day at the School Compliance Group, all of the employees of the department have gone on an
official out-of-town event without her and, as a result, she was left alone at the office for several
days. Respondents did not even have the courtesy to offer her the opportunity to catch up with the
group so that she could make it to the event, even if belatedly. Then again, on May 20, 2004, STI
made an official companywide announcement of Jacob’s appointment as new STI President and
CEO, Fernandez as new STI-Makati COO, and Luz as new STI-Makati School Administrator, but
Ico’s appointment as new Compliance Manager was inconsiderately excluded. Respondents made
her go through the rigors of a contrived investigation, causing her to incur unnecessary legal
expenses as a result of her hiring the services of counsel. Her well-deserved awards and distinctions
were unduly withheld in the guise of continuing investigation – which obviously was taking too
long to conclude; investigation began formally on May 28, 2004 (start of audit), yet by August 17
(date of memorandum informing Ico of the withholding of Korea travel award), the investigation
was still allegedly ongoing. She was deprived of the privilege to attend company events where she
would have received her well-deserved awards with pride and honor, and her colleagues would have
been inspired by her in return. Certainly, respondents made sure that Ico suffered a humiliating
fate and consigned to oblivion.
Indeed, Ico could not be faulted for taking an indefinite leave of absence, and for altogether
failing to report for work after August 9, 2004. Human nature dictates that Ico should refuse to
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subject herself to further embarrassment and indignities from the respondents and her colleagues.
All told, Ico was deemed constructively dismissed as of May 18, 2004. Finally, since the position of
STI-Makati COO was never abolished, it follows that Ico should be reinstated to the very same
position, and there to receive exactly what Fernandez gets by way of salaries, benefits, privileges
and emoluments, without diminution in amount and extent. Ico, multi-awarded, deserving and
loyal, is entitled to what Fernandez receives, and is deemed merely to take over the office from him;
moreover, the position of Chief Operations Officer is not merely an ordinary managerial position,
as it is a senior managerial office. In turn, Fernandez – or anyone who currently occupies the
position of STI-Makati COO – must vacate the office and hand over the same to Ico.
It is correct for Ico to have included among the reliefs prayed for in her Complaint that she
be paid the salary, benefits and privileges being enjoyed by Fernandez currently. The Court, in
granting said relief, deems it only fair that she should be entitled to what Fernandez is receiving.
Not only that the position requires greater expertise in many areas, or that it involves great
responsibility, or that Ico deserves it from the point of view of her qualifications and experience;
but it would be to prevent another form of oppressive practice, where an employee is appointed to
a senior management position, there to enjoy only the prestige or title, but not the benefits
commensurate with the work and responsibility assumed. It would likewise prevent a situation
where, as in this case, an employer – obliged by law or the courts to reinstate an "unwanted"
employee holding a senior management position – is given an opportunity to retaliate by limiting
the employee’s salary, privileges and benefits to a certain level – low or high, so long as it is within
the managerial range– that is however 1) not commensurate with the work and responsibility
assumed by the employee, or 2) discriminatory, or 3) indicative of a tendency to favor only one or
some employees.
EXOCET SECURITY AND ALLIED SERVICES CORPORATION AND/OR MA. TERESA

MARCELO vs. ARMANDO D. SERRANO
G.R. No. 198538, September 29, 2014, J. Velasco, Jr.
It is manifestly unfair and unacceptable to immediately declare the mere lapse of the six-
month period of floating status as a case of constructive dismissal, without looking into the peculiar
circumstances that resulted in the security guard’s failure to assume another post. This is especially
true in the present case where the security guard’s own refusal to accept a non-VIP detail was the
reason that he was not given an assignment within the six-month period. The security agency, Exocet,
should not then be held liable.
Facts:
Petitioner Exocet Security (Exocet) is engaged in the business of providing security

personnel to its various clients. Exocet assigned Respondent Serrano to its client JG Summit
Holdings, Inc. (JG Summit) specifically as “close-in” security personnel of JG Summit's corporate
officer, Johnson Robert Go. Later, Serrano was re-assigned as close-in security for Lance Gokongwei,
and then to his wife, Mary Joyce Gokongwei. After 12 years in JG Summit, Serrano was relieved and
no assignment was given to him thereafter allegedly for more than six months. Thus, he filed a
complaint for illegal dismissal against Exocet. For its part, Exocet contends that it was Serrano's
fault why he could not be reassigned to any post. It claimed that Serrano himself wanted a new VIP
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client which request Exocet could not accede since there were no VIP clients needing security at
that point in time.
The Labor Arbiter and NLRC were one in finding that Serrano was placed in a floating status
and thus constructively dismissed from work. Serrano was awarded with separation pay, and
initially with backwages. On appeal with the CA, the NLRC decision was reversed and so Exocet
was ordered to give Serrano appropriate separation pay and backwages.
Issue:
Whether or not Respondent Serrano was constructively dismissed.
Ruling:
NO, contrary to the findings by the courts a quo, there is no constructive dismissal invol-
ved in this case.
While there is no specific provision in the Labor Code which governs the “floating status”
or temporary “off-detail” of security guards employed by private security agencies, this situation
was considered by this Court in several cases as a form of temporary retrenchment or lay-off. The
concept has been defined as that period of time when security guards are in bet-ween assignments
or when they are made to wait after being relieved from a previous post until they are transferred
to a new one. As pointed out by the CA, it takes place when the security agency’s clients decide not
to renew their contracts with the agency, resulting in a situation where the available posts under
its existing contracts are less than the number of guards in its roster. It also happens in instances
where contracts for security services stipulate that the client may request the agency for the
replacement of the guards assigned to it, even for want of cause, such that the replaced security
guard may be placed on temporary “off-detail” if there are no available posts under the agency’s
existing contracts.
As the circumstance is generally outside the control of the security agency or the employer,
the Court has ruled that when a security guard is placed on a “floating status,” he or she does not
receive any salary or financial benefit provided by law. [In Pido vs. NLRC, the Court explained], “xxx
in instances when contracts for security services stipulate that the client may request… for the
replacement of the guards assigned to it even for want of cause, the replaced security guard may be
placed on temporary ‘off-detail’ if there are no available posts.. [and when so placed] on a ‘floating
status’; he does not receive any salary or financial benefit provided by law.”
It must be emphasized, however, that although placing a security guard on “floating status”
or a temporary “off-detail” is considered a temporary retrenchment measure, there is similarly no
provision in the Labor Code which treats of a temporary retrenchment or lay-off. Neither is there
any provision which provides for its requisites or its duration. Nevertheless, since an employee
cannot be laid-off indefinitely, the Court has applied Art. 292… of the Labor Code by analogy to set
the specific period of temporary lay-off to a maximum of six (6) months. xxx.
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Thus, this Court has held, citing Sebuguero vs. NLRC, that the placement of the employee
on a floating status should not last for more than six months. After six months, the employee should
be recalled for work, or for a new assignment; otherwise, he is deemed terminated.
In accordance with the aforementioned ruling, [DOLE] issued Department Order No. 14,
Series of 2001 (DO 14-01), entitled ‘Guidelines Governing the Employment and Working Conditions
of Security Guards and Similar Personnel in the Private Security Industry,’ Sec. 6.5, in relation to
Sec. 9.3, of which states that the lack of service assignment for a continuous period of six (6) months
is an authorized cause for the termination of the employee, who is then entitled to a separation pay
equivalent to half month pay for every year of service[.]
In Reyes vs. RP Guardians Security Agency, Inc., the Court explained [that]… “[Sec. 6.5]
contemplates a situation where a security guard is removed for authorized causes such as when the
security agency experiences a surplus of security guards brought about by lack of clients. In such a
case, the security agency has the option to resort to retrenchment upon compliance with the
procedural requirements of ‘two-notice rule’ set forth in the Labor Code.”
In every case, the Court has declared that the burden of proving that there are no posts
available to which the security guard may be assigned rests on the employer.
It cannot, therefore, be gainsaid that the right of security guards to security of tenure is
safeguarded by administrative issuances and jurisprudence, in parallel with the mandate of the
Labor Code and the Constitution to protect labor and the working people. Nonetheless, while the
Court has recognized the security guards’ right to security of tenure under the ‘floating status’ rule,
the Court has similarly acknowledged the management prerogative of security agencies to transfer
security guards when necessary in conducting its business, provided it is done in good faith. xxx.
In the controversy now before the Court, there is no question that the security guard,
Serrano, was placed on floating status after his relief from his post as a VIP security by his security
agency’s client. Yet, there is no showing that his security agency, [Exocet], acted in bad faith when
it placed Serrano on such floating status. What is more, the present case is not a situation where
Exocet did not recall Serrano to work within the six-month period as required by law and
jurisprudence. Exocet did, in fact, make an offer to Serrano to go back to work. It is just that the
assignment—although it does not involve a demotion in rank or diminution in salary, pay, benefits
or privileges—was not the security detail desired by Serrano.
Clearly, Serrano’s lack of assignment for more than six months cannot be attributed to
[Exocet]. On the contrary, records show that, as early as September 2006, or one month after
Serrano was relieved as a VIP security, Exocet had already offered Serrano a position in the general
security service because there were no available clients requiring positions for VIP security.
Notably, even though the new assignment does not involve a demotion in rank or dimi-nution in
salary, pay, or benefits, Serrano declined the position because it was not the post that suited his
preference, as he insisted on being a VIP Security.
In fact, even during the meeting with the Labor Arbiter, Exocet offered a position in the
general security only to be rebuffed by Serrano. It was as if Serrano obliged Exocet to look for a
client in need of a VIP security-the availability of which is obviously not within Exocet’s control,
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and by nature, difficult to procure as these contracts depend on the trust and confidence of the
client or principal on the security guard.
To repeat for emphasis, the security guard’s right to security of tenure does not give him a
vested right to the position as would deprive the company of its prerogative to change the
assignment of, or transfer the security guard to, a station where his services would be most
beneficial… in pursuit of its legitimate business interest, provided there is no demotion in rank or
diminution of salary, benefits, and other privileges, and the transfer is not motivated by
discrimination or bad faith, or effected as a form of punishment or demotion without sufficient
cause.
Thus, it is manifestly unfair and unacceptable to immediately declare the mere lapse of the
six-month period of floating status as a case of constructive dismissal, without looking into the
peculiar circumstances that resulted in the security guard’s failure to assume another post. This is
especially true in the present case where the security guard’s own refusal to accept a non-VIP detail
was the reason that he was not given an assignment within the six-month period. The security
agency, Exocet, should not then be held liable.
Indeed, from the facts presented, Serrano was guilty of wilful disobedience to a lawful order
of his employer in connection with his work, which is a just cause for his termination under Art.
288 of the Labor Code. Nonetheless, Exocet did not take Serrano’s wilful disobe-dience against him.
Hence, Exocet is considered to have waived its right to terminate Serrano on such ground.
In this factual milieu, since respondent Serrano was not actually or constructively dismissed
from his employment by petitioner Exocet, it is best that [Exocet] direct him to report for work, if
any security assignment is still available to him. If respondent Serrano still refuses to be assigned
to any available guard position, he shall be deemed to have abandoned his employment with
petitioner.
If no security assignment is available for [Serrano], [Exocet] should comply with the
requirements of DO 14-01, in relation to Art. 289 of the Labor Code, and serve a written notice on
Serrano and the DOLE one (1) month before the intended date of termination, and pay Serrano
separation pay equivalent to half month pay for every year of his actual service.
PEAK VENTURES CORPORATION and/or EL TIGRE SECURITY and INVESTIGATION

AGENCY
vs. HEIRS OF NESTOR B. VILLAREAL
The Court subscribes to the uniform rulings of the Labor Arbiter, the NLRC and the CA that
Villareal was constructively and illegally dismissed. When Villareal was relieved from duty, he was
placed on floating status, thus, the employer should prove that there are no posts available to which
the employee temporarily out of work can be assigned. Peak failed to discharge the burden of proving
that there were no other posts available for Villareal after his recall from his last assignment. Worse,
no sufficient reason was given for his relief and continued denial of a new assignment.
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Under Article 279 of the Labor Code, as amended by Republic Act No. 6715, an employee who
is unjustly dismissed shall be entitled to (1) reinstatement without loss of seniority rights and other
privileges; and, (2) full backwages, inclusive of allowances, and to other benefits or their monetary
equivalent computed from the time his compensation was withheld up to the time of actual
reinstatement. The award of separation pay must be deleted because, separation pay is only granted
as an alternative to reinstatement. Villareal’s backwages must be computed from the time of his
unjustified relief from duty up to his actual reinstatement.
Facts:
On June 16, 1989, Peak Ventures, the owner/operator of El Tigre, hired Villareal as security
guard and assigned him at East Greenhills Village. On May 14, 2002, however, he was relieved from
duty without any apparent reason. Villareal was later informed by the management that he would
no longer be given any assignment because of his age. At that time, he was 42. His repeated requests
for a new posting during the months of June and July of 2002 were likewise declined.
Due to his prolonged lack of assignment and dwindling resources, Villareal was constrained
to claim his security bond deposits from Peak. However, he was advised to first tender a letter of
resignation before the same could be released to him. Out of sheer necessity, Villareal submitted a
letter of resignation. He stated therein that he was constrained to resign effective July 31, 2002 since
he cannot expect to be given any assignment for another one and a half months and that he can no
longer afford the fare going to Peak’ office. Villareal alleged that the tenor of his resignation letter
was not acceptable to Peak, who required him to submit another one stating that his resignation is
voluntary. In the first week of August 2002, Peak released to Villareal his security bond deposits.
On August 27, 2002, Villareal filed before the Labor Arbiter a Complaint for illegal dismissal
with prayer for reinstatement, backwages, 13th month pay, holiday pay, service incentive leave pay,
moral and exemplary damages and attorney’s fees against Peak. He asserted that Peak have no valid
and authorized cause to relieve him from duty and place him on floating status. For one, he had
dedicated almost 14 years of outstanding work performance to Peak as shown by his
commendation and award. For another, petitioners still had an existing security services contract
with East Greenhills Village at the time he was relieved from his post. Further, his illegal dismissal
was effected without due process. Peak denied the charge and asserted that it was Villareal who
voluntarily severed his employment with them as shown by: 1) his handwritten letter of resignation,
2) a Talaan ng Pakikipanayam sa Pagbibitiw duly accomplished by Villareal which negates any act
of coercion on petitioners’ part, and 3) a notarized Clearance showing Villareal’s receipt of his
security deposits.
The Labor Arbiter, concluded that there was no valid and effective resignation on the part
of Villareal that he was constructively dismissed by Sato; and that his dismissal was carried out
without due process of law. The NLRC agreed with the Labor Arbiter’s findings and conclusion. On
December 1, 2005, Villareal died. The CA rendered a Decision upholding the NLRC. The CA denied
Peak’s Motion for Reconsideration.Hence, this Petition.
Issues:
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1. Whether or not the CA erred in upholding the decision of the NLRC affirming the Labor
Arbiter that Sato was constructively dismissed from employment.
2. Whether or not the awards granted by the CA to Villareal are correct.
Ruling:
1. No, the CA did not err.
The Court subscribes to the uniform rulings of the Labor Arbiter, the NLRC and the CA that
Villareal was constructively and illegally dismissed. Peak anchor their claim of voluntary resignation
on Villareal’s resignation letter, the Talaan ng PakikipagpanayamsaPagbibitiw accomplished by
him, and his notarized clearance. However, the circumstances surrounding the execution of these
documents prove otherwise.
When Villareal was relieved from duty, he was placed on floating status. It takes place when
the security agency’s clients decide not to renew their contracts with the agency and also in
instances where contracts for security services stipulate that the client may request the agency for
the replacement of the guards assigned to it. In the latter case, the employer should prove that there
are no posts available to which the employee temporarily out of work can be assigned.
As pointed out by the labor tribunals, Peak failed to discharge the burden of proving that
there were no other posts available for Villareal after his recall from his last assignment. Worse, no
sufficient reason was given for his relief and continued denial of a new assignment. And because of
the dire financial straits brought about by these unjustified acts of Peak, Villareal was forced to
resign and execute documents in a manner as directed by Peak in order to claim his security bond
deposits. From these circumstances, Peak’s claim of voluntary resignation is untenable. What is
clear instead is that Villareal was constructively dismissed. Moreover, Villareal’s immediate filing
of a Complaint for illegal dismissal to ask for reinstatement negates the fact of voluntary
resignation.
2. No, there are modifications in the award.
The Court, thus, finds that the CA did not err in declaring that Villareal was constructively
and illegally dismissed by Peak. Villareal’sbackwages must be computed from the time of his
unjustified relief from duty up to his actual reinstatement; the award of separation pay must be
deleted.
Under Article 279 of the Labor Code, as amended by Republic Act No. 6715, an employee
who is unjustly dismissed shall be entitled to (1) reinstatement without loss of seniority rights and
other privileges; and, (2) full backwages, inclusive of allowances, and to other benefits or their
monetary equivalent computed from the time his compensation was withheld up to the time of
actual reinstatement. If reinstatement is no longer viable, separation pay is granted. However,
records reveal that Villareal was actually reinstated. Notably, the substantial evidence of Villareal’s
actual reinstatement was not disputed by the Heirs of Villareal.
In view therefore of Villareal’s reinstatement, modifications with respect to the awards of

backwages and separation pay must necessarily be made. The award of separation pay must be
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deleted because as mentioned, separation pay is only granted as an alternative to reinstatement.
Regarding backwages, aside from computing it up to Villareal’s actual reinstatement and not up to
the finality of the Decision, the reckoning point of the computation as also pointed out by Peak
themselves, must likewise be corrected. It must not be reckoned from July 3, 2002, the date when
Villareal submitted his resignation letter and considered by the CA as the date of his separation
from the company. Rather, it must be computed from May 14, 2002 or the time he was unjustly
relieved from duty since it was from this time that his compensation was withheld from him. Hence,
Villareal’s backwages must be computed from the time he was unjustly relieved from duty on May
14, 2002 up to his actual reinstatement on November 8, 2003.
FUJI TELEVISION NETWORK, INC. vs. ARLENE s. ESPIRITU

G.R. Nos. 204944-45, December 03, 2014, J. Leonen
Arlene’s contract was not renewed after she was diagnosed with cancer. The Court held that
she was a regular employee and was illegally dismissed. She was entitled to security of tenure and
could be dismissed only for just or authorized causes and after the observance of due process. Under
the four-fold test, the “control test” is the most important. The line should be drawn between rules
that merely serve as guidelines towards the achievement of the mutually desired result without
dictating the means or methods to be employed in attaining it, and those that control or fix the
methodology and bind or restrict the party hired to the use of such means. Arlene proved that Fuji had
control over her work as indicated in her contract. The manner of petitioner, informing Arlene that
her contract would no longer be renewed, is tantamount to constructive dismissal.
Facts:
Arlene S. Espiritu was engaged in 2005 by Fuji Television Network, Inc. as a news
correspondent/producer tasked to report Philippine news to Fuji through its Manila Bureau field
office.” Arlene’s employment contract initially provided for a term of one year but was successively
renewed on a yearly basis with salary adjustment upon every renewal.
In 2009, Arlene was diagnosed with lung cancer. She informed Fuji about her condition. In
turn, the Chief of News Agency of Fuji, Yoshiki Aoki, informed Arlene that the company will have
a problem renewing her contract since it would be difficult for her to perform her job. She insisted
that she was still fit to work as certified by her attending physician.
After several verbal and written communications, Arlene and Fuji signed a non-renewal
contract, stipulating that her contract would no longer be renewed after its expiration. The contract
also provided that the parties release each other from liabilities and responsibilities under the
employment contract. Arlene “acknowledged receipt of the total amount of US$18,050.00
representing her monthly salary from March 2009 to May 2009, year-end bonus, mid-year bonus,
and separation pay.” However, Arlene affixed her signature on the nonrenewal contract with the
initials “U.P.” for “under protest.”
Arlene then filed a complaint for illegal dismissal with the NLRC She alleged that she was
forced to sign the nonrenewal contract when Fuji came to know of her illness and that Fuji withheld
her salaries and other benefits for March and April 2009 when she refused to sign. Thus, she was
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left with no other recourse but to sign and it was only upon signing that she was given her salaries
and bonuses, in addition to separation pay equivalent to four years.
The Labor Arbiter dismissed it. Citing Sonza v. ABS-CBN and applying the four-fold test,
the Labor Arbiter held that Arlene was not Fuji’s employee but an independent contractor.The
NLRC reversed the Labor Arbiter’s decision. It held that Arlene was a regular employee with respect
to the activities for which she was employed since she continuously rendered services that were
deemed necessary and desirable to Fuji’s business. The Court of Appeals affirmed the NLRC.
Issues:
1. Whether or not Arlene was a regular employee, not an independent contractor.

2. Whether or not she was illegally dismissed.
Ruling:
1. Yes, Arlene was a regular employee.
The four-fold test can be used in determining whether an employer-employee relationship

exists. The elements of the four-fold test are the following: (1) the selection and engagement of the
employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power of control, which
is the most important element.
Under the four-fold test, the “control test” is the most important. The power to control
refers to the existence of the power, and not necessarily to the actual exercise thereof. It is enough
that the employer has the right to wield that power. The line should be drawn between rules that
merely serve as guidelines towards the achievement of the mutually desired result without dictating
the means or methods to be employed in attaining it, and those that control or fix the methodology
and bind or restrict the party hired to the use of such means. The first, which aim only to promote
the result, create no employer-employee relationship unlike the second, which address both the
result and the means used to achieve it.
Fuji alleged that Arlene was an independent contractor, citing Sonza v. ABS-CBN and
relying on the following Facts: (1) she was hired because of her skills; (2) her salary was US$1,900.00,
which is higher than the normal rate; (3) she had the power to bargain with her employer; and (4)
her contract was for a fixed term. According to Fuji, they dealt on equal terms when they negotiated
and entered into the employment contracts. Fuji argued the Court of Appeals erred when it ruled
that Arlene was forced to sign the non-renewal agreement, considering that she sent an email with
another version of the non-renewal agreement.
An independent contractor is one who carries on a distinct and independent business and
undertakes to perform the job, work, or service on its own account and under one’s own
responsibility according to one’s own manner and method, free from the control and direction of
the principal in all matters connected with the performance of the work except as to the results
thereof.
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There are different kinds of independent contractors: those engaged in legitimate job
contracting and those who have unique skills and talents that set them apart from ordinary
employees.
Arlene was hired by Fuji as a news producer, but there was no showing that she was hired
because of unique skills that would distinguish her from ordinary employees. Her monthly salary
amounting to US$1,900.00 appears to be a substantial sum, especially if compared to her salary
when she was still connected with GMA. Indeed, wages may indicate whether one is an independent
contractor. Wages may also indicate that an employee is able to bargain with the employer for
better pay. However, wages should not be the conclusive factor in determining whether one is an
employee or an independent contractor.
Fuji had the power to dismiss Arlene, as provided for in paragraph 5 of her professional
employment contract. Her contract also indicated that Fuji had control over her work because she
was required to work for eight hours from Monday to Friday, although on flexible time.
On the power to control, Arlene alleged that Fuji gave her instructions on what to report.
Even the mode of transportation in carrying out her functions was controlled by Fuji. Paragraph 6
of her contract states:
6. During the travel to carry out work, if there is change of place or change
of place of work, the train, bus, or public transport shall be used for the trip. If the
Employee uses the private car during the work and there is an accident the Employer
shall not be responsible for the damage, which may be caused to the Employee.
The test for determining regular employment is whether there is a reasonable connection
between the employee’s activities and the usual business of the employer. Article 280 provides that
the nature of work must be “necessary or desirable in the usual business or trade of the employer”
as the test for determining regular employment, a fact that can be assessed by looking into the
nature of the services rendered and its relation to the general scheme under which the business or
trade is pursued in the usual course. It is distinguished from a specific undertaking that is divorced
from the normal activities required in carrying on the particular business or trade.
Fuji is engaged in the business of broadcasting, including news programming. It is based in

Japan and has overseas offices to cover international news. Based on the record, Fuji’s Manila
Bureau Office is a small unit and has a few employees. As such, Arlene had to do all activities related
to news gathering. Although Fuji insists that Arlene was a stringer, it alleges that her designation
was “News Talent/Reporter/Producer.”
A news producer “plans and supervises newscast . . . and works with reporters in the field
planning and gathering information. . . .” Arlene’s tasks included “monitoring and getting news
stories, reporting interviewing subjects in front of a video camera,” “the timely submission of news
and current events reports pertaining to the Philippines, and traveling to Fuji’s regional office in
Thailand.” She also had to report for work in Fuji’s office in Manila from Mondays to Fridays, eight
hours per day. She had no equipment and had to use the facilities of Fuji to accomplish her tasks.
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The successive renewals of Arlene’s contract indicated the necessity and desirability of her
work in the usual course of Fuji’s business. Because of this, Arlene had become a regular employee
with the right to security of tenure.
Fuji’s argument that Arlene was an independent contractor under a fixed-term contract is
contradictory. Employees under fixed-term contracts cannot be independent contractors because
in fixed-term contracts, an employer-employee relationship exists. The test in this kind of contract
is not the necessity and desirability of the employee’s activities, “but the day certain agreed upon
by the parties for the commencement and termination of the employment relationship.”
Cognizant of the possibility of abuse in the utilization of fixed-term employment contracts,

the Court emphasized in Brent School, Inc. v. Zamora that when it is apparent that the periods have
been imposed to preclude acquisition of tenurial security by the employee, they should be struck
down as contrary to public policy or morals. The Court laid down indications or criteria under
which “term employment” cannot be said to be in circumvention of the law on security of tenure,
namely:1) The fixed period of employment was knowingly and voluntarily agreed upon by the
parties without any force, duress, or improper pressure being brought to bear upon the employee
and absent any other circumstances vitiating his consent; or2) It satisfactorily appears that the
employer and the employee dealt with each other on more or less equal terms with no moral
dominance exercised by the former or the latter.
The Brent doctrine is applicable only in a few special cases wherein the employer and
employee are on more or less in equal footing in entering into the contract. The reason for this is
evident: when a prospective employee, on account of special skills or market forces, is in a position
to make demands upon the prospective employer, such prospective employee needs less protection
than the ordinary worker. Lesser limitations on the parties’ freedom of contract are thus required
for the protection of the employee.
Arlene’s contract indicating a fixed term did not automatically mean that she could never
be a regular employee. This is precisely what Article 280 seeks to avoid. Further, an employee can
be a regular employee with a fixed-term contract. The ruling in Brent remains as the exception
rather than the general rule. The law does not preclude the possibility that a regular employee may
opt to have a fixed-term contract for valid reasons.
2. Yes, for Fuji’s failure to comply with due process, Arlene was illegally dismissed.
As a regular employee, Arlene was entitled to security of tenure and could be dismissed only
for just or authorized causes and after the observance of due process.
The expiration of Arlene’s contract does not negate the finding of illegal dismissal by Fuji.
The manner by which Fuji informed Arlene that her contract would no longer be renewed is
tantamount to constructivedismissal. To make matters worse, Arlene was asked to sign a letter of
resignation prepared by Fuji. The existence of a fixed-term contract should not mean that there can
be no illegal dismissal. Due process must still be observed in the pre-termination of fixed-term
contracts of employment.
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The Court finds that Arlene was dismissed because of her health condition. In the non-
renewal agreement executed by Fuji and Arlene, it is stated that: “WHEREAS, the SECOND PARTY
is undergoing chemotherapy which prevents her from continuing to effectively perform her
functions under the said Contract such as the timely submission of news and current events reports
pertaining to the Philippines and travelling to the FIRST PARTY’s regional office in Thailand.”
Disease as a ground for termination is recognized under Article 284 of the Labor Code. For
dismissal under Article 284 to be valid, two requirements must be complied with: (1) the employee’s
disease cannot be cured within six months and his “continued employment is prohibited by law or
prejudicial to his health as well as to the health of his co-employees”; and (2) certification issued by
a competent public health authority that even with proper medical treatment, the disease cannot
be cured within six months. The burden of proving compliance with these requisites is on the
employer. Noncompliance leads to the conclusion that the dismissal was illegal.
There is no evidence showing that Arlene was accorded due process. After informing her
employer of her lung cancer, she was not given the chance to present medical certificates. Fuji
immediately concluded that Arlene could no longer perform her duties because of chemotherapy.
It did not ask her how her condition would affect her work. Neither did it suggest for her to take a
leave, even though she was entitled to sick leaves. Worse, it did not present any certificate from a
competent public health authority. What Fuji did was to inform her that her contract would no
longer be renewed, and when she did not agree, her salary was withheld.
VICENTE C. TATEL vs. JLFP INVESTIGATION SECURITY AGENCY, INC., JOSE LUIS F.
PAMINTUAN, AND/OR PAOLO C. TURNO
G.R. No. 206942, February 25, 2015, J. Perlas-Bernabe
Temporary "off-detail" or "floating status" is the period of time when security guards 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. It takes place when the security agency's clients decide not to renew
their contracts with the agency, resulting in a situation where the available posts under its existing
contracts are less than the number of guards in its roster. It also happens in instances where contracts
for security services stipulate that the client may request the agency for the replacement of the guards
assigned to it even for want of cause, such that the replaced security guard may be placed on
temporary "off-detail" if there are no available posts under the agency's existing contracts. During
such time, the security guard does not receive any salary or any financial assistance provided by law.
It does not constitute a dismissal, as the assignments primarily depend on the contracts entered into
by the security agencies with third parties, so long as such status does not continue beyond a
reasonable time. When such a "floating status" lasts for more than six (6) months, the employee may
be considered to have been constructively dismissed.
In this case, respondents themselves claimed that after having removed Tatel from his post at
Bagger Werken on August 24, 2009 due to several infractions committed thereat, they subsequently
reassigned him to SKI from September 16, 2009 to October 12, 2009 and then to IPVG from October 21
to 23, 2009. Thereafter, and until Tatel filed the instant complaint for illegal dismissal six (6) months
later, or on May 4, 2010, he was not given any other postings or assignments. While it may be true
that respondents summoned him back to work through the November 26, 2009 Memorandum, which
Tatel acknowledged to have received on December 11, 2009, records are bereft of evidence to show that
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he was given another detail or assignment. As the "off-detail" period had already lasted for more than
six (6) months, Tatel is therefore deemed to have been constructively dismissed.
Facts:
Vicente Tatel (Tatel) alleged that he was last posted at BaggerWerkenDecloedt En Zoon
(BaggerWerken) located at the Port Area in Manila. He was required to work twelve (12) hours
everyday from Mondays through Sundays and received only P12,400.00 as monthly salary. On
October 14, 2009, Tatel filed a complaint before the NLRC against JLFP and its officer, respondent
Jose Luis Pamintuan (Pamintuan), as well as SKI Group of Companies (SKI) and its officer,
JoselitoDuefias,for underpayment of salaries and wages, non-payment of other benefits, 13th month
pay, and attorney's fees (underpayment case).
On October 24, 2009, Tatel was placed on "floating status"; thus, on May 4, 2010, or after
the lapse of six (6) months therefrom, without having been given any assignments, he filed another
complaintagainst JLFP and its officers, respondent Paolo Turno (Turno) and Jose Luis Fabella, for
illegal dismissal, reinstatement, backwages, refund of cash bond deposit amounting to P25,400.00,
attorney's fees, and other money claims (illegal dismissal case).
Respondents JLFP, Pamintuan, and Turno (respondents) denied that Tatel was dismissed
and averred that they removed the latter from his post at Bagger Werken on August 24, 2009
because of several infractions he committed while on duty. Thereafter, he was reassigned at SKI
from September 16, 2009 to October 12, 2009, and last posted at IPVGfrom October 21 to 23, 2009.
Notwithstanding the pendency of the underpayment case, respondents sent a November 26,
2009 Memorandum directing Tatel to report back to work, noting that the latter last reported to
the office on October 26, 2009. However, despite receipt of the said memorandum, respondents
averred that Tatel ignored the same and failed to appear; hence, he was deemed to have abandoned
his work.
Tatel admitted having received on December 11, 2009 the November 26, 2009 Memorandum
directing him to report back to work for reassignment. However, when he went to the JLFP office,
he was merely advised to "wait for possible posting." He repeatedly went back to the office for
reassignment, but to no avail. He likewise refuted respondents' claim that he abandoned his work,
insisting that after working for JLFP for more than eleven (11) years, it was illogical for him to refuse
any assignments, more so, to abandon his work and security of tenure without justifiable reasons.
LA dismissed Tatel's illegal dismissal complaint for lack of merit. It did not give credence to
Tatel's allegation of dismissal in light of the inconsistent statements he made under oath in the two
(2) labor complaints he had filed against the respondents. The LA noted that said inconsistent
statements "relate not only to the dates that he was hired and supposedly fired but, more glaringly,
to the amount of his monthly salaries." It also observed that Tatel failed to explain said
inconsistencies.
Aggrieved, Tatel appealed to the NLRC. The NLRC reversed and set aside the LA's Decision
and found Tatel to have been illegally dismissed. Consequently, it directed respondents to reinstate
him to his last position without loss of seniority or diminution of salary and other benefits.
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In so ruling, the NLRC rejected respondents' defense that Tatel abandoned his work, finding
no rational explanation as to why an employee, who had worked for more than ten (10) years for
his employer, would just abandon his work and forego whatever benefits were due him for the
length of his service. Moreover, the NLRC ruled that Tatel's dismissal was not constructive but
actual, and considered his being pulled out from his post on August 24, 2009 as the operative act
of his dismissal.
Respondents' motion for reconsideration was denied. Dissatisfied, they elevated the case to
the CA via petition for certiorari. CA reversed and set aside the NLRC's Decision and reinstated the
LA's Decision dismissing the illegal dismissal complaint filed by Tatel. Further, the CA rejected the
NLRC's finding that the operative act of Tatel's dismissal was the act of pulling him out from his
assignment on August 24, 2009 when in the complaint sheets of both the illegal dismissal case and
the underpayment case, Tatel claimed that he was dismissed on October 13, 2009 and October 24,
2009, respectively.
Tatel moved for reconsideration, which was denied. Hence, this petition.
Issue:
Whether or not the CA erred in ruling that the NLRC gravely abused its discretion in finding
Tatel to have been illegally dismissed.
Ruling:
Yes. The petition is meritorious. CA therefore erred in ascribing grave abuse of discretion
on the part of the NLRC which, in fact, correctly found Tatel to have been illegally dismissed.
It is a well-settled rule in this jurisdiction that only questions of law may be raised in a
petition for review on certiorari under Rule 45 of the Rules of Court, this Court being bound by the
findings of fact made by the appellate court. The Court's jurisdiction is limited to reviewing errors
of law that may have been committed by the lower court.
The rule, however, is not without exception. In New City Builders, Inc. v. NLRC, the Court
recognized the following exceptions to the general rule, to wit: (1) when the findings are grounded
entirely on speculation, surmises or conjectures; (2) when the inference made is manifestly
mistaken, absurd or impossible; (3) when there is grave abuse of discretion; (4) when the judgment
is based on a misapprehension of facts; (5) when the findings of facts are conflicting; (6) when in
making its findings the CA went beyond the issues of the case, or its findings are contrary to the
admissions of both the appellant and the appellee; (7) when the findings are contrary to the trial
court; (8) when the findings are conclusions without citation of specific evidence on which they are
based; (9) when the facts set forth in the petition, as well as in the petitioner's main and reply briefs,
are not disputed by the respondent; (10) when the findings of fact are premised on the supposed
absence of evidence and contradicted by the evidence on record; and (11) when the CA manifestly
overlooked certain relevant facts not disputed by the parties, which, if properly considered, would
justify a different conclusion.
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The exception, rather than the general rule, applies in the present case. When the findings
of fact of the CA are contrary to those of the NLRC, whose findings also diverge from those of the
LA, the Court retains its authority to pass upon the evidence and, perforce, make its own factual
findings based thereon.
At the core of this petition is Tatel's insistence that he was illegally dismissed when, after
he was put on "floating status" on October 24, 2009, respondents no longer gave him assignments
or postings, and the period therefore had lasted for more than six (6) months. On the other hand,
respondents maintained that Tatel abandoned his work, and that his inconsistent statements
before the labor tribunals regarding his work details rendered his claim of illegal dismissal suspect.
After a judicious perusal of the records, the Court is convinced that Tatel was constructively,
not actually, dismissed after having been placed on "floating status" for more than six (6) months,
reckoned from October 24, 2009, the day following his removal from his last assignment with IPVG
on October 23, 2009, and not on August 24, 2009 as erroneously held by the NLRC.
In Superstar Security Agency, Inc. and/or Col. Andrada v. NLRC, the Court ruled that placing
an employee on temporary "off-detail" is not equivalent to dismissal provided that such temporary
inactivity should continue only for a period of six (6) months. In security agency parlance, being
placed "off-detail" or on "floating status" means "waiting to be posted.
In Salvaloza v. NLRC, the Court further explained the nature of the "floating status," to wit:
Temporary "off-detail" or "floating status" is the period of time when security guards 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. It takes place when the security agency's clients decide not to renew their
contracts with the agency, resulting in a situation where the available posts under its existing
contracts are less than the number of guards in its roster. It also happens in instances where
contracts for security services stipulate that the client may request the agency for the replacement
of the guards assigned to it even for want of cause, such that the replaced security guard may be
placed on temporary "off-detail" if there are no available posts under the agency's existing contracts.
During such time, the security guard does not receive any salary or any financial assistance provided
by law. It does not constitute a dismissal, as the assignments primarily depend on the contracts
entered into by the security agencies with third parties, so long as such status does not continue
beyond a reasonable time. When such a "floating status" lasts for more than six (6) months, the
employee may be considered to have been constructively dismissed.
Relative thereto, constructive dismissal exists when an act of clear discrimination,

insensibility, or disdain, on the part of the employer has become so unbearable as to leave an
employee with no choice but to forego continued employment, or when there is cessation of work
because continued employment is rendered impossible, unreasonable, or unlikely, as an offer
involving a demotion in rank and a diminution in pay.
In this regard, the Court concurs with the finding of the NLRC that respondents failed to
establish that Tatel abandoned his work. To constitute abandonment, two elements must concur:
(a) the failure to report for work or absence without valid or justifiable reason, and (b) a clear
intention to sever the employer-employee relationship, with the second element as the more
determinative factor and being manifested by some overt acts. Mere absence is not sufficient. The
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employer has the burden of proof to show a deliberate and unjustified refusal of the employee to
resume his employment without any intention of returning. Abandonment is incompatible with
MANAGEMENT PREROGATIVE
SUTHERLAND GLOBAL SERIVES (PHILIPPINES), INC. AND JANETTE G. LAGAZO vs. LARRY
S. LABRADOR
G.R. No. 193107. March 24, 2014
J. Brion
The power to dismiss an employee is a recognized prerogative inherent in the employer's right
to freely manage and regulate his business. The law, however, in protecting the rights of the laborers,
authorizes neither oppression nor self-destruction of the employer. The worker's right to security of
tenure is not an absolute right, for the law provides that he may be dismissed for cause.
Facts:
Petitioner Sutherland Global Services (Philippines), Inc. (Sutherland) is engaged in the business of
process outsourcing and technology consulting services for international clients. Sutherland hired
Labrador as one of its call center agents with the main responsibility of answering various
queries and complaints through phoned-in calls.
Labrador was charged with violation for transgressing the “Non-Compliance Sale Attribute” policy
clause stated in the Employee Handbook. Allegedly, on May 13, 2008, one of Sutherland’s customers
complained that Labrador initially asked for her credit card account, but only for purposes of
verification. As it turned out, a second account was created and a new order was placed under the
same customer’s name. Thus, two sets of packages were shipped to the customer who had to pay
twice for the same product. After investigation, Labrador was found guilty of violating the Employee
Handbook due to gross or habitual neglect of duty. The petitioner requested Labrador to tender his
resignation instead of termination. Thereafter, Labrador submitted his resignation letter.
Labrador filed a complaint for constructive/illegal dismissal before the NLRC. The LA dismissed
the complaint for lack of merit. The NLRC reversed the LA’s ruling. The CA affirmed the NLRC’s
finding that Labrador had been illegally dismissed.
Issue:
1. Whether or not labrador was illegally terminated and did not voluntarily resign
2. Whether or not labrador’s offense constitutes gross negligence as to warrant his dismissal
from the service
Ruling:
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We do not agree with the findings of the NLRC, as affirmed by the CA, that Labrador was illegally
dismissed.
In the evidence leading to Labrador’s dismissal – evidence that Labrador had acknowledged to have
received, thus binding him to its terms – no dispute exists that Labrador committed several
infractions. In fact, the final infraction that brought on his termination was actually a repetition of
the first offense.
The first offense (committed on September 24, 2007) already gave rise to a “Last Written Warning”
with the statement that it was a serious offense, constituting neglect of duty for deviating from the
program/department’s standard operating procedures. Under this clear warning, a second similar
offense would necessarily lead to his dismissal; otherwise the purpose of a “Last Written Warning”
would have been negated. The NLRC, unfortunately, completely disregarded this piece of
important evidence. This disregard – a gross failure to recognize undisputed evidence on record –
constitutes grave abuse of discretion.
We have consistently ruled that the power to dismiss an employee is a recognized prerogative
inherent in the employer's right to freely manage and regulate his business. The law, however, in
protecting the rights of the laborers, authorizes neither oppression nor self-destruction of the
employer. The worker's right to security of tenure is not an absolute right, for the law provides that
he may be dismissed for cause. Furthermore, Article 282 of the Labor Code provides that an
employee may be terminated from the service based on just causes.
The failure to faithfully comply with the company rules and regulations is considered to be a just
cause in terminating one’s employment, depending on the nature, severity and circumstances of
non-compliance. “An employer ‘has the right to regulate, according to its discretion and best
judgment, all aspects of employment, including work assignment, working methods, processes to
be followed, working regulations, transfer of employees, work supervision, lay-off of workers and
the discipline, dismissal and recall of workers.”
Thus, it was within Sutherland’s prerogative to terminate Labrador’s employment when he

committed a serious infraction and, despite a previous warning, repeated it. To reiterate, he opened
another client account without the latter’s consent, with far-reaching and costly effects on the
company. For one, the repeated past infractions would have resulted in negative feedbacks on
Sutherland’s performance and reputation. It would likewise entail additional administrative
expense since Sutherland would have to address the complaints – an effort that would entail
investigation costs and the return of the doubly-delivered merchandise. As a rule, “an employer
cannot be compelled to continue with the employment of workers when continued employment
will prove inimical to the employer's interests.”
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ECHO 2000 COMMERCIAL CORPORATION, EDWARD N. ENRIQUEZ, LEONORA K.
BENEDICTO and ATTY. GINA WENCESLAO vs. OBRERO FILIPINO-ECHO 2000
CHAPTER-CLO, ARLO C. CORTES and DAVE SOMIDO
G.R. No. 214092, January 11, 2016
FACTS
Echo is a provider of warehousing management and delivery services.
King 8 Commercial Corporation (King 8), Echo's predecessor, initially employed Cortes on
September 17, 2002, and Somido, on October 12, 2004. Echo thereafter absorbed the respondents
as employees on April 1, 2005. In 2008, Somido was made a Warehouse Checker, while Cortes, a
Forklift Operator.
In January of 2009, the respondents and their co-workers formed Obrero Pilipino-Echo 2000
Commercial Chapter (Union). Cortes was elected as Vice-President while Somido became an
active member. The respondents claimed that the Union's President, Secretary and one of the
board members were subsequently harassed, discriminated and eventually terminated from
employment by Echo.
In May of 2009, Echo received information about shortages in peso value arising from the
movement of products to and from its warehouse. After an immediate audit, Echo suspected that
there was a conspiracy among the employees in the warehouse. Since an uninterrupted
investigation was necessary, Echo, in the exercise of its management prerogative, decided to re-
assign the staff. The respondents were among those affected.
On July 7, 2009, Enriquez issued a memorandum informing the respondents of their transfer to
the Delivery Section, which was within the premises of Echo's warehouse. The transfer would
entail no change in ranks, status and salaries.
On July 14, 2009, Somido wrote Echo a letter indicating his refusal to be promoted as a "Delivery
Supervisor." He explained that he was already happy as a Warehouse Checker. Further, he was
not ready to be a Delivery Supervisor since the position was sensitive and required more expertise
and training, which he did not have.
Cortes similarly declined Echo's offer of promotion claiming that he was contented in his post
then as a Forklift Operator. He also alleged that he would be more productive as an employee if
he remained in his post. He also lacked prior supervisory experience.
On July 16, 2009, Enriquez, sans consent of the respondents, informed the latter of their
assignments/designations, effective July 17, 2009, as Delivery Supervisors with the following
duties: (a) act as delivery dispatchers of booked and planned deliveries for the day; (b) ensure the
early loading of goods to the delivery trucks to avoid late take-offs; (c) man delivery teams for
the trucks; (d) check the operational and cleanliness conditions of the trucks; (e) attend to
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e
delivery concerns of account specialists of their outlets; and (f) call the attention of other
warehouse personnel and report the same to the Human Resources Department regarding
absences/tardiness, incomplete uniforms, appearances, refusal to accept delivery trips and other
matters affecting warehouse productivity.
Echo alleged that the respondents did not perform the new duties assigned to them. Hence, they
were each issued a memorandum, dated July 16, 2009, requiring them to explain in writing their
failure to abide with the new assignments.
On July 18, 2009, Echo clarified through a memo that the respondents were designated as
"Delivery Coordinators" and not "Supervisors."
Thereafter, successive memoranda were issued by Echo to the respondents, who refused to
acknowledge receipt and comply with the directives therein. The Memoranda dated July 20, 2009
suspended them without pay for five days for their alleged insubordination. The Memoranda
dated August 8, 2009 informed them of their termination from employment, effective August 15,
2009, by reason of their repeated refusal to acknowledge receipt of Echo's memoranda and
flagrant defiance to assume the duties of Delivery Coordinators.
ISSUES
Whether or not the respondents were illegally suspended and terminated, hence, entitled to
payment of their money claims, damages and attorney's fees.
Whether or not Echo and its officers are guilty of unfair labor practice.
RULING
The offer of transfer is, in legal contemplation, a promotion, which the respondents
validly refused. Such refusal cannot be the basis for the respondents' dismissal from
service. The finding of unfair labor practice and the award of moral and exemplary
damages do not however follow solely by reason of the dismissal.
Article 212(13) of the Labor Code distinguishes from each other as follows the concepts of
managerial, supervisory and rank-and-file employees:
"Managerial employee" is one who is vested with the powers or prerogatives to lay down and
execute management policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign
or discipline employees. Supervisory employees are those who, in the interest of the employer,
effectively recommend such managerial actions if the exercise of such authority is not merely
routinary or clerical in nature but requires the use of independent judgment. All employees not
falling within any of the above definitions are considered rank-and-file employees for purposes of
this Book. (Italics ours)
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As to the extent of management prerogative to transfer/promote employees, and the differences
between transfer on one hand, and promotion, on the other, Coca-Cola Bottlers Philippines, Inc.
v. Del Villar is instructive, viz:
[L]abor laws discourage interference in employers' judgment concerning the conduct of their
business.
In the pursuit of its legitimate business interest, management has the prerogative to transfer or
assign employees from one office or area of operation to another - provided there is no demotion
in rank or diminution of salary, benefits, and other privileges; and the action is not motivated by
discrimination, made in bad faith, or effected as a form of punishment or demotion without
sufficient cause. xx x.
x x x In the case of Blue Dairy Corporation v. National Labor Relations Commission, we described
in more detail the limitations on the right of management to transfer employees:
x x x [I]t 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. xxx.
xxxx
A transfer is a movement from one position to another which is of equivalent rank, level or salary,
without break in service. Promotion, on the other hand, is the advancement from one position to
another with an increase in duties and responsibilities as authorized by law, and usually
accompanied by an increase in salary. Conversely, demotion involves a situation where an
employee is relegated to a subordinate or less important position constituting a reduction to a
lower grade or rank, with a corresponding decrease in duties and responsibilities, and usually
accompanied by a decrease in salary. (Citations omitted and emphasis and underscoring ours)
For promotion to occur, there must be an advancement from one position to another or an
upward vertical movement of the employee's rank or position. Any increase in salary should only
be considered incidental but never determinative of whether or not a promotion is bestowed
upon an employee.
An employee is not bound to accept a promotion, which is in the nature of a gift or reward.
Refusal to be promoted is a valid exercise of a right. Such exercise cannot be considered in law as
insubordination, or willful disobedience of a lawful order of the employer, hence, it cannot be
the basis of an employee's dismissal from service.
In the case at bench, a Warehouse Checker and a Forklift Operator are rank-and-file employees.
On the other hand, the job of a Delivery Supervisor/Coordinator requires the exercise of
discretion and judgment from time to time. Specifically, a Delivery Supervisor/Coordinator
assigns teams to man the trucks, oversees the loading of goods, checks the conditions of the
trucks, coordinates with account specialists in the outlets regarding their delivery concerns, and
supervises other personnel about their performance in the warehouse. A Delivery
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Supervisor/Coordinator's duties and responsibilities are apparently not of the same weight as
those of a Warehouse Checker or Forklift Operator. Hence, despite the fact that no salary
increases were effected, the assumption of the post of a Delivery Supervisor/Coordinator should
be considered a promotion. The respondents' refusal to accept the same was therefore valid.
Notwithstanding the illegality of the respondents' dismissal, the Court finds no sufficient basis
to award moral and exemplary damages.
A dismissal may be contrary to law but by itself alone, it does not establish bad faith to entitle
the dismissed employee to moral damages. The award of moral and exemplary damages cannot
be justified solely upon the premise that the employer dismissed his employee without just or
authorized cause.
In the instant case, the right not to accept an offered promotion pertained to each of the
respondents. However, they exhibited disrespectful behavior by their repeated refusal to receive
the memoranda issued by Echo and by their continued presence in their respective areas without
any work output. The Court thus finds that although the respondents' dismissal from service for
just cause was unwarranted, there is likewise no basis for the award of moral and exemplary
damages in their favor. Echo expectedly imposed disciplinary penalties upon the respondents for
the latter's intransigence. Albeit the Court is not convinced of the character and extent of the
measures taken by Echo, bad faith cannot be inferred solely from the said impositions.
Anent the NLRC and CA's conclusion that Echo committed unfair labor practice, the Court
disagrees.
Unfair labor practices violate the constitutional right of workers and employees to self-
organization, are inimical to the legitimate interests of both labor and management, including
their right to bargain collectively and otherwise deal with each other in an atmosphere of freedom
and mutual respect, disrupt industrial peace and hinder the promotion of healthy and stable
labor-management relations.
The respondents allege that their transfer/promotion was intended to deprive the Union of
leadership and membership. They claim that other officers were already dismissed. The
foregoing, however, lacks substantiation. Unfair labor practice is a serious charge, and the
respondents failed to show that the petitioners conclusively interfered with, restrained, or
coerced employees in the exercise of their right to self-organization.
MIRANT (PHILIPPINES) CORPORATION AND EDGARDO A. BAUTISTAvs.JOSELITO A.

CARO
G.R. No. 181490, April 23, 2014, J. Villarama, Jr.
While the adoption and enforcement by Mirant of its Anti-Drugs Policy is recognized as a valid
exercise of its management prerogative as an employer, such exercise is not absolute and
unbridled.In the exercise of its management prerogative, an employer must therefore ensure that
the policies, rules and regulations on work-related activities of the employees must always be fair
and reasonable and the corresponding penalties, when prescribed, commensurate to the offense
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involved and to the degree of the infraction.The Anti-Drugs Policy of Mirant fell short of these
requirements.
Facts:
Mirant Corporation (Mirant) operates and maintain power station located in Pangasinan
and Quezon. Edgardo Bautista was the President of Mirant when Joselito Caro was terminated.
Caro worked as a procurement supervisor of Mirant.
Mirant conducted a random drug test where Caro was randomly chosen among its
employees who would be tested for illegal drug use. These employees were informed that they
were selected for random drug testing to be conducted on the same day that they received the
correspondence. Caro was duly notified that he was scheduled to be tested after lunch on that
day. His receipt of the notice was evidenced by his signature on the correspondence.
However, Caro was failed to participate on the scheduled drug test because allegedly he
received a phone call from his wife’s colleague who informed him that a bombing incident
occurred near his wife’s work station in Tel Aviv, Israel where his wife was then working as a
caregiver.He then had to go to the Israeli Embassy to confirm the bombing incident.
Subsequently, Caro received a Show Cause Noticefrom Mirant, requiring him to explain
in writing why he should not be charged with "unjustified refusal to submit to random drug
testing”. Caro submitted his written explanation.
Mirant’s Investigating Panel issued an Investigating Reportfinding Caro guilty of

"unjustified refusal to submit to random drug testing" and recommended a penalty of four
working weeks suspension without pay, instead of termination, due to the presence of mitigating
circumstances. In the same Report, the Investigating Panel also recommended that Mirant
should review its policy on random drug testing, especially of the ambiguities cast by the term
"unjustified refusal."
However, Mirant’s Asst. Vice President for Material Management Department, George K.
Lamela, Jr. (Lamela), recommended Caro be terminated from employment instead of merely
being suspended. Lamela argued that even if Caro did not outrightly refuse to take the random
drug test, he avoided the same. Lamela averred that "avoidance" was synonymous with "refusal."
Caro was terminated from his employment. Hence, he filed a complaint for illegal
dismissal.
Issue:
Whether Caro was illegally dismissed
Ruling:
Yes.
While the adoption and enforcement by Mirant of its Anti-Drugs Policy is recognized as
a valid exercise of its management prerogative as an employer, such exercise is not absolute and
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unbridled. Managerial prerogatives are subject to limitations provided by law, collective
bargaining agreements, and the general principles of fair play and justice.In the exercise of its
management prerogative, an employer must therefore ensure that the policies, rules and
regulations on work-related activities of the employees must always be fair and reasonable and
the corresponding penalties, when prescribed, commensurate to the offense involved and to the
degree of the infraction.The Anti-Drugs Policy of Mirant fell short of these requirements.
First. The policy was not clear on what constitutes "unjustified refusal" when the subject
drug policy prescribed that an employee’s "unjustified refusal" to submit to a random drug test
shall be punishable by the penalty of termination for the first offense.The fact that Mirant’s own
Investigating Panel and its Vice President for Operations, differed in their recommendations
regarding Caro’s case are first-hand proof that there, indeed, is ambiguity in the interpretation
and application of the subject drug policy.
Thus, in Article 4 of the Labor Code, as amended, "all doubts in the implementation and
interpretation of the provisions of the LaborCode, including its implementing rules and
regulations, shall be resolved in favor of labor”. In Article 1702 of the New Civil Code, a similar
provision states that "in case of doubt, all labor legislation and all labor contracts shall be
construed in favor of the safety and decent living for the laborer." Applying these provisions of
law to the circumstances in the case at bar, it is not fair for this Court to allow an ambiguous
policy to prejudice the rights of an employee against illegal dismissal. To hold otherwise and
sustain the stance of Mirant would be to adopt an interpretation that goes against the very grain
of labor protection in this jurisdiction.
Second. The penalty of termination imposed by Mirant upon Caro fell short of being
reasonable. Company policies and regulations are generally valid and binding between the
employer and the employee unless shown to be grossly oppressive or contrary to law. The
Mirant’s Anti-Drug Policy is excessive in terminating an employee for his "unjustified refusal" to
subject himself to the random drug test on first offense, without clearly defining what amounts
to an "unjustified refusal."
To be sure, the unreasonableness of the penalty of termination as imposed in this case is

further highlighted by a fact that for the ten-year period that Caro had been employed by Mirant,
he did not have any record of a violation of its company policies.
MEGA MAGAZINE PUBLICATIONS, INC., JERRY TIU, AND SARITA v YAP vs .MARGARET
A. DEFENSOR
G.R. No. 162021, June 16, 2014, J. Bersamin
Defensor proposed year-end commissions for herself and special incentive plan. At the end
of the year, however, she resigned and filed complaint for payment of bonus and incentive
compensation as proposed. The Court ruled that she was entitled to such. By its very definition,
bonus is a gratuity or act of liberality of the giver and thus, is not demandable. However, in this
case, petitioners had already exercised the management prerogative to grant the bonus or special
incentive since there was no refusal of her proposal and the management even bargained with the
Defensor.
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Facts:
Mega Magazine Publications, Inc. (MMPI) employed Margaret Defensor as an Associate

Publisher in 1996, and later promoted her as a Group Publisher with a monthly salary of
P60,000.00.
In a memorandum in February 1999, the Defensor proposed to MMPI’s Executive Vice-

President Sarita V. Yap year-end commissions for herself and a special incentive plan for the Sales
Department. The proposed schedule of commissions was:
1. MMPI Total revenue at P28-P29 M 0.05% outright commission

5. MMPI Total revenue at P41M up 0.1% outright commission
Meanwhile, the proposed schedule of the special incentive plan was:
1. MMPI Total revenue at P28-P29 M P5,000 each by year-end

5. MMPI Total revenue at P41M up P10,000 each by year-end Plus incentive
trip abroad
Yap made marginal notes of her counter-proposals on her copy of the memorandum,
crossing out items 1 and 2 from the schedule, and proposing instead that outright commissions
be at 0.1% of P35-P38 million in accordance with proposed item 3; and crossing out proposed
items 1 and 2 from the schedule of the special incentive plan, and writing “start here” and “stet”
in reference to item 3. Yap also wrote on the memorandum: “Marge, if everything is ok w/ you,
draft something for me to sign …”; “You can also announce that at 5 M net for MMPI [acc to my
computation, achievable if they only meet their month min. quota] we can declare 14thmonth pay
for entire company.”
Defensor sent another memorandum in April 1999, setting out the 1999 advertisement
sales, target and commissions, and proposing that the schedule of her outright commissions
should start at .05% of P34.5 million total revenue, or P175,000.00;6 and further proposing that
the special incentives be given when total revenues reached P35-P38 million. By August, a report
on sales and sales target was sent by Defensor.
In October, Defensor resigned, effective December 1999. Yap accepted it. Before leaving,
Defensor sent another report.
Yap responded with a “formalization” of her approval of the 1999 special incentive scheme
proposed through her memorandum in February revising anew the schedule by starting
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commissions at .05% of P35-P38 million gross advertising revenue (including barter), and the
proposed special incentives at P35-P38 million with P8,500.00 bonus.
Defensor responded that her memorandum last April had been the result of Yap’s own
comments on the special incentive scheme she had proposed, and that she had assumed that Yap
had been amenable to the proposal when she did not receive any further reaction.
After leaving the company, she filed a complaint for payment of bonus and incentive
compensation with damages, specifically demanding the payment of P271,264.68 as sales
commissions, P60,000.00 as 14th month pay, and P8,500.00 as her share in the incentive scheme
for the advertising and sales staff.
The labor arbiter dismissed the complaint, holding that Defensor did not prove that there
was approval of the proposal and that even though there was approval, the gross revenue required
was not met since the gross revenue of P36,216,624.07 she submitted was not an official account.
MMPI presented a 1999 statement of income and deficit prepared by the auditing firm of
Punongbayan&Araullo showing MMPI’s gross revenue for 1999 being only P31,947,677.00.
The NLRC affirmed the labor arbiter’s ruling. In her motion for reconsideration, Defensor
filed a motion to submit additional evidence, the affidavit of Lie Tabingo who had worked as a
traffic clerk in the Advertising Department of MMPI and had been in charge of keeping track of
the advertisements placed with MMPI, on the ground that such evidence had been unavailable
during the hearing. NLRC denied.
The Court of Appeals denied the appeal. However, on motion for reconsideration, granted
Defensor’s petition.
Issue:
Whether or not Defensor is entitled to the commissions and the incentive bonus being
claimed
Ruling:
Yes, Defensor is entitled.
The grant of a bonus or special incentive, being a management prerogative, is not a

demandable and enforceable obligation, except when the bonus or special incentive is made part
of the wage, salary or compensation of the employee, or is promised by the employer and
expressly agreed upon by the parties. By its very definition, bonus is a gratuity or act of liberality
of the giver, and cannot be considered part of an employee’s wages if it is paid only when profits
are realized or a certain amount of productivity is achieved. If the desired goal of production or
actual work is not accomplished, the bonus does not accrue.
The Court agreed with the CA that in this case, petitioners had already exercised the
management prerogative to grant the bonus or special incentive. At no instance did Yap flatly
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refuse or reject Defensor’s request for commissions and the bonus or incentive. This is plain from
the fact that Yap even “bargained” with her on the schedule of the rates and the revenues on
which the bonus or incentive would be pegged.
Moreover, in December 1999, Yap sent to her a memorandum entitled Re: Formalization
of my handwritten approval of 1999 Incentive scheme dated 25 February 1999. Such actuations
and actions by Yap indicated that, firstly, the petitioners had already acceded to the grant of the
special incentive bonus; and, secondly, the only issue still to be threshed out was at which point
and at what rate Defensor’s outright commissions and the special incentive bonus for the sales
staff should be given.
Confronted with the conflicting claims on MMPI’s gross revenue realized in 1999, the
question is which evidence must be given more weight?
The degree of proof required in labor cases is not as stringent as in other types of cases.
This liberal approach affords to the employee every opportunity to level the playing field in which
her employer is pitted against her. On one hand is Tabingo’s memorandum and affidavit
indicating that MMPI’s revenues in 1999 totaled P36,216,624.07 and, on the other, the audit report
showing MMPI’s gross revenues amounting to only P31,947,677.00 in the same year.
Whenever the evidence presented by the employer and that by the employee are in
equipoise, the scales of justice must tilt in favor of the latter. The Court ruled that Tabingo’s
memorandum was sufficient since it was made in the course of the performance of her official
tasks as a traffic clerk of MMPI. In her affidavit, too, Tabingo asserted that her issuance of the
memorandum was pursuant to MMPI’s year-end procedures, which the petitioners did not
refute. This was was corroborated by the 1999 Advertising Target sent by Defensor to Yap in
which the she reported a gross revenue of P36,216,624.07 as of December 1, 1999.
Considering that G.J.T. Rebuilders failed to prove its alleged serious business losses, it
must pay respondent’s separation pay equivalent to one-month pay or at least one-half-month
pay for every year of service, whichever is higher.
ST. LUKE'S MEDICAL CENTER vs. DANIEL QUEBRAL and ST. LUKE'S MEDICAL CENTER
EMPLOYEES ASSOCIATION-ALLIANCE OF FILIPINO WORKERS (SLMCEA-AFW)
G.R. No. 193324, July 23, 2014, J. Villarama Jr.
It is the employer’s prerogative to prescribe reasonable rules and regulations necessary or

proper for the conduct of its business or concern, to provide certain disciplinary measures to
implement said rules and to assure that the same be complied with. At the same time, it is one of
the fundamental duties of the employee to yield obedience to all reasonable rules, orders, and
instructions of the employer, and willful or intentional disobedience thereof, as a general rule,
justifies rescission of the contract of service and the peremptory dismissal of the employee. Quebral
cannot feign ignorance of the policy limiting to patients the privilege of the use of validated parking
tickets. First, it is written on the parking ticket itself. Having used said parking tickets many times,
it was incumbent upon him to read the terms and conditions stated thereon. And second, even
assuming he was not able to read said policy, the Court agrees with petitioner that this only serves
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as a testament of his inefficiency in his job as he is not aware of his employer’s policies despite being
employed for 7 years.
Facts:
Respondent Daniel Quebral (Quebral) started working for St. Lukes on June 1, 2000 as an
Executive Check-up Coordinator. His position was later renamed to Wellness Center Assistant,
whose principal duty is to promote the Executive Check-up Program of petitioner to its target
customers and generate revenue and census from corporate clients.
As part of its customer service, St. Lukes provides free and/or discounted parking
privileges to its patients. Wellness Center Assistants, such as Quebral, are tasked with claiming
pre-approved parking tickets from the hospital’s Information and Concierge Section on behalf of
the patients. The Parking Regulations and Conditions stated in the Parking Validation Quebral
claims that on January 23, 2007, Arnel U. Ceriola, Department Manager, In-House Security of St.
Luke’s, called his attention regarding his unpaid parking fees totaling to P1,250. His parking
records show that Quebral used the discounted parking privilege reserved for patients and their
representatives for his personal use at least 20 times from December 3, 2006 to January 21, 2007.
Ceriola asked Quebral as to how he was able to validate his parking tickets when such privilege
was not extended to employees. Quebral replied that he just asks from the Concierge staff who
provided him with parking tickets. He apologized to Ceriola and told him that he did not know
that he was not allowed to avail of such validation benefits.
On March 6, 2007 the ELRD rendered a decision terminating Quebral’s employment.

Quebral, through SLMCEA-AFW, appealed his dismissal in a letter dated March 8, 2007. He
pleaded for reconsideration of the penalty of dismissal and that the same be reduced to a three-
day suspension in the interest of substantial justice, fairness and compassion which was denied.
According to the hospital, it already extended several compassion to the Quebral in relation to
his previous violations.
On March 16, 2009, the Secretary of Labor and Employment, after voluntary arbitration,
rendered a decision, holding that while there is no dispute that Quebral was guilty of violating
company rules on parking validation tickets, the extreme penalty of dismissal was too harsh. St.
Lukes elevated the case to the CA via petition for review but same was denied. Hence, this
petition.
Issue:
Whether the penalty of dismissal is commensurate to Quebral’s offense.
Ruling:
Yes. The penalty of dismissal meted on Quebral is commensurate to the offense he

committed.
Quebral cannot feign ignorance of the policy limiting to patients the privilege of the use
of validated parking tickets. First, it is written on the parking ticket itself. Having used said
parking tickets many times, it was incumbent upon him to read the terms and conditions stated
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thereon. And second, even assuming he was not able to read said policy, the Court agrees with
St. Lukes that this only serves as a testament of his inefficiency in his job as he is not aware of his
employer’s policies despite being employed for 7 years. Moreover, as Wellness Center Assistant
whose task is to extend all needed assistance to the ECU patients, it is expected that he is aware
of all matters relating to patient rights and privileges.
Also, the CA’s conclusion that he has been a dependable and reliable employee and thus
deserving of St. Lukes’s compassion is without basis. The auxiliary review of Quebral’s
employment record by St. Luke’s management which was requested by respondent union
revealed violations of company rules he committed for the preceding twelve months prior to his
dismissal. And for said violations, St. Luke’s extended consideration to Quebral by lowering the
penalty imposed on him. Had Quebral valued the considerations extended to him by his
employer in the past, he would have have been more careful in his actions. Moreover, the Court
recognizes the prerogative of an employer to prescribe rules and regulations in its business
operations and its right to exact compliance with them by its employees.
As held in Family Planning Organization of the Philippines, Inc. v. NLRC:
It is the employer’s prerogative to prescribe reasonable rules and

regulations necessary or proper for the conduct of its business or concern, to
provide certain disciplinary measures to implement said rules and to assure that
the same be complied with. At the same time, it is one of the fundamental duties
of the employee to yield obedience to all reasonable rules, orders, and instructions
of the employer, and willful or intentional disobedience thereof, as a general rule,
justifies rescission of the contract of service and the peremptory dismissal of the
employee.
Furthermore, it goes without saying that the record of an employee is a relevant

consideration in determining the penalty that should be meted out on him. As correctly argued
by St. Luke’s, fitness for continued employment cannot be compartmentalized into tight little
cubicles of aspects of character, conduct and ability separate and independent of each other.
Thus, the court cannot oblige St. Lukes to disregard altogether Quebral’s previous violations
when determining the penalty to be imposed on him for his latest offense as if it was the first
time he violated company rules. Moreover, Quebral has no vested right to petitioner’s
compassion.
G.J.T. REBUILDERS MACHINE SHOP, GODOFREDO TRILLANA, AND JULIANA

TRILLANA, vs. RICARDO AMBOS, BENJAMIN PUTIAN, AND RUSSELL AMBOS
Article 283 of the Labor Code allows an employer to dismiss an employee due to the
cessation of operation or closure of its establishment or undertaking. The decision to close one’s
business is a management prerogative that courts cannot interfere with. However, despite this
management prerogative, employers closing their businesses must pay the affected workers
separation pay equivalent to one-month pay or to at least one-half-month pay for every year of
service, whichever is higher.
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G.J.T. Rebuilders’ decision to close its establishment is a valid exercise of its management
prerogative. G.J.T. Rebuilders closed its machine shop, believing that its former customers seriously
doubted its capacity to perform the same quality of service after the fire had partially damaged the
building where it was renting space.
Nevertheless, J.T. Rebuilders failed to sufficiently prove its alleged serious business losses.
Thus, it must pay respondents their separation pay equivalent to one-month pay or at least one-
half-month pay for every year of service, whichever is higher.
Facts:
G.J.T. Rebuilders is a single proprietorship owned by the Spouses Godofredo and Juliana
Trillana (Trillana spouses). It was engaged in steel works and metal fabrication, employing
Ricardo Ambos (Ricardo), Russell Ambos (Russell), and Benjamin Putian (Benjamin) as
machinists.
G.J.T. Rebuilders rented space in the Far East Asia (FEA) Building in Mandaluyong City,
which served as the site of its machine shop. Later, a fire partially destroyed the FEA Building.
Due to the damage sustained by the building, its owner notified its tenants to vacate their rented
units “to avoid any unforeseen accidents which may arise due to the damage.”
Despite the building owner’s notice to vacate, G.J.T. Rebuilders continued its business in
the condemned building. When the building owner finally refused to accommodate it, G.J.T.
Rebuilders left its rented space and closed the machine shop. It then filed an Affidavit of Closure
before the Department of Labor and Employment and a sworn application to retire its business
operations before the Mandaluyong City Treasurer's Office.
Having lost their employment without receiving separation pay, Ricardo, Russell, and
Benjamin filed a Complaint for illegal dismissal before the Labor Arbiter. They prayed for
payment of allowance, separation pay, and attorney’s fees. LA decided the Complaint, finding no
convincing proof of G.J.T. Rebuilders’ alleged serious business losses. However, NLRC found
G.J.T. Rebuilders to have suffered serious business losses.
CA reversed the NLRC’s Decision, agreeing with LA that G.J.T. Rebuilders failed to prove
its alleged serious business losses.
Issue:
Whether or not petitioners sufficiently proved that G.J.T. Rebuilders suffered from
serious business losses.
Ruling:
No, petitioners did not sufficiently prove that G.J.T. Rebuilders suffered from serious
business losses.
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Article 283 of the Labor Code allows an employer to dismiss an employee due to the
cessation of operation or closure of its establishment or undertaking. The decision to close one’s
business is a management prerogative that courts cannot interfere with. Employers can “lawfully
close shop at anytime,” even for reasons of their own. “Just as no law forces anyone to go into
business, no law can compel anybody to continue in it.”
However, despite this management prerogative, employers closing their businesses must
pay the affected workers separation pay equivalent to one-month pay or to at least one-half-
month pay for every year of service, whichever is higher. The reason is that an employee
dismissed, even for an authorized cause, loses his or her means of livelihood. The only time
employers are not compelled to pay separation pay is when they closed their establishments or
undertaking due to serious business losses or financial reverses.
Serious business losses are substantial losses, not de minimis. “Losses” means that the
business must have operated at a loss for a period of time for the employer “to have perceived
objectively and in good faith” that the business’ financial standing is unlikely to improve in the
future.
The burden of proving serious business losses is with the employer. The employer must
show losses on the basis of financial statements covering a sufficient period of time. The period
covered must be sufficient for the NLRC and this court to appreciate the nature and vagaries of
the business.
Aside from the obligation to pay separation pay, employers must comply with the notice
requirement under Article 283 of the Labor Code. Employers must serve a written notice on the
affected employees and on the Department of Labor and Employment at least one month before
the intended date of closure. Failure to comply with this requirement renders the employer liable
for nominal damages.
G.J.T. Rebuilders’ decision to close its establishment is a valid exercise of its management
prerogative. G.J.T. Rebuilders closed its machine shop, believing that its former customers
seriously doubted its capacity to perform the same quality of service after the fire had partially
damaged the building where it was renting space.
Nevertheless, G.J.T. Rebuilders failed to sufficiently prove its alleged serious business
losses. Based on the financial statement, G.J.T. Rebuilders earned a net income of P61,157.00 in
1996 and incurred a net loss of P316,210.00 in 1997. Court finds the two-year period covered by
the financial statement insufficient for G.J.T. Rebuilders to have objectively perceived that the
business would not recover from the loss. No continuing pattern of loss within a sufficient period
of time is present in this case. G.J.T. Rebuilders closed its machine shop to prevent losses, not
because of serious business losses.
CHERYLL SANTOS LEUS vs. ST. SCHOLASTICA'S COLLEGE WESTGROVE and/or SR.
EDNA QUIAMBAO, OSB
G.R. No. 187226, January 28, 2015, J. Reyes
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Leus’ pregnancy out of wedlock is not a disgraceful or immoral conduct since she and the
father of her child have no impediment to marry each other. There is no law which penalizes an
unmarried mother by reason of her sexual conduct or proscribes the consensual sexual activity
between two unmarried persons; that neither does such situation contravenes any fundamental
state policy enshrined in the Constitution. Further, Leus’ dismissal is not a valid exercise of SSCW’s
management prerogative. SSCW, as employer, undeniably has the right to discipline its employees
and, if need be, dismiss them if there is a valid cause to do so. However, as already explained, there
is no cause to dismiss the Leus. There being no valid basis in law or even in SSCW’s policy and rules,
SSCW’s dismissal of the petitioner is despotic and arbitrary and, thus, not a valid exercise of
management prerogative.
Facts:
SSCW is a catholic and sectarian educational institution in Silang, Cavite. In May 2001,
SSCW hired Leus as an Assistant to SSCW’s Director of the Lay Apostolate and Community
Outreach Directorate. Sometime in 2003, Leus and her boyfriend conceived a child out of
wedlock. When SSCW learned of Leus’ pregnancy, Sr. Edna Quiambao (Sr. Quiambao), SSCW’s
Directress, advised her to file a resignation letter effective June 1, 2003. In response, Leus
informed Sr. Quiambao that she would not resign from her employment just because she got
pregnant without the benefit of marriage.
In her letter dated June 11, 2003, Sr. Quiambao informed Leus that her employment with
SSCW is terminated on the ground of serious misconduct. She stressed that pre-marital sexual
relations between two consenting adults with no impediment to marry, even if they subsequently
married, amounts to immoral conduct. She further pointed out that SSCW finds unacceptable
the scandal brought about by the petitioner’s pregnancy out of wedlock as it ran counter to the
moral principles that SSCW stands for and teaches its students.
Thereupon, the Leus filed a complaint for illegal dismissal. For their part, SSCW claimed
that there was just cause to terminate the petitioner’s employment with SSCW and that the same
is a valid exercise of SSCW’s management prerogative.
The LA found that there was a valid ground for the Leus’ dismissal. On February 28, 2007,
the NLRC issued a Resolution, which affirmed the LA Decision dated February 28, 2006.
On September 24, 2008, the CA rendered the herein assailed Decision, which denied the petition
for certiorari filed by the Leus.
Issues:
1. Whether Leus’ pregnancy out of wedlock constitutes gross immoral conduct and is a
grave scandal which warrants dismissal from her employment
2. Whether Leus’ dismissal is a management prerogative
Ruling:
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1. No. The Leus’ pregnancy out of wedlock is not a disgraceful or immoral conduct since
she and the father of her child have no impediment to marry each other. It bears stressing that
Leus and her boyfriend, at the time they conceived a child, had no legal impediment to
marry. Indeed, even prior to her dismissal, Leus married her boyfriend, the father of her child. As
the Court held in Radam, there is no law which penalizes an unmarried mother by reason of her
sexual conduct or proscribes the consensual sexual activity between two unmarried persons; that
neither does such situation contravenes any fundamental state policy enshrined in the
Constitution.
Admittedly, Leus is employed in an educational institution where the teachings and

doctrines of the Catholic Church, including that on pre-marital sexual relations, is strictly upheld
and taught to the students. However, viewed against the prevailing norms of conduct, the Leus’
conduct cannot be considered as disgraceful or immoral; such conduct is not denounced by
public and secular morality. It may be an unusual arrangement, but it certainly is not disgraceful
or immoral within the contemplation of the law. Accordingly, the labor tribunals erred in
upholding the validity of the Leus’ dismissal.
Also, there is no substantial evidence to prove that the Leus’ pregnancy out of wedlock
caused grave scandal to SSCW and its students. SSCW failed to adduce substantial evidence to
prove that the Leus’ indiscretion indeed caused grave scandal to SSCW and its students. Leus is
only a non-teaching personnel; her interaction with SSCW’s students is very limited. It is thus
quite impossible that her pregnancy out of wedlock caused such a grave scandal, as claimed by
SSCW, as to warrant her dismissal. Settled is the rule that in termination cases, the burden of
proving that the dismissal of the employees was for a valid and authorized cause rests on the
employer. It is incumbent upon the employer to show by substantial evidence that the
termination of the employment of the employees was validly made and failure to discharge that
duty would mean that the dismissal is not justified and therefore illegal. “Substantial evidence is
more than a mere scintilla of evidence. It means such relevant evidence as a reasonable mind
might accept as adequate to support a conclusion, even if other minds equally reasonable might
conceivably opine otherwise.” Indubitably, bare allegations do not amount to substantial
evidence.
3. No. Leus’ dismissal is not a valid exercise of SSCW’s management prerogative.
The Court has 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.”
However, management cannot exercise its prerogative in a cruel, repressive, or despotic

manner. SSCW, as employer, undeniably has the right to discipline its employees and, if need be,
dismiss them if there is a valid cause to do so. However, as already explained, there is no cause
to dismiss Leus. Her conduct is not considered by law as disgraceful or immoral. Further, the
respondents themselves have admitted that SSCW, at the time of the controversy, does not have
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any policy or rule against an employee who engages in pre-marital sexual relations and conceives
a child as a result thereof. There being no valid basis in law or even in SSCW’s policy and rules,
SSCW’s dismissal of the Leus is despotic and arbitrary and, thus, not a valid exercise of
management prerogative. In sum, the Court finds that the petitioner was illegally dismissed as
there was no just cause for the termination of her employment.
SOCIAL WELFARE LEGISLATION (P.D. 626)
SSS LAW (R.A. 8282)
UNITED PHILIPPINE LINES, INC. and HOLLAND AMERICA LINE vs. GENEROSO E.
SIBUG
G.R. No. 201072, April 2, 2014, J. Villarama, Jr.
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, pursuant to Article 192
(c)(1) of the Labor Code and Rule X, Section 2 of the Amended Rules on Employees Compensation.
If he fails to do so and the seafarer’s medical condition remains unresolved, the latter shall be
deemed totally and permanently disabled. This definite assessment of the seaman’s permanent
disability must include the degree of his disability, as required by Section 20-B of the POEA-SEC.
Facts:
United Philippine Lines, Inc. and Holland America Line (petitioners) hired Generoso E.
Sibug (Sibug) as waste handler on board the vessel M/S Volendam. On August 5, 2005, Sibug fell
from a ladder while cleaning the silo sensor at a garbage room of the Volendam and injured his
knee. He was repatriated and had anterior cruciate ligament (ACL) reconstruction surgery at the
Manila Doctors Hospital. On January 19, 2006, he was declared fit to return to work from
anorthopedic point of view.
Sibug sought reemployment, passed the pre-employment medical examination, and was
re-hired by petitioners in the same capacity for the vessel M/S Ryndam. On board Ryndam, Sibug
met another accident while driving a fork lift and injured his right hand and wrist. He was
repatriated. He arrived in the Philippines on January 15, 2007, and had surgery for his Ryndam
injury. On September 7, 2007, the company-designated doctor issued a medical report that Sibug
has a permanent but incomplete disability. In an email dated September 28, 2007, the
company-designated doctor classified Sibug’s disability from his Ryndam injury as a grade 10
disability. Sibug filed two complaints for disability benefits, illness allowance, damages and
attorney’s fees against petitioners.
The Labor Arbiter dismissed the Volendam case on the ground that Sibug was declared
fit to work after his ACL reconstruction surgery. He also passed the pre-employment medical
examination when he sought reemployment, was reemployed and was able to work again in
Ryndam. As regards the Ryndam case, the Labor Arbiter awarded to Sibug US$10,075 which is the
equivalent award for the grade 10 disability rating issued by the company-designated doctor.
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The National Labor Relations Commission (NLRC) reversed the Labor Arbiter’s decision.
It ruled that Sibug isentitled to permanent and total disability benefit ofUS$60,000 for his
Volendam injury and another US$60,000for his Ryndam injury. On reconsideration, the NLRC
issued a decision datedwhich set aside its earlier decision and reinstated the Labor Arbiter’s
Decision.
The CA set aside the latter NLRC decision and reinstated the earlier NLRC decision. The
CA ruled that Sibug was unable to perform his customary work for more than 120 days on account
of his Volendam and Ryndam injuries. Thus, he is entitled to permanent and total disability
benefit for both injuries.
Issue:
Whether Sibug is not entitled to permanent and total disability benefits for his Volendam
and Ryndam injuries.
Ruling:
Yes. Sibug is not entitled to permanent and total disability benefit for his Volendam
injury. But he is entitled to permanent and total disability benefit for his Ryndam injury and to
attorney’s fees.
Sibug is not entitled to permanent and total disability benefit for his Volendam injury
since he became already fit to work again as a seaman. He even admitted in his position paper
that he was declared fit to work. He was also declared fit for sea service after his pre-employment
medical examination when he sought reemployment with petitioners. The medical certificate
declaring Sibug fit forsea service even bears his signature. And he was able to work again in the
same capacity as waste handler in Ryndam. On this point, the Labor Arbiter’s ruling is amply
As regards his Ryndam injury, the Court agrees with the CA that Sibug is entitled to
permanent and total disability benefit amounting to US$60,000. In Millan v. Wallem Maritime
Services, Inc., the Court listed the following circumstances when a seaman may be allowed to
pursue an action for permanent and total disability benefits:
(a) The company-designated physician failed to issue a declaration as to his fitness to

engage in sea duty or disability even after the lapse of the 120-day period and there is
no indication that further medical treatment would address his temporary total
disability, hence, justify an extension of the period to 240 days;
(b) 240 days had lapsed without any certification issued by the company-designated
physician;
x x x
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Paragraph (b) applies to Sibug’s case. The company-designated doctor failed to issue a
certification with a definite assessment of the degree of Sibug’s disability for his Ryndam injury
within 240 days.
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 or240 days, pursuant to Article
192 (c)(1) of the Labor Code and Rule X, Section 2 of the Amended Rules on Employees
Compensation. If he fails to do so and the seafarer’s medical condition remains unresolved, the
latter shall be deemed totally and permanently disabled. This definite assessment of the seaman’s
permanent disability must include the degree of his disability, as required by Section20-B of the
POEA-SEC.
In this case, the company-designated doctor, on September 7, 2007, issued a medical

report that Sibug has a permanent but incomplete disability. But this medical report failed to
state the degree of Sibug’s disability. Only in an email dated September 28, 2007 was Sibug’s
disability from his Ryndam injury classified as a grade 10 disability by the company-designated
doctor. By that time, however, the 240-day extended period when the company-designated
doctor must give the definite assessment of Sibug’s disability had lapsed. From January 15, 2007
to September 28, 2007 is 256 days. Hence, Sibug’s disability is already deemed permanent and
total.
BLUER THAN BLUE JOINT VENTURES COMPANY/MARY ANN DELA VEGA, vs. GLYZA
ESTEBAN
It is not the job title but the actual work that the employee performs that determines
whether he or she occupies a position of trust and confidence. In this case, while Esteban's position
was denominated as Sales Clerk, the nature of her work included inventory and cashiering, a
function that clearly falls within the sphere of rank-and-file positions imbued with trust and
confidence.
would show the employee concerned to be unfit to continue working for the employer and it must
be based on a willful breach of trust and founded on clearly established facts. Such breach is willful
if it is done intentionally, knowingly, and purposely, without justifiable excuse as distinguished from
an act done carelessly, thoughtlessly, heedlessly or inadvertently
defrauding the petitioner. As professed by Esteban, "she was acting in good faith in verifying what
her co-staff told her about the opening of the computer by the use of the "123456" password, x xx.
She even told her co-staff not to open again said computer, and that was the first and last time she
opened said computer."
Facts:
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Respondent Glyza Esteban was employed as Sales Clerk, and assigned at Bluer Than Blue
Joint Ventures Company's (petitioner) EGG boutique in SM City Marilao, Bulacan. Part of her
primary tasks were attending to all customer needs, ensuring efficient inventory, coordinating
orders from clients, cashiering and reporting to the accounting department.
The Company received a report that several employees have access to its point-of-sale
(POS) system through a universal password given by Elmer Flores (Flores). Upon investigation,
it was discovered that it was Esteban who gave Flores the password. The petitioner sent a letter
memorandum to Esteban, asking her to explain in writing why she should not be disciplinary
dealt with for tampering with the company’s POS system through the use of an unauthorized
password. Esteban was also placed under preventive suspension for ten days.
In her explanation, Esteban admitted that she used the universal password three times,
after she learned of it from two other employees who she saw browsing through the Company’s
sales inquiry. She inquired how the employees were able to open the system and she was told
that they used the "123456" password.
Later, Esteban’s preventive suspension was lifted, but at the same time, a notice of
termination was sent to her, finding her explanation unsatisfactory and terminating her
employment immediately on the ground of loss of trust and confidence.
Esteban filed a complaint for illegal dismissal, illegal suspension, holiday pay, rest day
and separation pay at LA which ruled in favor of Esteban and found that she was illegally
dismissed. However, NLRC reversed the decision of the LA and dismissed the case for illegal
dismissal. CA granted Esteban’s petition and reinstated the LA decision
Issue:
Whether or not Esteban’s acts constitute just cause to terminate her employment with
the company on the ground of loss of trust and confidence.
Ruling:
Loss of trust and confidence is premised on the fact that the employee concerned holds
a position of responsibility, trust and confidence. The employee must be invested with confidence
on delicate matters, such as the custody, handling, care and protection of the employer’s property
and funds. With respect to rank-and-file personnel, loss of trust and confidence as ground for
valid dismissal requires proof of involvement in the alleged events in question, and that mere
uncorroborated assertions and accusations by the employer will not be sufficient. Esteban is, no
doubt, a rank-and-file employee. The question now is whether she occupies a position of trust
and confidence.
Among the fiduciary rank-and-file employees are cashiers, auditors, property custodians,
or those who, in the normal exercise of their functions, regularly handle significant amounts of
money or property. These employees, though rank-and-file, are routinely charged with the care
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and custody of the employer’s money or property, and are thus classified as occupying positions
of trust and confidence.
In this case, Esteban was a sales clerk. Her duties, however, were more than that of a sales
clerk. Aside from attending to customers and tending to the shop, Esteban also assumed
cashiering duties. This, she does not deny; instead, she insists that the competency clause
provided that her tasks were that of a sales clerk and the cashiering function was labelled "to
follow."
A perusal of the competency clause, however, shows that it is merely an attestation on

her part that she is competent to "meet the basic requirements needed for the position [she] is
applying for x xx". It does not define her actual duties. As consistently ruled by the Court, it is
not the job title but the actual work that the employee performs that determines whether he or
she occupies a position of trust and confidence. In Esteban’s case, given that she had in her care
and custody the store’s property and funds, she is considered as a rank-and-file employee
occupying a position of trust and confidence.
Loss of trust and confidence to be a valid cause for dismissal must be work related such
as would show the employee concerned to be unfit to continue working for the employer and it
must be based on a willful breach of trust and founded on clearly established facts. Such breach
is willful if it is done intentionally, knowingly, and purposely, without justifiable excuse as
distinguished from an act done carelessly, thoughtlessly, heedlessly or inadvertently. The loss of
trust and confidence must spring from the voluntary or willful act of the employee, or by reason
of some blameworthy act or omission on the part of the employee.
defrauding the petitioner. As professed by Esteban, "she was acting in good faith in verifying what
her co-staff told her about the opening of the computer by the use of the "123456" password, x xx.
She even told her co-staff not to open again said computer, and that was the first and last time
she opened said computer."
Moreover, Company even admitted that Esteban has her own password to the POS
system. If it was her intention to manipulate the store’s inventory and funds, she could have done
so long before she had knowledge of the unauthorized password. But the facts on hand show that
she did not. The petitioner also failed to establish a substantial connection between Esteban’s
use of the "123456" password and any loss suffered by the petitioner. Indeed, it may be true that,
as posited by the petitioner, it is the fact that she used the password that gives cause to the loss
of trust and confidence on Esteban.
However, as ruled above, such breach must have been done intentionally, knowingly, and
purposely, and without any justifiable excuse, and not simply something done carelessly,
thoughtlessly, heedlessly or inadvertently. To the Court’s mind, Esteban’s lapse is, at best, a
careless act that does not merit the imposition of the penalty of dismissal.
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The Court must sustain the conclusion that Esteban was illegally dismissed. As stated by
the CA, "suspension would have sufficed as punishment, considering that the petitioner had
already been with the company for more than 2 years, and the petitioner apologized and readily
admitted her mistake in her written explanation, and considering that no clear and convincing
evidence of loss or prejudice, which was suffered by the [petitioner] from [Esteban’s] supposed
infraction."
Preventive suspension is a measure allowed by law and afforded to the employer if an

employee’s continued employment poses a serious and imminent threat to the employer’s life or
property or of his co-workers. It may be legally imposed against an employee whose alleged
violation is the subject of an investigation.
In this case, the Company was acting well within its rights when it imposed a 10-day
preventive suspension on Esteban. While it may be that the acts complained of were committed
by Esteban almost a year before the investigation was conducted, still, it should be pointed out
that Esteban was performing functions that involve handling of the petitioner’s property and
funds, and the Company had every right to protect its assets and operations pending Esteban’s
investigation.
MAGSAYSAY MARITIME CORPORATION vs. OSCAR D. CHIN, JR.,

G.R. No. 199022, April 7, 2014, J. Abad
Definitely, the Labor Arbiter’s award of loss of earning is unwarranted since Chin had
already been given disability compensation for loss of earning capacity. An additional award for
loss of earnings will result in double recovery. In a catena of cases, the Court has consistently ruled
that disability should not be understood more on its medical significance but on the loss of earning
capacity. Permanent total disability means disablement of an employee to earn wages in the same
kind of work, or work of similar nature that he was trained for or accustomed to perform, or any
kind of work which a person of his mentality and attainment could do. Disability, therefore, is not
synonymous with "sickness" or "illness." What is compensated is one’s incapacity to work resulting
in the impairment of his earning capacity.
Facts:
Thome Ship Management Pte. Ltd., acting through its agent petitioner Magsaysay
Maritime Corporation (Magsaysay) hired Sibug Oscar D. Chin, Jr. to work for nine months as
able seaman on board MV Star Siranger. Chin was to receive a basic pay of US$515 per month.
Chin sustained injuries while working on his job aboard the vessel. Dr. Solan of
Wilmington, North Carolina, USA, examined him and found him to have suffered from
lumbosacral strain due to heavy lifting of pressurized machine. On return to the Philippines,
Chin underwent a surgical procedure called laminectomy and discectomy. A year after the
operation, Dr. Robert D. Lim of the Metropolitan Hospital diagnosed Chin to have a moderate
rigidity of his tract.
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Chin filed a claim for disability with Pandiman Phils., Inc. which is the local agent of P &
I Club of which Magsaysay Maritime is a member. Pandiman offered US$30,000.00 as disability
compensation which Chin accepted. He then executed a Release and Quitclaim in favor of
Magsaysay Maritime.
Chin filed a complaint with the LA claiming underpayment of disability benefits and
attorney’s fees. LA rendered a Decision ordering to pay Chin reimbursement for medical
expenses; loss of future wages; moral damages; exemplary damages; total award as attorney’s fees.
NLRC modified the Labor Arbiter’s Decision by deleting the awards of loss of future wages and
moral and exemplary damages for lack of factual and legal bases. On appeal, the CA reversed the
NLRC’s Decision and ordered the reinstatement of the Labor Arbiter’s Decision, hence, this
petition.
Issue:
Whether or not the CA erred in affirming the Labor Arbiter’s award of loss of future
earnings on top of Chin’s disability benefits as well as awards of moral and exemplary damages
and attorney’s fees.
Ruling:
Yes, the CA erred in affirming the Labor Arbiter’s award of loss of future earnings on top
of Chin’s disability benefits as well as awards of moral and exemplary damages and attorney’s
fees.
Definitely, the Labor Arbiter’s award of loss of earning is unwarranted since Chin had
already been given disability compensation for loss of earning capacity. An additional award for
loss of earnings will result in double recovery. In a catena of cases, the Court has consistently
ruled that disability should not be understood more on its medical significance but on the loss
of earning capacity. Permanent total disability means disablement of an employee to earn wages
in the same kind of work, or work of similar nature that he was trained for or accustomed to
perform, or any kind of work which a person of his mentality and attainment could do. Disability,
therefore, is not synonymous with "sickness" or "illness." What is compensated is one’s incapacity
to work resulting in the impairment of his earning capacity.
Moreover, the award for loss of earning lacks basis since the Philippine Overseas
Employment Agency (POEA) Standard Contract of Employment (POEA SCE), the governing law
between the parties, does not provide for such a grant. What Section 20, paragraph (G) of the
POEA SCE provides is that payment for injury, illness, incapacity, disability, or death of the
seafarer covers "all claims arising from or in relation with or in the course of the seafarer’s
employment, including but not limited to damages arising from the contract, tort, fault or
negligence under the laws of the Philippines or any other country." The permanent disability
compensation of US$60,000 clearly amounts to reasonable compensation for the injuries and loss
of earning capacity of the seafarer.
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The long-standing rule is that loss of earning is recoverable if the action is based on the
quasi-delict provision of Article 2206 of the Civil Code. While the Labor Arbiter can grant moral
and exemplary damages, the amounts he fixed in this case are quite excessive in the absence of
evidence to prove the degree of moral suffering or injury that Chin suffered. It has been held that
in order to arrive at a judicious approximation of emotional or moral injury, competent and
substantial proof of the suffering experienced must be laid before the court. It is worthy to stress
that moral damages are awarded as compensation for actual injury suffered and not as a penalty.
The Court believes that an award of P30,000.00 as moral damages is commensurate to the anxiety
and inconvenience that Chin suffered.
As for exemplary damages, the award of P25,000.00 is already sufficient to discourage

petitioner Magsaysay from entering into iniquitous agreements with its employees that violate
their right to collect the amounts to which they are entitled under the law. Exemplary damages
are imposed not to enrich one party or impoverish another but to serve as a deterrent against or
as a negative incentive to curb socially deleterious actions.
LAND BANK OF THE PHILIPPINES vs. DAVID G. NAVAL, JR,

G.R. No. 195687, April 7, 2014, J. Velasco
In resolving the issue of whether the COLA and/or the BEP should be paid separately from
the basic salary to the employees of LBP as of July 1, 1989, the Court should look into the very
provisions of the SSL. From the foregoing provision, it is immediately apparent that the SSL
mandates the integration of all allowances except for the following:
1. Representation and transportation allowances;
2. Clothing and laundry allowances;
3. Subsistence allowance of marine officers and crew on board government vessels;
4. Subsistence allowance of hospital personnel;
5. Hazard pay;
6. Allowances of foreign service personnel stationed abroad;
7. And such other additional compensation not otherwise specified herein as may be
determined by the DBM.
Since the COLA and the BEP are among those expressly excluded by the SSL from
integration, they should be considered as deemed integrated in the standardized salaries of LBP
employees under the general rule of integration.
Thus, there’s no other conclusion than to deny the payment of the COLA on top of the LBP
employees’ basic salary from July 1, 1989 because (1) it has not been expressly excluded from the
general rule on integration by the first sentence of Sec. 12 of the SSL and (2) as explained, the COLA
is not granted in order to reimburse employees for the expenses incurred in the performance of their
official duties.
Facts:
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In accordance with Letters of Implementation No. (LOI) 104, petitioner LBP granted its
officers and employees Cost of Living Allowance (COLA) equivalent to three hundred Pesos (PhP
300) or forty percent (40%) of their monthly basic salary, whichever is higher, every month.
Further, pursuant to LO1 116, LBP gave its employees a monthly allowance called a "Bank
Equity Pay" (BEP). For employees whose monthly basic salary is one thousand five hundred and
one pesos (PhP 1,501) and above, the amount of BEP is five hundred pesos (PhP 500), while for
those with a basic pay of one thousand five hundred pesos (PhP 1,500) and below, the monthly
BEP is five hundred fifty pesos (PhP 550).
LBP Board of Directors issued Resolution No. ‘88-109 integrating the COLA into the basic
pay of LBP employees. DBM-CCC No. 10 specifically stated that the COLA and BEP granted to
employees of GOCCs and GFIs shall be deemed integrated into the basic salary effective July 1,
1989. Thus, in conformity with the provisions of DBM-CCC No. 10, LBP likewise integrated the
BEP into the basic pay of its employees effective as of July 1, 1989.
Later on, Court nullified DBM-CCC No. 10 for the reason that it was not published in the
Official Gazette or in a newspaper of general circulation, as required by law. Naval wrote then
LBP President Margarito Teves appealing for the restoration of their COLA and BEP. Receiving
no immediate response, respondents sent a final demand letter reiterating the claim for the
payment of their COLA and BEP. Petitioner LBP, however, in a letter denied respondents’ appeal
based on a Civil Service Commission (CSC) ruling citing DBM Budget Circular 2001-03 which
prohibits the payment of COLA and similar allowances on top of the basic salary on the ground
that it would constitute double compensation.
Naval instituted a Petition for Mandamus before the RTC of Manilato compel LBP to pay
their COLA and the BEP allowances over and above their basic salaries because of their alleged
clear legal right to receive these allowances which was granted and was affirmed by CA.LBP filed
a Petition for Review before this Court. However this Court in a minute resolution, denied the
petition. Hence, this Omnibus Motion.
LBP specifically emphasized in its motion that LOI Nos. 104 and 116 have been repealed
by the Salary Standardization Law (SSL) and that LBP itself was excluded from the SSL’s coverage
even before its implementing rules were invalidated by the court. Thus, it is LBP’s position that
it cannot be legally compelled to pay the COLA and the BEP up to the present.
Issue:
Whether or not Naval and intervenors are entitled to the COLA and the BEP on top of
their basic salaries from 1989 up to the present.
Ruling:
No, they are not entitled entitled to the COLA and the BEP on top of their basic salaries
from 1989 up to the present.
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To recall, Naval’s demand for the payment of their COLA and BEP on top of their basic
salaries came after this Court’s promulgation of De Jesus, which nullified DBM-CCC No. 10 for
non-publication. It is their position that by the nullification of DBM-CCC No. 10 which expressly
named the COLA and BEP as integrated into the basic salary, LBP’s integration of the COLA and
the BEP is likewise invalid. In other words, respondents equate the nullification of the
implementing rules with the nullification of the very law which orders the integration of these
allowances into the basic salary. This Court had already refuted the soundness of this claim.
Rep. Act No. 6758 (Compensation and Classification Act of 1989) can be implemented
notwithstanding our ruling in De Jesus vs. Commission on Audit. While it is true that in said case,
this Court declared the nullity of DBM-CCC No. 10, yet there is nothing in our decision thereon
suggesting or intimating the suspension of the effectivity of Rep. Act No. 6758 pending the
publication in the Official Gazette of DBM-CCC No. 10. For sure, in Philippine International
Trading Corporation vs. Commission on Audit, this Court specifically ruled that the nullity of
DBM-CCC No. 10 will not affect the validity of Rep. Act No. 6758.
Thus, in resolving the issue of whether the COLA and/or the BEP should be paid
separately from the basic salary to the employees of LBP as of July 1, 1989, Court should look into
the very provisions of the SSL. From the foregoing provision, it is immediately apparent that the
SSL mandates the integration of all allowances except for the following:
1. Representation and transportation allowances;

2. Clothing and laundry allowances;
3. Subsistence allowance of marine officers and crew on board government vessels;
4. Subsistence allowance of hospital personnel;
5. Hazard pay;
6. Allowances of foreign service personnel stationed abroad;
7. And such other additional compensation not otherwise specified herein as may be
determined by the DBM.
Since the COLA and the BEP are among those expressly excluded by the SSL from
integration, they should be considered as deemed integrated in the standardized salaries of LBP
employees under the general rule of integration.
The enumerated fringe benefits in items (1) to (6) have one thing in common—they
belong to one category of privilege called allowances which are usually granted to officials and
employees of the government to defray or reimburse the expenses incurred in the performance
of their official functions. Consequently, if these allowances are consolidated with the
standardized salary rates, then the government official or employee will be compelled to spend
his personal funds in attending to his duties. On the other hand, item (7) is a "catch-all proviso"
for benefits in the nature of allowances similar to those enumerated.
Clearly, COLA is not in the nature of an allowance intended to reimburse expenses

incurred by officials and employees of the government in the performance of their official
functions. It is not payment in consideration of the fulfillment of official duty. As defined, cost of
living refers to "the level of prices relating to a range of everyday items" or "the cost of purchasing
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those goods and services which are included in an accepted standard level of consumption."
Based on this premise, COLA is a benefit intended to cover increases in the cost of living. Thus,
it is and should be integrated into the standardized salary rates.
Thus, there’s no other conclusion than to deny the payment of the COLA on top of the
LBP employees’ basic salary from July 1, 1989 because (1) it has not been expressly excluded from
the general rule on integration by the first sentence of Sec. 12 of the SSL and (2) as explained, the
COLA is not granted in order to reimburse employees for the expenses incurred in the
performance of their official duties.
BARKO INTERNATIONAL, INC./CAPT. TEODORO B. QUIJANO AND/OR FUYO KAIUN

CO. LTD. vs. EBERLY S. ALCAYNO
What is important is that the employee was unable to perform his customary work for more
than 120 days which constitutes permanent total disability, and not the actual injury itself.
Undoubtedly, the illness of the employee which incapacitated him to work more than 120 days after
repatriation is considered as work-related which entitles him to disability benefits. Indeed, the fact
that a certification declaring the employee as fit to work contrary to a prior finding of tuberculosis
can be considered as a ploy to circumvent the law intended to defeat the employee’s right to be
compensated for a disability which the law considers as permanent and total.
Facts:
On 2005, Alcayno was employed by Fuyo Kaiun Co. Ltd. through its local manning agent,
Barko International, Inc. (petitioners), as Able-bodied Seaman.
After one month on board the vessel, the Alcayno complained of stiff neck, and his right
jaw started to swell. His physical condition worsened despite medications given him on board
until he signed off on February 2, 2006 at the port of the Suez Canal, Egypt where he was
examined by a certain Dr. Michael H. Mohsen (Dr. Mohsen) of the Dr. Nazmy Hospital. Dr.
Mohsen’s diagnosis stated that the Alcayno had a "firm mass in the left side of neck with severe
diffuse infection and pus collection in the neck, gangrene and necrosis in skin and tissues of neck,
Uncontrolled D.M., Toxaemia and this condition may be due to chronic disease or malignancy."
The Medical Report issued by the Dr. Nazmy Hospital recommended hospital confinement about
5 days or more. It further reads, as follows: On February 8, 2006, Alcayno was repatriated to the
Philippines.
Upon arrival in Manila, Alcayno was examined by Dr. Nicomedes G. Cruz (Dr. Cruz), a
company-designated physician. The Diagnosis indicated: Uncontrolled diabetes mellitus and
tuberculous adenitis. The Sibug was placed under a six-month anti-tuberculosis treatment. As
early as June 23, 2006, Alcayno consulted a private physician, Dr. Regina Pascua Barba, who also
medically assessed him to be suffering from cervical tuberculosis adenitis as similarly assessed by
the company-designated physician. She recommended continuous treatment and medication
until January 2007.
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On July 6, 2006, the Alcayno filed a complaint for disability benefits, reimbursement of
medical expenses, payment of the unexpired portion of his contract, moral and exemplary
damages and attorney’s fees against the petitioners. To support his claim, he alleged that his
illness was contracted while he was on board M/V Cape Iris; that he was repatriated for medical
reasons and was treated for more than 120 days; and, that he suffered a permanent total disability
with Grade 1 impediment. Thus, he should be compensated by the petitioners. The petitioners
denied the claim and averred that a company-designated physician, in fact, issued a handwritten
medical evaluation on August 17, 2006 finding his condition well-controlled, asymptomatic, and
stable and therefore, physically fit to resume work anytime. On August 22, 2006, Dr. Cruz
declared the Sibug fit to work on even date after completion of the anti-Koch’s medication for six
months. Such fact was not disputed; hence, there is no disability to speak of.
Issue:
Whether or not Alcayno is entitled to total and permanent disability benefits just
because his injury rendered him incapable of performing his work for more than 120 days.
Ruling:
Yes. In disability claims, as in the case at bar, the employee bears the onus to prove by
substantial evidence his own positive assertions.
The Court finds merit in the Alcayno’s contention regarding the suspicious gesture of the
petitioners in having a medical certification declaring him as "fit to work" despite apparent clear
knowledge that he has been subjected to a long period of medical treatment. Both the company-
designated physician and the Alcayno’s private physician had similar findings that the Alcayno is
suffering from tuberculous adenitis which is occupational in character and compensable under
the attendant circumstances. Indeed, the fact that a certification declaring Alcayno as fit to work
contrary to a prior finding of tuberculosis can be considered as a ploy to circumvent the law
intended to defeat the Alcayno’s right to be compensated for a disability which the law considers
as permanent and total.
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."
While Alcayno may have pulmonary fibrosis right lower lung with calcified benign as per
PEME, it must be noted that he was declared fit for work. Hence, he was able to board the vessel.
The sickness that complainant now seeks for disability benefit is tuberculosis adenitis and
diabetes mellitus. Tuberculosis adenitis is a form of tuberculosis which affects the lymph nodes.
The diagnosed illness Tuberculosis Adenitis is considered as work-related under Section 32-A,
No. 18 of the Amended POEA Contract. This was found in the June 15, 2006 findings of Dr.
Nicomedes Cruz, the company-designated physician. Clearly, the sickness is work-related and
regarded as an occupational disease. Thus, the same is compensable.
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Again, what is important is that he was unable to perform his customary work for more
than 120 days which constitutes permanent total disability, and not the actual injury itself.
Undoubtedly, the illness of the Alcayno which incapacitated him to work more than 120 days
after repatriation is considered as work-related which entitles him to disability benefits.
This Court, moreover, agrees with the CA regarding the applicability of the doctrine in
the case of Crystal Shipping that a seafarer's continuous inability to work due to a work-related
illness for a period of more than 120 days need not be qualified by a declaration of fitness to work
by a company-designated physician for it to be considered as a permanent total disability which
is compensable.
APQ SHIPMANAGEMENT CO., LTD., and APQ CREW MANAGEMENT USA, INC., vs.
ANGELITO L. CASEÑAS
There are three (3) requirements necessary for the complete termination of the employment
contract: 1] termination due to expiration or other reasons/causes; 2] signing off from the vessel;
and 3] arrival at the point of hire. In this case, there was no clear showing that Caseñas signed off
from the vessel upon the expiration of his employment contract, which was in February or April
2005. He did not arrive either in Manila, his point of hire, because he was still on board the vessel
MV Haitien Pride on the supposed date of expiration of his contract. It was only on August 14, 2006
that he signed off from MV Haitien Pride and arrived in Manila on August 30, 2006.
Facts:
Caseñas was hired by APQ, acting in behalf of its principal, Crew Management, as Chief
Mate for vessel MV Perseverance for 8 months starting from June 16, 2004 to February 16, 2005.
On June 16, 2004, he left Manila to join his assigned vessel in Miami, Florida, USA, but
the vessel could not leave the port because of its incomplete documents for operation; he was
transferred to another vessel, MV HAITIEN PRIDE, which was in Haiti, again because of
incomplete documents, the vessel could not leave the port; that they were not provided food and
had to fish for their own food and were not paid their salaries; that he suffered extreme stress
and anxiety because of the situation; that his employment contract was extended by APQ from
the original 8 months to 26 months; that he felt he became weaker and got tired easily; that
despite his unpaid wages and weakened condition, he performed his duties as Chief Mate
diligently.
In August 2006, he began to suffer shortness of breath and chest pains; that he was
diagnosed with hypertension and was given medicines; that he was repatriated due to his
condition and he arrived in the Philippines on August 30, 2006; that within 3 days thereafter, he
reported to APQ for post-employment medical examination where the company physician
diagnosed him with Ischemic Heart Disease; that he was declared "unfit for sea service"; he was
not able to work for more than 120 days from his repatriation; and was advised to take his
medications for life; APQ refused to provide him medical attention, he incurred medical
expenses.
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Caseñas demanded payment of permanent total disability benefits, sickness allowance
and medical expenses to which he was entitled under the POEA Standard Employment Contract
(POEA-SEC), but APQ refused to pay; that he sent a series of letters to the representatives of the
shipowners regarding their unpaid wages, but despite efforts, APQ still refused to pay their
salaries; and that he was compelled to seek redress and filed a complaint for permanent total
disability benefits, reimbursement of medical expenses, sickness allowance, non-payment of
salaries representing the extended portion of the employment contract, damages, and attorney's
fees.
APQ alleged that upon expiration of the contract, Caseñas refused to return to the
Philippines; that Caseñas demanded payment of his wages for the extended portion of the
contract; that it could not be held liable for claims to the extended portion of the contract for it
did not consent to it; that as early as January 2005, it had been making arrangements, through
American Airlines for Caseñas’ repatriation at the end of his contract in February 2005; that he
was fully paid of his wages for the duration of his 8-month contract; and that Caseñas suffered
illness after the expiration of the contract, hence, it could not be made liable to pay him any
benefits for his injury/illness.
Caseñas, disputed the position of APQ, claiming that his contract of employment was
duly extended. APQ countered that there is no mutual consent of the parties as provided in
Caseñas’ employment contract for extension.
The Labor Arbiter (LA) rendered the Decision dismissing Caseñas' complaint. Caseñas
failed to prove mutual consent of the parties to the extension of the contract. Also, that the illness
suffered by Caseñas was sustained while serving on board MVCap Haitien Pride, which was
outside the period of his contractual employment. Thus, Caseñas' claims could not be awarded.
NLRC, acting on the motion for reconsideration filed by APQ, reconsidered and set aside
the NLRC Resolution. It explained that the documentary evidence presented only proved the
extension of contract but not the consent given to it by APQ. The NLRC explained that Caseñas
directly dealt with the shipowner to the exclusion of APQ and Crew Management, hence, his
recourse was against the shipowner. Thus, APQ could not be held liable for the unpaid salaries,
as well as the permanent disability benefits, because these were claims that accrued after the
expiration of the employment contract.
The CA reinstated the earlier NLRC Resolution. The CA cited the case of Place well
International Services Corporation v. Camote, where it was written:
xxx a subsequently executed side agreement of an overseas contract worker with the
foreign employer is void, simply because it is against our existing laws, morals and public policy.
The subsequent agreement cannot supersede the terms of the standard employment contract
approved by the POEA. Assuming arguendo that petitioner entered into an agreement with the
foreign principal for an extension of his contract of employment, sans approval by the POEA, the
contract that governs petitioner's employment is still the POEA-SEC until his repatriation. As far
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as Philippine law is concerned, petitioner's contract of employment with respondents was
concluded only at the time of his repatriation on August 30, 2006.
The CA explained that a declaration from the company designated physician as to the
fitness or unfitness of a seafarer to continue his sea-duties is sanctioned by Section 20(B)(3) of
the POEA-SEC. There being no declaration made by the company-designated physician within
the 120-day period as to the fitness of Caseñas, the CA opined that he was undoubtedly entitled
to disability benefits.
Issue:
May the Court rule that the employment contract of Caseñas was extended with the
consent of APQ/Crew Management?
Ruling:
Yes, the Court rules in the affirmative.
Employment contracts of seafarers on board foreign ocean-going vessels are not ordinary
contracts. They are regulated and an imprimatur by the State is necessary. While the seafarer and
his employer are governed by their mutual agreement, the POEA Rules and Regulations require
that the POEA-SEC be integrated in every seafarer’s contract. In this case, there is no dispute that
Caseñas’ employment contract was duly approved by the POEA and that it incorporated the
provisions of the POEA-SEC.
The controversy started when Caseñas claimed disability benefits as well as unpaid wages
from the APQ upon his return to the Philippines. APQ refused to pay, arguing that his sickness
was contracted after his employment contract expired which it claims was not extended as it was
without its consent.
While the contract stated that any extension must be made by mutual consent of the
parties, it, however, incorporated Department Order (DO) No. 4 and Memorandum Circular No.
09, both series of 2000, which provided for the Standard Terms and Conditions Governing the
Employment of Filipino Seafarers on Board Ocean Going Vessels. Sections 2 and 18 thereof
provide:
SECTION 2. COMMENCEMENT/ DURATION OF CONTRACT
A. The Employment contract between the employer and the seafarer shall commence
upon actual departure of the seafarer from the airport or seaport in the point of hire and
with a POEA approved contract. It shall be effective until the seafarer’s date of arrival at
the point of hire upon termination of his employment pursuant to Section 18 of this
Contract.
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B. The period of employment shall be for a period mutually agreed upon by the seafarer
and the employer but not to exceed 12 months. Any extension of the contract shall be
subject to the mutual consent of both parties.
xxx
SECTION 18. TERMINATION OF EMPLOYMENT
A. The employment of the seafarer shall cease when the seafarer completes his period of
contractual service aboard the vessel, signs off from the vessel and arrives at the point of
hire.
B. The employment of the sea farer is also terminated when the seafarer arrives at the
point of hire for any of the following reasons:
1. When the seafarer signs off and is disembarked for medical reasons pursuant to Section
20 (B)[5] of this Contract.
xxx
Both provisions require the seafarer to arrive at the point of hire as it signifies the
completion of the employment contract, and not merely its expiration. A seafarer’s employment
contract is terminated even before the contract expires as soon as he arrives at the point of hire
and signs off for medical reasons, due to shipwreck, voluntary resignation or for other just causes.
There are three (3) requirements necessary for the complete termination of the
employment contract: 1] termination due to expiration or other reasons/causes; 2] signing off
from the vessel; and 3] arrival at the point of hire. In this case, there was no clear showing that
Caseñas signed off from the vessel upon the expiration of his employment contract, which was
in February or April 2005. He did not arrive either in Manila, his point of hire, because he was
still on board the vessel MV Haitien Pride on the supposed date of expiration of his contract. It
was only on August 14, 2006 that he signed off from MV Haitien Pride and arrived in Manila on
August 30, 2006.
In Inter-orient Maritime Enterprises, Inc. v. NLRC, the Court held that the obligations and
liabilities of the local agency and its foreign principal do not end upon the expiration of the
contracted period as they were duty bound to repatriate the seaman to the point of hire to
effectively terminate the contract of employment.
APQ avers that Caseñas transferred from MV Perseverance to MV Haitien Pride, which
was not the ship specifically mentioned in his contract. Section 15 of the POEA-SEC guides the
Court on this. It reads:
Section 15. Transfer Clause– The seafarer agrees to be transferred at any port to any vessel
owned or operated, manned or managed by the same employer, provided it is accredited
to the same manning agent and provided further that the position of the seafarer and the
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rate of his wages and terms of services are in no way inferior and the total period of
employment shall not exceed that originally agreed upon. Any form of transfer shall be
documented and made available when necessary.
APQ did not argue that MV Haitien Pride was not operated or managed by Crew
Management. It did not claim either that said vessel was not accredited by it. The logical
conclusion, is that MV Haitien Pride was operated/managed by Crew Management and
accredited by APQ. Thus, Caseñas’ transfer should have been documented and made part of its
records for future purposes, but no documentation has been shown.
Even assuming arguendo that MV Haitien Pride was not related in any way with either
Crew Management or APQ, it is with more reason that the transfer should have been properly
documented pursuant to the above provision because it necessitated the termination of his
employment contract and his repatriation to the Philippines, pursuant to Section 26(A) of the
POEA-SEC. The said provision specifically provides that:
Section 26. Change of Principal.
A. When there is change of principal of the vessel necessitating the termination of

employment of the seafarer before the date indicated in the Contract, the seafarer shall
be entitled to earned wages, repatriation at employer’s expense and one month basic pay
as termination pay.
B. If by mutual agreement, the seafarer continues his service on board the same vessel,
such service shall be treated as a new contract. The seafarer shall be entitled to earned
wages only.
C. In case arrangement has been made for the seafarer to join another vessel to complete
his contract, the seafarer shall be entitled to basic wage until the date joining the other
vessel.
Caseñas claimed that his transfer was due to the fact that MV Perseverance could not
leave port because of incomplete documents for its operation. This was not disputed. Having
incomplete documents for the vessel’s operation renders it unseaworthy. While seaworthiness is
commonly equated with the physical aspect and condition of the vessel for voyage as its ability
to withstand the rigors of the sea, it must not be forgotten that a vessel should be armed with the
necessary documents required by the maritime rules and regulations, both local and
international. It has been written that vessel seaworthiness further extends to cover the
documents required to ensure that the vessel can enter and leave ports without problems.
Caseñas’ contract should have been terminated and he should have been repatriated to
the Philippines because a seafarer cannot be forced to sail with an unseaworthy vessel, pursuant
to Section 24 of the POEA-SEC. However, no showing that his contract was terminated by reason
of such transfer. His joining in MV Haitien Pride could only mean that it was for the purpose of
completing his contract as the transfer was made well within the period of his employment
contract on board MV Perseverance.
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On its claim of lack of consent, APQ insists that as proof of its intention not to extend
Caseñas’ contract, it already arranged his plane ticket as early as January & February 2005, in
anticipation of the expiration of the contract, attaching the e-mail copy of the American Airlines
E-ticket & Itinerary.
Again, a scrutiny of the records reveals otherwise. Thus, these communications reveal
that APQ had actual knowledge that Caseñas continued working on board the said vessel after
February/April 2005. Despite such knowledge, APQ neither posed any objection to the extension
of the contract nor make any effort to protect itself from any responsibility that might arise from
the extension, if it did not indeed intend to extend the employment contract.
APQ cannot now feign ignorance of any extension of the contract and claim that it did
not consent to it. As it had knowledge of the extended contract, APQ is solidarily liable with Crew
Management for Caseñas’ claims. Caseñas is, therefore, entitled to the unpaid wages during the
extended portion of his contract.
As to Caseñas’ claim for medical and other benefits, there is no dispute that the symptoms
of Caseñas’ illness began to manifest during the term of his employment contract. The fact that
the manifestations of the illness only came about in August 2006 will not bar a conclusion that
he contracted the ailment while the contract was subsisting. The overall state and condition that
he was exposed to over time was the very cause of his illness. Thus, the CA was correct in
reinstating the NLRC resolution awarding sickness allowance as well as disability benefits in favor
of Caseñas.
TEEKAY SHIPPING PHILIPPINES, INC., TEEKA Y SHIPPING LIMITED and ALEX

VERCHEZ vs. EXEQUIEL O. JARIN
G.R. No. 195598, June 25, 2014, J. Reyes
The enumeration in Section 32-A does not preclude other illnesses/diseases not so listed
from being compensable. The POEA-SEC cannot be presumed to contain all the possible injuries
that render a seafarer unfit for further sea duties. This is in view of Section 20(B)(4) of the POEA-
SEC which states that "(t)hose 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. In the case at bar, Jarin was able to prove that his rheumatoid
arthritis was contracted out of his daily duties as Chief Cook onboard M.T. Erik Spirit where he was
also tasked to carry heavy things.
Facts:
Petitioner Teekay Phils. is a domestic corporation engaged in the recruitment of maritime

personnel for its foreign principal, Teekay Ltd. Verchez is the president of Teekay Phils.
After passing the standard Pre-Employment Medical Examination, the petitioners hired
Jarin as Chief Cook for a period of eight months. Jarin was deployed on July 9, 2006 onboard M.T.
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Erik Spirit, a crude oil tanker. During the third week of February 2007, M.T. Erik Spirit was in
Canada when Jarin complained of swelling in the joints of his two elbows. Jarin was taken to a
Canadian hospital where he was diagnosed with rheumatoid arthritis. Steroid-based medications
were administered to him and they caused him the side effects of puffiness of the face and edema.
Despite of this, however, Jarin was able to complete his employment contract.
Upon arrival in the Philippines, Jarin immediately reported to the petitioners. Company-
designated physician, Dr. Christine O. Bocek whose Post-Medical Report showed that Jarin has
"moon facies and bipedal edema secondary to steroid intake, rheumatoid arthritis, resolving and
upper respiratory tract infection." Jarin was referred to another company-designated physician
at the Metropolitan Medical Center for further assessment under the care of Dr. Wilanie Romero-
Dacanay, whose medical report stated that Jarin’s arthritis and cushingnoid features were not
work-related. Dr. Dacanay noted that chronic obstructive pulmonary disease is almost always
the result of cigarette smoking to which Jarin admitted to have been engaged in since he was in
high school. Jarin underwent laboratory tests and was advised to come back on September 17,
2007. The following day, Dr. Mylene Cruz-Balbon issued a private and confidential evaluation
stating that rheumatoid arthritis is a chronic illness "which can become progressive that has the
potential to cause joint destruction and functional disability." Jarin was "no longer recommended
for further sea duties."
Upon Teekay Phils direction, Jarin went to Pandiman where he was informed that his
illness is not work-related and that Teekay Phils. stopped paying for his medical treatments. Jarin
filed a complaint before the Arbitration Branch of the National Labor Relations Commission
claiming US$60,000.00 as permanent total disability benefit, US$2,889.60 as sickness allowance
for his incapacity to work for 120 days pursuant to the Philippine Overseas Employment Agency-
Standard Employment Contract for Filipino Seafarers (POEA-SEC), US$10,000.00 as moral
damages and exemplary damages and ten percent (10%) of the total monetary award as attorney’s
fees. The Labor Arbiter granted Jarin’s money claims. The NLRC ruled in favour of the petitioners.
CA reversed the NLRC.
Issue:
Whether or not Jarin’s illness is work-related
Ruling:
Yes. Under the 2000 POEA-SEC, a work-related illness is "any sickness resulting to
disability or death as a result of an occupational disease listed under Section 32-A with the
conditions set therein satisfied."
The Court has held, however, that the enumeration in Section 32-A does not preclude
other illnesses/diseases not so listed from being compensable. The POEA-SEC cannot be
presumed to contain all the possible injuries that render a seafarer unfit for further sea
duties. This is in view of Section 20(B)(4) of the POEA-SEC which states that "(t)hose 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
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that his working conditions caused or at least increased the risk of contracting the disease. "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."
Substantial evidence consists of such relevant evidence which a reasonable mind might
accept as adequate to justify a conclusion that there is a causal connection between the nature of
his employment and his illness, or that the risk of contracting the illness was increased by his
working conditions. Only a reasonable proof of work-connection, not direct causal relation is
required to establish compensability of a non-occupational disease.
In the case at bar, Jarin was able to prove that his rheumatoid arthritis was contracted out
of his daily duties as Chief Cook onboard M.T. Erik Spirit. The narration of facts in his position
paper detailed the nature of his work as Chief Cook and the daily working conditions on sea duty.
“Sa bawat kada-dalawang buwan kami ay nagkakaroon ng food supply or provision sa

aming kompanya.\ Sa araw na ito dumating sa puerto ang aming provision iyon ayaming
hinahakot o binubuhat at ipapasok sa loob ng freezer. Kahit na kami ay pawis na pawis ay hindi
kami tumitigil hangga’t hindi natataposang mga hakutin at pagkatapos ng aming maghapong
trabaho sa galley sa mga 7:00 ng gabi ay aming isasalansan sa kanya-kanyang lalagyanang bawat
isa na aming natanggap na provision sa mga dry store at sa malamig na freezer at lalo na yong
mga manok, karne, baboy at kung ano-ano pa.”
Further, a careful study of the medical opinions issued by the petitioners’ doctors strikes
this Court to declare that as early as February 2007, Jarin’s rheumatoid arthritis was already
detected by a doctor in Canada. This was fully verified by the medical opinions issued by the
petitioners’ company-designated physicians in Manila which all indicated that Jarin has
rheumatoid arthritis. This is why an intensive medical treatment was administered to him under
their care. To recall, even the medical report dated August 16, 2007 advised Jarin to continue his
medication and to come back to them on September 17, 2007 considering that his body did not
respond well to the injections already given him. On August 17, 2007, Dr. Balbon issued an
opinion declaring him unrecommendable for further sea duties coupled with the drastic
withdrawal of the medical treatment given to him by the petitioners. It is unmistakable from
such recommendation that Jarin’s rheumatoid arthritis has rendered him permanently
incapacitated to work as a seaman.
THE LATE ALBERTO B. JAVIER, as substituted by his surviving wife, MA. THERESA M.
JAVIER, and children, KLADINE M. JAVIER, CHRISTIE M. JAVIER, JALYN M. JAVIER,
CANDY GRACE M. JAVIER and GLIZELDA M.JAVIER vs. PHILIPPINE TRANSMARINE
CARRIERS, INC. and/or NORTHERN MARINE MANAGEMENT, LTD.
G.R. No. 204101, July 02, 2014, J. Brion
Javier suffered hypertension and filed claim for disability benefit, sickness allowance, and
reimbursement for medical expenses. The Labor Arbiter granted his claims except for the
reimbursement. Certification acknowledging receipt of sickness allowance equivalent and payment
in full of his medical treatment was made by Javier. The NLRC ordered the deduction of the expenses
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paid from the peso equivalent of the total monetary award. The Court held that there was abuse of
discretion on the part of NLRC. As a matter of law, the benefit of medical treatment at the
employer’s expense is separate and distinct from the disability benefits and sickness allowance to
which the seafarer is additionally entitled. Accordingly, any amount that the respondents may have
expended for Alberto’s medical treatment should not be deducted from the monetary award that
consisted only of the disability benefits and attorney’s fees.
Facts:
Philippine Transmarine Carriers, Inc. (PTCI), for its principal Northern Marine
Management, Ltd., hired Alberto as “pumpman,” on board the vessel “MT Neptune Glory.” This
was Alberto’s 20th contract with the respondents. Prior to his hiring, Alberto underwent the
required Pre-employment Medical Examination and was declared “fit for work” by PTCI’s
Alberto suddenly felt severe headache with dizziness, vomiting and physical weakness
while he was on board. He was confined at the University of Texas Medical Branch Hospital. He
underwent a series of medical examination and was diagnosed to be suffering from hypertension.
Alberto was repatriated to the Philippines for further medical treatment.
Upon arrival in Manila, Alberto was referred to Dr. Justo Cammayo at the Manila Doctors
Hospital. Alberto had a series of medical treatment and examination. He then underwent
coronary artery bypass surgery due to a “three vessel Coronary Artery Disease.” Alberto was
subsequently discharged. The doctors, however, failed to either declare him as “fit to return to
work” or to assess his disability grading.
Thus, Alberto sought the opinion of Dr. Efren Vicaldo who assessed Alberto’s disability
as “impediment grade 1” and declared him as “unfit to resume work as seaman in any capacity,”
and “not expected to land a gainful employment given his medical background.”
When Alberto’s claim for disability benefits and sickness allowance pursuant to the
Philippine Overseas Employment Administration Standard Employment Contract (POEA-SEC)
was denied by respondents, he filed a complaint for disability benefits, illness allowance, and
reimbursement of medical expenses.
The Labor Arbiter granted his claims except for the reimbursement of medical expenses.
The NLRC affirmed his entitlement to disability benefits. However, it found that Alberto
made a certification acknowledging receipt in full of his sickness allowance equivalent to 120 days
and payment in full of his medical treatment. The NLRC ordered the deduction of the expenses
paid from the peso equivalent of the total monetary award.
Meanwhile, Alberto died. He was substituted by his heirs, the petitioners. They sought
reconsideration of the deduction of Alberto’s sickness allowance and medical expenses from the
total monetary award which was denied. The Court of Appeals affirmed the NLRC’s resolution.
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Issue:
Whether or not the deduction of the medical expenses from the total monetary award is
correct
Ruling:
No, the CA erred in not finding that the NLRC committed grave abuse of discretion in
ordering the deduction of the medical expenses paid by the respondents from the total monetary
award.
The LA denied for lack of basis the reimbursement of medical expenses. Due to the
deletion of the sickness allowance from the total monetary award, Alberto was effectively left
with only the disability benefits and the 10% attorney’s fees as his monetary award.
The NLRC had no reason, both in fact and in law, to order the deduction from the total
monetary award the amount for Alberto’s medical treatment. As a matter of law, the benefit of
medical treatment at the employer’s expense is separate and distinct from the disability benefits
and sickness allowance to which the seafarer is additionally entitled. Accordingly, any amount
that the respondents may have expended for Alberto’s medical treatment should not be deducted
from the monetary award that consisted only of the disability benefits and attorney’s fees.
The Court ruled that there was grave abuse of discretion amounting to lack and excess of
jurisdiction. The NLRC treated the employer’s liability to pay medical expenses as part of the
permanent disability benefits to which Alberto is entitled. The NLRC reached its conclusion even
if the POEA-SEC treats these two kinds of liabilities distinctly and even if the bases for their
payment are different.
The separate treatment of, and the distinct considerations in, the three kinds of liabilities
under the POEA-SEC can only mean that the POEA-SEC intended to make the employer liable
for each of these three kinds of liabilities. Employers must: (1) pay the seafarer sickness allowance
equivalent to his basic wage in addition to the medical treatment that they must provide the
seafarer with at their cost; and (2) compensate the seafarer for his permanent total or partial
disability as finally determined by the company-designated physician.
Though Section 20 of the POEA-SEC did not expressly state that the employer’s liabilities
are cumulative in nature so as to hold the employer liable for the sickness allowance, medical
expenses and disability benefits, it does not also state that the compensation and benefits are
alternative or that the grant of one bars the grant of the others.
The POEA-SEC is imbued with public interest. Accordingly, its provisions must be
construed fairly, reasonably and liberally in favor of the seafarer in the pursuit of his employment
on board ocean-going vessels.
ALONE AMAR P. TAGLE vs. ANGLO-EASTERN CREW MANAGEMENT, PHILS., INC.,

ANGLO-EASTERN CREW MANAGEMENT (ASIA) and CAPT. GREGORIO B. SIALSA
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G.R. No. 209302, July 9, 2014, J. Mendoza
A seafarer may have basis to pursue an action for total and permanent disability benefits
only if any of the following conditions are present: (a) The company-designated physician failed to
issue a declaration as to his fitness to engage in sea duty or disability even after the lapse of the 120-
day period and there is no indication that further medical treatment would address his temporary
total disability, hence, justify an extension of the period to 240 days; (b) 240 days had lapsed without
any certification issued by the company designated physician; (c) The company-designated
physician declared that he is fit for sea duty within the 120-day or 240-day period, as the case may
be, but his physician of choice and the doctor chosen under Section 20-B(3) of the POEA-SEC are of
a contrary opinion; (d) The company-designated physician acknowledged that he is partially
permanently disabled but other doctors who he consulted, on his own and jointly with his employer,
believed that his disability is not only permanent but total as well; (e) The company-designated
physician recognized that he is totally and permanently disabled but there is a dispute on the
disability grading; (f) The company-designated physician determined that his medical condition is
not compensable or work-related under the POEA-SEC but his doctor-of-choice and the third doctor
(g) The company-designated physician declared him totally and permanently disabled but the
employer refuses to pay him the corresponding benefits; and (h) The company-designated physician
declared him partially and permanently disabled within the 120-day or 240-day period but he
remains incapacitated to perform his usual sea duties after the lapse of said periods. Furthermore,
the onus probandi falls on the seafarer to establish or substantiate his claim that he is entitled to
disability benefits by the requisite quantum of evidence. He has to prove causation between the
nature of his employment and his illness, or that the risk of contracting the illness was increased
by his working condition. Otherwise, for lack of factual and legal basis, he will not be entitled to
any claim.
Facts:
On June 16, 2008, Alone Amar P. Tagle (Tagle) was hired by Anglo-Eastern Crew
Management, Phils., Inc. for Anglo-Eastern Crew Management (Asia) and was assigned to work
on board the vessel NV Al Isha’a as 3rd Engineer. Just two days after boarding the vessel, he was
found unconscious inside the engine room of the vessel. Upon docking of the vessel at the nearest
port, he was admitted at the TajMahal Medical Complex, Ltd., Hamdard University Hospital, in
Karachi, Pakistan, where he was diagnosed to be suffering from cervical spondylosis and heat
exhaustion. He was thereafter repatriated.
A day after his return to the country, he was admitted at the Metropolitan Medical Center
where he was later on diagnosed to be suffering from cervical and lumbar spondylosis, chronic
L5 spondylosis and Grade 1 spondylolis thesis. As a result, he was prescribed several medicines
and was advised to continue his rehabilitation on an out-patient basis. Following orders from the
company-designated physician, he continued his treatment and rehabilitation and had regular
check-ups twice a month from August to October 2008. While his back improved, he continued
to sufferfrom on and off bouts of pain on his neck. Until 2009, he was continuously treated and
his medical expenses were being shouldered by the respondents. He also continued to receive his
basic wage. However, despite being advised to report back on February 3, 2009 for re-evaluation,
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Tagle no longer reported back to the company-designated physician. Instead, he sought the
opinion of his own physician, who, on a Disability Rating Report stated that:
“He is given a PERMANENT DISABILITY Rating. HE IS UNFIT TO BE A SEAMAN

(sic) ON WHATEVER CAPACITY.”
Acting on Tagle’s request for compensation, respondents offered a settlement based on

the disability grading given by the company-designated physician. However, Tagle refused and
insisted that he be paid the benefits corresponding to that given to those suffering from
permanent total disability. As such, he filed his complaint before the LA claiming permanent
total disability benefits. On the other hand, respondents sought the dismissal of the complaint
for lack of merit, or, in the alternative, the limitation of the award of disability benefits as
suggested by its company-designated physician. It contended that the disability gradings
suggested by the company-designated physicians should prevail considering that they
thoroughly examined and treated petitioner from August 2008 to January 2009.
Eventually, the LA opined that the conclusion of Dr. Escutin that Tagle was permanently
disabled should be upheld because the findings of the company-designated physicians, which
were often biased, did not declare him as "fit to work." It also awarded attorney’s fees, but
dismissed the claims for sick wages and damages for lack of legal basis. However, the said decision
was reversed by the NLRC. It held that since the company designated physicians had been
treating him since his repatriation in July 2008 until January 2009, they wherein a better position
to know the injury suffered by him, its treatment and its disability grading. Tagle sought
reconsideration but to no avail. Hence, he appealed to the Court of Appeals. The latter affirmed
the NLRC decision.
Issue:
Whether or not Tagle is entitled to disability benefits equivalent to those suffering from
permanent disability.
Ruling:
The rule is that a seafarer’s right to disability benefits is a matter governed by law, contract
and medical findings. The relevant legal provisions are Articles 191 to 193 of the Labor Code and
Section 2, Rule X of the Amended Rules on Employee Compensation (AREC). The relevant
contracts are the POEA-SEC, the collective bargaining agreement, if any, and the employment
agreement between the seafarer and his employer. Summarizing the interplay of these provisions
as they relate to the establishment of a seafarer’s claim to disability benefits, the Court, in Vergara
v. Hammonia, wrote:
As these provisions operate, the seafarer, upon sign-off from his vessel, must
report to the company-designated physician within three (3) days from arrival for
diagnosis and treatment. For the duration of the treatment but in no case to
exceed 120 days, the seaman is on temporary total disability as he is totally unable
to work. He receives his basic wage during this period until he is declared fit to
work or his temporary disability is acknowledged by the company to be
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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.
In other words, a seafarer may have basis to pursue an action for total and permanent
disability benefits only if any of the following conditions are present:
(a) The company-designated physician failed to issue a declaration as to his fitness

to engage in sea duty or disability even after the lapse of the 120-day period and
there is no indication that further medical treatment would address his temporary
total disability, hence, justify an extension of the period to 240 days;
(b) 240 days had lapsed without any certification issued by the company
designated physician;
(c) The company-designated physician declared that he is fit for sea duty within
the 120-day or 240-day period, as the case may be, but his physician of choice and
the doctor chosen under Section 20-B(3) of the POEA-SEC are of a contrary
opinion;
(d) The company-designated physician acknowledged that he is partially
permanently disabled but other doctors who he consulted, on his own and jointly
with his employer, believed that his disability is not only permanent but total as
well;
(e) The company-designated physician recognized that he is totally and
permanently disabled but there is a dispute on the disability grading;
(f) The company-designated physician determined that his medical condition is
not compensable or work-related under the POEA-SEC but his doctor-of-choice
and the third doctor selected under Section 20-B(3) of the POEA-SEC found
otherwise and declared him unfit to work;
(g) The company-designated physician declared him totally and permanently
disabled but the employer refuses to pay him the corresponding benefits; and
(h) The company-designated physician declared him partially and permanently
disabled within the 120-day or 240-day period but he remains incapacitated to
perform his usual sea duties after the lapse of said periods.
After an assiduous assessment of the evidence, however, the Court finds that Tagle’s claim
for permanent disability benefits are without basis at all:
1) Despite the examinations and procedures that were conducted on Tagle, they were not
yet able to form a definitive assessment of his ailment. Of the repeated in the medical reports of
the company-designated physicians is the fact that despite the described medical examinations
conducted on him, he was to be re-evaluated following continued physical therapy and
medications. Unfortunately, despite orders from the company-designated physician to come
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back once more on February 3, 2009 for re-evaluation, he never did. Clearly, when he decided to
seek the opinion of Dr. Escutin, it was yet to be established by the company-designated
physicians whether he was totally or partially disabled, as the disability grading was tentatively
given and only as a suggestion, from the results of the various examinations conducted on him
as of that time.
Noteworthy is the observation of the CA that from the time Tagle sustained his injury
until a disability grading of Grade 11 (for the chest-trunk-spine) and Grade 12 (for the neck), only
110 days had lapsed. At the time he instituted his labor complaint on February 11, 2009, only 196
days had lapsed. Clearly, respondents were deprived of the opportunity to determine whether his
claim for permanent total disability benefits had any merit.
2) Even assuming ex gratia argument is that the company-designated physicians had

arrived at a final conclusion of Grade 11/12 disability, Tagle’s evidence would still cast doubt on
such findings. In stark contrast to the detailed medical reports by the company-designated
physicians, a reading of the medical report of Dr. Escutin shows that it was not supported by any
diagnostic tests and/or procedures sufficient to refute the results of those administered to him
by the company-designated physicians.
Moreover, Dr. Escutin’s conclusion that he suffered from "permanent disability" and that
he was unfit to serve as a seaman in any capacity was anchored primarily on Tagle’s own
narration. However, his narration was not supported by the findings in the medical reports of the
company-designated physicians. Dr. Escutin’s bases for his conclusion were, thus, inexistent. The
initial finding of the company-designated physician that Tagle suffered from "Grade 1
Spondylolisthesis" does not provide sufficient basis to award him permanent total disability
benefits. When Tagle was initially diagnosed, therefore, by the company-designated physicians
with "Grade 1 Spondylolis thesis," he was suffering the least severe case of spondylolis thesis. The
report only intended to give a medical assessment as to the severity of his back injury. It never
meant to provide a disability grading of Grade 1 equivalent to permanent total disability.
3) For disability to be compensable under Section 20 (B)(4) of the POEA-SEC, two

elements must concur: (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. In
other words, to be entitled to compensation and benefits under this provision, it is not sufficient
to simply 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. In this case, the record is bereft of any
evidence to prove satisfaction of the said conditions. There is even no substantiation at all that
Tagle’s collapse while on board the MV Al Isha’a directly caused, or at least increased the risk of,
his neck and back injury. No medical history and/or record prior to his deployment on board the
vessel or any evidence as to the nature of his work was ever presented or alluded to in order to
demonstrate that the working conditions on board the said vessel increased the risk of
contracting his illness.
Indeed, evidence on record is totally bare of essential facts on how Tagle contracted or
developed his illness and how and why his working conditions increased the risk of contracting
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the same. In the absence of substantial evidence, the Court cannot just presume that his job
caused his illness or aggravated any pre-existing condition he might have had. Moreover, the fact
that Tagle passed the company’s Pre-Employment Medical Examination (PEME) is of no
moment. It has been settled that the PEME is not exploratory in nature. It was not intended to
be a totally in-depth and thorough examination of an applicant’s medical condition. The PEME
merely determines whether one is "fit to work" at sea or "fit for sea service," it does not state the
real state of health of an applicant. In short, the "fit to work" declaration in the respondent’s
PEME cannot be a conclusive proof to show that he was free from any ailment prior to his
deployment.
Verily, the grant of total and permanent disability is not automatically awarded simply
because a seafarer suffered an injury or contracted an illness after initially passing his PEME.
Awards of compensation cannot rest on speculations or presumptions, for the claimant must
prove a positive proposition. In this case, the onus probandi falls on Tagle to establish or
substantiate his claim that he is entitled to disability benefits by the requisite quantum of
evidence. He has to prove causation between the nature of his employment and his illness, or
that the risk of contracting the illness was increased by his working condition. For lack of factual
and legal basis to sustain them, he is not entitled to any claim, more so his ancillary claims for
medical expenses, damages and attorney's fees.
MAGSAYSAY MARITIME CORPORATION, EDUARDO U. MANESE and NORWEGIAN

CRUISE LINE vs. HENRY M. SIMBAJON
G.R. No. 203472, July 9, 2014, J. Brion
Under Section 32-A of the POEA-SEC, for an occupational disease and the resulting
disability or death from it to be compensable, all of the following conditions must first be satisfied:
1) The seafarer’s work must involve the risks described herein; 2) The disease was contracted as a
result of the seafarer’s exposure to the described risks; 3) The disease was contracted within a period
of exposure and under such other factors necessary to contract it; and 4) There was no notorious
negligence on the part of the seafarer. In the case at bar, the third condition is absent. Hence, the
claim of previous contracts with the same employer as long enough to expose the employee to work-
related risks to trigger a disease, in the absence of the respective dates and durations of those,
created a possibility that he acquired his disease at some other time when he was not on board and
working in any of the employer’s vessels. Moreover, while it is provided for in the law that it is the
company-designated physician who declares the fitness to work of a seafarer who sustains a work-
related injury/illness or the degree of the seafarer’s disability, a finding by the doctor of choice of
the employee in contrast with that made of the company-designated physician, necessitates the
appointment of a third doctor whose decision shall be final and binding. Otherwise, the assessment
of the company-designated physician as to the seafarer’s health should stand. Also, for work-related
illnesses acquired by seafarers from the time the 2010 amendment to the POEA-SEC took effect, the
declaration of disability should no longer be based on the number of days the seafarer was treated
or paid his sickness allowance, but rather on the disability grading he received, whether from the
company-designated physician or from the third independent physician, if the medical findings of
the physician chosen by the seafarer conflicts with that of the company-designated doctor.
Facts:
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On July 21, 2004, petitioner Norwegian Cruise Line (NCL) hired respondent Henry M.
Simbajon (Simbajon) as a cook on board its vessel, the Norwegian Star (Hotel), under a Philippine
Overseas Employment Administration Standard Employment Contract (POEA-SEC). Simbajon’s
employment contract, for the fourth time, was coursed through petitioner Magsaysay Maritime
Corporation (Magsaysay), the authorized manning agent of NCL in the Philippines. Before hiring,
he was required to undergo and pass the mandatory Pre-Employment Medical Examination
(PEME). He was asked in this examination to disclose all his existing and prior medical conditions
and focused on 23 medical conditions, including diabetes. He confirmed that he had never been
afflicted with this disease and that he had no family history of it. His medical tests confirmed this
claim and he was given a clean bill of health and declared "fit for employment" or "fit for sea
service."
On July 24, 2004, he boarded the Norwegian Star (Hotel) and joined its crew. Only six
days after embarkation, he complained of increased urination and having a constant feeling of
thirst. He consulted the doctor on board and was initially diagnosed with possible Diabetes
mellitus Type II (DM Type II). He was subsequently referred to an on-shore physician while the
vessel was docked at Alaska. The on-shore physician confirmed that initial diagnosis.
Thereafter, he was repatriated for further medical treatment. He then consulted an

endocrinologist designated by Magsaysay from the Alegre Medical Clinic. The series of medical
tests performed on him confirmed the previous findings. On October 4, 2004, he again consulted
the company-designated doctor and his illness was found to be asymptomatic. Nonetheless, the
attending physician advised him to continue with his medication.
On subsequent dates of medical evaluation, although his tests revealed normal results,
he was still advised to continue with his medications. Because of these positive developments,
the company-designated physician opined on February 2, 2005 that his DM Type II was already
under control. As such, he was declared "fit to work". Significantly, from the time of his
disembarkation until the said date, he was paid his illness allowance. However, despite the "fit to
work" declaration of Magsaysay’s designated physician, he was not rehired by petitioners.
Dissatisfied with the company-designated physician’s medical opinion, he sought a second
opinion from Dr. Efren R. Vicaldo, an internal medicine doctor from the Philippine Heart Center.
Aside from giving a Grade VI (50%) rating to his resulting disability, Dr. Vicaldo opined
that his DM Type II was "work aggravated/related" and that "he is now unfit to resume work as a
seaman in any capacity". Based on this medical assessment, Simbajon filed with the LA a
complaint for disability benefits, illness allowance, reimbursement of medical expenses, damages
and attorney’s fees, against the petitioners.
Eventually, the LA ruled that his disease is work-related and, therefore, compensable.
However, the said decision was reversed by the NLRC. On appeal to the CA, it has been ruled
that Simbajon must still be declared to have permanent and total disability because he was not
able to perform his customary work for more than 120 days.
Issue:
Whether or not Simbajon’s disease is compensable.
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Ruling:
1) While the seafarers and their employers are governed by their mutual agreements, the
POEA rules and regulations require that the POEA-SEC be integrated in every contract. This
contains the standard terms and conditions of the seafarer’s employment in foreign ocean-going
vessels. Under its Section 32-A, for an occupational disease and the resulting disability or death
from it to be compensable, all of the following conditions must first be satisfied:
1. The seafarer’s work must involve the risks described herein;
2. The disease was contracted as a result of the seafarer’s exposure to the described risks;
3. The disease was contracted within a period of exposure and under such other factors
necessary to contract it; and
An examination of the surrounding facts and circumstances regarding Simbajon’s

sickness will show that the third condition from the above enumeration is absent in this case. He
started exhibiting the symptoms of DM Type II barely six days after embarkation. If his disease
had been acquired because of his exposure to different kinds of work-related stress, it is very
unusual that it developed in a very short span of time. Furthermore, he claimed that he had
already finished three previous contracts with NCL which, as he argued, had been long enough
to expose him to work-related risks to trigger the said disease. Unfortunately, he failed to state
the respective dates and durations of his three previous employment contracts with NCL. The
absence of this evidence leaves the Court at a loss for supporting data on when he started working
for NCL or if there had been long intervals in between his previous contracts to break their
continuity. The records do not even disclose how long the interim period was in between his last
and most present contract with NCL. To our mind, there is always the possibility that he acquired
his disease at some other time when he was not on board and working in any of NCL’s vessels.
Moreover, the fact that his PEME results cleared him from pre-identified diseases including
Diabetes mellitus, is without effect. It has been settled that PEMEs are usually not exploratory in
nature. The tests conducted are not intended to be an in-depth and thorough examination of an
applicant’s medical condition. They merely determine whether the examinee is "fit to work" at
sea or "fit for sea service"; they do not describe the real state of health of an applicant. Thus, he
cannot rely on his PEME results alone to support his claim that his disease only developed after
embarkation. Also, there is a probability that his disease was already preexisting even before he
boarded NCL’s vessel; his diabetes was not detected because it was asymptomatic. Hence, for
failure to prove that his disease was contracted within his six days of service because of factors
necessary to contract it, we cannot support his assertion that his DM TypeII was a work-related
disease that should merit compensation from the petitioners.
2) The glaring disparity between the findings of the petitioners’ designated physicians
and Dr. Vicaldo calls for the intervention of a third independent doctor, agreed upon by
petitioners and Simbajon. In this case, no such third-party physician was ever consulted to settle
the conflicting findings of the first two sets of doctors. After being informed of Dr. Vicaldo’s unfit-
to-work findings, he proceeded to file his complaint for disability benefits with the LA. This move
totally disregarded the mandated procedure under the POEA-SEC requiring the referral of the
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conflicting medical opinions to a third independent doctor for final determination. Dr. Vicaldo,
too, is a medical practitioner not unknown to this Court, as he has issued certifications in several
disability claims that proved unsuccessful.
It has been settled that the duty to secure the opinion of a third doctor belongs tothe
employee asking for disability benefits. In the case at bar, it is undisputed that Simbajon was the
only one who knew of the conflicting results between Dr. Vicaldo’s findings with that of the
petitioners’ designated physicians. The petitioners had no reason to consider a third doctor
because they were not aware that he secured a separate independent opinion regarding his
disability. Thus, the obligation to comply with the requirement of securing the opinion of a
neutral, third-party physician rested on Simbajon’s shoulders. By failing to observe the required
procedure under the POEA-SEC, he clearly violated its terms. And without a binding third-party
opinion, the fit-to work certification of petitioners’ designated physicians prevails over that of
Dr. Vicaldo’s unfit-to-return-to-work finding. Also, Dr. Vicaldo only examined Simbajon once
while Magsaysay’s designated physicians conducted series of tests and treatments upon him.
Thus, between the two, the latter’s medical opinion deserves more credence for being more
thorough and exhaustive.
3) Contrary to Simbajon’s claim, his inability to resume work after the lapse of more than
120 days from the time he suffered his illness does not by itself automatically entitle him to
permanent and total disability benefits. His several consultations with the company-designated
doctors revealed that his DM Type II was asymptomatic. Because of this finding, the company-
designated doctors had to conduct further treatments and prescribe his continuous medication
before finally concluding that he was fit to return to work on February 2, 2005, or 172 days from
his disembarkation. The period is 68 days short of the 240 days provided in the case of Vergara
vs. Hammonia Maritime Services, Inc., et al. Within this period, the company can continue to
treat the employee or conduct an observation period (while continuing to pay his total temporary
disability pay), before the Vergara deadline is reached.
Also, even assuming that his illness is work-related, he is still not entitled to permanent
and total disability benefits because his situation does not fall in any of the circumstances when
a seafarer may claim for permanent and total disability benefits.
This Court would also like to point out that for work-related illnesses acquired by
seafarers from the time the 2010 amendment to the POEA-SEC took effect, the declaration of
disability should no longer be based on the number of days the seafarer was treated or paid his
sickness allowance, but rather on the disability grading he received, whether from the company-
designated physician or from the third independent physician, if the medical findings of the
physician chosen by the seafarer conflicts with that of the company-designated doctor.
4) This Court is of the view that Simbajon’s non-rehiring, despite of the declaration of
Magsaysay’s designated physician that he is already "fit to resume work", did not translate to the
permanent and total character of his disability. At the very least, Simbajon could have used his
non-rehiring to support the argument that his contract was prematurely terminated by
petitioners. He was declared fit to work but he was not reaccepted in his former or a similar
position despite the remaining 104 days in his contract. But he never made an issue out of this.
Even at the level of the labor tribunals, his pleadings focused solely on the classification of his
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disability as permanent and total. Premature contract termination and entitlement to permanent
and total disability benefits are two different labor issues. One is based on the untimely
termination of the contract without any just or valid cause, while the other is on the
compensation that the law aims to give to seafarers who are rendered unable to resume sea
service due to work-related disease. Thus, we cannot rule that Simbajon’s contract had been
preterminated without any just or valid cause, and hold him entitled to payment of his salaries
for the unexpired portion of his contract. Otherwise we would be violating petitioners’ due
process rights.
BAHIA SHIPPING SERVICES, INC. and FRED OLSEN CRUISE LINES LIMITED vs.
CRISANTE C. CONSTANTINO
G.R. No. 180343, July 9, 2014, J. Brion
Under the POEA-SEC, it is the company-designated physician who declares the fitness to
work of a seafarer who sustains a work-related injury/illness or the degree of the seafarer’s
disability. While a seafarer is not precluded from seeking a second opinion on his medical condition
or disability, a finding by his doctor of choice in contrast with that made of the company-designated
physician, necessitates the appointment of a third doctor whose decision shall be final and binding.
Such disagreement should have been referred to a third doctor jointly by the employer and the
seafarer. In the case at bar, the non-referral cannot be blamed on the employer. Since it was the
seafarer who consulted another doctor without informing his employer, he should have actively
requested that the disagreement be referred to a final and binding third opinion. In the absence of
any request from him, the employer-company cannot be expected to respond. As such, in the
absence of a third doctor resolution of the conflicting assessments between the doctors, the
assessment of the company-designated physician as to the seafarer’s health should stand.
Facts:
On February 27, 2002, Crisante C. Constantino (Constantino) entered into a nine-month

contract of employment as utility with Bahia Shipping, Services, Inc. and its principal, Fred Olsen
Cruise Lines, Limited (petitioners), for the vessel MIS Braemar. The contract had been verified
and approved by the Philippine Overseas Employment Administration (POEA) and he boarded
the vessel on March 26, 2002.
Sometime in April 2002 while at work onboard the vessel, Constantino complained of low
back pain radiating to his right thigh after allegedly lifting several pieces of heavy luggage. The
ship doctor gave him medications and advised him to rest. When the vessel arrived at the
Barbados, he was referred to a shore-based physician, orthopedic surgeon Dr. Jerry A.W. Thorne,
for examination and magnetic resonance imaging (MRI). The MRI revealed mild to moderate
desiccation of Constantino’s lumbar intervertebral disc. Dr. Thorne diagnosed him to be suffering
from an acute exacerbation of a pre-existing lumbar disc syndrome and declared him unfit to
work for 10 days.
On April 25, 2002, Constantino was repatriated and referred to petitioners’ physician, Dr.
Robert D. Lim (Dr. Lim) of the Metropolitan Hospital, who placed him under the care of an
orthopedic surgeon. He underwent an excision biopsy of a mass in his right flank and was
subjected to medication, treatment, rehabilitation and therapy for several months starting early
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May 2002until October 2, 2002 when Dr. Lim issued a report on his medical condition, stating
that "patient is now fit to work."On the same day, he accepted and concurred with a Certificate
of Fitness for Work.
Despite these developments, he engaged the services of a lawyer to claim disability

compensation from the petitioners and, to explore a possible settlement with them. On May 31,
2003, he consulted a physician of his choice, Dr. Marciano Almeda (Dr. Almeda), an occupational
medicine and orthopedics specialist. Dr. Almeda assessed him to have suffered from permanent
partial disability with a Grade 11 impediment under the POEA Standard Employment Contract
(POEA-SEC) and declared him unfit for further sea duties. The petitioners denied the claim,
prompting him to file a complaint for disability benefits, illness allowance, reimbursement of
medical expenses, damages and attorney’s fees against them.
On the one hand, Constantino alleged before the labor arbiter that despite the treatment
given to him by the company-designated physicians, his ailment had not improved. He claimed
that his back pain continued. Considering it as self-serving, he rejected Dr. Lim’s medical report
on his condition, particularly his fit to work assessment. On the other hand, the petitioners
argued that his claim should fail considering that immediately on his repatriation, he underwent
regular and rigorous examination and was subjected to specialized treatments, tests and
procedures, including surgery and therapy sessions, administered or supervised by its accredited
doctors and specialists, at their expense. They also contended that as he had executed the
certificate of fitness for work on October 2, 2002, he is estopped from questioning the findings of
their accredited doctors.
Eventually, the Labor Arbiter rendered a decision dismissing the complaint for lack of
merit. The said decision was affirmed by the NLRC. On appeal, the CA found the medical report
of Dr. Almeda, Constantino’s chosen physician, more credible as it was based on his own personal
assessment of Constantino’s ailment and he is more qualified than Dr. Lim, who is not a specialist
in orthopedics. It further held that it cannot rely on the certification of fitness for work signed by
Constantino as it was in the nature of a quitclaim where it was not even shown that he received
anything in signing the document. The petitioners moved for, but failed to secure, a
reconsideration of the CA decision. Hence, this petition.
Issue:
Whether or not Constantino is entitled to claim permanent disability compensation from

petitioners.
Ruling:
Constantino is not entitled to claim permanent disability compensation from petitioners.
First, the employment relationship between Constantino and the petitioners is governed
by the POEA-SEC, otherwise known as the Amended Standard Terms and Conditions Governing
the Employment of Filipino Seafarers On-Board Ocean-Going Vessels. Thus, when the seafarer
enters into an individual contract with the employer, as Constantino did in February 2002, the
terms and conditions of the contract must be in accordance with the POEA-SEC and shall be
strictly and faithfully observed. It is customary therefore that the individual contract between the
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seafarer and the employer is verified and approved by the POEA. As had been declared by the
Court in an earlier ruling, the POEA-SEC is the law between the parties, together with their CBA,
if there is any.
Under the POEA-SEC, it is the company-designated physician who declares the fitness to
work of a seafarer who sustains a work-related injury/illness or the degree of the seafarer’s
disability. Section 20 (B) 3 of the POEA-SEC provides:
Upon sign-off from the vessel for medical treatment, the seafarer shall be entitled to
sickness allowance equivalent to his basic wage until he is declared fit to work or the degree of
his permanent disability has been assessed by the company-designated physician but in no case
shall this period exceed one hundred twenty (120 days)
This Court cannot fault the Labor Arbiter and the NLRC for dismissing the complaint as
it was in accordance with the above-cited provision of the POEA-SEC. Dr. Lim, the company-
designated physician, declared Constantino fit to work after almost six months of extensive
examination, treatment and rehabilitation (therapy sessions) by the company-accredited
specialists, including an orthopedic surgeon, upon his repatriation.
This Court thus finds no merit on Constantino’s objections on Dr. Lim’s qualification or
the lack of it when Dr. Lim declared him fit to work. Since he failed to show any bad faith that
attended the company doctors’ medical reports, or that the reports were self-serving and were
issued to allow the petitioners to avoid liability, we rule that the NLRC did not commit any grave
abuse of discretion in its ruling; in short, the NLRC ruling is in accord with the facts and the law.
Second, the third paragraph of the Section 20 (B)3 of the POEA-SEC states that "If a doctor
appointed by the seafarer disagrees with the assessment of the company-designated physician, a
third doctor may be agreed jointly between the Employer and the seafarer and the third doctor’s
decision shall be final and binding on both parties. Clearly, Constantino was not precluded from
seeking a second opinion on his medical condition or disability. He did consult on May 31, 2003
with Dr. Almeda whose assessment of his medical condition and disability disagreed with that of
Dr. Lim. Dr. Almeda found Constantino unfit to work, although he gave him a POEA-SEC Grade
11 impediment equivalent to permanent partial disability as compared with the fit-to-work
assesssment of Dr. Lim who managed the petitioners’ medical team handling his treatment and
rehabilitation. The disagreement should have been referred to a third doctor for final
determination, jointly by Constantino and the petitioners. There was no such referral. To our
mind, the non-referral cannot be blamed on the petitioners. Since Constantino consulted with
Dr. Almeda without informing the petitioners, he should have actively requested that the
disagreement between his doctor’s assessment and that of Dr. Lim be referred to a final and
binding third opinion.
In the absence of any request from Constantino (as shown by the records of the case), the
employer-company cannot be expected to respond. As the party seeking to impugn the
certification that the law itself recognizes as prevailing, Constantino bears the burden of positive
action to prove that his doctor’s findings are correct, as well as the burden to notify the company
that a contrary finding had been made by his own physician. Upon such notification, the
company must itself respond by setting into motion the process of choosing a third doctor who,as
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the POEA-SEC provides, can rule with finality on the disputed medical situation. In the absence
of a third doctor resolution of the conflicting assessments between Dr. Lim and Dr. Almeda, Dr.
Lim’s assessment of Constantino’s health should stand. Thus, the CA’s conclusion that
Constantino's inability to work for more than 120 days rendered him permanently disabled
cannot be sustained.
Third, the Certificate of Fitness for Work executed by Constantino cannot be a quitclaim
that should be looked upon with disfavor. It signified, as earlier pointed out, his concurrence
with the Dr. Lim's fit-to-work declaration. Moreover, nothing in the records substantiates his
submission that he signed the document only because the petitioners assured him of re-
deployment or that he applied for redeployment but was refused.
ROSEMARIE ESMARIALINO vs. EMPLOYEES’ COMPENSATION COMMISSION, SOCIAL

SECURITY SYSTEM and JIMENEZ PROTECTIVE and SECURITY AGENCY
G.R. No. 192352, July 23, 2014, J. Reyes
Rosemarie Esmarialino filed an application for the Employees’ Compensation Death

Benefits before the SSS. She contends there is a causal connection between Leukemia to her late
husband’s job as a security guard. SSS denied her claim. Such denial was affirmed by ECC and CA.
In affirming the ruling of the CA, the Supreme Court held that the principles of presumption of
compensability” and “aggravation” found in the old Workmen’s Compensation Act is expressly
discarded under the present compensation scheme. The new principle being applied is a system
based on social security principle; thus, the introduction of “proof of increased risk”. Since
Rosemarie failed to present evidence which would indicate the connection between Leukemia and
her husband’s job, her application necessarily fails.
Facts:
Rosemarie’s husband, Edwin C. Esmarialino (Edwin), with SS No. 331555504, worked as a

Security Guard for Jimenez Protective and Security Agency since May, 1993. For the years 2002,
2003 and 2004, Edwin was assigned at the Mercury Drug Store Gagalangin Branch. In May, 2004,
Edwin was diagnosed through biopsy with Acute Myelogenous Leukemia at the Chinese General
Hospital. On March 20, 2005, he died.
Rosemarie filed an application for EC death benefits which was denied by the SSS on the
ground that “there is no causal relationship between Acute Myelogenous Leukemia to the
member’s job as a security guard.” Rosemarie appealed the SSS decision to the ECC. The ECC
likewise dismissed the claim.
To challenge the ECC’s denial of her claims, Rosemarie filed before the CA a petition for
review under Rule 43 of the Rules of Court. Rosemarie ascribed grave error on the part of the ECC
when it concluded that leukemia, which significantly contributed to Edwin Esmarialino’s (Edwin)
death, had no causal relation with the work of a security guard. Rosemarie argued that Edwin’s
employment regularly required him to take either straight 12 or 24 hours of duty, with only a
24hour rest period on the last day of each month. Edwin was thus constantly sleep deprived and
his immune system became weak. Eventually, he succumbed to leukemia. Citing Government
Service Insurance System v. Cuntapay, the ECC argued that medical evidence is indispensable, as
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in this case, where the causal connection between one’s work and disease is not apparent to a lay
man or readily observable without the conduct of a medical examination. The ECC pointed out
that if Rosemarie’s claims would be granted, it would be tantamount to compensating every
employee’s sickness brought about by a weakened immune system to the detriment of the State
Insurance Fund.
On November 10, 2009, the CA rendered the herein assailed Decision affirming the ECC’s
ruling. Hence, this petition.
Issue:
Whether the death benefits under Workmen Compensation should be paid to Rosemarie
despite the absence of proof that leukemia is work-related illness.
Ruling:
No. To say that since the proof is not available, therefore, the trust fund has the obligation
to pay is contrary to the legal requirement that proof must be adduced. The existence of
otherwise nonexistent proof cannot be presumed. It is well to stress that the principles of
“presumption of compensability” and “aggravation” found in the old Workmen’s Compensation
Act is expressly discarded under the present compensation scheme. As illustrated in the said Raro
case, the new principle being applied is a system based on social security principle; thus, the
introduction of “proof of increased risk.”
The law, as it now stands requires the claimant to prove a positive thing — the illness was
caused by employment and the risk of contracting the disease is increased by the working
conditions. To say that since the proof is not available, therefore, the trust fund has the obligation
to pay is contrary to the legal requirement that proof must be adduced. The existence of
otherwise nonexistent proof cannot be presumed. Compassion for the victims of diseases not
covered by the law ignores the need to show a greater concern for the trust fund to which the
tens of millions of workers and their families look to for compensation whenever covered
accidents, diseases and deaths occur.
JORAINA DRAGON TALOSIG vs. UNITED PHILIPPINES LINES, INC, ET AL

G.R. No. 198388, July 28, 2014, CJ. Sereno
In Quizora v. Denholm Crew Management (Phils.), Inc., this Court categorically declared
that the petitioner cannot simply rely on the disputable presumption provision mentioned in
Section 20(B)(4) of the 2000 POEA-SEC. As he did so without solid proof of work-relation and work-
causation or work-aggravation of his illness, the Court cannot provide him relief. The disputable
presumption provision in Section 20(B) does not allow him to just sit down and wait for respondent
company to present evidence to overcome the disputable presumption of work-relatedness of the
illness. Contrary to his position, he still has to substantiate his claim in order to be entitled to
disability compensation. He has to prove that the illness he suffered was work-related and that it
must have existed during the term of his employment contract. He cannot simply argue that the
burden of proof belongs to respondent company. On that note, we emphasize that making factual
findings based only on presumptions and absent the quantum of evidence required in labor cases is
an erroneous application of the law on compensation proceedings. This Court has ruled in Gabunas,
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Sr. v. Scanmar Maritime Services, Inc., citing Government Service Insurance System v. Cuntapay,
that claimants in compensation proceedings must show credible information that there is probably
a relation between the illness and the work. Probability, and not mere possibility, is required;
otherwise, the resulting conclusion would proceed from deficient proof.
Facts:
Petitioner Joraina Talosig (Joraina) is the widow of Vladimir Talosig (Talosig), a seafarer
hired as an assistant butcher in the ship MS Zuiderdam. The vessel is owned by respondent
Holland American Line Wastours, Inc. through its local manning agent, respondent United
Philippine Line, Inc. (UPLI).
In August 2005, Talosig and respondent executed a Contract of Employment

incorporating the Standard Terms and Conditions Governing the Employment of Filipino
Seafarers on Board Ocean- Going Vessels (Standard Employment Contract) as prescribed by the
Philippine Overseas Employment Administration (POEA). The duration of the contract was
twelve (12) months. Talosig underwent the required Pre-Employment Medical Examination
(PEME) prior to his deployment. He passed the PEME and was declared fit to work. He boarded
MS Zuiderdamon 26 August 2005.
During his employment with respondent, he was confined in the South Miami Hospital
sometime in December 2005 after suffering a month of rectal bleeding and lower abdominal pain.
He was then diagnosed with a malignant neoplasm infiltrating colonic mucosa.
Subsequently, he was medically repatriated. Upon arrival in the Philippines on 24

December 2005, he was immediately confined at the Asian Hospital. There he was diagnosed to
be suffering from colon cancer, Stage IV — the most advanced stage thereof. After months of
confinement and treatment for his illness, he eventually passed away as a result of
cardiopulmonary arrest secondary to sepsis and multiple organ failure secondary to colon cancer,
Stage IV (bone metastasis).
Joraina, Talosig’s widow, thereafter filed a Complaint with the National Labor Relations
Commission (NLRC) for death benefits, damages and attorney’s fees.
Issue:
Whether or not the death of Talosig is a compensable death.
Ruling:
No. The death of Talosig is not compensable death.
The denial of Talosig’s claim is based on two grounds: (1) that at the time of his death,
Talosig was no longer under the employment of respondents; and (2) that there was neither any
showing that the cause of his death was one of those covered by the POEA Standard Employment
Contract, nor was there any proof that it was work-related.
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It is undeniable that the death of a seafarer must have occurred during the term of his
contract of employment for it to be compensable.
Section 32-A of the POEA Standard Employment Contract considers the possibility of
compensation for the death of a seafarer occurring after the termination of the employment
contract on account of a work-related illness. But for death to be compensable, under this
provision, the claimant must fulfill all the requisites for compensability. Further, petitioner is
correct in that a disputable presumption in favor of the compensability of an illness suffered by
a seafarer during the term of his contract is provided under Section 20 B(4)[14]of the POEA
Standard Employment Contract. This disputable presumption works in favor of the employee
pursuant to the following mandate under Executive Order No. 247 dated 21 July 1987, under
which the POEASEC was created: “to secure the best terms and conditions of employment of
Filipino contract workers and ensure compliance Section 32-A of the POEA Standard
Employment Contract considers the possibility of compensation for the death of a seafarer
occurring after the termination of the employment contract on account of a work-related illness.
But for death to be compensable, under this provision, the claimant must fulfill all the requisites
for compensability. Hence, unless contrary evidence is presented by the seafarer’s employer/s,
this disputable presumption stands.
In this case, The Court agrees with the CA that colon cancer is not one of those types of
cancer that are compensable under Section 32 of the POEA Standard Employment Contract. The
Court is aware that we previously ruled that death caused by colon cancer may be compensable.
In Leonis Navigation Co., Inc. v. Villamater this Court has ruled that it is true that under Section
32A of the POEA Standard Employment Contract, only two types of cancers are listed as
occupational diseases — (1) Cancer of the epithelial lining of the bladder (papilloma of the
bladder); and (2) cancer, epithellematous or ulceration of the skin or of the corneal surface of the
eye due to tar, pitch, bitumen, mineral oil or paraffin, or compound products or residues of these
substances. Section 20 of the same Contract also states that those illnesses not listed under
Section 32 are disputably presumed as work-related. Section 20 should, however, be read together
with Section 32-A on the conditions to be satisfied for an illness to be compensable, to wit: For
an occupational disease and the resulting disability or death to be compensable, all the following
conditions must be established: 1. The seafarer’s work must involve the risk described herein; 2.
The disease was contracted as a result of the seafarer’s exposure to the described risks; 3. The
disease was contracted within a period of exposure and under such other factors necessary to
contract it;4. There was no notorious negligence on the part of the seafarer.
In Quizora v. Denholm Crew Management (Phils.), Inc., this Court categorically declared
that the petitioner cannot simply rely on the disputable presumption provision mentioned in
Section 20(B) (4) of the 2000 POEA-SEC. As he did so without solid proof of work-relation and
work-causation or work-aggravation of his illness, the Court cannot provide him relief. The
disputable presumption provision in Section 20(B) does not allow him to just sit down and wait
for respondent company to present evidence to overcome the disputable presumption of work-
relatedness of the illness. Contrary to his position, he still has to substantiate his claim in order
to be entitled to disability compensation. He has to prove that the illness he suffered was work-
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related and that it must have existed during the term of his employment contract. He cannot
simply argue that the burden of proof belongs to United Philippine Lines.
In other words, the claimant must not merely rely on the disputable presumption, but
must be able to present no less than substantial evidence to support her claim. Substantial
evidence is more than a mere scintilla. It must reach the level of relevant evidence that a
reasonable mind might accept as sufficient to support a conclusion. As aptly ruled by the CA,
Talosig did not present any proof of a causal connection or at least a work relation between the
employment of Talosig and his colon cancer. Talosig merely relied on presumption of causality.
She failed either to establish or even to mention the risks that could have caused or, at the very
least, contributed to the disease contracted by Talosig.
On that note, the Court emphasizes that making factual findings based only on
presumptions and absent the quantum of evidence required in labor cases are an erroneous
application of the law on compensation proceedings. This Court has ruled in Gabunas, Sr. v.
Scanmar Maritime Services, Inc., citing Government Service Insurance System v. Cuntapay, that
claimants in compensation proceedings must show credible information that there is probably a
relation between the illness and the work. Probability, and not mere possibility, is required;
otherwise, the resulting conclusion would proceed from deficient proof.
STATUS MARITIME CORPORATION, MS. LOMA B. AGUIMAN, FAIRDEAL GROUP

MANAGEMENT S.A., and MT FAIR JOLLY vs. SPOUSES MARGARITO B. DELALAMON
and PRISCILA A. DELALAMO.
G.R. No. 198097, July 30, 2014, J. Reyes
Section 20(E) of the POEA-SEC is clearly states that a seafarer who knowingly conceals and
does not disclose past medical condition, disability and history in the pre-employment medical
examination constitutes fraudulent misrepresentation and shall disqualify him from any
compensation and benefits. This may also be a valid ground for termination of employment and
imposition of the appropriate administrative and legal sanctions. Thus, for knowingly concealing
his diabetes during the PEME, Sps. Delalamo committed fraudulent misrepresentation which under
the POEA-SEC unconditionally barred his right to receive any disability compensation or illness
benefit
Facts:
Margarito was hired by Status Maritime Corporation (Status Maritime), for and in behalf
of its principal, Fairdeal Group Management S.A. (Fairdeal), as Chief Engineer with a monthly
basic salary of US$1,300.00. The employment contract was originally for a period of nine (9)
months from July 26, 2005 to April 26, 2006 but Margarito later on requested for, and was
granted, extension until October 2006.
In September 2006, while the vessel was in United Arab Emirates (UAE), Margarito
complained of loss of appetite. He was sent to the National Medical Center at the Port of Fujairah,
UAE, for diagnosis and treatment. Ina Medical Report dated September 2, 2006, Margarito was
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diagnosed with "Renal Insufficiency: Diabetes Mellitus; IHD Blood+CBC+Anemia." He was
medically repatriated on September 6, 2006.
Margarito and his wife Priscila (respondents) filed a complaint before the Labor Arbiter
(LA) for the payment of permanent disability benefits, sickness allowance, damages and
attorney’s fees against Fairdeal, M/T Fair Jolly, Status Maritime and its President, Loma B.
Aguiman
For their part, the petitioners denied any liability for Margarito’s monetary claims. They
asserted that he failed to comply with the requirement of reporting to the petitioners within three
(3) working days from his arrival for a post-employment medical examination. Also, according to
the petitioners,
The LA found no merit in the respondents’ complaint. This was affirmed by the NLRC.
On appeal, the CA reversed the findings of the labor tribunals. The CA held that Margarito was
exempt from complying with the 3-day mandatory reporting requirement because when he
arrived in the Philippines, his physical condition was already deteriorating and was in need of
urgent medical attention. Thus, it could not be expected of him to prioritize the reporting
requirement before attending to his medical needs. Also, his wife actually notified the petitioners
of his medical condition, through Allan Lopez. The CA further ruled that Margarito’s cause of
death is actually listed as an occupational disease under the POEA-SEC.
Issue:
Whether or not Margarito is entitled to the payment of permanent disability benefits amd
sickness allowance.
Ruling:
No, he is not.
While the medical episodes that transpired after Margarito’s disembarkation from the
vessel show that he was already in a deteriorating physical condition when he arrived in the
Philippines and it cannot be reasonably expected of him to prioritize the errand of personally
reporting to the petitioners’ office instead of yielding to the physical strain caused by his serious
health problems, the Court ruled that Margarito is disqualified from receiving compensation
benefits for knowingly concealing his pre-existing illness of diabetes.
In other words, notwithstanding that his failure to report within 3-days is excusable,
Margarito is still disqualified from receiving any compensation or benefits for his illness because
he did not disclose during his PEME that he was suffering from diabetes. Section 20(E) of the
POEA-SEC is clear on this matter:
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E. A seafarer who knowingly conceals and does not disclose past medical
condition, disability and history inthe pre-employment medical examination
constitutes fraudulent misrepresentation and shall disqualify him from any
compensation and benefits. This may also be a valid ground for termination of
employment and imposition of the appropriate administrative and legal
sanctions.
The following portions of Dr. Dacanay’s medical report dated May 17, 2007 show that
Margarito knowingly concealed his pre-existing illness of diabetes when he was subjected to
PEME: "Based on patient’s Pre-Employment Medical Examination dated July 21, 2005, patient has
unremarkable past medical history and was pronounced fit to work as seaman during that time.
However, during patient’s initial evaluation, he claimed to be diabetic for almost 6 years and was
diagnosed in a clinic in Parañaque and was maintained on Metformin 500mg since then.
The fact that Margarito passed his PEME cannot excuse his willful concealment nor can
it preclude the petitioners from rejecting his disability claims. PEME is not exploratory and does
not allow the employer to discover any and all pre-existing medical condition with which the
seafarer is suffering and for which he may be presently taking medication. The PEME is nothing
more than a summary examination of the seafarer’s physiological condition; it merely determines
whether one is "fit to work" at sea or "fit for sea service" and it does not state the real state of
health of an applicant. The "fit to work" declaration in the PEME cannot be a conclusive proof to
show that he was free from any ailment prior to his deployment.
Thus, for knowingly concealing his diabetes during the PEME, Margarito committed
fraudulent misrepresentation which under the POEA-SEC unconditionally barred his right to
receive any disability compensation or illness benefit. This finding renders any issue on work-
relatedness irrelevant since the premise which bars disability compensation is the fraudulent
misrepresentation of a pre-existing disease and not the fact that it was pre-existing.
It is true that the pre-existence of an illness does not irrevocably bar compensability
because disability laws still grant the same provided the seafarer’s working conditions bear causal
connection with his illness. These rules, however, cannot be asserted perfunctorily by the
claimant as it is incumbent upon him to prove, by substantial evidence, as to how and why the
nature of his work and working conditions contributed to and/or aggravated his illness. The
respondents failed to discharge this burden of proof.
No evidence is on record showing the specific essential facts on how and why Margarito’s
working conditions exacerbated his diabetes which in turn gave rise to its various complications,
one of which led to his death. The respondents failed to particularly describe his working
conditions while on sea duty. Also, no expert medical opinion was presented regarding the causes
of his diabetes.
On record are mere general statements presented as self-serving allegations which were
not validated by any written document visibly demonstrating that the working conditions on
board the vessel served to worsen Margarito’s diabetes.
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OSG SHIPMANAGEMENT MANILA, INC, et al. vs. JOSELITO B. PELLAZAR
The mere lapse of the 120-day period itself does not automatically warrant the payment of
permanent total disability benefits. Hence, the NLRC could not have gravely abused its discretion
in not granting Pellazar permanent total disability benefits based on this as the entitlement to
disability is governed not by the period of disability per se but by the specific provisions of the law
and contract. Since there is a conflict in the assessment of the company-designated physicians and
Dr. Sabado’s certification in relation to Pellazar’s fitness or unfitness to work, the matter should
have been referred to a third doctor for final determination as required by the POEA-SEC and the
parties’ CBA. Since Pellazar was responsible for the non-referral to the third doctor because of his
failure to inform the manning agency that he would be consulting Dr. Sabado, he should suffer the
consequences of the absence of a binding third opinion. Thus, the NLRC was well within the bounds
of its jurisdiction, in upholding the disability assessment of Drs. De Guzman and Banaga as against
Pellazar’s physician of choice. Since the company-designated physicians gave Pellazar only a Grade
10 disability - and not a permanent total disability - he cannot be entitled to the full disability
benefits
Facts:
Joselito B. Pellazar (Pellazar), an oiler in the vessel MIT Delphina, filed a complaint for
permanent total disability benefits and damages against OSG Ship management. Pellazar was
deployed to the M/T Delphinaon and while he was on duty onboard the vessel, his right hand
was injured after it was struck by a solid iron pipe. Later, he was medically repatriated.
Upon his arrival in Manila, Pellazar reported to OSG Manila and was referred to the
company-designated physicians, (Dr. De Guzman) and (Dr. Banaga). For the duration of
Pellazar’s treatment and evaluation, he was subjected to an x-ray examination, went through
therapy sessions and was referred to an orthopedic specialist, as well as a physiatrist. The
company-designated physicians gave Pellazar a Grade 10 disability rating for "loss of grasping
power for large objects between fingers and palm of one hand."
On September 30, 2006, Pellazar consulted a physician of his choice, (Dr. Sabado) of the
Dagupan Orthopedic Center in Dagupan City, who certified that he was "permanently unfit for
any sea duty." In addition to Dr. Sabado’s certification, Pellazar claimed that despite the lapse of
120 days, and the fact that he had already undergone maximum medical care, he was still unfit
for sea work; thus, the complaint for disability benefits under the Collective Bargaining
Agreement (CBA).
The OSG Ship management denied liability. The LA ruled in Pellazar’s favor and awarded
him permanent total disability benefits. However, the NLRC modified the labor arbiter’s decision.
It ruled that Pellazar is entitled only to an award of $10,075.01 which is the equivalent of a Grade
10 disability in accordance with the disability rating given to him by the company designated
physicians. It gave more weight tothe assessment of the company designated physicians,
particularly Dr. Banaga, over that of Dr. Sabado who examined Pellazar for only a day. The CA
reversed the NLRC rulings and, reinstated LA Darlucio’s award of permanent total disability
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benefits to Pellazar thereby disregarding the Grade 10 disability rating—in accordance with the
POEA-SEC—of the company-designated physicians.
Issue:
Whether or not the CA erred when it automatically declared Pellazar permanently and
totally disabled for the reason that he had been unable to work for more than 120 days from his
repatriation
Ruling:
Yes, it is for the reason that mere lapse of the 120 day period does not warrant payment
of permanent total disability benefits
Entitlement to disability benefits by seamen on overseas work is a matter governed, not

only by medical findings but, by Philippine law and by the contract between the parties. By
contract, the POEA Standard Employment Contract and the parties' CBA bind the seaman and
his employer to each other. The terms under the POEA-SEC are to be read in accordance with
what the Philippine law provides.
The mere lapse of the 120-day period itself does not automatically warrant the payment
of permanent total disability benefits. Hence, the NLRC could not have gravely abused its
discretion in not granting Pellazar permanent total disability benefits based on this as the
entitlement to disability is governed not by the period of disability per se but by the specific
provisions of the law and contract. It must be observed that Pellazar continued to undergo
medical treatment under the care of the petitioners’ company designated doctors until he was
finally given a Grade 10 disability in August 2006.
Under the CBA and the POEA-SEC, it is the company-designated physician who shall
determine a seafarer’s disability or his fitness to work. In granting Pellazar a Grade 10 disability
rating in accordance with the finding of the company designated physician, the NLRC simply
observed the provisions of the parties’ POEA-SEC. For this reason, no grave abuse of discretion
can similarly be imputed against the NLRC.
The NLRC’s reliance on the findings of company- designated physician is not tainted with
grave abuse of discretion on two grounds: non-compliance with the procedure under the POEA-
SEC and CBA and the company designated physician’s findings, although not binding on the
Court, generally prevails over other medical findings.
Under the POEA-SEC and the AMOSUP/IMEC TCCC CBA, the degree of disability arising
from a work-connected injury or illness of a seafarer or his fitness to work shall be assessed by
the company- designated physician to make the employer liable.
In the present case, since there is a conflict in the assessment of the company-designated
physicians and Dr. Sabado’s certification in relation to Pellazar’s fitness or unfitness to work, the
matter should have been referred to a third doctor for final determination as required by the
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POEA-SEC and the parties’ CBA. Since Pellazar was responsible for the non-referral to the third
doctor because of his failure to inform the manning agency that he would be consulting Dr.
Sabado, he should suffer the consequences of the absence of a binding third opinion. Thus, the
NLRC was well within the bounds of its jurisdiction, in upholding the disability assessment of
Drs. De Guzman and Banaga as against Pellazar’s physician of choice.
By recognizing that a disagreement between the company designated physicians and the
physician chosen by the seafarer may exist, the POEA-SEC itself impliedly recognizes the
seafarer’s right to request a second medical opinion from a physician of his own choice. That the
seafarer should not be prevented from seeking an independent medical opinion proceeds from
the theory that a company-designated physician, naturally, may downplay the compensation due
to the seafarer because that is what the employer, after all, expects of him. Accordingly, the Court
observed that labor tribunals and the courts are not bound by the medical findings of the
company-designated physician and that the inherent merits of its medical findings will be
weighed and duly considered.
However, even on this context, the NLRC’s ruling awarding Pellazar disability benefits
based on the Grade 10 rating of Drs. De Guzman and Banaga can fully withstand a Rule 65
challenge since the Grade 10 rating had ample basis in the extensive evaluation and treatment of
Pellazar by these two company doctors, including an orthopedic specialist and a physiatrist.
In stark contrast, Dr. Sabado, Pellazar’s chosen physician, examined him only once and
could have treated him for a few hours only, considering as the petitioners point out, that Pellazar
came all the way from Antipolo, where he resides, to Dagupan City, where Dr. Sabado is
practicing his profession. It is as if, the petitioners aver, Pellazar sought out Dr. Sabado in
Dagupan City for a favorable certification.
While Dr. Sabado’s diagnosis was consistent with that of the company-designated
physicians (which centered on the injury in Pellazar’s 5th right finger and the resulting loss of
grasping power of said fifth finger), Dr. Sabado certified Pellazar to be permanently unfit for sea
service. Notwithstanding Dr. Sabado’s unfit-to-work certification (which the LA relied upon in
ruling in Pellazar’s favor), the NLRC gave more credence to the Grade 10 disability rating of
Pellazar than the assessment of Dr. Sabado.
Since the company-designated physicians gave Pellazar only a Grade 10 disability - and
not a permanent total disability - he cannot be entitled to the full disability benefits of
US$75,000.00 under the AMOSUP-IMEC TCCC CBA.
WALLEM MARITIME SERVICES, INC., et al. vs. DONNABELLE PEDRAJAS, et al.

It is settled that when the death of a seaman resulted from a deliberate or willful act on his
own life, and it is directly attributable to the seaman, such death is not compensable. The death of
a seaman during the term of his employment makes the employer liable to the former's heirs for
death compensation benefits. This rule, however, is not absolute. The employer may be exempt
from liability if it can successfully prove that the seaman's death was caused by an injury directly
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attributable to his deliberate or willful act. Wallem were able to prove that Hernani committed
suicide, Hernani’s death is not compensable and his heirs are not entitled to any compensation or
benefits.
Facts:
In 2004, Wallem Maritime Services, Inc. and Hernani Pedrajas (Hernani) entered into a
contract of employment wherein Hernani was hired as Engine Boy on board the M/V Crown Jade.
In March 2005, during the effectivity of his employment contract and while the vessel was in
Italy, Hernani was found hanging on the Upper Deck B of the vessel with a rope tied to his neck.
Hernani's spouse DonnabellePedrajas (Pedrajas), was informed that Hernani hanged himself and
was found dead in the vessel. She was also informed that investigations were being conducted by
the Italian Government relative to Hernani's death. His body was repatriated back to the
Philippines in April 2005.
Suspecting foul play, Donnabelle sought the assistance of the (PNP) to conduct a forensic
examination on the remains of Hernani and to investigate the cause of his death. Donnabelle
also requested the (NBI) to investigate the incident. After the investigation, the PNP Crime
Laboratory and the NBI concluded that homicide cannot be totally ruled out. Due to the
foregoing, in June 2005, Donnabelle, as beneficiary of Hernani, filed a claim for death
compensation benefits under the POEA Standard Employment Contract and the Associates
Marine Officer's and Seafarer's Union of the Philippines Collective Bargaining Agreement
(AMOSUP-CBA).
The Labor Arbiter (LA) ruled in favor of Wallem and denied Pedrajas’ claim for death
benefits.The NLRC reversed the LA's decision and ruled that Hernani's death was not proven to
be self-inflicted. The CAheld that Wallem failed to discharge its burden of proving that Hernani
committed suicide, so as to evade its liability for death benefits.
Issue:
Whether or not Hernani committed suicide during the term of his employment contract
which would exempt Wallem from paying Hernani's death compensation benefits to his
beneficiaries
Ruling:
Yes, Wallem were able to prove that Hernani committed suicide, Hernani’s death is not
compensable and his heirs are not entitled to any compensation or benefits.
It is settled that when the death of a seaman resulted from a deliberate or willful act on
his own life, and it is directly attributable to the seaman, such death is not compensable. The
death of a seaman during the term of his employment makes the employer liable to the former's
heirs for death compensation benefits. This rule, however, is not absolute. The employer may
be exempt from liability if it can successfully prove that the seaman's death was caused by an
injury directly attributable to his deliberate or willful act. Hence, Pedrajas’ entitlement to any
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death benefit depends on whether Wallem’s evidence suffices to prove that Hernani committed
suicide, and the burden of proof rests on his employer.
In the case at bar, the Medical Examiner appointed by the Italian Court was not merely
limited to the autopsy of the remains of Hernani. The findings of the Italian Medical Examiner
were made after he personally and carefully examined the place immediately after the incident.
The medical examiner had the luxury of investigating the crime scene, the rope used for hanging,
type of knot, temperature and position of the body when found.
Apparent from the foregoing, the report of the Italian Medical Examiner, which stated
that Hernani committed suicide, is more categorical and definite than the uncertain findings of
the PNP Crime Laboratory and the NBI that homicide cannot be totally ruled out. Excerpts from
the PNP and NBI reports would disclose that both agencies were unsure if homicide or suicide
was the underlying cause of Hernani's death. Hence, the Court agrees with the findings of the LA
and his judgment to give weight and credence to the evidence submitted by Wallem proving that
Hernani committed suicide.
Anent the suicide notes left by Hernani to his wife and to the vessel's crew, the CA did
not appreciate the notes due to Wallem’s alleged failure to prove that the notes were written by
Hernani. On their part, Pedrajas’ alleged that since the original copies of the notes were not
presented, but mere photocopies, the same should not be considered by the Court. We cannot
find merit in respondents' protestations against the documentary evidence submitted by
petitioners because they were mere photocopies.
It is settled that proceedings before the NLRC are not covered by the technical rules of
evidence and procedure as observed in the regular courts. The LA and the NLRC are directed to
use every and all reasonable means to ascertain the facts in each case speedily and objectively,
without regard to technicalities of law and procedure all in the interest of substantial justice. In
this light, the LA need not resort to the technical rules of evidence, in order to ascertain whether
the notes were written by Hernani.
Since the Labor Arbiter had, after comparing the suicide notes and the letters presented
by Pedrajas, concluded and determined that the letters were of the handwriting of Hernani, the
CA should have considered these pieces of evidence, in determining whether Hernani committed
suicide, as it explained the reason why Hernani took his life. Further, Wallem were able to explain
why the original copies of the documents were not presented during the proceedings before the
LA. The reason for its non-production is that the notes were in the possession of the Italian
Authorities as part of the evidence in their investigation and will not be released until such time
as a final determination in said proceedings is made. Wallem’s failure to submit the original copy
of the suicide notes is, thus, not a ground for disregarding such note.
RICARDO A. DALUSONG vs. EAGLE CLARC SHIPPING PHILIPPINES, INC., et al.

G.R. No. 204233, September 3, 2014, Acting C.J. Carpio
When a seafarer claims disability due to injuries incurred during work, and the findings of
his physician disagrees with the assessment of the company-designated physician as to the degree
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of his injury, a third doctor may be agreed jointly between the employer and the seafarer and the
third doctor’s decision shall be final and binding on both parties. However where there was no third
doctor appointed by both parties whose decision would be binding on the parties, it is up to the
labor tribunal and the courts to evaluate and weigh the merits of the medical reports of the
company-designated doctor and the seafarer’s doctor. Clearly, the findings of the company-
designated doctor, who, with his team of specialists which included an orthopedic surgeon and a
physical therapist, periodically treated the seafarer Dalusong for months and monitored his
condition, deserve greater evidentiary weight than the single medical report of Dalusong’s doctor,
who appeared to have examined Dalusong only once.
In addition, just because the seafarer is unable to perform his job and is undergoing medical
treatment for more than 120 days does not automatically entitle the seafarer to total and permanent
disability compensation. 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. When the company-
designated physician gave Dalusong a final, permanent partial disability grading beyond the 120-
day period but before the 240 day maximum, then Dalusong is not entitled to permanent disability
benefits.
Facts:
Petitioner Ricardo Dalusong was hired by respondents Eagle Clarc Shipping Philippines,
Inc., Norfield Offshore AS, and/or Capt. Leopoldo Arcillar as Able Seaman on board their vessel.
While he was working on board, the vessel suddenly moved due to a swell, and a crew member
fell directly on Daluson, injuring his right foot. He was brought to the hospital in Texas, where
he was diagnosed with a fractured ankle and his foot was placed in cast. Later, he was repatriated
to the Philippines.
One month after physical therapy, Dr. Cruz, the company-designated doctor, gave
Dalusongan interim disability grading based on the POEA schedule of disability of “grade 8 that
is moderate rigidity or one third loss of motion or lifting power of the trunk.” Upon further
rehabilitation, Dalusong’s condition improved. On July 2010, the company-designated doctor
issued a final disability grading under the POEA schedule of disability of “grade 11 - complete
immobility of an ankle joint in normal position.” Dalusong disagreed with the disability
assessment and consulted Dr. Nicanor Escutin, a physician of his own choice. In his Disability
Report, Dr. Escutin found Dalusong to be suffering from “PARTIAL PERMANENT DISABILITY.”
Dr. Escutin concluded that Dalusong is “unfit for sea duty in whatever capacity as seaman.”
Dalusong filed with the NLRC a complaint against private respondents, claiming full
disability benefits of US$ 80,000.00, sick wages, damages, and attorney’s fees. The LA ruled in
favor of the respondents and did not give probative value to Dr. Escutin because (1) the doctor
who issued the report is not the company-designated doctor mandated under the POEA-
Standard Employment Contract (POEA-SEC);(2) the medical report does not show the manner
by which the examination was conducted; and (3) the medical report was made almost four
months after Dalusong had stopped his medical consultations with the company-designated
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doctor, during which period petitioner could have committed acts which might have aggravated
his condition. Besides, the Labor Arbiter stated that both the company designated doctor and
Dalusong’s doctor found Dalusong to be suffering from partial permanent disability. The LA
found respondents liable to Dalusong in the amount of US$ 12,551 representing disability benefits
plus attorney’s fees equivalent to 10% of the total award.
The NLRC modified the LA decision, and held that Dalusong was totally and permanently
unfit to perform his usual duties and responsibilities, but it did not sustain the US$80,000.00
disability benefits claimed by Dalusong in the absence of a CBA supporting such claim.
The CA ruled that in the absence of adequate tests and examinations to support his
medical report, the findings of Dalusong’s doctor cannot prevail over that of the company-
designated doctor, whose thorough findings were supported by multiple tests and examinations
on Dalusong. It nullified the NLRC’s decision and reinstated the LA’s assignment of grade 11
disability to Dalusong.
Issues:
1. Did the company designated doctor fail to establish Dalusong’s degree of disability?
2. Did Dalusong suffer total and permanent disability because his treatment and
examinations went beyond 120 days?
Ruling:
1. No. The findings of the company-designated doctor, who periodically treated Dalusong
for months and monitored his condition, deserve greater evidentiary weight than the single
medical report of Dalusong’s doctor, who appeared to have examined Dalusong only once.
Section 20(B)(3)15 of the POEA-SEC provides that “[i]f a doctor appointed by the seafarer
disagrees with the assessment [of the company designated doctor], a third doctor may be agreed
jointly between the Employer and the seafarer,” and “[t]he third doctor’s decision shall be final
and binding on both parties.” In this case, there was no third doctor appointed by both parties
whose decision would be binding on the parties. Hence, it is up to the labor tribunal and the
courts to evaluate and weigh the merits of the medical reports of the company-designated doctor
and the sea farer’s doctor. The Labor Arbiter did not give probative value to the medical report
issued by Dalusong’s doctor primarily because there was no evidence of tests and examinations
conducted to support his medical report. On the other hand, the NLRC ruled that the findings of
Dalusong’s doctor, who gave him Grade 1 Disability rating is more appropriate and applicable to
the injury suffered by Dalusong. The Court of Appeals gave more credence to the findings of the
company-designated doctor, which were supported by multiple tests and examinations on
Dalusong, compared to the medical report of Dalusong’s doctor which was not supported by
adequate tests and examinations.
The Court agrees with the Court of Appeals’ ruling, giving more credence to the medical
findings of the company-designated doctor. Contrary to the ruling of the NLRC, Dalusong’s
doctor did not categorically give Dalusong’s grade 1 disability rating which is equivalent to total
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and permanent disability. Dalusong’s physician found Dalusong to be suffering from “PARTIAL
PERMANENT DISABILITY,” and “is UNFIT FOR SEA DUTY in whatever capacity as seaman.”
Aside from this seemingly inconsistent assessment by Dalusong’s doctor, there was no evidence
submitted of medical procedures, examinations or tests which would support his conclusion that
Dalusong is unfit for sea duty in whatever capacity as a seaman. In contrast, the company-
designated doctor gave Dalusong a final disability grading under the POEA schedule of
disabilities of “grade 11-complete immobility of an ankle joint in normal position,” only after
Dalusong had undergone a series of medical tests and examinations, and physical therapy over a
period of six months, during which the company designated doctor issued periodic medical
reports. As the Court aptly statedin Philman Marine Agency, Inc. (now DOHLE-PHILMAN
Manning Agency,Inc.) v. Cabanban, “the doctor who have had a personal knowledge of the actual
medical condition, having closely, meticulously and regularly monitored and actually treated the
seafarer’s illness, is more qualified to assess the seafarer’s disability.” Based on the Disability
Report of Dalusong’s doctor, it appears that he only conducted a physical examination on
Dalusong before issuing his final diagnosis and disability rating on Dalusong’s condition. Clearly,
the findings of the company-designated doctor, who, with his team of specialists which included
an orthopedic surgeon and a physical therapist, periodically treated Dalusong for months and
monitored his condition, deserve greater evidentiary weight than the single medical report of
Dalusong’s doctor, who appeared to have examined Dalusong only once.
2. No. The law, the rules and jurisprudence provide that if the 120 days initial period is
exceeded and no declaration by the company-designate physician that the seafarer is either fit to
work or the degree of permanent disability 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.
Dalusong argues that since his treatment lasted for more than 120days, then his disability
is deemed total and permanent. Dalusong’s contention is not entirely correct. Although Article
192(c)(1), Chapter VI, Title II, Book IV of the Labor Code, as amended, states that a disability
which lasts continuously for more than 120 days is deemed total and permanent, the law makes
a qualification [“except as otherwise provided for in the Rules”].
Section 2, Rule X of the Implementing Rules of Title II, Book IV of the Labor Code, as
amended, states that if the disability is 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.
These provisions should be read in conjunction with Sec. 20(B)(3) of the POEA-SEC,
which provides, in part, that 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
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degree of permanent disability has been assessed by the company-designated physician but in no
case shall this period exceed one hundred twenty (120) days.
The Court, interpreting these provisions in Vergara v. Hammonia Maritime Services, Inc.,
held that 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
this period that a permanent partial or total disability already exists.
Just because the seafarer is unable to perform his job and is undergoing medical treatment
for more than 120 days does not automatically entitle the seafarer to total and permanent
disability compensation. In this case, Dalusong's medical treatment lasted more than 120 days
but less than240 days, after which the company-designated doctor gave Dalusong a final
disability grading under the POEA schedule of disabilities of "grade 11-complete immobility of an
ankle joint in normal position." Thus, before the maximum 240-day medical treatment period
expired, Dalusong was issued afinal disability grade 11 which is merely equivalent to a permanent
partial disability, since under Section 32 of the POEA-SEC, only those classified under grade 1 are
considered total and permanent disability. Clearly, Dalusong is only entitled to permanent partial
disability compensation, since his condition cannot be considered as permanent total disability.
INTERORIENT MARITIME ENTERPRISES, INC. vs. VICTOR M. CREER III

G.R. No. 181921, September 17, 2014, J. Del Castillo
After the expiration of respondent’s contract, he informed the company of his illness but
was not given any doctor’s referral. He was diagnosed initially with pneumonia and asthma then
with tuberculosis. The Court denied his disability benefit claim for non-compliance with the three-
day rule on post-employment medical examination and because respondent’s illness is not
compensable. The Court held that POEA Contract’s provisions must be applied fairly, reasonably
and liberally in favor of the seafarers, for it is only then that its beneficent provisions can be fully
carried into effect. This exhortation cannot, however, be taken to sanction the award of disability
benefits and sickness allowance based on flimsy evidence and/ or even in the face of an unjustified
non-compliance with the mandatory reporting requirement under the POEA Contract.
Facts:
InterOrient hired Victor as Galley Boy/2nd Cook on board the M/V MYRTO owned by
Claidero Shipping Company, Ltd. for nine months, which may be extended for three months
upon mutual consent.
Prior to embarkation, Victor went through the requisite Pre-Employment Medical

Examination (PEME) and was declared fit for sea duty. Victor was tasked to get provisions from
the cold storage which is kept at its coldest temperature to maintain freshness of the food stored.
He would do this either immediately before or after his exposure to intense heat in the galley. He
alleged that while he was to get provisions from the cold storage, he felt a sudden pain in his
chest that radiated to his back. Since then, he experienced incessant cough, nasal congestion,
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difficulty in breathing, physical weakness, chills and extreme apprehension. This condition
persisted until the expiration of his contract.
When he was back to Manila, he reported to the office of InterOrient and informed the
company of the pain he experienced while on board. InterOrient merely advised him to consult
a doctor without giving him any doctor’s referral. He did, however, sign a Receipt and Release
wherein he acknowledged that he received full payment of his monetary entitlements, that he
discharges them from any other liability and that he certifies that he has worked under normal
conditions and has not contracted any illness or injury from work.
Victor then had medical examination at Fatima Medical Clinic, shouldering all expenses.
Although he reported his condition to InterOrient, he was still not given any medical assistance.
Instead, he was merely told to continue medication and consultation.
He went to Heart and Lung Diagnostic Center, where Dr. Ayuyao diagnosed him to be
suffering Community-Acquired Pneumonia 1 and Bronchial Asthma. One month later, Dr.
Ayuyao prescribed Victor with anti-TB medications. Victor claimed that he continued his
medication for nine months. But when he consulted Dr. Purugganan from Citihealth Diagnostic
Center, it was found out that he had far-advanced pulmonary tuberculosis.
Victor consulted another physician, Dr. Vicaldo at the Philippine Heart Center. Dr.
Vicaldo issued a medical certificate indicating that Victor was diagnosed with Hypertension,
Stage II, and Pulmonary Tuberculosis. He gave Victor an impediment grade VIII (33.59%) and
further declared him unfit to resume work as a seaman in any capacity, and that his illness was
considered work-aggravated.
Victor alleged that he regularly informed InterOrient of his sickness. However, he was
neither apprised of his rights to nor paid sickness allowance amounting to US$940.00 as
mandated in the Philippine Overseas Employment Agency (POEA) 2000 Amended Standard
Terms and Conditions of Employment Contract Governing Seafarers.
He then filed with the Labor Arbiter Complaint for permanent disability benefits for
pulmonary tuberculosis, medical reimbursement, sickness allowance, compensatory, moral and
exemplary damages, and attorney’s fees against InterOrient.
The Labor Arbiter dismissed the complaint. It was noted that Victor has not ever made
any formal claim for sickness allowance, medical benefits and disability benefits while on board
the vessel or immediately after his repatriation. Neither did he submit to, nor apply for any post-
employment medical examination within three days from his repatriation, which is a
requirement for claims for sickness and disability benefits. The complaint was only filed 15
months after repatriation. Victor’s appeal to the NLRC was denied.
The Court of Appeals granted Victor permanent disability benefits. The CA found that
Victor was overworked and over-fatigued as a result of the long hours of work required by his
duties and that he was exposed to daily rapid variations in temperature. The CA concluded that
with his daily exposure to these factors which could weaken his immune system, it was not
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impossible that he contracted tuberculosis during the course of his employment. The Receipt
and Release signed by Victor was found unconscionable.
Issue:
Whether or not InterOrient can be held accountable for Victor’s disease even if the same
was diagnosed 11 months after he disembarked from the vessel upon the termination of his
employment contract
Ruling:
No, Victor’s claim was denied. The Court held that Victor’s non-compliance with the
three-day rule on post-employment medical examination is fatal to his cause. It is mandatory
that within three days from his repatriation, he is examined by a company-designated physician.
Victor’s repatriation was not due to any medical reasons but because his employment
contract had already expired. Other than his self-serving allegation that he experienced pain
while on board, he was not able to substantiate the same. There was no showing that he reported
his injury to his officers while on board the vessel; neither did he prove that he sought medical
attention but was refused. He presented no evidence that he indeed requested for medical
attention, much more that he was rebuffed.
The rationale for the rule on mandatory post-employment medical examination within
three days from repatriation by a company-designated physician is that reporting the illness or
injury within three days from repatriation fairly makes it easier for a physician to determine the
cause of the illness or injury. Ascertaining the real cause of the illness or injury beyond the period
may prove difficult. To ignore the rule might set a precedent with negative repercussions, like
opening floodgates to a limitless number of seafarers claiming disability benefits, or causing
unfairness to the employer who would have difficulty determining the cause of a claimant’s
illness because of the passage of time. The employer would then have no protection against
unrelated disability claims.
The Court also ruled that Victor’s illness is not compensable. For an illness to be
compensable, it requires the concurrence of two elements: (1) that the illness must be work-
related; and (2) that the work- related illness must have existed during the term of the seafarer’s
employment contract.
Victor submitted no concrete proof that his illness was contracted during the term of his
contract with InterOrient. Victor never alleged that he was coerced into signing the Receipt and
Release or that he did not understand the same. All that he put forward were bare allegations,
and insistence that his working conditions are proof enough that his work contributed to his
contracting the disease.
He also failed to show that his illness is work-related. Work-related illness is defined as
any sickness resulting in disability or death due to an occupational disease listed under Section
32-A. Pulmonary Tuberculosis is listed as an occupational disease under Section 32-A (18).
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However, for the disability caused by this occupational disease to be compensable, the POEA
Contract provides that all of these conditions must be satisfied: (1) The seafarer’s work must
involve the risks described herein; (2) The disease was contracted as a result of the seafarer’s
exposure to the described risks; (3) The disease was contracted within a period of exposure and
under such other factors necessary to contract it; (4) There was no notorious negligence on the
part of the seafarer.
The Court ruled that Victor failed to comply with these conditions. The Court was not
convinced that Victor’s pulmonary tuberculosis is work-acquired or work-aggravated because if
it were so, then at the outset, Victor should have already been diagnosed with pulmonary
tuberculosis when he sought medical help one month from his repatriation.
While it is undisputed that Victor’s work involved the risks provided in the POEA
Contract (first condition), there was failure to prove that the TB was contracted as a result of his
exposure to the said described risks (second condition).
Likewise, the third and fourth conditions were not satisfied. There was no credible
evidence on record to prove that the TB was contracted within a period of exposure and under
such other factors necessary to contract it. Neither is there substantial evidence presented to
show that his working conditions activated the disease-causing organism that may be dormant
in his system. Pulmonary tuberculosis is airborne and easily transmissible by infected patients.
The risk of being infected, or acquiring, the tuberculosis infection is mainly determined by
exogenous factors. There are so many possibilities how and when Victor could have acquired
pulmonary tuberculosis. Whoever claims entitlement to the benefits provided by law should
establish his right thereto by substantial evidence.
As the Court reiterated in a number of cases, it is "well aware of the principle that,
consistent with the purposes underlying the formulation of the POEA Contract, its provisions
must be applied fairly, reasonably and liberally in favor of the seafarers, for it is only then that its
beneficent provisions can be fully carried into effect. This exhortation cannot, however, be taken
to sanction the award of disability benefits and sickness allowance based on flimsy evidence and/
or even in the face of an unjustified non-compliance with the mandatory reporting requirement
under the POEA Contract."
PEDRO LIBANG, JR. vs. INDOCHINA SHIP MANAGEMENT INC., MR. MIGUEL SANTOS,
and MAJESTIC CARRIERS, INC.
Libang was employed as Cook on board M/V Baltimar Orion. While on board, he
experienced illness which was found to be due to high blood pressure and high blood sugar. He was
repatriated. In the medical certificate of the company-designated physician, he was diagnosed to be
suffering from hypertension which could be pre-existing. Another doctor diagnosed his illness as
secondary Impediment Grade VI. The Court found him to be entitled to disability benefit. Given the
failure of the first doctor to fully evaluate petitioner’s illness, he was justified in seeking the medical
expertise of his physician of choice. The alleged concealment by petitioner of his hypertension
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during his pre-employment medical examination was also unsubstantiated, but was a mere
hearsay.
Facts:
Libang entered into a nine-month employment contract with Indochina Ship

Management, Inc. (ISMI), domestic manning agency acting in behalf of its foreign shipping
company, Majestic. Libang was engaged as a Cook for the vessel M/V Baltimar Orion. In August
2002, he was deployed. He had finished three employment contracts with ISMI before.
In March 2003, while on board, he experienced numbness on the left side of his face,
difficulty in hearing from his left ear, blurred vision of his left eye and speech problem. Thus,
Libang obtained medical attention in Trinidad and Tobago. He was later admitted for three days
in a hospital in Dominican Republic, where he was found to be suffering from high blood
pressure. He also had high blood sugar, with normal hepatic and cardiac enzymes. Libang was
unable to again join M/V Baltimar Orion even after he was discharged from the hospital.
Libang was eventually repatriated. He arrived in the Philippines on April 8, 2003. Two
days later, he was endorsed for medical attention to the company-designated physician, Dr.
Robert Lim of the Marine Medical Services in Metropolitan Hospital. He was treated beginning
April 10, 2003 and was under the care of a cardiologist, neurologist and an
internist/endocrinologist. Dr. Lim issued to Libang a medical certificate indicating that he has
undergone medical/surgical evaluation treatment at Robert D. Lim, MD Marine Medical Services
Metropolitan Hospital from April 10, 2003 to present (August 2, 2003) due to Hypertension,
Diabetes Mellitus Type 2 and Small Pontine Infarct.
In August 13, another medical certificate was issued wherein Dr. Lim noted that based on
pre-employment examination, Libang denied having high blood pressure. However, on history
taking during initial examination, he claimed that he had been hypertensive for about 3 years
already with irregular intake of unrecalled medications so his hypertension could be pre-existing.
As to his Diabetes Mellitus and Small Pontine Infarct, no fasting blood sugar result is noted so it
is difficult to say whether both are pre-existing or not.
Considering Dr. Lim’s failure to assess Libang’s disability, the latter sought medical
attention and assessment from another doctor, Dr. Efren R. Vicaldo of the Philippine Heart
Center. The following were indicated as diagnosis: Hypertensive Cardiovascular Disease,
Diabetes Mellitus, S/P Cerebrovascular accident, left hemiparesis, secondary Impediment Grade
VI (50%).
The document with the heading "Justification of Impediment Grade VI (50%) for Seaman
Pedro L. Libang, Jr." that was attached to Dr. Vicaldo’s medical certificate provided the following
details: When examined, Libang’s blood pressure was elevated at 140/90 mmHg. He had left-
sided motor deficit on the upper and lower extremities. He is now unfit to resume work as seaman
in any capacity. His illness is considered work aggravated. He requires lifetime maintenance
medication both for hypertension and diabetes. This will prevent recurrence of stroke and the
occurrence of other cardiovascular complications such as coronaryartery disease and congestive
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heart failure. He is not expected to land a gainful employment given his medical background. He
needs regular monitoring of his fasting blood sugar and renal function to pre-empt possible renal
complication.
Libang filed with the NLRC a Complaint for disability benefit against ISMI and its former
President Miguel Santos. Respondents disputed any liability by arguing that the disability benefit
being claimed pertained to a pre-existing illness that was concealed by Libang during a pre-
employment medical examination for his deployment in 2002.
The Labor Arbiter granted the petition. The LA stated that Libang had gone through a
thorough and rigid screening process of ISMI before an agreement or the contract of employment
between the parties was reached and actualized. Respondents should not be allowed to make use
of the argument. Also, there simply is no showing that the subject illness was pre-existing.
Hypertension is a health condition that could easily be detected by ordinary modes of physical
examination.
NLRC affirmed this ruling. As shown by Libang, the nature of his work as a cook exposed
him to certain hazards. He was constantly exposed to installation of various kinds of harmful
fumes and emissions and chemicals being used for cleaning, etc. He was also exposed to varying
changes of temperatures of extreme hot and cold, such as in the cold storage and in kitchen
areas.What the law requires is a reasonable work-connection and not a direct one. NLRC held
that there is reasonable basis to conclude that the nature of Libang’s work contributed, even to
small degree, to the development of his illness.
On appeal, the CA ruled in favor of the respondents. It held that the lone assessment
made by Dr.Vicaldo could not have justified the LA’s and NLRC’s finding of a Grade VI disability.
The Philippine Overseas Employment Administration-Standard Employment Contract (POEA-
SEC) requires the company-designated physician to be the one to make a disability assessment
of a seafarer.
Issue:
Whether or not Libang is entitled to disability benefit
Ruling:
Yes, he is entitled. The Court held that the CA erred in finding that the NLRC acted with
grave abuse of discretion when it declared Libang entitled to the disability benefit.
The CA did not nullify the ruling of the NLRC upon a finding that Libang’s illnesses were
pre-existing or not work-related. Thus, the Court did not disturb the factual findings that
Libang’s illnesses were work-related and acquired only during the course of his employment in
M/V Baltimar Orion.
The CA rejected the NLRC’s decision upon finding that Libang’s disability was based
solely on a medical certificate issued by Dr.Vicaldo. There was, however, no dispute that Libang
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suffered from hypertension, diabetes mellitus type 2 and small pontine infarct, as this was
indicated in the medical certificates that were issued by the company-designated physician, Dr.
Lim. But Dr. Lim did not indicate a complete evaluation of Libang’s illnesses and an assessment
of his disability or fitness to work.His assessment was evidently uncertain and the extent of his
examination for a proper medical diagnosis was incomplete.
The alleged concealment by Libang of his hypertension during his pre-employment

medical examination was also unsubstantiated, but was a mere hearsay purportedly relayed to
Dr. Lim by one Dr. Aileen Corbilla, his co-attending physician. A categorical statement from Dr.
Lim that Libang’s illnesses were pre-existing and non-work-related was made only in his affidavit
after the labor complaint had been filed. Dr. Lim gave no explanation for his statement that
Libang’s illnesses were not work-related.
Section 20(B) of the POEA-SEC provides: The liabilities of the employer when the seafarer
suffers work-related injury or illness during the term of his contract are as follows:
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.
Clearly, there was a breach by Dr. Lim of his obligation as the company-designated
physician. He is expected to arrive at a definite assessment of the seafarer’s fitness or permanent
disability within the 120 or 240 days, as the case may be. The Court however did not make any
declaration as to Libang’s disability since the petition is for the reinstatement of the labor
tribunals’ decisions.
Given the failure of Dr. Lim to fully evaluate Libang’s illness, the seafarer was justified in
seeking the medical expertise of his physician of choice. The medical certificate issued by
Dr.Vicaldo included a determination of the disability grade that applied to Libang’s condition.
He was declared to be unfit to resume to work as a seafarer in any capacity. The alleged severity
of Libang’s illnesses could be linked with Dr. Lim’s statement that Libang’s hypertension was
"severe" and that he "had been under the care of a cardiologist, neurologist and endocrinologist."
It is settled that strict rules of evidence are not applicable in claims for compensation and
disability benefits. The respondents could not be allowed to benefit from their physician's
inaction or refusal to disclose the results of the diagnostic tests performed upon Libang, the
extent of the patient's illnesses, and the effect of the severity of these illnesses on his fitness or
disability.
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The Court held that the labor tribunals acted reasonably when they relied upon the
findings of Dr. Vicaldo.
JEBSEN MARITIME INC., APEX MARITIME SHIP MANAGEMENTCO. LLC., AND/OR

ESTANISLAO SANTIAGO vs. WILFREDO E. RAVENA
A seafarer must prove that his illness is an occupational disease to claim disability benefits.
He cannot merely cling to his allegations that the conditions in the engine room aggravated his
illness but must present substantial evidence to prove the same.
Facts:
Ravena was employed by Jebsen and Apex Maritime as engineer. He was medically
checked and was declared fit to work. However, sometime in 2007, he had to be repatriated due
to illness which was later found out to be adenocarcinoma. After reaching the Philippines, he
immediately went home to Iloilo instead of contacting Jebsen in Manila.
After a month, he went to Jebsen to process his claim for disability benefits but Jebsen
denied his claim stating that adenocarcinoma was not an occupational disease. This prompted
Ravena to file a complaint for disability benefits before the Labor Arbiter. The LA ruled in favor
of Ravena. On appeal, the NLRC reversed the decision reiterating that the disease was not an
occupational disease and that Ravena failed to prove that the conditions in the engine room
aggravated his condition. The CA reversed the decision of the NLRC stating that seafarers need
not prove that the disease was work-related. Hence, the present petition.
Issue:
Whether or not Ravena is entitled to disability benefits
Ruling:
No. Section 20-B of the POEA-SEC governs the compensation and benefits for the work-
related injury or illness that a seafarer on board sea-going vessels may have suffered during the
term of his employment contract. This section should be read together with Section 32- A of the
POEA-SEC that enumerates the various diseases deemed occupational and therefore
compensable. Thus, for a seafarer to be entitled to the compensation and benefits under Section
20-B, the disability causing illness or injury must be one of those listed under Section 32-A.
Of course, the law recognizes that under certain circumstances, certain diseases not
otherwise considered as an occupational disease under the POEA-SEC may nevertheless have
been caused or aggravated by the seafarer's working conditions. In these situations, the law
recognizes the inherent paucity of the list and the difficulty, if not the outrightimprobability, of
accounting for all the known and unknown diseases that may be associated with, caused or
aggravated by such working conditions. Hence, the POEA-SEC provides for a disputable
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presumption of work-relatedness for non-POEA-SEC-listed occupational disease and the
resulting illness or injury which he may have suffered during the term of his employment
contract.
This disputable presumption is made in the law to signify that the non-inclusion in the
list of compensable diseases/illnesses does not translate to an absolute exclusion from disability
benefits. In other words, the disputable presumption does not signify an automatic grant of
compensation and/or benefits claim; the seafarer must still prove his entitlement to disability
benefits by substantial evidence of his illness' work-relatedness.
In Cootauco v. MMS Phil. Maritime Services, Inc., the Court categorically declared that
whoever claims entitlement to the benefits provided by law should establish his rights to the
benefits by substantial evidence.
Thus, in situations where the seafarer seeks to claim the compensation and benefits that
Section 20-B grants to him, the law requires the seafarer to prove that: (1) he suffered an illness;
(2) he suffered this illness during the term of his employment contract; (3) he complied with the
procedures prescribed under Section 20-B; (4) his illness is one of the enumerated occupational
disease or that his illness or injury is otherwise work-related; and (5) he complied with the four
conditions enumerated under Section 32-A for an occupational disease or a disputably-presumed
work-related disease to be compensable.
Under these considerations, Ravena's claim must obviously fail; he failed to substantially
satisfy the prescribed requirements to be entitled to disability benefits.
First, Ravena failed to comply with the procedural requirements of Section 20-B of the
POEA-SEC. Under Section 20-B(3), paragraph 2, a seafarer who was repatriated for medical
reasons must, within three working days from his disembarkation, submit himself to a post-
employment medical examination(PEME) to be conducted by the company-designated
physician. Failure of the seafarer to comply with this three-day mandatory reporting requirement
shall result in the forfeiture of his right to claim the POEA-SEC granted benefits.
In this case, the records show that Ravena was repatriated on May 12, 2007; he reported
to Jebsen only on June 18, 2007 or more than one (1) month from the time of his disembarkation.
Without doubt, therefore, Ravena failed to comply with his three-day reporting duty under the
POEASEC. The reporting requirement, of course, is not absolute as we have allowed, in certain
exceptional circumstances, a seafarer's claim despite his non-reporting within the mandated
three-day period, i.e., when the seafarer is physically incapacitated to comply with the reporting
requirement, provided, he gives, within the same three-day period, a written notice of his
incapacity to the manning agency.
The facts of this case, unfortunately, do not support a disregard of the three-day reporting
rule for as soon as he disembarked in Manila, Ravena immediately went to his hometown in Iloilo
which is at a considerable distance from Manila, compared with Jebsen’s office which is in Manila.
Even if he had been physically incapacitated, it would have been easier for him to contact Jebsen
in Manila than to go home in Iloilo. What made matters worse for Ravena was his failure to offer
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an adequate explanation that could have excused his non-reporting within the three-day period.
In the pleadings that he submitted before the LA, the NLRC and even before the CA, he simply
claimed that "he opted to go straight home to Iloilo when no agents from [Jebsens] were present
to fetch him and attend to his medical need."
Second, Ampullary cancer is not an occupational disease. Section 32-A of the POEA-SEC
considers only two types of cancers as compensable occupational disease: (1) cancer of the
epithelial lining of the bladder; and (2) cancer, epitheliomatous or ulceration of the skin or of the
corneal surface of the eye due to certain chemicals. The LA and the CA may have correctly
afforded Ravena the benefit of the legal presumption of work-relatedness. The legal correctness
of the CA's appreciation of Ravena's claim, however, ends here for as we pointed out above,
Section 20-B(4) affords only a disputable presumption that should be read together with the
conditions specified by Section 32-A of the POEA-SEC.
Under Section 32-A, for the disputably-presumed disease resulting in disability to be

compensable, all of the following conditions must be satisfied:
1. The seafarer's work must involve the risks describe therein;

2. The disease was contracted as a result of the seafarer's exposure to
the described risks;
3. The disease was contracted within a period of exposure and under
such factors necessary to contract it; and
Ravena failed to prove the work-relatedness of his ampullary cancer as he failed to satisfy
these conditions. For one, he did not enumerate his specific duties as a 4th engineer or the
specific tasks which he performed on a daily basis on board M/V Tate J. Also, he did not show
how his duties or the tasks that he performed caused, contributed to the development of, or
aggravated his ampullary cancer. He likewise did not specify the substances or chemicals which
he claimed he was exposed to.
The cause of ampullary cancer is medically unknown, although certain risk factors are
believed to contribute to its development, i.e., genetic factors, like patients with familial
adenomatous polyposis, and certain genetic alterations; smoking; and certain diseases such as
diabetes milletus. Ampullary cancer is a rare condition and experts are not certain what
preventive steps, if any, may be taken, although it is known to be more prevalent in men than
women.
INC SHIPMANAGEMENT, INCORPORATED, et al. vs. BENJAMIN I. ROSALES

Dr. Cruz, the company physician, gave Rosales a partial permanent disability assessment
but a private physician gave him a permanent total disability assessment. Under these
circumstances, the assessment of the company-designated physician is more credible for having
been arrived at after months of medical attendance and diagnosis, compared with the assessment
of a private physician done in one day on the basis of an examination or existing medical records.
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Facts:
On October 12, 2005, INC hired Rosales for a period of ten (10) months as Chief Cook for
the vessel MIV Franklin Strait. Sometime in February 2006, while on board the vessel, Rosales
experienced severe chest pain and breathing difficulties, coupled with numbness on his left arm.
On February 13, 2006, a physician at Mount Sinai Medical Center in Miami, Florida, USA
examined him. He underwent a coronary angiogram and also an angioplasty in the left anterior
artery of his heart. All these were provided by the company at its own expense. Rosales was
thereafter declared unfit to work and was advised to continue treatment in his home country.
On October 10, 2006, Dr. Cruz, the company physician, gave Rosales a partial permanent
disability assessment equivalent to Grade 7 (moderate residuals of disorder) under the POEA-
SEC. The assessment took into account the marked improvement of his condition. On
November 9, 2006, Rosales sought the medical advice of Dr. Efren R. Vicaldo (Dr. Vicaldo), a
cardiologist at the Philippine Heart Center for a second opinion. He gave Rosales a
permanent total disability rating of Grade 1 under the POEA-SEC.
On the strength of Dr. Vicaldo’s more favorable finding, Rosales claimed permanent total
disability benefits from INC. The company denied the claim. Following the denial, Rosales filed
a complaint on December 7, 2006 for disability benefits, illness allowance, and reimbursement of
medical expenses, damages and attorney’s fees against INC before the Arbitration Branch of the
NLRC.
The CA granted the petition in its decision of December 6, 2010, thereby reinstating the
LA’s decision finding Rosales entitled to permanent total disability benefits.INC primarily argues
that the CA erred in finding that there had been grave abuse of discretion in the ruling of the
NLRC; that (1) the disability is measured in terms of gradings, not by the number of days of actual
inability to work; and (2) in a conflict of findings between the company-designated physician and
the private physician, it is the company-designated physician’s findings that should prevail
Issue:
Whether or not Rosales is entitled to full disability compensation benefits because he

was unable to work for one hundred twenty (120) days.
Ruling:
No.
While Rosales was entitled to temporary total disability benefits during his treatment
period (because he could not totally work during this whole period), it does not follow that he
should likewise be entitled to permanent total disability benefits when his disability was assessed
by the company-designated physician after his treatment. He may be recognized to be
have permanent disability because of the period he was out of work and could not work [in this
case, more than one hundred twenty (120) days], but the extent of his disability (whether total or
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partial) is determined, not by the number of days that he could not work, but by the disability
grading the doctor recognizes based on his resulting incapacity to work and earn his wages. It is
the doctor’s findings that should prevail as he/she is equipped with the proper discernment,
knowledge, experience and expertise on what constitutes total or partial disability. His
declaration serves as the basis for the degree of disability that can range anywhere from Grade 1
to Grade 14. Notably, this is a serious consideration that cannot be determined by simply
counting the number of treatment lapsed days.
The company can insist on its disability rating even against a contrary opinion by another
doctor, unless the seafarer expresses his disagreement by asking for the referral to a third doctor
who shall make his or her determination and whose decision is final and binding on the
parties. Since Rosales signed the POEA-SEC, he bound himself to abide by its conditions
throughout his employment. The records show that after obtaining a medical certificate from Dr.
Vicaldo classifying his illness as Grade 1 (contrary to Dr. Cruz’ Grade 7 assessment that the
company insisted on), Rosales immediately proceeded to secure the services of a counsel and
forthwith filed a complaint for disability benefits.
To definitively clarify how a conflict situation should be handled, upon notification that
the seafarer disagrees with the company doctor’s assessment based on the duly and fully disclosed
contrary assessment from the seafarer’s own doctor, the seafarer shall then signify his intention
to resolve the conflict by the referral of the conflicting assessments to a third doctor whose ruling,
under the POEA-SEC, shall be final and binding on the parties. Upon notification, the company
carries the burden of initiating the process for the referral to a third doctor commonly agreed
between the parties.
Thus, as matters stand in the present case, the complaint was premature; it should have
been dismissed as early as the LA’s level since the fit-to-work certification and grading by the
company-designated physician prevails unless a third party doctor, sought by the parties,
declares otherwise.
Even granting that the complaint should be given due course, the Court holds that the
company-designated physician’s assessment should prevail over that of the private
physician. The company-designated physician had thoroughly examined and treated Rosales
from the time of his repatriation until his disability grading was issued, which was from February
20, 2006 until October 10, 2006. In contrast, the private physician only attended to Rosales once,
on November 9, 2006. This is not the first time that this Court met this situation. Under these
circumstances, the assessment of the company-designated physician is more credible for having
been arrived at after months of medical attendance and diagnosis, compared with the assessment
of a private physician done in one day on the basis of an examination or existing medical records.
CATALINO B. BELMONTE, JR vs. C.F. SHARP CREW MANAGEMENT, INC, et al.

The entitlement of a seafarer on overseas employment to disability benefits is governed by

the medical findings, by law and by the parties’ contract.” Section 20-B19 of the POEA-SEC laid out
the procedure to be followed in assessing the seafarer’s disability in addition to specifying the
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employer’s liabilities on account of such injury or illness. The same provision also provides that the
seafarer is not irrevocably bound by the findings of the company-designated physician as he is
allowed to seek a second opinion and consult a doctor of his choice. In case of disagreement between
the findings of the company-designated physician and the seafarer’s private physician, the parties
shall jointly agree to refer the matter to a third doctor whose findings shall be final and binding on
both. The disagreement between the findings of the company-designated physician and Belmonte’s
private doctor was never referred to a third doctor chosen by both CFSCMI and Belmonte, following
the procedure spelled out in Section 20(B), paragraph 3 of the POEA-SEC. Considering the absence
of findings coming from a third doctor, the Court holds that the certification of the company-
designated physician should prevail. The Court does so for the following reasons: first, the records
show that Belmonte only consulted the private physician after his complaint with the LA has been
filed; second, the medical certificate was issued after a one-day consultation; and third, the medical
certification was not supported by particular tests or medical procedures conducted on Belmonte
that would sufficiently controvert the positive results of those administered to him by the company-
Facts:
Belmonte entered into a six (6) months contract of employment with C.F. Sharp Crew
Management, Inc., (CFSCMI) as A/B Cook on board the vessel M/T Summity, with a basic
monthly salary of $698.00. After undergoing the required preemployment medical examination
and being declared fit for sea duty, he was deployed on September 14, 2008.
Unfortunately, on December 12, 2008, Belmonte met an accident on board the vessel
when he was used as a human mannequin during an emergency fire drill exercise. A metal ladder
accidentally hit the right sternoclavicular part of his body from which he sustained an injury. On
December 13, 2008, he was brought to a clinic in France where his x-ray result showed that he
has a fracture at the right sternoclavicular bone. As a result, on December 22, 2008, Belmonte
was repatriated to the Philippines.
Upon his return, Belmonte was referred by CFSCMI to the company-designated

physician, (Dr. Pobre), an Orthopaedic Surgeon, who issued an Initial Medical Report dated
December 23, 2008 assessing Belmonte’s injury as “Fracture, Non-Displaced, Sterno-Clavicular
Junction, Right”. In the Follow-Up Report released on January 27, 2009, Dr. Pobre stated that
Belmonte’s fracture has fully healed, but he still advised the latter to undergo physical therapy at
the right sternoclavicular for at least two weeks. By February 14, 2009, Belmonte had completed
three physical therapy sessions. Thus, in Dr. Pobre’s Final Medical Report dated February 17,
2009, Belmonte was declared “FIT TO WORK and can resume normal sea duties, effective
immediately.”
After almost two years from the time Belmonte was declared fit to work or on January 26,
2011, Belmonte instituted a complaint against the respondents before the LA for disability
benefits, moral and exemplary damages, and attorney’s fees. To support his claim, on March 14,
2011, Belmonte consulted a private doctor, (Dr. Jacinto), to evaluate and determine his health
condition. On even date, Dr. Jacinto issued a medical certificate declaring Belmonte physically
unfit to go back to work.
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Issue:
Whether or not Belmonte is entitled to receive permanent total disability benefits
Ruling:
No, Belmonte is not entitled to receive permanent total disability benefits.
The question of Belmonte’s entitlement to permanent total disability benefits, while

basically a question of law apposite for a Rule 45 review, nevertheless hinges for its resolution on
a factual issue, the question of whether the medical findings of the private doctor should be given
more weight than the findings of the company-designated physician.
In the main, the crux of Belmonte’s argument focuses only on the assumption that just
because he has not been re-hired by CFSCMI, he is deemed to be permanently unfit for sea duty.A
review of the records of this case shows that the pertinent provisions of the parties’ Collective
Bargaining Agreement are similar to those found in the 2000 POEA-SEC, that it is the finding of
the company-designated physician which is controlling. If the doctor appointed by the seafarer
disagrees with the assessment of the company-designated physician, a third doctor may be
agreed jointly between the employer and the seafarer. The third doctor’s finding shall be final
and binding on both parties. Apparently, this procedure was not availed of by Belmonte.
The entitlement of a seafarer on overseas employment to disability benefits is governed

by the medical findings, by law and by the parties’ contract.” Section 20-B19 of the POEA-SEC
laid out the procedure to be followed in assessing the seafarer’s disability in addition to specifying
the employer’s liabilities on account of such injury or illness. The same provision also provides
that the seafarer is not irrevocably bound by the findings of the company-designated physician
as he is allowed to seek a second opinion and consult a doctor of his choice. In case of
disagreement between the findings of the company-designated physician and the seafarer’s
private physician, the parties shall jointly agree to refer the matter to a third doctor whose
findings shall be final and binding on both.
More than this, the disagreement between the findings of the company-designated
physician and Belmonte’s private doctor was never referred to a third doctor chosen by both
CFSCMI and Belmonte, following the procedure spelled out in Section 20(B), paragraph 3 of the
POEA-SEC. Had this been done, Belmonte’s medical condition could have been easily clarified
and finally determined.
Considering the absence of findings coming from a third doctor, the Court holds that the
certification of the company-designated physician should prevail. The Court does so for the
following reasons: first, the records show that Belmonte only consulted the private physician
after his complaint with the LA has been filed; second, the medical certificate was issued after a
one-day consultation; and third, the medical certification was not supported by particular tests
or medical procedures conducted on Belmonte that would sufficiently controvert the positive
results of those administered to him by the company-designated physician.
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ROBERT KUA, CAROLINE N. KUA, and MA. TERESITA N. KUA vs. GREGORIO
SACUPAYO and MAXIMINIANO PANERIO
G.R. No. 191237, September 24, 2014, J. Perez
Vicmar’s officers initially failed to remit the SSS contributions and payments of respondents
such that respondents were denied benefits under the SSS Law which they wanted to avail of. It was
only under threat of criminal liability that Vicmar’s officers subsequently remitted what they had
long deducted from the wages of respondents. Such officers are criminally liable under R.A. 8282.
The elements of criminal liability under Section 22 (a) are: 1) The employer fails to register its
employees with the SSS; 2) The employer fails to deduct monthly contributions from the salaries
and/or wages of its employees; and 3) Having deducted the SSS contributions and/or loan payments
to SSS, the employer fails to remit these to the SSS.
Facts:
As required by law, Vicmar Development Corporation, through its officers, deducted the
Social Security System (SSS) contributions of respondents Gregorio Sacupayo and Maximiniano
Panerio from their wages. It also deducted four hundred sixty eight pesos (Php468.00) per month
from the wage of Sacupayo as his monthly amortization for a ten thousand peso (Php10,000.00)
loan he obtained from the SSS on November 14, 2002. The deductions were remitted by Vicmar
to the SSS at first. Sometime in 2003 and 2004, unknown to respondents and despite the
continued SSS deductions from their wages, Vicmar stopped remitting the same to the SSS. The
un-remitted contributions for each respondent reached five thousand seven hundred sixty pesos
(Php5,760.00) each. For the amortizations, a total of eleven thousand two hundred thirty two
pesos (Php11,232.00) was deducted from the wages of Sacupayo as full payment for his loan. Yet
only four thousand pesos (Php4,000.00) was remitted.
Meantime, on August 7, 2004 and August 9, 2004 respectively, Sacupayo and Panerio were
dismissed from employment. Both filed complaints for illegal dismissal. Panerio was thereafter
afflicted with Chronic Persistent Asthma but when he applied for sickness benefits before the
SSS in October 2004, the same was denied for the reason that no contributions or payments were
made for twelve (12) months prior to the semester of confinement. Sacupayo, for his part, filed
another loan application before the SSS but was also denied outright for non-payment of a
previous loan which should have been fully paid if not for the failure of Vicmar to remit the
amounts due to the SSS.
Aggrieved, respondents filed complaints before the Office of the City Prosecutor in
Cagayan de Oro City. Vicmar then remitted to SSS the contributions and loan payments of
respondents sometime thereafter. Nevertheless, probable cause was found and three (3) separate
Information were filed against the officers of Vicmar for violation of Section 22 (a) in relation to
Section 28 (e) of RA 8282 otherwise known as the Social Security Act of 1997. Vicmar’s officers
appealed the finding of probable cause against them which was granted in a Resolution ordering
the City Prosecutor to desist from filing the case or to withdraw the cases if one has already been
filed for the following reason: Section 28 of RA 8282 above-cited merely lays down a disputable
presumption that the members’ contribution to the SSS is deemed misappropriated if the
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employer fails to remit the same to the SSS within 30 days from the date they became due. The
full payment and remittance of the same destroys this presumption.
Issue:
Whether or not Vicmar’s officers should be held liable under Section 28 (e) of Republic
Act No. 8282?
Ruling:
Yes. Sections 22 (a) and (d) and 28 (e) of R.A. No. 8282 read:
SEC. 22. Remittance of Contributions. -(a) The contribution imposed in the preceding
section shall be remitted to the SSS within the first ten (10) days of each calendar month following
the month for which they are applicable or within such time as the Commission may prescribe.
Every employer required to deduct and to remit such contributions shall be liable for their
payment and if any contribution is not paid to the SSS as herein prescribed, he shall pay besides
the contribution a penalty thereon of three percent (3%) per month from the date the
contribution falls due until paid. If deemed expedient and advisable by the Commission, the
collection and remittance of contributions shall be made quarterly or semi- annually in advance,
the contributions payable by the employees to be advanced by their respective employers:
Provided, That upon separation of an employee, any contribution so paid in advance but not due
shall be credited or refunded to his employer.
(d) The last complete record of monthly contributions paid by the employer or the
average of the monthly contributions paid during the past three (3) years as of the date of filing
of the action for collection shall be presumed to be the monthly contributions payable by and
due from the employer to the SSS for each of the unpaid month, unless contradicted and
overcome by other evidence: Provided, That the SSS shall not be barred from determining and
collecting the true and correct contributions due the SSS even after full payment pursuant to this
paragraph, nor shall the employer be relieved of his liability under Section Twenty-eight of this
Act.
SEC. 28. Penal Clause. (e) Whoever fails or refuses to comply with the provisions of this
Act or with the rules and regulations promulgated by the Commission, shall be punished by a
fine of not less than Five thousand pesos (P5,000.00) nor more than Twenty thousand pesos
(P20,000.00), or imprisonment for not less than six (6) years and one (1) day nor more than twelve
(12) years or both, at the discretion of the court: Provided, That where the violation consists in
failure or refusal to register employees or himself, in case of the covered self-employed, or to
deduct contributions from the employees' compensation and remit the same to the SSS, the
penalty shall be a fine of not less than Five thousand pesos (P5,000.00) nor more than Twenty
thousand pesos (P20,000.00) and imprisonment for not less than six (6) years and one (1) day nor
more than twelve (12) years.
The elements of criminal liability under Section 22 (a) are:
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1. The employer fails to register its employees with the SSS;
2. The employer fails to deduct monthly contributions from the salaries and/or wages of
its employees; and
3. Having deducted the SSS contributions and/or loan payments to SSS, the employer fails
to remit these to the SSS.
The factual milieu obtaining herein does not denote a simple delay in payment. Again,
petitioners initially failed to remit the SSS contributions and payments of respondents such that
respondents were denied benefits under the SSS Law which they wanted to avail of. It was only
under threat of criminal liability that petitioners subsequently remitted what they had long
deducted from the wages of respondents.
MAGSAYSAY MITSUI OSK MARINE, INC. and/or MOL TANKSHIP MANAGEMENT (ASIA)
PTE LTD. vs. JUANITO G. BENGSON*
G.R. No. 198528, October 13, 2014, J. Del Castillo
It is recognized that any kind of work or labor produces stress and strain normally resulting
in wear and tear of the human body. It is also settled that the cardiovascular disease, coronary
artery disease, and other heart ailments are compensable. As such, when a seaman has long been
in the employ on an employer, no other conclusion can be arrived at other than his years of service
certainly taking a toll on his body. Hence, he could not have contracted his illness elsewhere except
while working for such employer.
Facts:
Since the year 1986, Juanito G.Bengson (Bengson) has been working as a seafarer for
Magsaysay Mitsui OSK Marine, Inc. (Magsaysay, Inc.), from his first position as Deck Cadet until
his present position as Third Mate Officer. On August 7, 2007, at the age of 45, he entered into
his 22nd contract of employment with Magsaysay, Inc. for and in behalf of its foreign principal
MOL Tankship Management (Asia) Pte., Ltd.,as a Third Mate Officer on board the vessel "KN
TRADER". Prior to his deployment, he underwent and passed the Pre-Employment Medical
Examination (PEME) and was found to be "fit for sea duty." Thereafter, he boarded the ship and
performed his assigned tasks.
On October 5, 2007, after doing his usual duties on board the vessel, he suddenly
experienced difficulty in breathing and numbness on half of his body. Thinking that it was caused
by fatigue, he rested for a while. After two hours, he still felt numbness over his half body
prompting him to ask for assistance. Eventually, he was brought to the Neurological Department
of the Izola General Hospital in Slovenia where he wasconfined for three days. While in the
hospital, he had partial paralysis of the right hand and a minor partial paralysis of the right leg.
His Computed Tomography (CT) Scan of the head showed a "small hematoma in the left part of
the crane". Due to his incapacity to work, his immediate repatriation was arranged.
Upon his arrival in the Philippines, he was immediately brought to the Manila Doctors
Hospital for confinement under the supervision of company-designated-physician Dr. Benigno
F. Agbayani, Jr. (Dr. Agbayani). Upon his discharge on November 1, 2007, his Medical
Abstract/Discharge Summary showed that he had a stroke.
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Dr. Agbayani later on issued an Initial Out-Patient Consult Report which stated that his
illness of "hematoma in the cranium" was not work-related. Thus, Magsaysay, Inc. and MOL
Tankship (petitioners) did not anymore issue any assessment on his disability grade. Later on,
Bengson filed his disability compensation claim against Magsaysay, Inc. However, during the
grievance proceedings before the Associated Marine Officers and Seamen’s Union of the
Philippines (AMOSUP), his claim was outrightly denied.
The Labor Arbiter declared that Bengson’s hematoma in the left part of his cranium is
related to his work as Third Mate, and the strenuous nature of his work and the conditions he
was subjected to while working on board petitioners’ vessel caused his illness. It also held that
Bengson suffered from permanent and total disability. The NLRC set aside the said decision.
However, on appeal to the CA, the ruling of the LA was reinstated.
Issue:
Whether or not Bengson’s illness is an occupational disease.
Ruling:
In many cases decided in the past, this Court has held that cardiovascular disease,
coronary artery disease, and other heart ailments are compensable.
In the present case, petitioners flatly claim that Bengson’s hypertensive cardio-vascular
disease is not compensable on the sole basis of its company-designated physician Agbayani’s
declaration that such illness is not work-related. However, the Court finds that his illness is work-
related. The undisputed facts indicate that Bengson has been working for petitioners since 1988;
that per his service record, he has been serving as Third Mate for twelve (12) years; and that as
Third Mate, he was saddled with heavy responsibilities relative to navigation of the vessel, ship
safety and management of emergencies. It is beyond doubt that Bengson was subjected to
physical and mental stress and strain: as Third Mate, he is the ship’s fourth in command, and he
is the ship’s safety officer; these responsibilities have been heavy burdens on respondent’s
shoulders all these years, and certainly contributed to the development of his illness. Besides, "it
is already recognized that any kind of work or labor produces stress and strain normally resulting
in wear and tear of the human body."Notably, it is a matter of judicial notice that an overseas
worker, having to ward off homesickness by reason of being physically separated from his family
for the entire duration of his contract, bears a great degree of emotional strain while making an
effort to perform his work well. The strain is even greater in the case of a seaman who is
constantly subjected to the perils of the sea while at work abroad and away from his family.
Clearly, his years of service certainly took a toll on his body, and he could not have
contracted his illness elsewhere except while working for petitioners. To be sure, the Court has
ruled that "the list of illnesses/diseases in Section 32-Adoes 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." And equally significant, "it is
not the injury which is compensated, but rather it is the incapacity to work resulting in the
impairment of one’s earning capacity."
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Bengson’s illness, which has likewise been diagnosed as intracerebral hemorrhageor
hemorrhagic stroke,is a serious condition, and could be deadly.In Alpha Ship Management
Corporation vs. Calo, it was held that an employee’s disability becomes permanent and total
when so declared by the company-designated physician, or, in case of absence of such a
declaration either of fitness or permanent total disability, upon the lapse of the 120 or 240-day
treatment period under Article 192 (c) (1) of the Labor Code and Rule X, Section 2 of the Amended
Rules on Employees’ Compensation Commission, 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 PO EA-SEC.
Bengson was repatriated on October 21, 2007 and immediately brought to the Manila
Doctors Hospital for confinement. He was discharged on November 1, 2007. On November 4,
2007, Agbayani issued an Initial Out-Patient Consult Report which stated that Bengson's illness
was not work-related. As a result of such adverse declaration, Bengson filed NLRC OFW Case No.
(M) 07-10402-08. Meanwhile, Bengson underwent medication and rehabilitation under
Agbayani's supervision until February 2008. However, Agbayani did not make a definite
assessment of Bengson's fitness or disability; even up to this day; thus, Bengson's medical
condition remains unresolved. In the meantime, Bengson's medical condition persists, and
petitioners did not renew or continue with Bengson's employment; nor was he able to work for
other employers. Quite understandably, Bengson's condition remains delicate given that his
illness is serious and could be fatal. Thus, applying the above doctrine in Alpha Ship Management
Corporation v. Calo, Bengson is deemed totally and permanently disabled and entitled to the
corresponding benefit under the POEASEC in the amount of US$60,000.00.
ANITA N. CANUEL, for herself and on behalf of her minor children, namely:
CHARMAINE, CHARLENE, and CHARL SMITH, all surnamed CANUEL vs. MAGSAYSAY
MARITIME CORPORATION, EDUARDO U. MANESE, and KOTANI SHIPMANAGEMENT
LIMITED
G.R. No. 190161, October 13, 2014, J. Perlas-Bernabe
As stated in Section 20 of the 2000 POEA-SEC, the seafarer’s beneficiaries may successfully
claim death benefits if they are able to establish that the seafarer’s death is (a) work-related and (b)
had occurred during the term of his employment contract. The first requirement is complied with if
the seafarer incurred an injury when he figured in an accident while performing his duties. In such
case, the injury is the proximate cause of his death or disability for which compensation is sought,
the previous physical condition of the employee is unimportant and recovery may be had for injury
independent of any pre-existing weakness or disease. With respect to the second requirement, the
Court takes this opportunity to clarify that while the general rule is that the seafarer’s death should
occur during the term of his employment, the seafarer’s death occurring after the termination of
his employment due to his medical repatriation on account of a work-related injury or illness
constitutes an exception thereto. The basis of such is the liberal construction of the afore-
mentioned law as impelled by the plight of the bereaved heirs who stand to be deprived of a just and
reasonable compensation for the seafarer’s death, notwithstanding its evident work-connection.
Facts:
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On July 14, 2006, Nancing R. Canuel (Nancing) was hired by respondent Magsaysay
Maritime Corporation (Magsaysay) as Third Assistant Engineer for its foreign principal,
respondent Kotani Ship management Limited (Kotani), to be deployed on board the vessel M/V
North Sea (vessel). He underwent the required pre-employment medical examination, and was
declared fit to work by the company-designated physician. Thereafter, he joined the vessel and
commenced his work on July 19, 2006.
On February 20, 2007, Nancing figured in an accident while in the performance of his
duties on board the vessel, and, as a result, injured the right side of his body.On March 5, 2007,
he was brought to Shanghai Seamen’s Hospital in Shanghai, China where he was diagnosed to
have suffered "bilateral closed traumatic hemothorax." Thereafter, he was medically repatriated
and immediately admitted to the Manila Doctor’s Hospital under the care of a team of medical
doctors led by Dr. Benigno A. Agbayani, Jr., Magsaysay’s Medical Coordinator. Due to his
worsening condition, he was placed at the hospital’s intensive care unit but eventually died on
April 25, 2007. His death certificate indicated the immediate cause of his death as acute
respiratory failure, with lung metastasis and r/o bone cancer as antecedent cause and underlying
cause, respectively.
Subsequently, Nancing’s widow, Anita, for herself and on behalf of their children, (herein
petitioners) filed a complaint against Magsaysay and Kotani, as well as Magsaysay’s
Manager/President, Eduardo U. Manese (respondents), before the NLRC seeking to recover
death benefits, death compensation of minor children, burial allowance, damages, and attorney’s
fees.
In their defense, respondents denied any liability and contended that while Nancing died
of acute respiratory failure, the real cause of his death, as shown in the autopsy conducted by the
National Bureau of Investigation, was lung cancer. As per advice of their company doctor that
the said illness is not work-related, it averred that the same was not compensable.
Eventually, the Labor Arbiter, declaring that Nancing’s death was the result of a work-
related injury that occurred during the term of his employment, ruled in favor of petitioners. The
NLRC, on appeal, sustained the findings of the LA. Dissatisfied, respondents sought for a
reconsideration which was, however, denied. On appeal to the CA on certiorari, it was found out
that the NLRC Ruling was tainted with grave abuse of discretion and, thus, a new judgment
dismissing petitioners’ complaint for death benefits was rendered.
Issue:
Whether or not the death of Nancing is compensable.
Ruling:
Yes, the death of Nancing is compensable.
The terms and conditions of a seafarer’s employment are governed by the provisions of
the contract he signs with the employer at the time of his hiring. Deemed integrated in his
employment contract is a set of standard provisions determined and implemented by the POEA,
called the "Standard Terms and Conditions Governing the Employment of Filipino Seafarers on
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Board Ocean-Going Vessels," which provisions are considered to be the minimum requirements
acceptable to the government for the employment of Filipino seafarers on board foreign ocean-
going vessels.
The provisions currently governing the entitlement of the seafarer’s beneficiaries to death
benefits are found in Section 20 of the 2000 POEA-SEC.Part A (1) thereof states that the seafarer’s
beneficiaries may successfully claim death benefits if they are able to establish that the seafarer’s
death is (a) work-related and (b) had occurred during the term of his employment contract.
As the records show, Nancing suffered a work-related injury within the term of his
employment contract when he figured in an accident while performing his duties as Third
Assistant Engineer at cylinder number 7 of the vessel on February 20, 2007. The foregoing
circumstances aptly fit the legal attribution of the phrase "arising out of and in the course of
employment" which the Court, in the early case of Iloilo Dock & Engineering Co. vs. Workmen’s
Compensation Commission, pronounced as follows:
The two components of the coverage formula – "arising out of" and "in the course
of employment" – are said to be separate tests which must be independently
satisfied; however, it should not be forgotten that the basic concept of
compensation coverage is unitary, not dual, and is best expressed in the word,
"work-connection," because an uncompromising insistence on an independent
application of each of the two portions of the test can, in certain cases, exclude
clearly work-connected injuries. The words "arising out of" refer to the origin or
cause of the accident, and are descriptive of its character, while the words "in the
course of" refer to the time, place, and circumstances under which the accident
takes place.
As a matter of general proposition, an injury or accident is said to arise "in the

course of employment" when it takes place within the period of the employment,
at a place where the employee reasonably may be, and while he is fulfilling his
duties or is engaged in doing something incidental thereto.
That Nancing was suffering from lung cancer, which was found to have been pre-existing,
hardly impels a contrary conclusion since – as the LA herein earlier noted – the February 20, 2007
injury actually led to the deterioration of his condition.
Settled is the rule that if the injury is the proximate cause of his death or disability for
which compensation is sought, the previous physical condition of the employee is unimportant
and recovery may be had for injury independent of any pre-existing weakness or disease. Clearly,
Nancing’s injury was the proximate cause of his death considering that the same, unbroken by
any efficient, intervening cause, triggered the following sequence of events: (a) Nancing’s
hospitalization at the Shanghai Seamen’s Hospital where he was diagnosed with "bilateral closed
traumatic haemothorax"; (b) his repatriation and eventual admission to the Manila Doctor’s
Hospital; and (c) his acute respiratory failure, which was declared to be the immediate cause of
his death. Thus, for the foregoing reasons, it cannot be seriously disputed that the first
requirement for death compensability concurs in this case.
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With respect to the second requirement for death compensability, the Court takes this
opportunity to clarify that while the general rule is that the seafarer’s death should occur during
the term of his employment, the seafarer’s death occurring after the termination of his
employment due to his medical repatriation on account of a work-related injury or illness
constitutes an exception thereto. Here, Nancing’s repatriation occurred during the eighth (8th)
month of his one (1) year employment contract. Were it not for his injury, which had been earlier
established as work-related, he would not have been repatriated for medical reasons and his
contract consequently terminated pursuant to Part 1 of Section 18 (B) of the 2000 POEA-SEC. If
the Court were to apply the provisions of Section 20 of the 2000 POEA-SEC as above-cited based
on a strict and literal construction thereof, then the heirs of Nancing would stand to be barred
from receiving any compensation for the latter’s death despite its obvious work-relatedness. As
such, the work-related death would, by mere legal technicality, be considered to have occurred
after the term of his employment on account of his medical repatriation. Hence, a liberal
construction of the 2000 POEA-SEC should be adopted, as impelled by the plight of the bereaved
heirs who stand to be deprived of a just and reasonable compensation for the seafarer’s death,
notwithstanding its evident work-connection.
Applying the rule on liberal construction, the Court is thus brought to the recognition
that medical repatriation cases should be considered as an exception to Section 20 of the 2000
POEA-SEC. Accordingly, the phrase "work-related death of the seafarer, during the term of his
employment contract" under Part A (1) of the said provision should not be strictly and literally
construed to mean that the seafarer’s work-related death should have precisely occurred during
the term of his employment. Rather, it is enough that the seafarer’s work-related injury or illness
which eventually causes his death should have occurred during the term of his employment.
Taking all things into account, the Court reckons that it is by this method of construction that
undue prejudice to the laborer and his heirs may be obviated and the State policy on labor
protection be championed. For if the laborer’s death was brought about (whether fully or
partially) by the work he had harbored for his master’s profit, then it is but proper that his demise
be compensated. Here, since it has been established that (a) the seafarer had been suffering from
a work-related injury or illness during the term of his employment, (b) his injury or illness was
the cause for his medical repatriation, and (c) it was later determined that the injury or illness
for which he was medically repatriated was the proximate cause of his actual death although the
same occurred after the term of his employment, the above-mentioned rule should squarely
apply. Perforce, the present claim for death benefits should be granted.
BAHIA SHIPPING SERVICES, INC., FRED OLSEN CRUISE LINE, and MS. CYNTHIA C.
MENDOZA vs. JOEL P. HIPE, JR.
G.R. No. 204699, November 12, 2014, J. Perlas-Bernabe
Hipe failed to comply with the procedure laid down under Section 20 (B) (3) of the 2000
POEA-SEC with regard to the joint appointment by the parties of a third doctor whose decision
shall be final and binding on them in case the seafarer’s personal doctor disagrees with the
company-designated physician’s fit-to-work assessment. Jurisprudence provides that the seafarer’s
non-compliance with the said conflict resolution procedure results in the affirmance of the fit-to-
work certification of the company-designated physician. In light of the contrasting diagnoses of the
company-designated physician and Hipe’s personal doctor, Hipe filed his complaint before the
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NLRC but prematurely did so without any regard to the conflict-resolution procedure under Section
20 (B) (3) of the 2000 POEA-SEC. Thus, consistent with Jurisprudence, the fit-to-work certification
of the company designated physician ought to be upheld.
Facts:
Hipe had been hired by petitioner Bahia Shipping Services, Inc. (Bahia) for its foreign
principal, Fred Olsen Cruise Line (Olsen), and deployed to the latter’s various vessels under seven
(7) consecutive contracts. He was last employed by Bahia as plumber for the vessel M/S Braemar
(vessel) under a six-month contract commencing on the day of his embarkation on December 6,
2007. Despite the lapse of the six-month contract on June 6, 2008, Hipe continued to work aboard
the vessel without any new contract. On June 22, 2008, in the course of the performance of his
duties as plumber, he sustained a back injury while carrying heavy equipment for use in his
plumbing job. After one (1) month, however, he claimed that his condition worsened and, upon
his request, he was repatriated to Manila on August 5, 2008.
Upon Hipe’s arrival, he was examined by the company-designated physician, Dr. Lim
wherein the medical results revealed that he was suffering from "Lumbosacral Strain with right
L5 Radiculopathy." Thereafter, he was referred to an orthopedic surgeon and a psychiatrist for
supervision and therapy. On October 2, 2008, Dr. Lim issued a medical assessment that "Hipe
still has had considerable improvement with less pain and negligible tenderness at the
lumbosacral area," and that, per advise of the attending orthopedic surgeon, Hipe was to
continue his rehabilitation and medications and to return on October 9, 2008 "for reevaluation
and possible resumption of sea duties." On the latter date, Hipe was declared fit to work, and
thus executed the corresponding Certificate of Fitness for Work. Subsequently, or on February
25, 2009, Hipe, however, sought a second opinion from Dr. Garduce who (a) opined that he was
suffering from "+ Tenderness on low back area, + Straight leg raising test associated with
numbness and weakness of both lower extremities," (b) declared him unfit to work as seaman-
plumber, and (c) assessed his disability rating at Grade 5. Thereafter, Hipe filed a complaint
before the Labor Arbiter (LA) for the payment of permanent disability compensation, sick wages,
reimbursement of medical and transportation expenses, moral and exemplary damages, and
attorney’s fees against Bahia, its President, Cynthia C. Mendoza, and its foreign principal, Olsen
(respondents).
Issue:
Whether or not Hipe is entitled to disability benefits.
Ruling:
No. The issue of whether the seafarer can legally demand and claim disability benefits
from the employer/manning agency for an injury or illness suffered may be determined from the
pertinent provisions of Section 20 (B) of the 2000 POEA-SEC. Pursuant to the afore-quoted
provision, two (2) elements must concur for an injury or illness of a seafarer to be compensable:
(a) the injury or illness must be work-related; and (b) that the work-related injury or illness must
have existed during the term of the seafarer’s employment contract.
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In the present case, Hipe was made to continuously perform work aboard the vessel
beyond his six-month contract without the benefit of a formal contract. Considering that any
extension of his employment is discretionary on the part of respondents and that the latter
offered no explanation why Hipe was not repatriated when his contract expired on June 5, 2008,
it is correct to rule that he was still under the employ of respondents when he sustained an injury
on June 22, 2008. Consequently, the injury suffered by Hipe was a work-related injury and his
eventual repatriation on August 5, 2008, for which he was treated/rehabilitated can only be
considered as a medical repatriation.
Nonetheless, Hipe was subsequently declared fit to work by the company-designated

physician on October 9, 2008, or merely 65 days after his repatriation, thus negating the existence
of any permanent disability for which compensability is sought. Said fit-to-work certification
must stand for two (2) reasons:
First, while Hipe’s personal doctor disagreed with the above mentioned assessment,
opining that "it would be impossible for him to work as seaman-plumber" and recommending a
disability grade of five, records show, however, that such opinion was not supported by any
diagnostic tests and/or procedures as would adequately refute the fit-to-work assessment, but
merely relied on a review of Hipe’s medical history and his physical examination; and Second,
Hipe failed to comply with the procedure laid down under Section 20 (B) (3) of the 2000 POEA-
SEC with regard to the joint appointment by the parties of a third doctor whose decision shall be
final and binding on them in case the seafarer’s personal doctor disagrees with the company-
designated physician’s fit-to-work assessment. Jurisprudence provides that the seafarer’s non-
compliance with the said conflict resolution procedure results in the affirmance of the fit-to-work
certification of the company-designated physician.
In light of the contrasting diagnoses of the company-designated physician and Hipe’s

personal doctor, Hipe filed his complaint before the NLRC but prematurely did so without any
regard to the conflict-resolution procedure under Section 20 (B) (3) of the 2000 POEA-SEC. Thus,
consistent with Jurisprudence, the fit-to-work certification of the company designated physician
ought to be upheld.
CONCHITA J. RACELIS vs. UNITED PHILIPPINE LINES, INC. and/or HOLLAND

AMERICA LINES, INC.,* and FERNANDO T. LISING
The Court, in the recent case of Canuel, recognized that a medical repatriation case
constitutes an exception to the second requirement under Section 20 (A) (1) of the 2000 POEA-SEC,
i.e., that the seafarer’s death had occurred during the term of his employment, in view of the
terminative consequences of a medical repatriation under Section 18 (B) of the 2000 POEA-SECin
order to avail death benefits. In essence, the Court held that under such circumstance, the work-
related death need not precisely occur during the term of his employment as it is enough that the
seafarer’s work-related injury or illness which eventually causes his death had occurred during the
term of his employment. Employing the same spirit of liberality in the interpretation of the above
provisions, the Court finds that it would be highly inequitable and even repugnant to the State’s
policy on labor to deny Conchita’s claim for death benefits for the mere technicality triggered by
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Rodolfo’s prior medical repatriation. As it has been clearly established that Rodolfo had been
suffering from a work-related illness during the term of his employment that caused his medical
repatriation and, ultimately, his death on March 2, 2008, it is but proper to consider the same as a
compensable work-related death despite the death having occurred after his repatriation.
Facts:
Rodolfo L. Racelis (Rodolfo) was recruited and hired by respondent United Philippine
Lines, Inc. (UPL) for its principal, respondent Holland America Lines, Inc. (HAL) to serve as
"Demi Chef De Partie" on board of a vessel. In the course of his last employment contract, Rodolfo
experienced severe pain in his ears and high blood pressure causing him to collapse while in the
performance of his duties. He was medically repatriated on February 20, 2008 for further medical
treatment. Upon arrival in Manila, he was immediately brought to a hospital where he was seen
by a company-designated physician Dr. Legaspi and was diagnosed to be suffering from
Brainstem (pontine) Cavernous Malformation. He underwent surgery twice for the said ailment
but developed complications and died on March 2, 2008. Through an electronic mail (e-mail)
dated July 22, 2008, a certain Dr. Abaya informed Atty. Florencio L. Aquino, Managing Associate
of the law firm of Del Rosario and Del Rosario, counsel for UPL, HAL, and its officer, Fernando
T. Lising (respondents), that Rodolfo’s illness was congenital and that there may be familial
strains in his case, hence, his death was not work-related.
Rodolfo’s surviving spouse, Conchita, herein petitioner, sought to claim death benefits
pursuant to the International Transport Workers’ Federation- Collective Bargaining Agreement
(ITWF-CBA), of which her husband was a member, but to no avail. Consequently, she filed a
Complaint for death benefits, burial assistance, moral and exemplary damages, and attorney’s
fees against herein respondents before the NLRC. In their defense, respondents maintained that
Conchita is not entitled to death benefits under Section 20 (A) (1) of the 2000 Philippine Overseas
Employment Administration Standard Employment Contract (2000 POEA-SEC). They averred
that Rodolfo’s illness, i.e., Brainstem (pontine) Cavernous Malformation, was not work-related,
considering that said illness is not listed as an occupational disease under the 2000
POEASEC. They likewise pointed out that Rodolfo’s death on March 2, 2008 did not occur during
the term of his employment contract in view of his prior repatriation on February 20, 2008, hence,
was non-compensable.
Issue:
Whether or not petitioner Conchita is entitled to death benefits.
Ruling:
Yes, she is.
Among other basic provisions, the Philippine Overseas Employment Administration-

Standard Employment Contract (POEA-SEC) – specifically, its 2000 version – stipulates that the
beneficiaries of a deceased seafarer may be able to claim death benefits for as long as they are
able to establish that (a) the seafarer’s death is work-related, and (b) such death had occurred
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during the term of his employment contract. These requirements are explicitly stated in Section
20 (A) (1) thereof.
I. The Death of the Seafarer is Work-Related.
While it is true that Brainstem (pontine) Cavernous Malformation is not listed as an

occupational disease under Section 32-A of the 2000 POEASEC, Section 20 (B) (4) of the same
explicitly provides that "the liabilities of the employer when the seafarer suffers work-related
injury or illness during the term of his contract are as follows: those illnesses not listed in Section
32 of this Contract are disputably presumed as work related." In other words, the 2000 POEA-
SEC "has created a disputable presumption in favor of compensability, saying that those illnesses
not listed in Section 32 are disputably presumed as work-related. This means that even if the
illness is not listed under Section 32-Aof the POEA-SEC as an occupational disease or illness, it
will still be presumed as work-related, and it becomes incumbent on the employer to overcome
the presumption." This presumption should be overturned only when the employer’s refutation
is found to be supported by substantial evidence, which, as traditionally defined is "such relevant
evidence as a reasonable mind might accept as sufficient to support a conclusion."
Records show that respondents’ sole evidence to disprove that Rodolfo’s illness is work-
related was the medical opinion of Dr. Abaya, wherein it was explained that Rodolfo’s ailment is
a congenital malformation of blood vessels in the brain that may be due to familial
strains. However, as correctly observed, the document presented cannot be given probative value
as it was a mere print out of an e-mail that was not signed or certified to by the doctor. Moreover,
records reveal that Rodolfo was attended by Dr. Legaspi from the time he was admitted at the
Medical City on February 20, 2008 up to his death on March 2, 2008 and not by Dr. Abaya whose
qualifications to diagnose such kind of illness was not even established. Thus, with no substantial
evidence on the part of the employer and given that no other cogent reason exists to hold
otherwise, the presumption under Section 20 (B) (4) should stand.
II. The Seafarer’s Death Occurred During the Term of Employment.
Moving to the second requirement, respondents assert that Rodolfo’s death on March 2,
2008 had occurred beyond the term of his employment, considering his prior medical
repatriation on February 20, 2008 which had the effect of contract termination. The argument is
founded on Section 18 (B) (1) of the 2000 POEA-SEC.
While it is true that a medical repatriation has the effect of terminating the seafarer’s
contract of employment, it is, however, enough that the work related illness, which eventually
becomes the proximate cause of death, occurred while the contract was effective for recovery to
be had. Guided by this principle, the Court, in the recent case of Canuel, recognized that a
medical repatriation case constitutes an exception to the second requirement under Section 20
(A) (1) of the 2000 POEA-SEC, i.e., that the seafarer’s death had occurred during the term of his
employment, in view of the terminative consequences of a medical repatriation under Section 18
(B) of the same. In essence, the Court held that under such circumstance, the work-related death
need not precisely occur during the term of his employment as it is enough that the seafarer’s
work-related injury or illness which eventually causes his death had occurred during the term of
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his employment. Applying the rule on liberal construction, the Court is thus brought to the
recognition that medical repatriation cases should be considered as an exception to Section 20
of the 2000 POEA-SEC. Accordingly, the phrase "work-related death of the seafarer, during the
term of his employment contract" under Part A (1) of the said provision should not be strictly and
literally construed to mean that the seafarer’s work-related death should have precisely occurred
during the term of his employment.
Employing the same spirit of liberality, the Court finds that it would be highly inequitable
and even repugnant to the State’s policy on labor to deny Conchita’s claim for death benefits for
the mere technicality triggered by Rodolfo’s prior medical repatriation. As it has been clearly
established that Rodolfo had been suffering from a work-related illness during the term of his
employment that caused his medical repatriation and, ultimately, his death on March 2, 2008, it
is but proper to consider the same as a compensable work-related death despite it having
occurred after his repatriation. To echo the case of Canuel, "it is enough that the seafarer’s work-
related injury or illness which eventually causes his death should have occurred during the term
of his employment.”
JOEL B. MONANA vs. MEC GLOBAL SHIPMANAGEMENT AND MANNING

CORPORATION AND HD HERM DAVELSBERG GMBH
G.R. No. 196122, November 12, 2014, J. Leonen
The Monana suffered stroke during the course of his employment. He then filed a
complaint for payment of disability benefit. The Supreme Court ruled that Section 20(B)
of the POEA contract provides that entitlement to disability benefits requires that the
seafarer’s disability be work-related and that it occur during the contract’s term. The
POEA contract 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.” The POEA contract also states that “illnesses not
listed in Section 32 of this contract are disputably presumed as work related.”
Facts:
The petitioner Joel Monana was employed by respondent MEC Global as an

ordinary seafarer for a six-month duration on board on one of its ships. During his
employment, Monana suffered stroke and was then repatriated and subjected to
rehabilitation. The medical condition of Monana was first classified as non-work-
related. However, by seeking a second opinion, his medical condition was then classified
as work-related. Because of this, Monana claimed disability and illness allowance. MEC
Global refused. This then prompted Monana to file a complaint with the Labor Arbiter.
The Labor Arbiter rendered a decision in favor of Monana and ordered MEC
Global to Monana disability benefits. On appeal the NLRC reversed and set aside the
decision of the LA. The Court of Appeals affirmed the decision of NLRC. Hence, the
current petition.
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Petitioner Monana contends that hypertension is a work-related illness and
therefore compensable.
Issue:
Whether or not hypertension is a compensable illness entitling Monana to be paid

Ruling:
No, hypertension is not a compensable disease.
Section 20(B) of the POEA contract provides that entitlement to disability benefits
requires that the seafarer’s disability be work-related and that it occur during the contract’s term.
The POEA contract 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.”The POEA contract also states that “illnesses not listed in Section
32 of this contract are disputably presumed as work related.”
SECTION 32-A Occupational Diseases
For an occupational disease and the resulting disability or death to be compensable, all
of the following conditions must be satisfied:
(1) The seafarer’s work must involve the risks described herein;
(2) The disease was contracted as a result of the seafarer’s exposure to the described
risks;
(3) The disease was contracted within a period of exposure and under such other factors
necessary to contract it;
(4) There was no notorious negligence on the part of the seafarer.
Both the National Labor Relations Commission and Court of Appeals found that
petitioner failed to prove compliance with the conditions under Section 32 of the POEA contract,
thus, failing to show a causal connection between his illness and his work.
A petition for review is limited to questions of law. This court does not “re-examine
conflicting evidence, re-evaluate the credibility of witnesses, or substitute the findings of fact of
the NLRC, an administrative body that has expertise in its specialized field.” This court has held
that “factual findings of the NLRC, when affirmed by the Court of Appeals, are generally
conclusive on this court.” Monana presents no compelling reason for this court to deviate from
this general rule.
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BERNARDINA P. BARTOLOME vs. SOCIAL SECURITY SYSTEM and SCANMAR
MARITIME SERVICES, INC.
G.R. No. 192531, November 12, 2014, J. Velasco
Even though parental authority is severed by virtue of adoption, the ties between the
adoptee and the biological parents are not entirely eliminated. Thus, the biological mother of a
deceased employee who was legally adopted and whose adopter had died during the adoptee’s
minority, is entitled to the death benefits under R.A. No. 8282 or the Social Security System (SSS)
of the Social Welfare Legislation (PD 626) as a secondary beneficiary being an independent parent
The death of the adopter during the adoptee’s minority resulted in the restoration of the biological
mother’s parental authority over the adopted child.
Facts:
John Colcol (John) was employed as electrician by Scanmar Maritime Services, Inc., on
board the vessel Maersk Danville, since February 2008. As such, he was enrolled under the
government's Employees' Compensation Program (ECP). Unfortunately, an accident occurred on
board the vessel whereby steel plates fell on John, which led to his untimely death the following
day.
John was, at the time of his death, childless and unmarried. Thus, petitioner Bernardina
P. Bartolome, John’s biological mother and, allegedly, sole remaining beneficiary, filed a claim
for death benefits under PD 626 with the Social Security System (SSS) La Union. However, SSS
denied the claim stating that she is no longer considered as the parent of JOHN COLCOL as he
was legally adopted by CORNELIO COLCOL based on documents you submitted to them. The
Employees’ Compensation Commission (ECC) affirmed the ruling of the SSS.
In denying the claim, both the SSS La Union branch and the ECC ruled against
Bartolome’s entitlement to the death benefits sought after under PD 626 on the ground she can
no longer be considered John’s primary beneficiary. As culled from the records, John and his
sister Elizabeth were adopted by their great grandfather, Bartolome’s grandfather, Cornelio
Colcol (Cornelio), by virtue of the Decision in Spec. Proc. No. 8220-XII of the Regional Trial Court
in Laoag City which decree of adoption attained finality. Consequently, as argued by the agencies,
it is Cornelio who qualifies as John’s primary beneficiary, not Bartolome.
Aggrieved, Bartolome filed a Motion for Reconsideration, which was likewise denied by
the ECC. Hence, the instant petition.
Issue:
Whether or not Bartolome, as the biological mother of the deceased employee who was
legally adopted is entitled to the death benefits under PD 626 of the Social Security
System (SSS).
Ruling:
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Yes, Bartolome qualifies as John’s dependent parent
True, when Cornelio, in 1985, adopted John, then about two (2) years old, Bartolome’s
parental authority over John was severed. However, lest it be overlooked, one key detail the ECC
missed, aside from Cornelio’s death, was that when the adoptive parent died less than three (3)
years after the adoption decree, John was still a minor, at about four (4) years of age.
John’s minority at the time of his adopter’s death is a significant factor in the case at bar.
Under such circumstance, parental authority should be deemed to have reverted in favor of the
biological parents. To be sure, reversion of parental authority and legal custody in favor of the
biological parents is not a novel concept. Section 20 of Republic Act No. 8552 (RA 8552),
otherwise known as the Domestic Adoption Act, provides:
Section 20. Effects of Rescission.– If the petition [for rescission of adoption] is granted,
the parental authority of the adoptee's biological parent(s), if known, or the legal custody of the
Department shall be restored if the adoptee is still a minor or incapacitated. The reciprocal rights
and obligations of the adopter(s) and the adoptee to each other shall be extinguished.
The provision adverted to is applicable herein by analogy insofar as the restoration of

custody is concerned. The manner herein of terminating the adopter’s parental authority, unlike
the grounds for rescission, justifies the retention of vested rights and obligations between the
adopter and the adoptee, while the consequent restoration of parental authority in favor of the
biological parents, simultaneously, ensures that the adoptee, who is still a minor, is not left to
fend for himself at such a tender age.
Moreover, this ruling finds support on the fact that even though parental authority is
severed by virtue of adoption, the ties between the adoptee and the biological parents are not
entirely eliminated. To demonstrate, the biological parents, in some instances, are able to inherit
from the adopted, as can be gleaned from Art. 190 of the Family Code and Art. 984 of the New
Civil Code. It is apparent in these provisions that the biological parents retain their rights of
succession to the estate of their child who was the subject of adoption. While the benefits arising
from the death of an SSS covered employee do not form part of the estate of the adopted child,
the pertinent provision on legal or intestate succession at least reveals the policy on the rights of
the biological parents and those by adoption vis-à-vis the right to receive benefits from the
adopted. In the same way that certain rights still attach by virtue of the blood relation, so too
should certain obligations, which, We rule, include the exercise of parental authority, in the event
of the untimely passing of their minor offspring’s adoptive parent. Thus, this Court holds that
Cornelio’s death at the time of John’s minority resulted in the restoration of petitioner’s parental
authority over the adopted child.
It is also worthy to mention that following Cornelio’s death in 1987, records reveal that
both Bartolome and John repeatedly reported "Brgy. Capurictan, Solsona, Ilocos Norte" as their
residence. In fact, this very address was used in John’s Death Certificate executed in Brazil, and
in the Report of Personal Injury or Loss of Life accomplished by the master of the vessel boarded
by John. Likewise, this is John’s known address as per the ECC’s assailed Decision. Similarly, this
same address was used by Bartolome in filing her claim before the SSS La Union branch and,
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thereafter, in her appeal with the ECC. Hence, it can be assumed that aside from having been
restored parental authority over John, petitioner indeed actually exercised the same, and that
they lived together under one roof. In fact, John, in his SSS application, named Bartolome as one
of his beneficiaries for his benefits under RA 8282, otherwise known as the "Social Security Law."
Consequently, the confluence of circumstances – from Cornelio’s death during John’s

minority, the restoration of Bartolome’s parental authority, the documents showing singularity
of address, and John’s clear intention to designate Bartolome as a beneficiary - effectively made
Bartolome petitioner, to Our mind, entitled to death benefit claims as a secondary beneficiary
under PD 626 as a dependent parent.
NEW FILIPINO MARITIME AGENCIES INC., ST. PAUL MARITIME CORP., and ANGELINA
T. RIVERA vs. MICHAEL D. DESPABELADERAS
G.R. No. 209201, November 19, 2014, J. Mendoza
There being no assessment, Michael’s condition cannot be considered a permanent total

disability. Temporary total disability only becomes permanent when declared by the company
physician within the period he is allowed to do so, or upon the expiration of the maximum 240-day
medical treatment period without a declaration of either fitness to work or permanent disability. A
seafarer’s inability to work and the failure of the company-designated physician to determine fitness
or unfitness 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.
The Court agrees with New Filipino’s stance that Michael was indeed guilty of medical
abandonment for his failure to complete his treatment even before the lapse of the 240 days period.
Section 20(D) of the POEA-SEC instructs that no compensation and benefits shall be payable in
respect of any injury, incapacity, disability or death of the seafarer resulting from his willful or
criminal act or intentional breach of his duties. Michael was duty-bound to complete his medical
treatment until declared fit to work or assessed with a permanent disability grading.
Facts:
Michael D. Despabeladeras was hired by New Filipino Maritime Agencies Inc., for and in
behalf of its principal, St. Paul Maritime Corp., as Wiper to work on board the vessel M/V
"ATHENS HIGHWAY" for a period of nine (9) months, with a basic monthly salary of US$415.00.
Prior to embarkation, Michael underwent the required Pre- Employment Medical Examination
and was declared "Fit for Sea Service" by the company doctor. On April 26, 2009, Michael joined
the assigned vessel. On August 20, 2009, while going down the stairs of the vessel to get some
tools to be used for dismantling the engine’s piston, Michael slipped and fractured his left hand.
He was brought to the nearest hospital in Brunswick, Georgia, where he was diagnosed with Ulna
Styloid Fracture, Left Wrist.
On August 28, 2009, Michael was repatriated to the Philippines for better medical
treatment and management. Upon arrival in Manila on August 31, 2009, he was referred to the
company-designated physician, Dr. Nicomedes G. Cruz. Later on, Dr. Cruz endorsed Michael to
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an orthopedic surgeon. Michael’s medical treatment was supervised by Dr. Cruz from August
2009 until February10, 2010. Despite continuous treatment under the care of Dr. Cruz, Michael
alleged that his medical condition did not improve. This prompted him to consult another
physician, Dr. Rogelio C. Catapang, Jr., who declared him unfit to resume his duties as a seaman
on January 16, 2010.
Michael’s check-up with the orthopedic surgeon on February 3, 2010 showed minimal
pain on the left hand, but he was advised to continue with his medical therapy. Michael went
back for his check-up on February 10, 2010, and he was asked to return for a follow-up check up
on February 17, 2010. He failed to return on the said date. Instead, he demanded that he be paid
disability benefits. After his demand for payment of disability benefits was refused, Michael filed
a complaint for disability compensation and other monetary claims before the NLRC.
The Labor Arbiter (LA) ruled in favor of Michael and awarded his claim for permanent
total disability benefits under the CBA. On appeal, the NLRC reversed the LA decision, reasoning
out that there was no positive proof warranting the award of disability benefits because there was
no assessment of any disability grading by Dr. Cruz. The CA reversed the NLRC and sustained
the LA award of permanent total disability benefits. Hence, New Filipino et al. filed this petition.
Issue:
Whether or not Michael was entitled to disability benefits for failure to perform his pre-
injury duties as seaman for more than 120 days.
Ruling:
No, Michael is not entitled to total and permanent disability benefits.
The 120-day rule, as aptly posited by New Filipino, et al., has already been clarified in
Vergarawhere it was declared that the 120-day rule could not simply be applied as a general rule
for all cases and in all contexts. In other words, it cannot be used as a cure-all formula for all
maritime compensation cases.
The terms agreed upon by the parties pursuant to the POEA-SEC are to be read and
understood in accordance with Philippine laws, particularly, Articles 191 to 193 of the Labor Code
and the applicable implementing rules and regulations in case of any dispute, claim or grievance.
The above provisions must be read together with Section 20(B)(3) of the POEA-SEC.
It should be noted that on February 10, 2010 when Michael last visited the company-
designated orthopedic surgeon, it had been 166 days since he was referred to the company-
designated physician upon his repatriation on August 28, 2009. During this time, Michael was
under temporary total disability inasmuch as the 240-day period provided under the aforecited
Rules had not yet lapsed. The CA, therefore, erred when it ruled that Michael’s disability was
permanent and total.
At that time, which was within the 240-day period, Michael was still undergoing
treatment by the company doctors. The orthopedic surgeon noted that Michael’s fracture was
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healing and there was greater probability of a fit for work declaration. After the lapse of 120 days,
the treatment period was considered extended as Michael was advised to continue medical
therapy to improve his condition to which he agreed. There was, thus, an indication that further
therapy sessions would address his temporary disability. He was expected to return for his
therapy session, but he failed to do so. Clearly, under the circumstances, the 240-day extension
period was justified.
There being no assessment, Michael’s condition cannot be considered a permanent total

disability. Temporary total disability only becomes permanent when declared by the company
physician within the period he is allowed to do so, or upon the expiration of the maximum 240-
day medical treatment period without a declaration of either fitness to work or permanent
disability.
A seafarer’s inability to work and the failure of the company-designated physician to determine
fitness or unfitness 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.
On the issue of abandonment, the Court agrees with New Filipino’s stance that Michael
was indeed guilty of medical abandonment for his failure to complete his treatment even before
the lapse of the 240 days period. Due to his willful discontinuance of medical treatment with Dr.
Cruz, the latter could not declare him fit to work or assess his disability. Michael’s claim that
requiring him toawait the medical assessment of Dr. Cruz would mean that his fate would unduly
rest in the hands of the company doctor does not persuade. Worthy of note is that the company
designated physician is mandated under the law to issue a medical assessment within 240 days
from the seafarer’s repatriation. It is, therefore, incorrect to conclude that a seafarer is at the
mercy of the company doctor.
Thus, without any disability assessment from Dr. Cruz, Michael’s claim for disability
compensation cannot prosper. Section 20(D) of the POEA-SEC instructs that no compensation
and benefits shall be payable in respect of any injury, incapacity, disability or death of the seafarer
resulting from his willful or criminal act or intentional breach of his duties. Michael was duty-
bound to complete his medical treatment until declared fit to work or assessed with a permanent
disability grading. It is undisputed that Michael did not undergo further treatment. Michael filed
his complaint on January 12, 2010 and that he was able to secure a medical certificate from Dr.
Catapang on January 16, 2010. Such medical certificate was useless and did not provide Michael
with a cause of action to go after petitioners. Indeed, a seafarer has the right to seek the opinion
of other doctors under Section 20-B(3) of the POEA-SEC but this is on the presumption that there
is already a certification by the company-designated physician as to his fitness or disability which
he finds 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. The failure of Michael to observe the procedure under the POEA SEC provided a
sufficient ground for the denial of his claim for permanent total disability benefits.
ROMMEL B. DARAUG vs. KGJSFLEET MANAGEMENT MANILA, INC., KRISTIAN

GERHARDJEBSEN SKIPSREDER, MR. GUY DOMINO A. MACAPAYAG and/or M/V "IBIS
ARROW,"
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G.R. No. 211211, January 14, 2015, J. Mendoza
Permanent total disability means disablement of an employee to earn wages in the same
kind of work, or work of similar nature, that he was trained for or accustomed to perform, or any
kind of work which a person of his mentality and attainment could do. In 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. As Daraug was never actually incapacitated, it would be
highly unjust if he would be awarded the disability benefits which the law accords only to the
deserving and utterly unfair to KGJS if they would be made to pay.
Facts:
Rommel B. Daraug (Daraug) was employed by KGJS Fleet Management Manila, Inc.
(KGJS) for the second time on December 7, 2007 to serve as motorman on board the vessel M/V
Fayal Cement.
On December 23, 2007, while Daraug was working in the storage room, several steel plates
fell and hit his leg. Specifically, it resulted in the fracture of his right fibula and tibia. He was then
medically repatriated, examined and treated by the company-designated physicians, Dr. Fidel C.
Chua (Dr. Chua) of Trans-Global Health Systems, Inc., Makati City; and Dr.Tiong Sam Lim (Dr.
Lim), an orthopedic surgeon from Chinese General Hospital. After his treatment, Dr. Lim and
Dr. Chua concluded that Daraug’s right leg was fully healed and that he was fit to work.
OnJanuary 16, 2009, he executed the Certificate of Fitness to Work releasing KGJS of any liability
that might arise as a result of his injury. Much later, he underwent several examinations which
confirmed that he was fit to work.
On May 12, 2009, Daraug was hired again by KGJS for the third time, for and in behalf of
its foreign principal, KGJS Kristian Gerhard Jebsen Skipsreder AS (KGJS AS), as a motorman on
board M/V Ibis Arrow. The contract of employment, approved by the Philippine Overseas
Employment Administration (POEA), was for a period of nine (9) months with a basic salary of
US$643.00 exclusive of overtime and other benefits commencing on January 4, 2009. It contained
a clause stating that “the NSA/NMU-AMOSUP Model Agreement CBAs as applicable shall be
considered to be incorporated into and to form part of the contract.”
On October 31, 2009, while Daraug was working in the engine room, he accidentally
slipped and fell, injuring his right leg again. On November 3 and 12, 2009, the doctors of Meyer
Servicos Medicus Clinic in Brazil found that he had sustained a severe bruise/hematoma on his
right leg and recommended that he disembark from the vessel and continue his treatment in his
home port. He was then medically repatriated on November 14, 2009.
Almost immediately upon his arrival on November 16, 2009, Daraug reported to Dr. Chua
who, in turn, referred him again to Dr. Lim. After an x-ray test found no fracture on his leg, Dr.
Lim recommended that he take anti-inflammatory drugs and antibiotics for his injury.
Concurring in the findings and recommendations of Dr. Lim, Dr. Chua diagnosed Daraug to have
suffered from contusion hematoma. After re-evaluating him on December 4, 2009, and again on
December 21, 2009, Dr. Lim found that Daraug had recovered from his injuries and declared him
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fit to work. From the time he was repatriated until he was declared fit to work, he was paid his
sick wages. Again, he executed another Certificate of Fitness to Work.
About two and a half months later, on March 5, 2010, Daraug filed a complaint against
KGJS and KGJS AS, seeking permanent disability benefits under the NSA/NMU-AMOSUP CBA,
sick wages, damages, and attorney’s fees. In his Affidavit-Complaint, he claimed that his latest
injury which occurred on board the M/V Ibis Arrow, together with his previous accident on board
the M/V Fayal Cement, rendered him permanently disabled.
After the submission of all the pleadings, the Labor Arbiter (LA) rendered his decision
granting Daraug’s claims. In finding them meritorious, the LA found the medical assessment of
the company-designated physicians unreliable and biased in favor of the KGJSs.
As stated above, the NLRC reversed the LA ruling. The NLRC was of the considered view
that the finding of Dr. Lim that Daraug was fit to work should have been given credence,
considering the time and effort that he spent in monitoring and treating his condition.
The CA opined, as the NLRC did, that the findings of Dr. Lim and Dr.Chua should have
been given credence. For the appellate court, the extensive medical attention given by the
company-designated physicians to Daraug from the very beginning enabled them to be familiar
with, and acquire a detailed knowledge of, his medical condition, as compared to just one (1) day
of examination by Dr. Jacinto.
Issue:
Whether or not Daraug’s injuries rendered him permanently disabled to entitle him to
permanent disability benefits.
Ruling:
No. Daraug’s claim for benefits was premature. A seafarer may have basis to pursue an
action for total and permanent disability benefits, if any of the following conditions are present:
x x x
(c) The company-designated physician declared that he is fitfor 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;
x x x
Moreover, in Philippine Hammonia Ship Agency, Inc. v. Dumadag, the seafarer consulted
his own physician onfour (4) dates. The Daraug in the case at bench was examined by his
owndoctor for only one (1) day, that is, on April 13, 2010, almost four (4)months after he was
declared fit to work by the company-designated doctors.Even worse, the medical certificate of
Dr. Jacinto failed to state the reasonson which he based his conclusion. Thus, the Supreme Court
finds that the conclusionsof Dr. Jacinto cannot prevail over the findings of the KGJS’physicians.
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Aside from the finding of the company-designated physicians, it is worthy to note that
the evidence on record indubitably shows that Daraug continued to work as a seaman under
another employer. As aptly pointed out by the KGJS, Daraug was able to acquire gainful
employment with Imperial and was able to fully serve two (2) separate employment contracts
with them. 36 Several medical certifications from his pre-employment examinations were even
issued attesting to his overall fitness. Certainly, the Court cannot ignore these facts.
In view of the foregoing, Daraug is not entitled to his monetary claims. It should be
remembered that permanent total disability means disablement of an employee to earn wages in
the same kind of work, or work of similar nature, that he was trained for or accustomed to
perform, or any kind of work which a person of his mentality and attainment could do.
Indisability compensation, it is not the injury which is compensated, but rather the incapacity to
work resulting in the impairment of one's earning capacity. As Daraug was never actually
incapacitated, it would be highly unjust if he would be awarded the disability benefits which the
law accords only to the deserving and utterly unfair to KGJS if they would be made to pay.
UNICOL MANAGEMENT SERVICES, INC., LINK MARINE PTE. LTD. AND/OR

VICTORIANO B. TIROL, III vs. DELIA MALIPOT, IN BEHALF OF GLICERIO MALIPOT
G.R. No. 206562, January 21, 2015, J. Peralta
Section 20 of the POEA “Standard Terms and Conditions Governing the Overseas
Employment of Filipino Seafarers On-Board Ocean-Going Ships,” provides that the employer is
liable to pay the heirs of the deceased seafarer for death benefits once it is established that he died
during the effectivity of his employment contract. However, the employer may be exempt from
liability if it can successfully prove that the seaman’s death was caused by an injury directly
attributable to his deliberate or willful act.
Facts:
Respondent Delia Malipot (Delia) is the surviving spouse of the deceased seaman Glicerio
Malipot (seaman Glicerio) with whom the latter has two minor children.On July 16, 2008, seaman
Glicerio was processed for hiring by petitioner Unicol Management Services (petitioner Unicol),
acting for and in behalf of its principal, petitioner Link Marine Pte. Ltd. (petitioner Link Marine)
for the vessel Heredia Sea as Chief Engineer Officer for a contract duration of four (4) months.
Prior to his employment, seaman Glicerio was made to undergo a rigorous pre-
employment medical examination conducted by petitioners’ designated physicians and was
found fit to work physically and mentally.On August 18, 2008, he left the Philippines to join the
vessel Heredia Sea.
In her complaint, Delia alleged that seaman Glicerio suffered emotional strain when
petitioners refused to allow him to go home and be with his family. As early as November 16,
2008, he already manifested his desire to end his contract and gave petitioners enough time to
secure his replacement. His request was relayed by the Master of Heredia Sea to petitioners’ Port
Captain. However, the Port Captain, allegedly, did not allow him to leave the vessel. The Port
Captain also allegedly threatened him by telling him that once he leaves and sets his feet on
Philippine soil, he will immediately be arrested and will never be employed by any vessel ever
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again, and he will be made to pay for all the expenses of his deployment. She further contended
that he became depressed, especially when December came and he was still not allowed to go
home. Seaman Glicerio called up and texted her, begging her to talk to the Port Captain and allow
him to go home. He soon became ill and experienced chest pains and palpitations. He was seen
by a physician at the Fujairah Port Medical Center in Fujairah, United Arab Emirates and was
diagnosed with Muscoskeletal pain and Emotional trauma/illness. Despite this, he was not
repatriated. Even when his 4-month contract expired on December 18, 2008, he was still not
allowed to join his family for Christmas. She stressed that his death was compensable because
his emotional trauma was caused by the conditions of his job and aggravated by the acts of the
Port Captain.
For their part, petitioners admitted having hired seaman Glicerio for a period of four to
six months starting August 18, 2008 and ending February 18, 2009. They averred that before the
end of his employment contract, or on January 13, 2009, petitioners received information that
seaman Glicerio committed suicide by hanging in the store room of the Heredia Sea. This report
was confirmed by the Certification of the Philippine Consulate General at Dubai, and the
accompanying documents, namely: Medico Legal Report issued by the Ministry of Justice of the
United Arab Emirates and the Death Certificate issued by the Ministry of Health of the United
Arab Emirates.
As a result of the foregoing events, Delia filed a Complaint before the Labor Arbiter
claiming death compensation under seaman Glicerio’s POEA contract. Eventually, the Labor
Arbiter rendered a decision awarding death compensation. It ruled that petitioners failed to
satisfactorily prove by substantial evidence that seaman Glicerio committed suicide as it relied
on the inconclusive report of the medico-legal consultant, which merely gave the cause of death.
With the NLRC, the said decision wasreversed and respondent’s complaint was dismissed for lack
of merit. Undaunted, Delia filed a motion for reconsideration which was, however, denied.
Accordingly, she filed a certiorari petition before the CA which later on reversed the NLRC ruling
and awarded death benefits holding that petitioners failed to prove the cause or circumstances
which lead to seaman Glicerio’s suicide.
Issue:
Whether or not seaman Glicerio committed suicide during the term of his employment
contract which would exempt petitioners from paying the death compensation benefits to his
beneficiaries.
Ruling:
Taking into consideration the Investigation Report, log book extracts and Master’s Report
submitted by petitioners, the same all strongly point out that seaman Glicerio died because he
committed suicide. Hence, the beneficiaries are not entitled to receive death compensation
benefits.
Contrary to the findings of the CA, the afore-mentioned documents completely detailed
the events that happened prior to seaman Glicerio’s death, i.e., from the last person who
corresponded with him when he was still alive, the circumstances leading to the day he was
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discovered dead, to the person who discovered him dead. Based on the investigation, it appears
that seaman Glicerio was cheerful during the first two months. However, he, thereafter, kept to
himself after telling people that his family is facing problems in the Philippines and that he
already informed petitioners to look for his replacement.
The result of the above investigations is even bolstered by the Medical Reportissued by
Dr. Sajeed Aboobaker who diagnosed him with musculoskeletal pain and emotional trauma due
to family problems, when the latter complained of chest pains and palpitations on December 10,
2008. Clearly, both the Medico-Legal Report and Death Certificate indicate that the actual cause
of death of seaman Glicerio is “suicidal asphyxia due to hanging.” As such, the possibility of foul
play regarding seaman Glicerio’s suicide was eliminated considering that an external examination
of his body shows no violence or resistance or any external injuries. In fact, the post-mortem
examination conclusively established that the true cause of his death was suicidal asphyxia due
to hanging.
All told, taking the Medico-Legal Report and the Death Certificate, together with the
Investigation Report, log book extracts, and Master’s Report, we find that petitioners were able
to substantially prove that seaman Glicerio’s death was attributable to his deliberate act of killing
himself by committing suicide.
Section 20 of the POEA “Standard Terms and Conditions Governing the Overseas
Employment of Filipino Seafarers On-Board Ocean-Going Ships,” provides that the employer is
liable to pay the heirs of the deceased seafarer for death benefits once it is established that he
died during the effectivity of his employment contract. However, the employer may be exempt
from liability if it can successfully prove that the seaman’s death was caused by an injury directly
attributable to his deliberate or willful act. Thus, since petitioners were able to substantially prove
that seaman Glicerio’s death is directly attributable to his deliberate act of hanging himself, his
death, therefore, is not compensable and his heirs not entitled to any compensation or benefits.
Finally, although this Court commiserates with the Glicerio, absent substantial evidence
from which reasonable basis for the grant of benefits prayed for can be drawn, we are left with
no choice but to deny Delia’s petition, lest an injustice be caused to the employer.
ONE SHIPPING CORP., AND/OR ONE SHIPPING KABUSHIKI KAISHA/JAPAN vs.

IMELDA C. PEÑAFIEL
G.R. No. 192406, January 21, 2015, J. Peralta
It has been settled that in order to avail of death benefits, the death of the employee should
occur during the effectivity of the employment contract. Once it is established that the seaman died
during the effectivity of his employment contract, the employer is liable. However, if he died after
he pre-terminated the contract of employment, pursuant to Section 20 (A) of the POEA Standard
Employment Contract, the terms and conditions contained in the contract of employment ceased
to have force and effect, including the payment of death compensation benefits to the heirs of a
seafarer. Perforce, the same is true especially when there is no evidence to show that the illness was
acquired during the term of his employment with petitioners and neither were there indications that
he was already suffering from an ailment at the time he pre-terminated his employment contracts.
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Even more, granting that petitioners were made aware of the seaman’s prior heart ailment, the fact
still remains that he died after the effectivity of his contract.
Facts:
One Shipping Corp., for and in behalf of its principal One Shipping Kabushiki
Kaisha/Japan (herein petitioners), hired the late Ildefonso S. Peñafiel as Second Engineer on
board the vessel MV/ACX Magnolia for a duration of twelve (12) months. Peñafiel boarded the
vessel on August 29, 2004 and died on July 2, 2005. His wife, Imelda C. Peñafiel (Imelda), herein
respondent, then filed for monetary claims arising from his death. She alleged that while her
husband Ildefonso was performing his task on board the vessel, the latter felt a throbbing pain
in his chest and shortening of breath, as if he was about to fall. Thinking that the same was due
to his heavy workload, Ildefonso took a rest. However, after recovering, Ildefonso allegedly
informed his superior about the pain but the latter ignored him. On May 21, 2005, Ildefonso
disembarked from the vessel and returned to the Philippines on the same day. She further
claimed that upon arrival, Ildefonso reported to the petitioner manning agency to ask for medical
attention for his condition, but instead of being sent for post medical examination, Ildefonso was
allegedly informed by the petitioners that he was already scheduled for his next deployment.
Thus, Ildefonso was required to undergo the pre-employment medical examination at the
PMP Diagnostic Center, Inc. on July 2, 2005. However, after allegedly completing the medical
and laboratory examinations, Ildefonso collapsed and was immediately brought to the Philippine
General Hospital where he died at 2:05 p.m. of the same day due to myocardial infarction.
Resultantly, she asserted that she called up petitioner manning agency and told them about the
incident hoping that she would be given the necessary benefits.
Petitioners, on the other hand, while admitting that they contracted the services of the
late Ildefonso, denied any liability for the claims of Imelda. They maintained that at the time
Ildefonso died on July 2, 2005, the latter was no longer an employee of the petitioners as he
requested for a leave and voluntarily pre-terminated his contract on April 9, 2005. Thus, he
disembarked from the vessel on May 21, 2005. They also alleged that in the early part of June
2005, Ildefonso reported at petitioners’ office applying for a new employment and requested that
he be lined up for another vessel. Accordingly, he was advised to undergo the usual pre-
employment medical examination before considering his request. Petitioners were then
surprised when they learned about Ildefonso's passing.
Eventually, the Labor Arbiter dismissed the complaint for lack of merit. Thus, Imelda filed
her appeal with the NLRC in which the latter affirmed the decision of the Labor Arbiter.
Undaunted, she filed a petition for certiorari under Rule 65 with the CA which was granted.
Hence, petitioners were ordered to jointly and severally pay death benefits to Imelda and her
three minor children. Feeling aggrieved, petitioners sought for a motion for reconsideration
which was, however, denied. Hence, this petition.
Issue:
Whether or not the death of Ildefonso is compensable.
Ruling:
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No, the death of Ildefonso Peñafiel is not compensable.
It is indisputable that Ildefonso was previously employed by the petitioners. Based on the
records, however, he pre-terminated his contract of employment with the petitioners when on
April 9, 2005, he requested for a vacation leave effective May 2005. The said request was granted
by the petitioners. Hence, Ildefonso was duly paid of all that was due him as a result of his
employment and, subsequently, Ildefonso was repatriated to the Philippines on May 21, 2005.
Clearly, at the time of his repatriation, the employer-employee relationship between him and the
petitioners had already been terminated. Thus, pursuant to Section 20 (A) of the POEA Standard
Employment Contract, the Labor Arbiter was correct in concluding that the terms and conditions
contained in the contract of employment ceased to have force and effect, including the payment
of death compensation benefits to the heirs of a seafarer. It has been settled that in order to avail
of death benefits, the death of the employee should occur during the effectivity of the
employment contract. Once it is established that the seaman died during the effectivity of his
employment contract, the employer is liable. In the present case, Ildefonso died after he pre-
terminated the contract of employment. That alone would have sufficed for his heirs not to be
entitled for death compensation benefits.
Furthermore, there is no evidence to show that Ildefonso's illness was acquired during
the term of his employment with petitioners. The CA’s conclusion that the fact that One Shipping
hired Ildefonso despite a waiver and prior knowledge of his heart ailment behooves petitioners
to accept liability for said death in the course of his employment is misguided. Granting that
petitioners were made aware of Ildefonso's prior heart ailment, the fact still remains that he died
after the effectivity of his contract. There is even no reason given why Ildefonso asked for a pre-
termination of his contract which resulted in his repatriation. To surmise that he asked for the
pre-termination of his contract due to a medical condition is highly speculative and must not be
considered as a fact. There are no indications that he was already suffering from an ailment at
the time he pre-terminated his employment contract with petitioners. There was no report of
any illness suffered by him while on board the MV “ACX Magnolia”. Also, upon his arrival in the
Philippines, or at any time within three working days from the date of his return, there is no
showing that the deceased required any medical treatment nor did he report to petitioners any
ailment being suffered by him. Instead, he immediately signed up for another tour of duty,
thereby indicating that he was physically fit to take on another assignment.
Also, this Court finds no substantial evidence to prove that his illness which caused his
death was aggravated during the term of his contract. The death of a seaman several months after
his repatriation for illness does not necessarily mean that: (a) the seaman died of the same illness;
(b) his working conditions increased the risk of contracting the illness which caused his death;
and (c) the death is compensable, unless there is some reasonable basis to support otherwise.
While the Court adheres to the principle of liberality in favor of the seafarer in construing
the Standard Employment Contract, it cannot allow claims for compensation based on surmises.
When the evidence presented negates compensability, the Court has no choice but to deny the
claim, lest we cause injustice to the employer.
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AL O. EYANA vs. PHILIPPINE TRANSMARINE CARRIERS, INC., ALAIN A. GARILLOS,
CELEBRITY CRUISES, INC. (U.S.A.)
G.R. No. 193468, January 28, 2015, J. Reyes
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. It is of no consequence that
Eyana 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. In the instant petition, Dr. Alegre’s January
20, 2007 report addressed to PTCI clearly indicated that the petitioner’s persistent back pains
remained unresolved. Hence, the continuation of physical therapy and an increased Gabapentin
dose were recommended. Petitioner Eyana is therefore, entitled to permanent disability benefits.
Facts:
Respondent Philippine Transmarine Carriers, Inc. (PTCI) is a local manning agency, with
Alain A. Garillos (Garillos) as its crewing manager and official representative.
PTCI, for and on behalf of its foreign principal, Celebrity Cruises, Inc. (CCI), hired Eyana
to assume the position of a utility cleaner on board M/V Century. Eyana then joined the ship on
April 15, 2006. His contract covered a period of eight months and his basic monthly salary was
US$267.00. His tasks were predominantly manual in nature, which involved lifting, carrying,
loading, transporting and arranging food supplies, and floor cleaning.
On August 2, 2006, Eyana felt a sudden pain in his back after lifting a 30-kilo block of
cheese from the freezer shelf. He was no longer able to carry the cheese to the kitchen. He
reported the incident to his superior.
Eyana was confined in a hospital in Oslo, Norway from August 4 to 16, 2006. He was
medically repatriated to the Philippines on August 17, 2006.
PTCI immediately referred Eyana to Dr. Natalio G. Alegre II (Dr. Alegre) for treatment.
The initial consultation was on August 18, 2006. Dr. Alegre noted that Eyana was (a) suffering
from severe low back pains, (b) experiencing numbness and weakness in his right lower leg, and
(c) having difficulty bending and sitting. The former was, thus, advised to undergo physical
therapy thrice a week. Thereafter, he was advised to undergo a surgery which he denied. Dr.
Alegre then told him that he has an option to undergo physical therapy instead. On January 20,
2007, Dr. Alegre informed PTCI that Eyana still suffered from persistent back pains and restricted
truncal mobility.
On June 6, 2007, Eyana sought the opinion of Dr. Venancio P. Garduce, Jr. (Dr. Garduce),
an orthopedic surgeon. The medical certificate signed by the latter indicated that Eyana had (a)
nerve root compression at L4-L5 and L5-S1; (b) numbness and sensory deficits of 40% with
weakness of the left big toe extension; and (c) limited range of motion of the back. Dr. Garduce
concluded that Eyana had a Disability Grade of One and was thus unfit for sea duty.
On June 7, 2007, Eyana filed before the LA a complaint for disability benefits and medical
reimbursements.
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On December 17, 2007, the LA rendered a Decision awarding to Eyana the amounts of
US$80,000.00 as total and permanent disability benefits. NLRC entered another decision which
gives an award of disability compensation equivalent to GRADE EIGHT (8) under the [POEA-
SEC] to Eyana. The respondents thereafter filed a Petition for Certiorari, which the CA dismissed.
Hence this petition.
Issue:
Whether Gariilo is entitled to permanent disability benefit.
Ruling:
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
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. 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.
The Court finds that the petitioner is entitled to total and permanent disability benefits
under the provisions of the POEA SEC.
In the instant petition, Dr. Alegre’s January 20, 2007 report addressed to PTCI clearly
indicated that the Eyana’s persistent back pains remained unresolved. Hence, the continuation
of physical therapy and an increased Gabapentin dose were recommended. The Court cannot
disregard the fact that Eyana was a utility cleaner before he was injured. His tasks in the ship
were predominantly manual in nature involving a lot of moving, lifting and bending. At the time
Dr. Alegre belatedly issued the disability assessment, Eyana could not revert back to his
customary gainful occupation without subjecting himself to serious discomfort and pain.
Further, the Court disagrees with the NLRC which found fault on the part of the
petitioner in refusing to undergo surgery as recommended by Dr. Alegre. Records show that
Eyana underwent physical therapy. Eyana cannot be faulted that he opted for physical therapy
instead of surgery. If indeed surgery was the only way for Eyana to be able to fully recover from
his injury, he should have been categorically informed of such fact and warned of the
consequences of his choice. The petitioner did not refuse treatment. He just availed of an option
presented to him. Besides, even if he underwent surgery, there is likewise no assurance of full
recovery.
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C.F. SHARP CREWMANAGEMENT, INC. AND REEDEREI CLAUS PETER OFFEN vs.
CLEMENTE M. PEREZ
G.R. No. 194885, January 26, 2015, J.Villarama Jr.
Accident is an unintended and unforeseen injurious occurrence; something that does not
occur in the usual course of events or that could not be reasonably anticipated; an unforeseen and
injurious occurrence not attributable to mistake, negligence, neglect or misconduct. Accident is
that which happens by chance or fortuitously, without intention and design, and which is
unexpected, unusual and unforeseen. To stress, to be entitled to the compensation under Section
21(a) of the CBA, a seafarer must suffer an injury as a result of an accident. But there is no proof
that Perez met an accident and was injured, that he met an unintended and unforeseen injurious
occurrence while on board the Rio Grande.
Facts:
C.F. Sharp Crew Management, Inc.and Reederei Claus Peter Offen hired Clemente M.
Perez (Perez) as Oiler on board the vessel M/V P&ONedlloyd Rio Grande. The parties signed the
10-month employment contract on May 22, 2000 and they agreed to comply with the
1996Philippine Overseas Employment Administration Standard Employment Contract (POEA-
SEC). Perez's employment is also covered by a Collective Bargaining Agreement (CBA).
While the Rio Grande was in Singapore on November 1, 2000, Perez failed to report for
duty. But at 9:30 a.m., he showed up at the crew mess confused. The crew got scared of him. The
Master of the RioGrande decided that Perez will be a high risk for the safety of the ship and its
crew and must be repatriated. Perez was diagnosed to have acute psychosis at Gleneagles
Maritime Medical Center and was declared unfit for sea duty.
Perez arrived in Manila on November 22, 2000 and petitioners referred him to Dr.
Baltazar V. Reyes, Jr. Dr. Reyes’s psychiatric evaluation stated that Perez did not present any
psychiatric difficulty of note, and that it is best to do a psychological test and to observe Perez
for another month without medication. According to Dr. Reyes, Perez felt that his illness was
caused by unfair treatment from the German chief engineer. In 1996, Perez was sent home after
a similar breakdown inSpain but he was able to return to work in September 1997, said Dr. Reyes.
Dr. Reyes’s impression is that Perez has recurrent acute psychotic disorder for it does not show
all the time. He may be normal at one time buthis psychotic disorder will become manifest once
triggered by an outside factor, most probably by a problem with his superiors.
Meantime, in another medical report dated February 8, 2002, Dr. Abesamis stated that
Perez can still go back to sea duty but recurrence of the same psychotic breakdown is possible.
According to Dr. Abesamis, Perez denied that he had a psychotic breakdown in 1996.Perez sued
the petitioners for disability benefits, moral and exemplary damages, and attorney’s fees. He
claimed that while he was told that he is already fit to work as seaman, the doctor refused to issue
a medical certificate on the ground that he has yet to fully recover from his illness. When he
sought re-employment, petitioners rejected him because of his illness. His claim for disability
benefits under the CBA was also denied.
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Then, petitioners advised him to claim disability benefits from the Social Security System
(SSS) and gave him the SSS Forms/Medical Certificates duly signed by Dr. Abesamis.
For their part, petitioners argued that Perez is not entitled to disability benefits because
he concealed his pre-existing psychotic illness. According to them, Perez concealed that he was
repatriated in 1996and 1997 for psychotic episodes. They claimed that Perez is already fit to work,
citing the result of his psychological examination after his repatriation. They also claimed that
the CBA is not applicable because it covers disability caused by accident and that Perez is not
entitled to damages and attorney’s fees because they have showed good faith in dealing with him.
The Labor Arbiter ruled in favor of Perez and ordered petitioners to pay him disability
benefits, sickness allowance and attorney’s fees.
The NLRC reversed the Labor Arbiter’s ruling but ordered petitioners to pay Perez
sickness allowance. It ruled that Perez is not entitled to disability benefits since he concealed his
psychotic features in his application form when he sought employment with petitioners.
The CA reversed the NLRC’s ruling and reinstated the Labor Arbiter’s award of disability
benefits and attorney’s fees to Perez.
Issue:
Whether or not Perez is entitled to US$125,000 as disability benefits and 10% thereof as
attorney’s fees.
Ruling:
No. The Supreme Court finds the petition partly meritorious and rule that Perez is
entitled to US$60,000 as permanent and total disability benefits in accordance with the 1996
POEA-SEC. The Supreme Court disagrees with the CA that Perez is entitled to the higher amount
of US$125,000 under the CBA. The award of attorney’s fees is also proper.
The Supreme Court disagrees with petitioners that Perez is not entitled to disability
benefits because he is guilty of fraud in concealing his pre-existing medical condition. Petitioners
cannot rely on Section 20(E)19 of the 2000 POEA-SEC since, as discussed above, it is the 1996
POEA-SEC that is applicable to the instant case.
The above-quoted provision does not mention unconcealment. It only requires that the
seafarer be furnished a copy of all pertinent medical records upon request. On this point, the
NLRC appears to have been misled in ruling that Perez is guilty of concealment.
Without a declaration that Perez is already fit to work or an assessment of the degree of
Perez’s disability by petitioners’ own doctors, Perez’s disability is therefore permanent and total.
This is equivalent to a Grade 1 impediment/disability entitling Perez toUS$60,000 as permanent
and total disability benefits under the 1996 POEA-SEC.
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The Supreme Court is unable to agree with the CA that Perez’s psychotic disorder is an
injury as a result of an accident from any cause whatsoever which would entitle Perez to disability
benefits amounting toUS$125,000 under the CBA. To stress, to be entitled to the compensation
under Section 21(a) of the CBA, a seafarer must suffer an injury as a result of an accident. But
there is no proof that Perez met an accident and was injured, that he met an unintended and
unforeseen injurious occurrence while on board the Rio Grande. Accident is an unintended and
unforeseen injurious occurrence; something that does not occur in the usual course of events or
that could not be reasonably anticipated; an unforeseen and injurious occurrence not
attributable to mistake, negligence, neglect or misconduct. Accident is that which happens by
chance or fortuitously, without intention and design, and which is unexpected, unusual and
unforeseen.
On the issue of attorney’s fees, the Supreme Court have held that where an employee is
forced to litigate and incur expenses to protect his right and interest, as in this case, he is entitled
to an award of attorney’s fees equivalent to 10% of the award. Thus, Perez is also entitled to
US$6,000 as attorney’s fees.
Petitioners’ claim of good faith is also unconvincing. Petitioners repeatedly deal with
seafarers and enter into employment contracts with them. They are therefore aware of the
contract they entered into with Perez and have a record of this one-page contract where they
agreed tocomply with the 1996 POEA-SEC. For them to cite the provision on concealment of the
2000 POEA-SEC in rejecting Perez’s claim for disability benefits thus negates good faith on their
part.
SEALANES MARINE SERVICES, INC./ARKLOW SHIPPING NETHERLAND AND/OR

CHRISTOPHER DUMATOL vs. ARNEL G. DELA TORRE
Dela Torre was repatriated and immediately underwent treatment and rehabilitation at the
company-designated facility, Marine Medical Services of the Metropolitan Medical Center,
exceeding the 240 days allowed to declare him either fit to work or permanently disabled. Under
Section 32 of the POEA SEC, only those injuries or disabilities classified as Grade 1 are considered
total and permanent. . The Court held that the POEA SEC must be read in harmony with the Labor
Code and the AREC. Although Dela Torre was given a Grade 11 disability rating the assessment may
be deemed tentative because he continued his physical therapy sessions beyond 240 days. Yet,
despite his long treatment and rehabilitation, he was eventually unable to go back to work as a
seafarer, which fact entitled him under the Dutch CBA to maximum disability benefits.
Facts:
Arnel Dela Torre was hired by Sealanes Marine Services, Inc., a local manning agency,
through its President, Christopher Dumatol, in behalf of its foreign principal, Arklow Shipping
Netherland, as an able seaman on board M/V Arklow Venture for a period of nine months at a
basic monthly salary of US$545.00. An overriding CBA between the Dela Torre’s union,
Associated Marine Officers’ and Seamen’s Union of the Philippines, and the Netherlands
Maritime Employers Association, called CBA for Filipino Ratings on Board Netherlands Flag
Vessels (Dutch CBA) also covered his contract.
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Dela Torre embarked on January 21, 2010. On August 1, 2010, during the crew’s rescue boat
drill at the port of Leith, Scotland, he figured in an accident and injured his lower back. An X-
ray of his lumbosacral spine was taken at a hospital at the port, but while according to his
attending physician he sustained no major injury, the pain in his back persisted and he was
repatriated. Dela Torre was referred by Sealanes to the Marine Medical Services of the
Metropolitan Medical Center. On August 5, 2010, an X-ray of his lumbosacral spine showed, per
the medical report, that he sustained “lumbar spine degenerative changes with associated L1
compression fracture.” The next day, a Magnetic Resonance Imaging scan of his lumbar spine
revealed an “acute compression fracture body of L1; right paracentral disc protrusion at L5-S1
causing minimal canal compromise; L4-L5 and L5-S1 disc dehydration.” On December 16, 2010,
an X-ray showed “compression deformity of L1 vertebra; L2-L1 disc space is now defined but
slightly narrowed.” On January 27, 2011, his fourth X-ray still showed a “compression fracture, L1
with narrowed L2-L1 disc space; no significant neural for minimal compromise.” Dela Torre
underwent several physical therapy sessions, and finally on March 10, 2011 the company-
designated physician assessed him with a Grade 11 disability for slight rigidity or one-third loss of
motion or lifting power of trunk. Nonetheless, he was informed of the assessment only in May
2011, or more than 240 days since the accident.
On May 20, 2011, Dela Torre filed a complaint for disability benefits, medical
reimbursement, underpaid sick leave, damages and attorney’s fees. On July 30, 2012, the LA
rendered judgment awarding him US$80,000.00 in disability benefits as provided in the Dutch
CBA, plus 10% as attorney’s fees. The NLRC affirmed the award of total disability benefits to Dela
Torre noting that he continued with his rehabilitation even after the company’s Grade 11 disability
rating issued on March 10, 2011, indicating that its disability rating was intended merely to comply
with the 240-day limit for the company-designated physician to either declare him fit to work or
to assess the degree of his permanent disability. The CA ruled that the seafarer’s right to disability
benefits is determined not solely by the company’s assessment of his impediment but also by law,
contract and medical findings and concurred that Dela Torre was entitled to total permanent
disability benefits. Hence, this appeal.
Issue:
Whether or not the CA erred in disregarding Dela Torre’s partial permanent disability
rating of Grade 11 under the POEA SEC schedule of disability benefits, even as they pointed out
that Dela Torre failed to refer his assessment to a neutral third doctor as provided in Paragraph
3, Section 20(B) of the POEA SEC.
Ruling:
No, the CA did not err.
It is expressly provided in Article 192(c)(1) of the Labor Code that a temporary total
disability lasting continuously for more than 120 days, except as otherwise provided in the Rules,
shall be deemed total and permanent. Section 2(b), Rule VII of the AREC, likewise provides that
a disability is total and permanent if as a result of the injury or sickness the employee is unable
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to perform any gainful occupation for a continuous period exceeding 120 days, except as
otherwise provided under Rule X of these Rules. Under
Section 20(B)(3) of the POEA SEC, it is the company-designated physician who should
determine the disability grading or fitness to work of the seafarer. Also, under Article 21.4.1 of
the Dutch CBA governing the parties, it is the doctor appointed by the company’s medical advisor
who shall determine the degree of disability suffered by a seafarer.
Under Section 32 of the POEA SEC, only those injuries or disabilities classified as Grade 1
are considered total and permanent. The Court read the POEA SEC in harmony with the Labor
Code and the AREC, and explained that: (a) the 120 days provided under Section 20(B)(3) of the
POEA SEC is the period given to the employer to determine fitness to work and when the seafarer
is deemed to be in a state of total and temporary disability; (b) the 120 days of total and temporary
disability may be extended up to a maximum of 240 days should the seafarer require further
medical treatment; and (c) a total and temporary disability becomes permanent when so declared
by the company-designated physician within 120 or 240 days, as the case may be, or upon the
expiration of the said periods without a declaration of either fitness to work or permanent
disability and the seafarer is still unable to resume his regular seafaring duties.
Dela Torre was repatriated on August 4, 2010 and immediately underwent treatment and
rehabilitation at the company-designated facility, Marine Medical Services of the Metropolitan
Medical Center. It lasted until July 20, 2011, exceeding the 240 days allowed to declare him either
fit to work or permanently disabled. Although he was given a Grade 11 disability rating on March
10, 2011, the assessment may be deemed tentative because he continued his physical therapy
sessions beyond 240 days. Yet, despite his long treatment and rehabilitation, he was eventually
unable to go back to work as a seafarer, which fact entitled him under the Dutch CBA to
maximum disability benefits.
The POEA SEC provides merely for the basic or minimal acceptable terms of a seafarer’s
employment contract, thus, in the assessment of whether his injury is partial and permanent, the
same must be so characterized not only under the Schedule of Disabilities in Section 32 of the
POEA SEC, but also under the relevant provisions of the Labor Code and the AREC implementing
Title II, Book IV of the Labor Code. While the seafarer is partially injured or disabled, he must
not be 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 may be the case, then he shall be deemed
totally and permanently disabled.
The Court ruled that it is of no consequence that the seafarer recovered from his illness
or injury, for what is important is that he was unable to perform his customary work for more
than 120 days, and this constitutes total permanent disability. Thus, that Dela Torre required
therapy beyond 240 days and remained unable to perform his customary work during this time
rendered unnecessary any further need by him to secure his own doctor’s opinion or that of a
neutral third doctor to determine the extent of his permanent disability.
Concerning the joint and solidary liability of the manning agency, Sealanes, its foreign
principal, Arklow Shipping Netherland, and Sealanes’ President Dumatol, Section 10 of Republic
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Act No. 8042 provides that, the liability of the principal/employer and the
recruitment/placement agency for any and all claims under this section shall be joint and several.
If the recruitment/placement agency is a juridical being, the corporate officers and directors and
partners as the case may be, shall themselves be jointly and solidarily liable with the corporation
or partnership for the aforesaid claims and damages. Laws are deemed incorporated in
employment contracts and the contracting parties need not repeat them. They do not even have
to be referred to. Every contract, thus, contains not only what has been explicitly stipulated, but
also the statutory provisions that have any bearing on the matter.
GSIS LAW (R.A. 8291)
GOVERNMENT SERVICE INSURANCE SYSTEM vs. JOSE M. CAPACITE

It is true that under Annex "A" of the Amended Rules on Employees’ Compensation, lung
cancer is occupational only with respect to vinyl chloride workers and plastic workers. However,
this will not bar a claim for benefits under the law if the complainant can adduce substantial
evidence that the risk of contracting the illness is increased or aggravated by the working conditions
to which the employee is exposed to. In the case at bar, aside from Jose’s general allegations proving
the stressful duties of his late wife, no reasonable proof exists to support the claim that her
respiratory disease, which is similar to lung cancer, was aggravated by her working conditions. The
records do not support the contention that she had been exposed to voluminous and dusty records,
nor do they provide any definite picture of her working environment.
Facts:
Elma Capacite was an employee in the Department of Agrarian Reform (DAR) – Eastern
Samar Provincial Office, Borongan, Eastern Samar, who successively held the following positions:
Junior Statistician, Bookkeeper, Bookkeeper II, and finally as Accountant I.
Due to persistent cough coupled with abdominal pain, Elma was admitted at the Bethany
Hospital. Elma died due to "Respiratory Failure secondary to Metastatic Cancer to the lungs;
Bowel cancer with Hepatic and Intraperitoneal Seeding and Ovarian cancer." Elma’s surviving
spouse, Jose, filed a claim for ECC death benefits before the Government Service Insurance
System (GSIS) Catbalogan Branch Office, alleging that Elma’s stressful working condition caused
the cancer that eventually led to her death. The GSIS denied Jose’s claim. The GSIS opined that
Jose had failed to present direct evidence to prove a causal connection between Elma’s illness and
her work in order for the claimant to be entitled to the ECC death benefits.
Jose appealed the GSIS decision to the ECC but the latter denied Jose’s claim for death
benefits. The ECC held that colorectal cancer is not listed as an occupational and compensable
disease under the Amended Rules on Employee’s Compensation. Although its item 17 provides
that "cancer of the lungs, liver and brain shall be compensable," the rules required "that it had
been incurred by employees working as vinyl chloride workers, or plastic workers."
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The CA reversed the ECC findings. Without discussing the nature of Elma’s employment,
the CA ruled that she had "adenocarcinoma of the lungs" or "lung cancer," which is a respiratory
disease listed under Annex "A" of the Amended Rules on Employee’s Compensation, entitling her
heirs to death benefits even if she had not been a "vinyl chloride worker, or plastic worker." GSIS
filed a motion for reconsideration which the CA denied in its resolution.
Issue:
Whether or not Elma’s illness is work-related.
Ruling:
No. PD 626, as amended, defines compensable sickness as "any illness definitely accepted
as an occupational disease listed by the Commission, or any illness caused by employment subject
to proof by the employee that the risk of contracting the same is increased by the working
conditions." Of particular significance in this definition is the use of the conjunction "or," which
indicates alternative situations.
Based on this definition, the Court ruled in GSIS v. Vicencio that for sickness and the
resulting death of an employee to be compensable, the claimant must show either: (1) that it is a
result of an occupational disease listed under Annex "A" of the Amended Rules on Employees'
Compensation with the conditions set therein satisfied; or (2) if not so listed, that the risk of
contracting the disease was increased by the working conditions.
While item 17, Annex "A" of the Amended Rules of Employee’s Compensation considers
lung cancer to be a compensable occupational disease, it likewise provides that the employee
should be employed as a vinyl chloride worker or a plastic worker. In this case, however, Elma
did not work in an environment involving the manufacture of chlorine or plastic, for her lung
cancer to be considered an occupational disease. There was, therefore, no basis for the CA to
simply categorize her illness as an occupational disease without first establishing the nature of
Elma’s work. Both the law and the implementing rules clearly state that the given alternative
conditions must be satisfied for a disease to be compensable.
The Court also does not find that Elma’s cause of death was work-connected. It is true
that under Annex "A" of the Amended Rules on Employees’ Compensation, lung cancer is
occupational only with respect to vinyl chloride workers and plastic workers. However, this will
not bar a claim for benefits under the law if the complainant can adduce substantial evidence
that the risk of contracting the illness is increased or aggravated by the working conditions to
which the employee is exposed to.
It is well-settled that the degree of proof required under P.D. No. 626 is merely substantial
evidence, which means, "such relevant evidence as a reasonable mind might accept as adequate
to support a conclusion." What the law requires is a reasonable work-connection and not a direct
causal relation. It is enough that the hypothesis on which the workman's claim is based is
probable. Medical opinion to the contrary can be disregarded especially where there is some basis
in the facts for inferring a work-connection. Probability, not certainty, is the touchstone. It is not
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required that the employment be the sole factor in the growth, development or acceleration of a
claimant’s illness to entitle him to the benefits provided for. It is enough that his employment
contributed, even if to a small degree, to the development of the disease.
The rule is that the party who alleges an affirmative fact has the burden of proving it
because mere allegation of the fact is not evidence of it. Proof of direct causal connection is not,
however, indispensably required. The law merely requires substantial evidence – such relevant
evidence as a reasonable mind might accept as adequate to support a conclusion that the
claimant’s employment contributed, even if to a small degree, to the development of the disease.
Thus, there is no requirement that the employment be the sole factor in the growth, development
or acceleration of a claimant’s illness for the latter to be entitled to the benefits provided for.
However, it is important to note that adequate proof must be presented to substantiate the claim
for death benefits.
Aside from Jose’s general allegations proving the stressful duties of his late wife, no
reasonable proof exists to support the claim that her respiratory disease, which is similar to lung
cancer, was aggravated by her working conditions. The records do not support the contention
that she had been exposed to voluminous and dusty records, nor do they provide any definite
picture of her working environment.
GOVERNMENT SERVICE INSURANCE SYSTEM vs. AURELIA Y. CALUMPIANO

GSIS filed the instant petition contending that respondent’s illnesses, hypertension and
Glaucoma, not being work-connected, cannot entitle her to disability retirement benefit. The SC
however ruled that hypertension is a listed occupational disease, such being the case it is not
necessary that there be proof of causal relation between the work and the illness which resulted in
the Calumpiano’s disability. The open-ended Table of Occupational Diseases requires no proof of
causation. In general, a covered claimant suffering from an occupational disease is automatically
paid benefits. As to her glaucoma, the SC ruled that since there appears to be a link between blood
pressure and the development of glaucoma, the Court concluded that respondent’s glaucoma
developed as a result of her hypertension. Such being the case, the latter is likewise compensable
under the New GSIS Act.
Facts:
Respondent Aurelia Y. Calumpiano was employed as Court Stenographer at the then

Court of First Instance ofSamar from January 5, 1972 until her retirement on March 30, 2002.
Shortly before her retirement, Calumpiano filed before the SC an application for disability
retirement on account of her ailments, Hypertensive Cardiovascular Disease and Acute Angle
Closure Glaucoma. To bolster her claim, Calumpiano submitted the medical certificates issued
by her attending physicians, Dr. Alfred I. Lim and Dr. Elmer Montes. TheSC approved
Calumpiano’s application for disability retirement, under RA 8291, otherwise known as the New
GSIS Act of 1997.
Calumpiano’s disability claim was forwarded to GSIS, but the latter denied her claim for
the reason that her illnesses were not work-related. On appeal, the ECC affirmed the decision of
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the GSIS and held that her hypertension and Glaucoma, cannot be considered work-connected,
thus not compensable. The CA however reversed the decision of the ECC and held that while
Calumpiano’s hypertension and glaucoma are not listed as occupational diseases, they were
nonetheless contracted and became aggravated during her employment as court stenographer;
that under the "increased risk theory," a "non-occupational disease" is compensable as long as
proof of a causal connection between the work and the ailment is established; that Calumpiano’s
illnesses are connected to her work, given the nature of and pressure involved in her functions
and duties as a court stenographer. Thus, Calumpiano is entitled to disability benefits. Hence,
this petition.
The GSIS argues that Calumpiano’sillnesses are not compensable under the principle of
increased risk; that although essential hypertension is listed as an occupational disease, it is not
compensable per seas the conditions under Section 1, Rule III of the Amended Rules on
Employees’ Compensation should be satisfied; that hypertension is compensable only "if it causes
impairment of function of body organs like kidneys, heart,eyes and brain, resulting in permanent
disability;" that since Calumpiano did not suffer "end-organ damage" to or impairment of her
kidneys, heart, eyes and brain which resulted in permanent disability, her illness is not
compensable and that Calumpiano’s other illness – glaucoma – is not compensable.
Issue:
Whether or not respondent Calumpiano’s hypertension and Glucoma are compensable.
Ruling:
Yes, they are. In resolving this case, the case of Government Service Insurance System v.
Baul comes into mind and lays the groundwork for a similar ruling. In said case, the Court held:
Cerebro-vascular accident and essential hypertension are considered as

occupational diseases under Nos. 19 and 29, respectively, of Annex "A" of the
Implementing Rules of P.D. No. 626, as amended. Thus, it is not necessary that
there be proof of causal relation between the work and the illness which resulted
in the respondent’s disability. The open-ended Table of Occupational Diseases
requires no proof of causation. In general, a covered claimant suffering from an
occupational disease is automatically paid benefits.
However, although cerebro-vascular accident and essential hypertension

are listed occupational diseases, their compensability requires compliance with
all the conditions set forth inthe Rules. In short, both are qualified occupational
diseases. For cerebro-vascular accident, the claimant must prove the following: (1)
there must be a history, which should be proved, of trauma at work (to the head
specifically) due to unusual and extraordinary physical or mental strain or event,
or undue exposure to noxious gases in industry; (2) there must be a direct
connection between the trauma or exertion in the course of the employment and
the cerebro-vascular attack; and (3) the trauma or exertion then and there caused
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a brain hemorrhage. On the other hand, essential hypertension is compensable
only if it causes impairment of function of body organs like kidneys, heart, eyes
and brain, resultingin permanent disability, provided that, the following
documents substantiate it: (a) chest X-ray report; (b) ECG report; (c) blood
chemistry report; (d) funduscopy report; and (e) C-T scan.
The degree of proof required to validate the concurrence of the above-

mentioned conditions under P.D. No. 626 is merely substantial evidence, that is,
such relevant evidence as a reasonable mind might accept as adequate to support
a conclusion. What the law requires is a reasonable work connection and not
direct causal relation. It is enough that the hypothesis on which the workmen’s
claim isbased is probable. As correctly pointed out by the CA, probability, not the
ultimate degree of certainty, is the test of proof in compensation proceedings. For,
in interpreting and carrying out the provisions of the Labor Code and its
Implementing Rules and Regulations, the primordial and paramount
consideration is the employee’s welfare. To safeguard the worker’s rights, any
doubt as to the proper interpretation and application must be resolved in [his]
favor.
Applying Bauland De Castro to the instant case and looking at the factual milieu, the
Court agrees with the CA’s conclusion and so declares that Calumpiano’s illness is compensable.
Calumpiano served the government for 30 long years; veritably, as the ECC itself said,
"[h]er duties were no doubt stressful and the same may have caused her to develop her ailment,
hypertension" – which is a listed occupational disease, contrary to the CA’s pronouncement that
it is not. And because it is a listed occupational disease, the "increased risk theory" does not apply
– again, contrary to the CA’s declaration; no proof of causation is required.
It can also be said that given Calumpiano’s age at the time, and taking into account the
nature, working conditions, and pressures of her work as court stenographer – which requires
her to faithfully record each and every day virtually all of the court’s proceedings; transcribe these
notes immediately in order to make them available to the court or the parties who require them;
take down dictations by the judge, and transcribe them; and type in final form the judge’s
decisions, which activities extend beyond office hours and without additional compensation or
overtime pay – all these contributed to the development of her hypertension – or hypertensive
cardiovascular disease, as GSIS would call it. Consequently, her age, work, and hypertension
caused the impairment of vision in both eyes due to "advanced to late stage glaucoma", which
rendered her "legally blind."
Contrary to the submissions of GSIS, there appears to be a link between blood pressure
and the development of glaucoma, which leads the Court to conclude that Calumpiano’s
glaucoma developed as a result of her hypertension.
In arriving at the above conclusions, the Court is well guided by the principles, declared
in Baul and De Castro, that probability, not certainty, is the test of proof in compensation cases;
that the primordial and paramount consideration is the employee’s welfare; that the strict rules
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of evidence need not be observed in claims for compensation; that medical findings of the
attending physician may be received in evidence and used as proof of the facts in dispute; that in
any determination of compensability, the nature and characteristics of the job are as important
as raw medical findings and a claimant’s personal and social history; that where the primary
injury is shown to have arisen in the course of employment, every natural consequence that flows
from the injury likewise arises out of the employment, unless it is the result of an independent
intervening cause attributable to claimant’s own negligence or misconduct; and that the policy
is to extend the application of the law on employees’ compensation to as many employees who
can avail of the benefits thereunder.
EMPLOYEE’S COMPENSATION
AGILE MARITIME RESOURCES INC., ATTY. IMELDA LIM BARCELONA and PRONAV
SHIP MANAGEMENT, INC. vs. APOLINARIO N. SIADOR
Dennis willfully caused his death while Apolinario's evidence fell short of substantial
evidence to establish its counter- defense of insanity. In other words, Apolinario's complaint must
be dismissed not because of doubt but because of the insufficiency of his evidence to
support his claim of insanity. POEA-SEC requires the employer to prove not only that the death is
directly attributable to the seafarer himself but also that the seafarer willfully caused his death,
evidence of insanity or mental sickness may be presented to negate the requirement of willfulness as
a matter of counter-defense. Since the willfulness may be inferred from the physical act itself of the
seafarer (his jump into the open sea), the insanity or mental illness required to be proven must be
one that deprived him of the full control of his senses; in other words, there must be sufficient proof
to negate voluntariness.
Facts:
On December 18, 2000, Dennis Siador, son of ApolinarioSiador, entered into a seven-
month contract of employment, as Ordinary Seaman on board the vessel LNG ARIES, with Agile
Maritime Resources, Inc. (Agile) - the local manning agent of petitioner Pronav Ship
Management, Inc.
On December 12, 2001, Apolinario filed a complaint for death benefits, damages and
attorney’s fees against the petitioners, including Agile’s President, Imelda Lim Barcelona
(Barcelona), for the death of Dennis “who fell from the vessel [on June 28, 2001] and who died in
the high seas x xx,” while the vessel was cruising towards Sodegaura, Japan. Dennis’ body was
never recovered. After Dennis jumped from the ship, he was seen calmly floating on his back and
was not swimming towards the life ring or the lifeboat while floating on the ocean.
The labor tribunals agree that Dennis committed suicide by jumping from the ship
because of his heavy “personal and psychological problems,” as shown by the unusual behavior
he exhibited days before the incident. The CA disagreed with the labor tribunals and ruled that
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even with Dennis’ unusual behavior, the “willfulness to take his own life could not be presumed
when he jumped overboard” and in fact “cast serious doubt” on the petitioners’ claim of
willfulness. It added that AB Tamayo’s statements that he saw Dennis jump overboard and
thereafter make no effort to reach the life ring “are not conclusive proof” of suicide.
Agile et. al asked the Court to set aside the CA ruling on the ground that the CA gravely
erred in reversing the decision and the resolution of the LA and the NLRC, as they committed no
grave abuse of discretion in deciding the case. They insist that there is “ample and convincing
evidence” showing that Dennis took his own life and that his death was not caused by his mental
problems.
Issues:
Whether or not the CA correctly found that the NLRC gravely abused its discretion in
holding that substantial evidence exists to support its conclusion that Dennis willfully took his
own life
Ruling:
Yes.
POEA-SEC pertinently reads: D. No compensation shall be payable in respect of any

injury, incapacity, disability or death of the seafarer resulting from his willful or criminal act or
intentional breach of his duties, provided however, that the employer can prove that such injury,
incapacity, disability or death is directly attributable to the seafarer.
Burden of proof is the duty of a party to present evidence on the facts in issue necessary
to establish his claim or defense by the amount of evidence required by law. As a claimant for
death benefits, Apolinario has the burden of proving that the seafarer’s death (1) is work-related;
and (2) happened during the term of the employment contract. Unarguably, Apolinario has
discharged this burden of proof.
Whether it is the employer or the seafarer, the quantum of proof necessary to discharge
their respective burdens is substantial evidence, i.e., such relevant evidence as a reasonable mind
might accept as adequate to support a conclusion, even if other minds equally reasonable might
conceivably opine otherwise.
Since Apolinario has initially discharged his burden of proof, Agile et.al., in order to avoid
liability, must similarly establish their defense. If the Agile et.al are able to establish their defense
by substantial evidence, the burden now rests on Apolinario to overcome the employer’s defense.
In other words, the burden of evidence now shifts to the seafarer’s heirs.
In the present case, the LA, NLRC and the CA uniformly found that Dennis jumped from
the ship. Additionally, the Agile et.al cited the following personal circumstances that may have
driven Dennis to do what he did: his dysfunctional family; the death of his mother after a
lingering illness; the bitter parting with his father whom he had not seen for three (3) after he
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and his two (2) brothers were thrown out from their home in Talisay, Cebu; and his
disappointment with his sister whose medical education he supported, only to learn that she got
married and did not even invite him to the wedding.
Based on these facts and the legal presumption of sanity, the Court conclude that the
NLRC did not gravely abuse its discretion when it affirmed the LA’s dismissal of the complaint;
we hold that the seafarer’s death was due to his willful act, as the employer posited and proved.
Since the POEA-SEC requires the employer to prove not only that the death is directly
attributable to the seafarer himself but also that the seafarer willfully caused his death, evidence
of insanity or mental sickness may be presented to negate the requirement of willfulness as a
matter of counter-defense. Since the willfulness may be inferred from the physical act itself of
the seafarer (his jump into the open sea), the insanity or mental illness required to be proven
must be one that deprived him of the full control of his senses; in other words, there must be
sufficient proof to negate voluntariness.
But his strange behavior cannot be the basis for a finding of grave abuse of discretion
because portions of the Crewmembers’ Statement itself rendered the basis for a finding of
insanity insufficient. To recall, a few hours before the accident, Filipino crew members
approached Dennis to ask him if anything was wrong with him and Dennis simply replied that
everything was in order.
While the NLRC may have erred in declaring that there is "no doubt" that Dennis committed
suicide by jumping overboard, this error does not amount to grave abuse of discretion since
conclusive proof is not necessary to establish willfulness.
NORIEL R. MONTIERO vs. RICKMERS MARINE AGENCY PHILS. INC.

G.R. No. 210634, January 14, 2015, C.J. Sereno
The CA correctly ruled that Montierro’s condition cannot be deemed a permanent total
disability. The Court has already delineated the effectivity of the Crystal
Shipping and Vergara rulings in the 2013 case Kestrel Shipping Co. Inc. v. Munar, by explaining:
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. Applying the
240-day rule to this case, we arrive at the same conclusion reached by the CA. Montierro’s
treatment by the company doctor began on 4 June 2010. It ended on 3 January 2011, when the
company doctor issued a “Grade 10” final disability assessment. Counting the days from 4 June 2010
to 3 January 2011, the assessment by the company doctor was made on the 213th day, well within the
240-day period. The extension of the period to 240 days is justified by the fact that Dr. Alegre issued
an interim disability grade of “10” on 3 September 2010, the 91st day of Montierro’s treatment, which
was within the 120-day period.
Facts:
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On 26 February 2010, respondent Rickmers Marine Agency Phils., Inc. (Rickmers), hired
petitioner NorielMontierro as Ordinary Seaman. He was assigned to work on board the
vessel M/V CSAV Maresias.
Sometime in May 2010, while on board the vessel and going down from a crane ladder,
Montierro lost his balance and twisted his legs, thus injuring his right knee.
Thereafter, on 31 May 2010, he was examined in Livorno, Spain by Dr. Roberto Santini,
who recommended surgical treatment at home and found him unfit for duty. Thus, on 2 June
2010, Montierro was repatriated to the Philippines for further medical treatment.On 4 June 2010,
two days after his repatriation, Montierro reported to Dr. Natalio G. Alegre II, the company-
designated physician. He underwent a magnetic resonance imaging (MRI) scan of his right knee.
The MRI showed he had “meniscal tear, posterior horn of the medical meniscus, and minimal
joint fluid.” Upon the recommendation of Dr. Alegre, Montiero underwent arthroscopic partial
medical meniscectomy of his right knee on 29 July 2010 at St. Luke’s Medical Center.On 20 August
2010, Montierro had his second check-up with Dr. Alegre, who noted that the former’s surgical
wounds had healed, but that there was still pain and limitation of motion on his right knee on
gaits and squats. The doctor advised him to undergo rehabilitation medicine and continue
physical therapy.
On 3 September 2010, the 91st day of Montierro’s treatment, Dr. Alegre issued
an interim disability grade of 10 for “stretching leg of ligaments of a knee resulting in instability
of the joint.” He advised Montierro to continue with the latter’s physical therapy and oral
medications.
Montierro further underwent sessions of treatment and evaluation between 17 September

2010 and 28 December 2010.On 3 January 2011, the 213th day of Montierro’s treatment, Dr.
Alegre issued a final disability grade 10.
Meanwhile, on 3 December 2010, one month before Dr. Alegre’s issuance of the final
disability grading, Montierro filed with the labor arbiter a complaint for recovery of permanent
disability compensation as sickness allowance, plus moral and exemplary damages and attorney’s
fees. To support his claim for total permanent disability benefits, Montierro relied on a Medical
Certificate dated 3 December 2010 issued by his physician of choice, Dr. Manuel C. Jacinto,
recommending total permanent disability grading, and explaining the former’s medical
condition.
LA and NLRC sustained Montiero’s claim. CA later reversed the ruling.
In its Decision downgrading the claim of Montierro to “Grade 10”

permanent partial disability benefits only, the CA ruled that his disability could not be deemed
total and permanent under the 240-day rule established by the 2008 case Vergara v. Hammonia
Maritime Services, Inc.Vergara extends the period to 240 days when, within the first 120-day
period (reckoned from the first day of treatment), a final assessment cannot be made because the
seafarer requires further medical attention, provided a declaration has been made to this
effect.The CA pointed out that only 215 days had lapsed from the time of Montierro’s medical
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repatriation on 2 June 2010 until 3 January 2011, when the company-designated physician issued
a “Grade 10” final disability assessment. It justified the extension of the period to 240 days on the
ground that Dr. Alegre issued an interim disability grade of “10” on 3 September 2010, the 91st day
of Montierro’s treatment, which was within the initial 1s20-day period.
Montierro insists that the 120-day rule laid down in the 2005 case Crystal Shipping, and
not the 240-day rule introduced by the 2008 case Vergara, applies to this case. Montierro cites
the more recent cases Wallem Maritime Services, Inc., v. Tanawan Maersk Filipinas Crewing, Inc.
v. Mesina,and Valenzona v. Fair Shipping Corp., all of which applied the Crystal Shipping doctrine
despite the fact that they were promulgated after Vergara.
Issue:
Whether or not the whether it is the 120-day rule or the 240-day rule that should apply to
this case.
Ruling:
The 240-day rule shall govern this case.
Thus, the CA correctly ruled that Montierro’s condition cannot be deemed a permanent
total disability. The Court has already delineated the effectivity of the Crystal
Shipping and Vergara rulings in the 2013 case Kestrel Shipping Co. Inc. v. Munar, by explaining:
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.
Thus, based on Kestrel, if the maritime compensation complaint was filed prior to
6 October 2008, the 120-day rule applies; if, on the other hand, the complaint was filed
from 6 October 2008 onwards, the 240-day rule applies.
In this case, Montierro filed his Complaint on 3 December 2010, which was after the
promulgation of Vergara on 6 October 2008. Hence, it is the 240-day rule that applies to this
case, and not the 120-day rule.
Montierro cannot rely on the cases that he cited, a survey of which reveals that all of them
involved Complaints filed before 6 October 2008. Wallem Maritime Servicesinvolved a
Complaint for disability benefits filed on 26 November 1998. In Maersk Filipinas Crewing,while
the Decision did not mention the date the Complaint was filed, the LA’s Decision was rendered
on 14 April 2008. Lastly, in Valenzona, the Complaint was filed sometime before 31 January 2003.
It thus comes as no surprise that the cases Montierro banks on followed the 120-day rule.
Applying the 240-day rule to this case, we arrive at the same conclusion reached by the
CA. Montierro’s treatment by the company doctor began on 4 June 2010. It ended on 3 January
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2011, when the company doctor issued a “Grade 10” final disability assessment. Counting the days
from 4 June 2010 to 3 January 2011, the assessment by the company doctor was made on the
213th day, well within the 240-day period. The extension of the period to 240 days is justified by
the fact that Dr. Alegre issued an interim disability grade of “10” on 3 September 2010, the 91st day
of Montierro’s treatment, which was within the 120-day period.
LABOR RELATIONS LAW
CERTIFICATION ELECTION
HERITAGE HOTEL MANILA vs. SECRETARY OF LABOR AND EMPLOYMENT

G.R. No. 172132, July 23, 2014, J. Bersamin
Basic in the realm of labor union rights is that the certification election is the sole concern
of the workers, and the employer is deemed an intruder as far as the certification election is
concerned. Thus, the petitioner lacked the legal personality to assail the proceedings for the
certification election, and should stand aside as a mere bystander who could not oppose the
petition, or even appeal the Med-Arbiter’s orders relative to the conduct of the certification election.
As the Court has explained in Republic v. Kawashima Textile Mfg., Philippines, Inc., except when it
is requested to bargain collectively, an employer is a mere bystander to any petition for certification
election; such proceeding is non-adversarial and merely investigative, for the purpose thereof is to
determine which organization will represent the employees in their collective bargaining with the
employer. The choice of their representative is the exclusive concern of the employees; the employer
cannot have any partisan interest therein; it cannot interfere with, much less oppose, the process
by filing a motion to dismiss or an appeal from it; not even a mere allegation that some employees
participating in a petition for certification election are actually managerial employees will lend an
employer legal personality to block the certification election. The employer’s only right in the
proceeding is to be notified or informed thereof.
Facts:
On October 11, 1995, respondent National Union of Workers inHotel Restaurant and
Allied Industries Heritage Hotel Manila Supervisors Chapter (NUWHRAINHHMSC) filed a
petition for certification election,seeking to represent all the supervisory employees of Heritage
Hotel Manila. The petitioner Heritage Hotel Manila (Heritage) filed its opposition, but the
opposition was denied. The med-arbiter issued an order to conduct certification election.
Heritage appealed but the same was later denied. A pre-election conference was then
scheduled. Heritage primarily filedits comment on the list of employees submitted by
NUWHRAINHHMSC,and simultaneously sought the exclusion of some from thelist of employees
for occupying either confidential or managerialpositions. Heritage later filed a motion to dismiss
raising the prolonged lack of interest of NUWHRAINHHMSCto pursue its petition for
certification election.
In May, 2000, Heritage filed a petition for the cancellation of NUWHRAINHHMSC’s

registration as a labor union for failing to submit its annual financial reports and an updated list
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of members as required by Article 238 and Article 239 of the Labor Code. It filed another motion
to seek either the dismissal or the suspension of the proceedings on the basis of its pending
petition for the cancellation of union registration.
The following day, however, the Department of LaborandEmployment (DOLE) issued a

notice scheduling the certification elections. Dissatisfied, Heritage commenced in the CA special
civil action for certiorari, alleging that the DOLE gravely abused its discretion in not suspending
the certification election proceedings. CA dismissed the petition for certiorari for non-exhaustion
of administrative remedies.
The certification election proceeded as scheduled, and NUWHRAINHHMSC obtained

the majority vote of the bargaining unit.Heritage filed a protest before the Med-arbiter (with
motion to defer the certification of the election results and the winner), insisting on the
illegitimacy of NUWHRAINHHMSC.
Med-arbiter dismissed the protest of Heritage. Heritage appealed with the Secretary of
the Labor and Employment (SOLE). SOLE affirmed the Med-arbiter’s ruling denying Heritage’s
protest. CA likewise dismissed Heritage’s appeal.
The CA ruled that the petition filed by Heritage in essence, a continuation of the debate
on the relevance of the Toyota Motor, Dunlop Slazenger and Progressive Developmentcases to the
issues raised.CA ruled further that Toyota Motor and Dunlop Slazenger are anchored on the
provisions ofArticle 245 of the Labor Code which prohibit managerial employees from joining
any labor union and permit supervisory employees to form a separate union of their own. The
language naturally suggests that a labor organization cannot carry a mixture of supervisory and
rank-and-file employees. Thus, courts have held that a union cannot become a legitimate labor
union if it shelters under its wing both types of employees. But there are elements of an elliptical
reasoning in the holding of these two cases that a petition for certification election may not
prosper until the composition of the union is settled therein. Toyota Motor, in particular, makes
the blanket statement that a supervisory union has no right to file a certification election for as
long asit counts rank-and-fileemployees among its ranks. More than four years after Dunlop
Slazenger, the Court clarified in Tagaytay Highlands International Golf Club Inc. vs. Tagaytay
Highlands Employees Union PTGWOthat while Article 245 prohibits supervisory employees from
joining a rank-and-fileunion, it does not provide what the effect is if a rank-and-fileunion takes
in supervisory employees as members, or vice versa. Toyota Motor and Dunlop Slazengerjump
into an unnecessary conclusion when they foster the notion that Article 245 carries with it the
authorization to inquire collaterally into the issue wherever it rears its ugly head. Tagaytay
Highlands proclaims, in the light of Department Order 9, that after a certificate of registration is
issued to a union, its legal personality cannot be subject to a collateral attack. It may be
questioned only in an independent petition for cancellation. In fine, Toyotaand Dunlop
Slazengerare a spent force. Since Tagaytay Highlandswas handed down after these two cases, it
constitutes the latest expression of the will of the Supreme Court and supersedes or overturns
previous rulings inconsistent with it. The ruling in SPI Technologies has been echoed in Tagaytay
Highlands, for which reason it is with Tagaytay Highlands, not SPI Technologies that Heritage
must joust The fact that the cancellation proceeding has not yet been resolved makesit obvious
that the legal personality of the union is still very much in force. The DOLE has thus every reason
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to proceed with the certification election and commits no grave abuse of discretion in allowing
it to prosper because the right to be certified as collective bargaining agent is one of the legitimate
privileges of a registered union. It is for the petitioner to expedite the cancellation case if it wants
to put an end to the certification case, but it cannot place the issue of the union’s legitimacy in
the certification case, for that would be tantamount to making the collateral attack the DOLE
has staunchly argued to be impermissible.
On the other hand, Heritage maintains that the ruling in Tagaytay Highlands
International Golf Club, Inc. v. Tagaytay Highlands Employees Union PTGWO (Tagaytay
Highlands) was inapplicable because itinvolved the cominglingof supervisory and rank-and-
fileemployees in one labor organization, while the issue here related tothe mixture of
membership between two employee groups — onevested with the right to self-organization(i.e.,
the rank-and-fileandsupervisory employees), and the other deprived of such right
(i.e.,managerial and confidential employees); that suspension of thecertification election was
appropriate because a finding of illegalmixture of membership during a petition for the
cancellation ofunion registration determined whether or not the union had met the20%
representation requirement under Article 234(c) of the LaborCode;and that in holding that mixed
membership was not aground for canceling the union registration, except when such wasdone
through misrepresentation, false representation or fraud underthe circumstances enumerated in
Article 239(a) and (c) of the Labor Code, the CA completely ignored the 20% requirement under
Article 234(c) of the Labor Code.
Issues:
2. Whether or not the DOLE committed grave abuse of discretion in issuing a notice
scheduling the certification elections.
3. Whether or not the pendency of a petition for cancellation of union registration is a
ground for suspension of certification election.
4. Which among Toyota Motor, Dunlop Slazengerand Tagaytay Highlandsapplied in
resolving the dispute arising from the mixed membership in NUWHRAINHHMSC
Ruling:
1. No. DOLE did not commit grave abuse of discretion in issuing a notice scheduling
the certification elections.
Basic in the realm of labor union rights is that the certificationelection is the sole concern
of the workers, and the employer is deemed an intruder as far as the certification election is
concerned.Thus, the petitioner lacked the legal personality to assail the proceedings for the
certification election, and should stand aside as a mere bystander who could not oppose the
petition, or even appeal the Med-Arbiter’s orders relative to the conduct of the certification
election.
As the Court has explained in Republic v. Kawashima Textile Mfg., Philippines, Inc., except
when it is requested to bargain collectively, an employer is a mere bystander to any petition for
certification election; Such proceeding is non-adversarial and merely investigative, for the
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purpose thereof is to determine which organization will represent the employees in their
collective bargaining with the employer. The choice of their representative is the exclusive
concern of the employees; the employer cannot have any partisan interest therein; It cannot
interfere with, much less oppose, the process by filing a motion to dismiss or an appeal from it;
Not even a mere allegation that some employees participating in a petition for certification
election are actually managerial employees will lend an employer legal personality to block the
certification election. The employer’s only right in the proceeding is to be notified or informed
thereof.
Heritage’s meddling in the conduct of the certificationelection among its employees

unduly gave rise to the suspicion that it intended to establish a company union.For that reason,
the challenges it posed against the certification election proceedings were rightly denied.
2. No. the pendency of a petition for cancellation of union registration is not a ground
for suspension of certification election.
Under the long established rule, too, the filing of the petition for the cancellation of
NUWHRAINHHMSC’s registration should not bar the conduct of the certification election.In
that respect, only a final order for the cancellation of the registration would have prevented
NUWHRAIN HHMSC from continuing to enjoy all the rights conferred on it as a legitimate labor
union, including the right to the petition for the certification election.This rule is now enshrined
in Article 238-A of the Labor Code, as amended by Republic Act No. 9481.
Still, Heritage assails the failure of NUWHRAINHHMSC to submit its periodic financial
reports and updated list of its members pursuant to Article 238 and Article 239 of the Labor Code.
It contends that the serious challenges against the legitimacy of NUWHRAINHHMSC as a union
raised in the petition for the cancellation of union registration should have cautioned the Med-
Arbiter against conducting the certification election. Heritage does not convince us. In The
Heritage Hotel Manila v. National Union of Workers in the Hotel, Restaurant and Allied Industries
HeritageHotel Manila Supervisors Chapter (NUWHRAINHHMSC),the Court declared that the
dismissal of the petition for the cancellation of the registration of NUWHRAINHHMSC was
proper when viewedagainst the primordial right of the workers to self-organization,collective
bargaining negotiations and peaceful concerted actions
3. Toyota Motorand Dunlop Slazenger cases shall govern the case at bar, to the effect
that a labor union ofmixed membership was not possessed with the requisite
personalityto file a petition for the certification election. Nonetheless, we still rule in
favor of NUWHRAINHHMSC.
This is not a novel matter. In Kawashima, the Court had reconciled its rulings in Toyota
Motor, Dunlop Slazenger andTagaytay Highlandsby emphasizing on the laws prevailing at the
time of filing of the petition for the certification election.
Toyota Motorand Dunlop Slazengerinvolved petitions forcertification election filed on

November 26, 1992 and September 15, 1995, respectively. In both cases, we applied the Rules and
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Regulations Implementing R.A. No. 6715 (also known as the 1989 Amended Omnibus Rules), the
prevailing rule then.
The 1989 Amended Omnibus Rules was amended on June 21,1997 by Department Order
No. 9, Series of 1997. Among the amendments was the removal of the requirement of indicating
in the petition for the certification election that there was no comingling of rank-and-file and
supervisory employees in the membership of the labor union. This was the prevailing rule when
the Court promulgated Tagaytay Highlands, declaring therein that mixed membership should
have no bearing on the legitimacy of a registered labor organization, unless the comingling was
due to misrepresentation, false statement or fraud as provided in Article 239 of the Labor Code.
Presently, then, the mixed membership does not result in the illegitimacy of the
registered labor union unless the same was done through misrepresentation, false statement or
fraud according to Article 239 of the Labor Code.
The Court notes that NUWHRAINHHMSC filed its petition for the certification election
on October 11, 1995. Conformably with Kawashima, the applicable law was the 1989 Amended
Omnibus Rules, and the prevailing rule was the pronouncement in Toyota Motor and Dunlop
Slazenger to the effect that a labor union ofmixed membership was not possessed with the
requisite personalityto file a petition for the certification election. Nonetheless, we still rule in
favor of NUWHRAINHHMSC.
The Court expounds. In both Toyota Motorand Dunlop Slazenger, the Court
wasconvinced that the concerned labor unions were comprised by mixed rank-and-file and
supervisory employees. In Toyota Motor, the employer submitted the job descriptions of the
concerned employees to prove that there were supervisors in the petitioning union for rank-and-
file employees. In Dunlop Slazenger, the Court observed that the labor union of supervisors
included employees occupying positions that apparently belonged to the rank-and- file.
In both Toyota Motorand Dunlop Slazenger, the employers were able to adduce
substantial evidence to prove the existence of the mixed membership. Based on the records
herein, however, the petitioner failed in that respect. To recall, it raised the issue of the mixed
membership in its comment on the list of members submitted by NUWHRAINHHMSC, and in
its protest. In the comment, it merely identified the positions that were either confidential or
managerial, but did not present any supporting evidence to prove or explain the identification.
In the protest, it only enumerated the positions that were allegedly confidential and managerial,
and identified two employees that belonged to the rank-and-file, but did not offer any description
to show that the positions belonged to different employee groups.
At any rate, the members of NUWHRAINHHSMC had already spoken, and elected it as
the bargaining agent. As between the rigid application of Toyota Motors and Dunlop Slazenger,
and the right of the workers to self-organization, we prefer the latter. For us, the choice is clear
and settled. What is important is that there is an unmistakable intent of the members of the
union to exercise their We cannot impose rigorous restraints on such right if we are to give
meaning to the protection to labor and social justice clauses of the Constitution.
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UNION REGISTRATION
TAKATA (PHILIPPINES) CORPORATION vs. BUREAU OF LABOR RELATIONS and

SAMAHANG LAKAS MANGGAGAWA NG TAKATA (SALAMAT)
G.R. No. 196276, June 4, 2014, J. Peralta
Arguing that respondent is guilty of fraud and misrepresentation with respect to the
minimum requirement of the law as to union membership, petitioner prays for the reversal of the
decision of the CA and the cancellation of respondent’s Union Certificate of Registration. The SC
however ruled that it does not appear in Article 234 (b) of the Labor Code that the attendees in the
organizational meeting must comprise 20% of the employees in the bargaining unit. In fact, even
the Implementing Rules and Regulations of the Labor Code does not so provide. It is only under
Article 234 (c) that requires the names of all its members comprising at least twenty percent (20%)
of all the employees in the bargaining unit where it seeks to operate. Clearly, the 20% minimum
requirement pertains to the employees’ membership in the union and not to the list of workers who
participated in the organizational meeting. Here, considering that there are 119 union members
which are more than 20% of all the employees of the bargaining unit, and since the law does not
provide for the required number of members to attend the organizational meeting, the 68 attendees
which comprised at least the majority of the 119 union members would already constitute a quorum
for the meeting to proceed and to validly ratify the Constitution and By-laws of the union. There is,
therefore, no basis for petitioner to contend that grounds exist for the cancellation of respondent's
union registration
Facts:
On July 7, 2009, petitioner Takata filed with the DOLE Regional Office a Petition for
Cancellation of the Certificate of Union Registration of Respondent SALAMAT on the ground
that the latter is guilty of misrepresentation, false statement and fraud with respect to the
number of those who participated in the organizational meeting, the adoption and ratification of
its Constitution and By-Laws, and in the election of its officers. Takata contended that only 68
employees attended the organizational meeting of respondent SALAMAT which number is
equivalent to only 17% of the total number of the 396 regular rank-and-file employees which
SALAMAT sought to represent. Consequently, Takata contended that respondent SALAMAT
failed to comply with the 20% minimum membership requirement for union membership.
The DOLE Regional Director granted the petition and ordered the cancellation of the
Union Certificate of Registration of Respondent SALAMAT.
Dissatisfied, respondent SALAMAT, through Bukluran ng Manggagawang Pilipino (BMP)

Paralegal Officer, filed a Notice and Memorandum of Appeal with the BLR. However, respondent
SALAMAT, through its counsels, likewise filed an appeal to the Office of the DOLE Secretary,
which the latter eventually referred to the BLR.
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The BLR reversed the decision of the DOLE Regional Director and ruled that Takata failed
to prove that respondent SALAMAT deliberately and maliciously misrepresented the number of
rank-and-file employees. The CA affirmed the decision of the BLR. Hence, this petition.
Issues:
1. Whether or not respondent SALAMAT committed forum shopping.

2. Whether or not respondent SALAMAT is guilty of fraud and misrepresentation with
respect to the minimum requirement of the law as to union membership.
Ruling:
1. No, respondent SALAMAT committed no forum shopping.
It is undisputed that BMP Paralegal Officer Domingo P. Mole was no longer authorized
to file an appeal on behalf of union SALAMAT and that BMP was duly informed that its services
were already terminated. SALAMAT even submitted before the BLR its "Resolusyon Blg. 01-2009"
terminating the services of BMP and revoking the representation of Mr. Domingo Mole in any of
the pending cases being handled by him on behalf of the union. So, considering that BMP
Paralegal Officer Domingo P. Mole was no longer authorized to file an appeal when it filed the
Notice and Memorandum of Appeal to DOLE Regional Office No. IV-A, the same can no longer
be treated as an appeal filed by union SALAMAT. Hence, there is no forum shopping to speak of
in this case as only the Appeal Memorandum with Formal Entry of Appearance filed by Atty.
Napoleon C. Banzuela, Jr. and Atty. Jehn Louie W. Velandrez is sanctioned by SALAMAT.
Since Mole's appeal filed with the BLR was not specifically authorized by respondent,
such appeal is considered to have not been filed at all. It has been held that "if a complaint is filed
for and in behalf of the plaintiff who is not authorized to do so, the complaint is not deemed
filed.
An unauthorized complaint does not produce any legal effect.
2. No, respondent SALAMAT is not guilty of fraud or misrepresentation.
It does not appear in Article 234 (b) of the Labor Code that the attendees in the
organizational meeting must comprise 20% of the employees in the bargaining unit. In fact, even
the Implementing Rules and Regulations of the Labor Code does not so provide. It is only under
Article 234 (c) that requires the names of all its members comprising at least twenty percent
(20%) of all the employees in the bargaining unit where it seeks to operate. Clearly, the 20%
minimum requirement pertains to the employees’ membership in the union and not to the list
of workers who participated in the organizational meeting. Indeed, Article 234 (b) and (c) provide
for separate requirements, which must be submitted for the union's registration, and which
SALAMAT did submit. Here, the total number of employees in the bargaining unit was 396, and
20% of which was about 79. Respondent SALAMAT submitted a document entitled "Pangalan ng
Mga Kasaping Unyon" showing the names of 119 employees as union members, thus SALAMAT
sufficiently complied even beyond the 20% minimum membership requirement. SALAMAT also
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submitted the attendance sheet of the organizational meeting which contained the names and
signatures of the 68 union members who attended the meeting. Considering that there are 119
union members which are more than 20% of all the employees of the bargaining unit, and since
the law does not provide for the required number of members to attend the organizational
meeting, the 68 attendees which comprised at least the majority of the 119 union members would
already constitute a quorum for the meeting to proceed and to validly ratify the Constitution and
By-laws of the union. There is, therefore, no basis for petitioner to contend that grounds exist for
the cancellation of SALAMAT's union registration. For fraud and misrepresentation to be
grounds for cancellation of union registration under Article 239 of the Labor Code, the nature of
the fraud and misrepresentation must be grave and compelling enough to vitiate the consent of
a majority of union members.
COLLECTIVE BARGAINING AGREEMENT
SPLASH PHILIPPINES, INC., ET AL. vs. RONULFO G. RUIZO

G.R. No. 193628. March 19, 2014
J. Brion
The 120-day rule cannot be used as a cure-all formula for all maritime compensation cases.
Its application must depend on the circumstances of the case, including especially compliance with
the parties' contractual duties and obligations as laid down in the POEA-SEC and/or their CBA, if
one exists.
Facts:
Ruizo entered into a nine-month contract of employment(as chief cook) with the agency for
Taiyo’s vessel, the M/V Harutamou. While on duty onboard the vessel, Ruizo experienced pain
in his lumbar region and groin. He was referred to the Karratha Medical Centre in Dampier,
Australia where he was diagnosed with “Blocked Right Kidney by Stone Repeat U/S Showed No
Improvement.” On December 21, 2005, Ruizo was repatriated to the Philippines due to the
completion of his contract. The agency referred him to the company-designated physician, who
diagnosed him to be suffering from a kidney ailment. Company physician prescribed medication
for him and recommended that he undergo a KUV/IVP, CT stonogram without contrast at the
National Kidney Institute which he did, at the expense of the petitioners.
While undergoing treatment, he filed a complaint on 26 May 2006 alleging maximum disability
benefits based on an alleged CBA as he was unable to work for more than 120 days and no
disability assessment was issued by the company physician.
Despite the filed complaint, the company-designated physician recommended that seafarer
undergo extracorporeal shockwave lithotripsy (ESWL). He was initially reluctant to submit to
the procedure, but he finally agreed and underwent ESWL on 19 January 2007, again at the
company's expense. He reported to the company doctor for a follow-up on 5 February 2007, but
failed to go back for a further ESWL which the urologist believed was necessary as “there is
possibility of declaring the patient fit to work after treatment."
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On May 7, 2007, without informing the company-designated physician or the company, Ruizo
consulted his own doctor who diagnosed him to be suffering from bilateral nephrolithiasis and
essential hypertension. Said doctor gave him a grade “7” disability. Ruizo claimed that he did not
report to the company doctor after 5 February 2007 because he was advised by the company-
designated doctor that he would already be forwarding his assessment to the company.
The Labor Arbiter and the NLRC denied compensation to the respondent considering that no
final medical assessment was issued by the company-designated physician which was due to the
non-reporting of the respondent. The Court of Appeals reversed the NLRC and awarded disability
benefits to the respondent based on the alleged CBA. Disability benefits were awarded because
the respondent was unable to work for more than 120 days because of his ailment.
Issue:
Whether or not respondent is entitled to disability benefits
Ruling:
The Supreme Court reversed the Court of Appeals and held that respondent is not entitled to
We cannot find a basis for the award of permanent total disability benefits to Ruizo, except for
the much belaboured 120 day argument. Nevertheless, the 120 day rule had already been modified
pursuant to the Court's previous pronouncement in Vergara. It cannot simply "be applied as a
general rule for all cases and in all contexts." In short, it cannot be used as a cure-all formula for
all maritime compensation cases. Its application must depend on the circumstances of the case,
including especially compliance with the parties' contractual duties and obligations as laid down
in the POEA-SEC and/or their CBA, if one exists.
Significantly, Ruizo himself recognized the relevance of the POEA SEC in his case when he
acknowledged that under the contract, "a medically repatriated seafarer is subject for
examination and treatment by the company designated physician for a period not exceeding 120
days. After which the company designated physician will make an assessment whether the
seafarer had already become fit for work or not.” Ruizo, however, was not medically repatriated;
he went home for a finished contract. In any event, as we said in Vergara: "a temporary total
disability only becomes permanent when so declared by the company physician within the
periods he is allowed to do so, or upon the expiration of the maximum 240-day medical treatment
period" without a declaration of either fitness to 'work or the existence of a permanent disability.”
Although the 240-day maximum treatment period under the rules had already expired, counted
from his repatriation on 21 December 2005, it can be said that the Ruizo and the company agreed
to have the treatment period extended as it was obvious that he still needed treatment. In fact,
he agreed, after some trepidation, to be subjected to an ultrasound procedure (ESWL) in the
effort of the company to improve his condition; he was expected to return after 5 February 2007
to the company-designated physician for a repeat ESWL, but he failed to do so. Clearly, under
the circumstances, the 120-day rule had lost its relevance.
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Under the POEA-SEC, the employer is liable for a seafarer's disability, resulting from a work-
connected injury or illness, only after the degree of disability has been established by the
company- designated physician and, if the seafarer consulted with a physician of his choice whose
assessment disagrees with that of the company-designated physician, the disagreement must be
referred to a third doctor for a final assessment.
In the present dispute, no showing exists that the relevant POEA-SEC provisions had been
observed or complied with. While the Ruizo reported to the company-designated physician upon
his repatriation for examination and treatment, he cut short his sessions with the doctor and
missed an important medical procedure (ESWL) which could have improved his health condition
and his capability to work. Riozo's explanation that he did not return for further ESWL because
the company-designated physician told him that he would already be forwarding his assessment
to the company is belied by the doctor's report to the agency dated 19 March 2007, stating that
he did not return for further ESWL. The reason for seaman’s failure to return and continue his
treatment with the company-designated physician was his awareness of the possibility that he
could be declared fit to work after treatment.
Thus, the facts of the case show that the absence of a disability assessment by the company-
designated physician was not of the doctor's making, but was due to respondent’s refusal to
undergo further treatment. In the absence of any disability assessment from the company-
designated doctor, seaman's claim for disability benefits must fail for his obvious failure to
comply with the procedure under the POEA-SEC which he was duty bound to follow
WESLEYAN UNIVERSITY-PHILIPPINES,
vs. WESLEYAN UNIVERSITY-PHILIPPINES FACULTY and STAFF ASSOCIATION
G.R. No. 181806, March 12, 2014
J. DEL CASTILLO
A Collective Bargaining Agreement (CBA) is a contract entered into by an employer and a

legitimate labor organization concerning the terms and conditions of employment. Like any other
contract, it has the force of law between the parties and, thus, should be complied with in good
faith. Unilateral changes or suspensions in the implementation of the provisions of the CBA,
therefore, cannot be allowed without the consent of both parties.
Facts:
Petitioner Wesleyan University-Philippines is a non-stock, non-profit educational institution

duly organized and existing under the laws of the Philippines. Respondent Wesleyan University-
Philippines Faculty and Staff Association, on the other hand, is a duly registered labor
organization acting as the sole and exclusive bargaining agent of all rank-and-file faculty and staff
employees of petitioner. In December 2003, the parties signed a 5-year CBA effective June 1, 2003
until May 31, 2008.
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On August 16, 2005, petitioner, through its President, Atty. Guillermo T. Maglaya (Atty. Maglaya),
issued a Memorandum providing guidelines on the implementation of vacation and sick leave
credits as well as vacation leave commutation. On August 25, 2005, respondent’s President,
Cynthia L. De Lara (De Lara) wrote a letter to Atty. Maglaya informing him that respondent is
not amenable to the unilateral changes made by petitioner. De Lara questioned the guidelines
for being violative of existing practices and the CBA, specifically Sections 1 and 2, Article XII of
the CBA.
On February 8, 2006, a Labor Management Committee (LMC) Meeting was held during which
petitioner advised respondent to file a grievance complaint on the implementation of the
vacation and sick leave policy. In the same meeting, petitioner announced its plan of
implementing a one-retirement policy which was unacceptable to respondent.
Unable to settle their differences at the grievance level, the parties referred the matter to a
Voluntary Arbitrator. Voluntary Arbitrator (VA) rendered a Decision declaring the one-
retirement policy and the Memorandum by the petitioner dated August 16, 2005 contrary to law.
Petitioners appealed the same to the CA which affirmed the Decision of the VA.
Issues:
Whether the change from two-retirement benefits policy to one-retirement policy is tantamount
to dimunition of benefits.
Whether the Memorandum dated August 16, 2005 is contrary to the existing CBA.
Ruling:
The Petition is bereft of merit.
The Non-Diminution Rule found in Article 100 of the Labor Code explicitly 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 still apply.
The practice of giving two retirement benefits to petitioner’s employees is supported by substantial
evidence.
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In this case, respondent was able to present substantial evidence in the form of affidavits to
support its claim that there are two retirement plans. Based on the affidavits, petitioner has been
giving two retirement benefits as early as 1997. Petitioner, on the other hand, failed to present
any evidence to refute the veracity of these affidavits. Petitioner’s contention that these affidavits
are self-serving holds no water. The retired employees of petitioner have nothing to lose or gain
in this case as they have already received their retirement benefits. Thus, they have no reason to
perjure themselves. Obviously, the only reason they executed those affidavits is to bring out the
truth. As we see it then, their affidavits, corroborated by the affidavits of incumbent employees,
are more than sufficient to show that the granting of two retirement benefits to retiring
employees had already ripened into a consistent and deliberate practice.
Moreover, petitioner’s assertion that there is only one retirement plan as the CBA Retirement
Plan and the PERAA Plan are one and the same is not supported by any evidence. There is nothing
in Article XVI of the CBA to indicate or even suggest that the "Plan" referred to in the CBA is the
PERAA Plan. Besides, any doubt in the interpretation of the provisions of the CBA should be
resolved in favor of respondent. In fact, petitioner’s assertion is negated by the announcement it
made during the LMC Meeting on February 8, 2006 regarding its plan of implementing a "one-
retirement plan." For if it were true that petitioner was already implementing a one-retirement
policy, there would have been no need for such announcement. Equally damaging is the letter-
memorandum dated May 11, 2006, entitled "Suggestions on the defenses we can introduce to
justify the abolition of double retirement policy," prepared by the petitioner’s legal counsel.
These circumstances, taken together, bolster the finding that the two-retirement policy is a
practice.Thus, petitioner cannot, without the consent of respondent, eliminate the two-
retirement policy and implement a one-retirement policy as this would violate the rule on non-
diminution of benefits
As a last ditch effort to abolish the two-retirement policy, petitioner contends that such practice
is illegal or unauthorized and that the benefits were erroneously given by the previous
administration. No evidence, however, was presented by petitioner to substantiate its allegations.
Considering the foregoing disquisition, we agree with the findings of the Voluntary Arbitrator,
as affirmed by the CA, that there is substantial evidence to prove that there is an existing practice
of giving two retirement benefits, one under the PERAA Plan and another under the CBA
Retirement Plan.
The Memorandum dated August 16, 2005 is contrary to the existing CBA.
Sections 1 and 2 of Article XII of the CBA provide that all covered employees are entitled to 15
days sick leave and 15 days vacation leave with pay every year and that after the second year of
service, all unused vacation leave shall be converted to cash and paid to the employee at the end
of each school year, not later than August 30 of each year.
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The Memorandum dated August 16, 2005, however, states that vacation and sick leave credits are
not automatic as leave credits would be earned on a month-to-month basis. This, in effect, limits
the available leave credits of an employee at the start of the school year. For example, for the first
four months of the school year or from June to September, an employee is only entitled to five
days vacation leave and five days sick leave. Considering that the Memorandum dated August 16,
2005 imposes a limitation not agreed upon by the parties nor stated in the CBA, we agree with
the CA that it must be struck down.
In closing, it may not be amiss to mention that when the provision of the CBA is clear, leaving
no doubt on the intention of the parties, the literal meaning of the stipulation shall govem.
However, if there is doubt in its interpretation, it should be resolved in favor of labor, as this is
mandated by no less than the Constitution.
UNIVERSITY OF SANTO TOMAS FACULTY UNION vs. UNIVERSITY OF SANTO TOMAS

G.R. No. 203957, July 30, 2014, J. Carpio
Money-claim underpayment of retirement benefits involves an issue arising from the

interpretation or implementation of a provision of the collective bargaining agreement which
according to Article 261 of the Labor Code falls within the original and exclusive jurisdiction of the
Voluntary Arbitrator or Panel of Voluntary Arbitrators, and not the Labor Arbiter. Said provision,
however, excluded from this original and exclusive jurisdiction, gross violation of the CBA, which is
defined as “flagrant and/or malicious refusal to comply with the economic provisions” of the CBA.
Facts:
In a letter dated February 6, 2007, Petitioner University of Santo Tomas Faculty Union
(USTFU) demanded from University of Santo Tomas (UST) through its Rector, Fr. Ernesto M.
Arceo, O.P. (“Fr. Arceo”), remittance of the total amount of P65,000,000.00 plus legal interest
thereon, representing deficiency in its contribution to the medical and hospitalization fund
(“fund”) of [UST’s] faculty members. This is due to the fact that the parties had, in the past,
concluded several Collective Bargaining Agreements for the mutual benefit of the union
members and UST, and one of these agreements was the 1996-2001 CBA. USTFU also sent UST a
letter dated February 26, 2007, accompanied by a summary of its claims pursuant to their 1996-
2001 CBA.
On March 2, 2007, Fr. Arceo informed USTFU that the aforesaid benefits were not meant
to be given annually but rather as a one-time allocation or contribution to the fund. USTFU then
sent [UST] another demand letter dated June 24, 2007 reiterating its position that UST is obliged
to remit to the fund, its contributions not only for the years 1996-1997 but also for the subsequent
years, but to no avail. Thus, USTFU filed against UST, a complaint for unfair labor practice, as
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well as for moral and exemplary damages plus attorney’s fees before the arbitration branch of the
NLRC.
UST sought the dismissal of the complaint on the ground of lack of jurisdiction. It
contended that the case falls within the exclusive jurisdiction of the voluntary arbitrator or panel
of voluntary arbitrators because it involves the interpretation and implementation of the
provisions of the CBA; and the conflict between the herein parties must be resolved as grievance
under the CBA and not as unfair labor practice. However, UST’s motion to dismiss was denied
by the LA.
The LA ruled in favor of USTFU. The LA classified USTFU’s complaint as one for unfair
labor practice, claims for sliding in of funds to hospitalization and medical benefits under the
CBA, damages and attorney’s fee with prayer for slide-in and restoration of medical benefits
under the CBA, which was subsequently affirmed by the NLRC. However, the CA, in its decision
disposed of the present case by agreeing with UST’s argument that the LA and the NLRC did not
have jurisdiction to hear and decide the present case. The CA stated that since USTFU’s ultimate
objective is to clarify the relevant items in the CBA, then USTFU’s complaint should have been
filed with the voluntary arbitrator or panel of voluntary arbitrators.
Issues:
1. Whether or not the LA has jurisdiction over the case at bar.

2. Whether or not USTFU claim has already prescribed.
Ruling:
1. No, it is not within the jurisdiction of the LA.
Jurisdiction is determined by the allegations of the complaint. In the present case, USTFU
alleged that UST committed unfair labor practice in its blatant violation of the economic
provisions of the 1996-2001 CBA, and subsequently, the 2001-2006 and 2006-2011 CBAs. UST,
meanwhile, has consistently questioned USTFU’s act of bringing the case before the LA, and of
not submitting the present case to voluntary arbitration. The LA assumed jurisdiction, but ruled
that UST did not commit any unfair labor practice in UST’s interpretation of the economic
provisions of the 1996-2001 CBA. The NLRC, on the other hand, ruled that there was indeed unfair
labor practice. The CA ruled that the LA and the NLRC did not have jurisdiction as there was no
unfair labor practice.
Reading the pertinent portions of the 1996-2001 CBA along with those of the Labor Code,
we see that UST and USTFU’s misunderstanding arose solely from their differing interpretations
of the CBA’s provisions on economic benefits, specifically those concerning the fund. Therefore,
it was clearly error for the LA to assume jurisdiction over the present case. The case should have
been resolved through the voluntary arbitrator or panel of voluntary arbitrators.
Article 217(c) of the Labor Code provides that the Labor Arbiter shall refer to the grievance
machinery and voluntary arbitration as provided in the CBA those cases that involve the
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interpretation of said agreements. Article 261 of the Labor Code further provides that all
unresolved grievances arising from the interpretation or implementation of the CBA, including
violations of said agreement, are under the original and exclusive jurisdiction of the voluntary
arbitrator or panel of voluntary arbitrators. Excluded from this original and exclusive jurisdiction
is gross violation of the CBA, which is defined in Article 261 as “flagrant and/or malicious refusal
to comply with the economic provisions” of the CBA.
It must also be emphasized that the jurisdiction of the Voluntary Arbitrator or Panel of
Voluntary Arbitrators under Article 262 must be voluntarily conferred upon by both labor and
management. The labor disputes referred to in the same Article 262 can include all those disputes
mentioned in Article 217 over which the Labor Arbiter has original and exclusive jurisdiction.
As shown in the above contextual and wholistic analysis of Articles 217, 261, and 262 of
the Labor Code, the National Labor Relations Commission correctly ruled that the Labor Arbiter
had no jurisdiction to hear and decide petitioner’s money-claim underpayment of retirement
benefits, as the controversy between the parties involved an issue “arising from the interpretation
or implementation” of a provision of the collective bargaining agreement. The Voluntary
Arbitrator or Panel of Voluntary Arbitrators has original and exclusive jurisdiction over the
controversy under Article 261 of the Labor Code, and not the Labor Arbiter.
Despite the allegation that UST refused to comply with the economic provisions of the
1996-2001 CBA, The Court cannot characterize UST’s refusal as “flagrant and/or malicious.”
Indeed, UST’s literal interpretation of the CBA was, in fact, what led USTFU to file its complaint.
To our mind, USTFU actually went beyond the text of the 1996-2001 CBA when it claimed that
the integrated tuition fee increase as described in Section 1D(2) is the basis for UST’s alleged
deficiency.
The Court cannot subscribe to USTFU’s view that the 1996-2001 CBA’s Article X:
Grievance Machinery is not applicable to the present case. When the issue is about the grievance
procedure, USTFU insists on a literal interpretation of the 1996-2001 CBA. Indeed, the present
case falls under Section 1’s definition of grievance: “[a]ny misunderstanding concerning policies
and practices directly affecting faculty members covered by this [collective bargaining]
agreement or their working conditions in the UNIVERSITY or any dispute arising as to the
meaning, application or violation of any provisions of this Agreement or any complaint that a
covered faculty member may have against the UNIVERSITY.” Section 2 excludes only termination
and preventive suspension from the grievance procedure.
2. Yes, USTFU’s claim has already prescribed.
The 1996-2001 CBA, as well as the applicable laws, is silent as to when UST’s alleged
violation becomes actionable. Thus, the Court applies Article 1150 of the Civil Code of the
Philippines: “The time for prescription for all kinds of actions, when there is no special provision
which ordains otherwise, shall be counted from the day they may be brought.”Prescription of an
action is counted from the time the action may be brought.
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It is error to state that USTFU’s cause of action accrued only upon UST’s categorical denial
of its claims on 2 March 2007. USTFU’s cause of action accrued when UST allegedly failed to
comply with the economic provisions of the 1996-2001 CBA. Upon such failure by UST, USTFU
could have brought an action against UST.
Article 290 of the Labor Code provides that unfair labor practices prescribe within one
year “from accrual of such unfair labor practice; otherwise, they shall be forever barred.” Article
291 of the same Code provides that money claims arising from employer-employee relations
prescribe “within three (3) years from the time the cause of action accrued; otherwise they shall
be forever barred.” Therefore, USTFU’s claims under the 1996-2001 CBA, whether characterized
as one for unfair labor practice or for money claims from employer-employee relations, have
already prescribed when USTFU filed a complaint before the LA.
In the case at bar, USTFU filed its complaint under the theory of unfair labor practice.
Thus, USTFU had one year from UST’s alleged failure to contribute, or “slide in,” the correct
amount to the fund to file its complaint. USTFU had one year for every alleged breach by UST:
school year (SY) 1997-1998, SY 1998-1999, SY 1999-2000, SY 2000-2001, SY 2001-2002, and SY 2002-
2003. USTFU did not file any complaint within the respective one-year prescriptive periods.
USTFU decided to file its complaint only in 2007, several years after the accrual of its several
possible causes of action. Even if USTFU filed its complaint under the theory of money claims
from employer-employee relations, its cause of action still has prescribed.
BENSON INDUSTRIES EMPLOYEES UNION-ALU-TUCP AND/OR VILMA GENON, et al.

vs. BENSON INDUSTRIES, INC.
When the parties, however, agree to deviate there from, and unqualifiedly covenant the
payment of separation benefits irrespective of the employer’s financial position, then the obligatory
force of that contract prevails and its terms should be carried out to its full effect. If the terms of a
CBA are clear and there is no doubt as to the intention of the contracting parties, the literal meaning
of its stipulations shall prevail.
Clearly, the fact that the employer, with full knowledge of its financial situation, freely and
voluntarily entered into such collective bargaining agreement with its employees, cannot be
accepted as an excuse to clear itself of its liability to pay its employees of separation benefits under
such agreement.
Facts:
Benson Industries, Inc. (Benson) is a domestic corporation engaged in the manufacturing

of green coils with the brand name Lion-Tiger Mosquito Killer.
Benson sent its employees, including herein petitioners, a notice informing them of their
intended termination from employment on the ground of closure and/or cessation of business
operations. Consequently, petitioners, through Benson Industries Employees Union-ALU-TUCP
(Union), filed a notice of strike.
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The strike did not, however, push through due to the parties’ amicable settlement during
the conciliation proceedings before the NCMB, whereby petitioners accepted Benson’s payment
of separation pay, computed at 15 days for every year of service, as per the parties’ Memorandum
of Agreement.
This notwithstanding, petitioners proffered a claim for the payment of additional

separation pay at the rate of four (4) days for every year of service. As basis, petitioners invoked
the existing collective bargaining agreement (CBA) executed by and between the Union and
Benson which states that “Benson shall pay to any employee/laborer who is terminated from the
service without any fault attributable to him, a ‘Separation Pay’ equivalent to not less than
nineteen (19) days’ pay for every year of service based upon the latest rate of pay of the
employee/laborer concerned.”
Benson opposed petitioners’ claim, averring that the separation pay already paid to them
was already more than what the law requires.
Issue:
Whether or not in computing the amount of separation benefits, the basis should be the
provision of the existing CBA between Benson and the Union
Ruling:
Yes. It is a familiar and fundamental doctrine in labor law that the CBA is the law between
the parties and they are obliged to comply with its provisions.
As a general rule when an employer which closes shop due to serious business losses is
exempt from paying separation benefits under Article 297 of the Labor Code.
When the parties, however, agree to deviate there from, and unqualifiedly covenant the
payment of separation benefits irrespective of the employer’s financial position, then the
obligatory force of that contract prevails and its terms should be carried out to its full effect.
Verily, it is fundamental that obligations arising from contracts have the force of law
between the contracting parties and thus should be complied with in good faith; and parties are
bound by the stipulations, clauses, terms and conditions they have agreed to, the only limitation
being that these stipulations, clauses, terms and conditions are not contrary to law, morals,
public order or public policy. Hence, if the terms of a CBA are clear and there is no doubt as to
the intention of the contracting parties, the literal meaning of its stipulations shall prevail.
In this case, it is undisputed that a CBA was forged by the employer, Benson, and its
employees, through the Union, to govern their relations. It is equally undisputed that Benson
agreed to and was thus obligated under the CBA to pay its employees who had been terminated
without any fault attributable to them separation benefits at the rate of 19 days for every year of
service.
Clearly, Benson, with full knowledge of its financial situation, freely and voluntarily
entered into such agreement with petitioners. Hence, having failed to show that the subject CBA
provision on separation benefits is contrary to law, morals, public order or public policy, or that
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the same can be interpreted as one with a condition – for instance, that the parties actually
contemplated non-payment of separation benefits in the event of closure due to serious business
losses.
PHILIPPINE ELECTRIC CORPORATION (PHILEC) vs. COURT OF APPEALS

G.R. No. 168612, December 10, 2014, J. Leonen
The schedule of training allowance stated in the memoranda served on Lipio and Ignacio,
Sr. did not conform to Article X, Section 4 of the June 1, 1997 collective bargaining agreement. A
collective bargaining agreement is “a contract executed upon the request of either the employer or
the exclusive bargaining representative of the employees incorporating the agreement reached after
negotiations with respect to wages, hours of work and all other terms and conditions of
employment, including proposals for adjusting any grievances or questions arising under such
agreement.” In the case at bar, Lipio and Ignacio, Sr. were selected for training during the effectivity
of the June 1, 1997 rank-and-file collective bargaining agreement. Therefore, Lipio’s and Ignacio,
Sr.’s training allowance must be computed based on Article X, Section 4 and Article IX, Section 1(f)
of the June 1, 1997 collective bargaining agreement.
Facts:
Philippine Electric Corporation (PHILEC) is a domestic corporation “engaged in the

manufacture and repairs of high voltage transformers.” Among its rank-and-file employees were
Eleodoro V. Lipio and Emerlito C. Ignacio, Sr., former members of the PHILEC Workers’ Union
(PWU). PWU is a legitimate labor organization and the exclusive bargaining representative of
PHILEC’s rank-and-file employees.
From June 1, 1989 to May 31, 1997, PHILEC and its rank-and-file employees were governed
by collective bargaining agreements. On August 18, 1997 and with the previous collective
bargaining agreements already expired, PHILEC selected Lipio for promotion from Machinist
under Pay Grade VIII to Foreman I under Pay Grade B. PHILEC served Lipio a
memorandum, instructing him to undergo training for the position of Foreman I beginning on
August 25, 1997. Ignacio, Sr., then DT-Assembler with Pay Grade VII, was likewise selected for
training for the position of Foreman I.
On September 17, 1997, PHILEC and PWU entered into a new collective bargaining
agreement, effective retroactively on June 1, 1997 and expiring on May 31, 1999. Under Article X,
Section 4 of the June 1, 1997 collective bargaining agreement, a rank-and-file employee promoted
shall be entitled to specified step increases in his or her basic salary.
Claiming that the schedule of training allowance stated in the memoranda served on
Lipio and Ignacio, Sr. did not conform to Article X, Section 4 of the June 1, 1997 collective
bargaining agreement, PWU submitted the grievance to the grievance machinery. PWU and
PHILEC undergone voluntary arbitration. For PHILEC’s failure to apply the schedule of step
increases under Article X of the June 1, 1997 collective bargaining agreement, PWU argued that
PHILEC committed an unfair labor practice under Article 248 of the Labor Code. PHILEC
emphasized that it promoted Lipio and Ignacio, Sr. while it was still negotiating a new collective
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bargaining agreement with PWU. Since PHILEC and PWU had not yet negotiated a new
collective bargaining agreement when PHILEC selected Lipio and Ignacio, Sr. for training,
PHILEC applied the “Modified SGV” pay grade scale which PHILEC and PWU allegedly agreed
to implement beginning on May 9, 1997.
Voluntary Arbitrator Jimenez held that PHILEC violated its collective bargaining
agreement with PWU but dismissed PWU’s claim of unfair labor practice. PHILEC received a
copy of Voluntary Arbitrator Jimenez’s decision on August 16, 1999. On August 26, 1999, PHILEC
filed a motion for partial reconsideration but was denied. PHILEC received a copy of the July 7,
2000 resolution on August 11, 2000. On August 29, 2000, PHILEC filed a petition for certiorari
before the Court of Appeals, alleging that Voluntary Arbitrator Jimenez gravely abused his
discretion in rendering his decision. The CA affirmed Voluntary Arbitrator Jimenez’s decision.
Issue:
Whether or not Voluntary Arbitrator Jimenez correctly awarded both Lipio and Ignacio,
Sr. training allowances based on the amounts and formula provided in the June 1, 1997 collective
bargaining agreement
Ruling:
Yes. A collective bargaining agreement is “a contract executed upon the request of either
the employer or the exclusive bargaining representative of the employees incorporating the
agreement reached after negotiations with respect to wages, hours of work and all other terms
and conditions of employment, including proposals for adjusting any grievances or questions
arising under such agreement.” A collective bargaining agreement being a contract, its provisions
“constitute the law between the parties” and must be complied with in good faith.
PHILEC, as employer, and PWU, as the exclusive bargaining representative of PHILEC’s

rank-and-file employees, entered into a collective bargaining agreement, which the parties
agreed to make effective from June 1, 1997 to May 31, 1999. Being the law between the parties, the
June 1, 1997 collective bargaining agreement must govern PHILEC and its rank-and-file
employees within the agreed period.
Lipio and Ignacio, Sr. were rank-and-file employees when PHILEC selected them for
training for the position of Foreman I beginning August 25, 1997. Lipio and Ignacio, Sr. were
selected for training during the effectivity of the June 1, 1997 rank-and-file collective bargaining
agreement. Therefore, Lipio’s and Ignacio, Sr.’s training allowance must be computed based on
Article X, Section 4 and Article IX, Section 1(f) of the June 1, 1997 collective bargaining agreement.
Contrary to PHILEC’s claim, Lipio and Ignacio, Sr. were not transferred out of the
bargaining unit when they were selected for training. Lipio and Ignacio, Sr. remained rank-and-
file employees while they trained for the position of Foreman I. Under Article IX, Section 1(e) of
the June 1, 1997 collective bargaining agreement, a trainee who is “unable to demonstrate his
ability to perform the work . . . shall be reverted to his previous assignment. . . .” According to
the same provision, the trainee “shall hold that job on a trial or observation basis and . . . subject
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to prior approval of the authorized management official, be appointed to the position in a regular
capacity.” Thus, training is a condition precedent for promotion. Selection for training does not
mean automatic transfer out of the bargaining unit of rank-and-file employees.
PHILEC allegedly applied the “Modified SGV” pay grade scale to prevent any salary
distortion within PHILEC’s enterprise. This pay grade scale, however, is not provided in the
collective bargaining agreement. In Samahang Manggagawa sa Top Form Manufacturing United
Workers of the Philippines (SMTFM-UWP) v. NLRC, this court ruled that “only provisions
embodied in the CBA should be so interpreted and complied with. Where a proposal raised by a
contracting party does not find print in the CBA, it is not part thereof and the proponent has no
claim whatsoever to its implementation.” Had PHILEC wanted the “Modified SGV” pay grade
scale applied within its enterprise, “it could have requested or demanded that the ‘Modified SGV’
scale be incorporated in the collective bargaining agreement.”
Given the foregoing, Lipio’s and Ignacio, Sr.’s training allowance should be computed
based on Article X, Section 4 in relation to Article IX, Section 1(f) of the June 1, 1997 rank-and-file
collective bargaining agreement.
UNFAIR LABOR PRACTICE
T & H SHOPFITTERS CORPORATION/GIN QUEEN CORPORATION, STINNES HUANG,

BEN HUANG and ROGELIO MADRIAGA vs. T & H SHOPFITTERS CORPORATION/GIN
QUEEN WORKERS UNION, ELPIDIO ZALDIVAR, DARI OS GONZALES, WILLIAM
DOMINGO, BOBBY CASTILLO, JIMMY M. PASCUA, GERMANO M. BAJO, RICO L.
MANZANO, ALLAN L. CALLORINA, ROMEO BLANCO, GILBERT M. GARCIA, CARLOS F.
GERILLO, EDUARDO A. GRANDE, EDILBRANDO MARTICIO, VIVENCIO SUSANO,
ROLANDO GARCIA, JR., MICHAEL FABABIER, ROWELL MADRIAGA, PRESNIL
TOLENTINO, MARVIN VENTURA, FRANCISCO RIVARES, PLACIDO TOLENTINO and
ROLANDO ROMERO
G.R. No. 191714, February 26, 2014
J. Mendoza
The test of whether an employer has interfered with and coerced employees in the exercise
of their right to self-organization, is, whether the employer has engaged in conduct which, it may
reasonably be said, tends to interfere with the free exercise of employees’ rights; and that it is not
necessary that there be direct evidence that any employee was in fact intimidated or coerced by
statements of threats of the employer if there is a reasonable inference that the anti-union conduct
of the employer does have an adverse effect on self-organization and collective bargaining.
Facts:
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Respondents treated T&H Shopfitters and Gin Queen as a single entity and their sole employer.
In their desire to improve their working conditions, respondents and other employees of
petitioners held their first formal meeting on November 23, 2003 to discuss the formation of a
union. The following day or on November 24, 2003, seventeen (17) employees were barred from
entering petitioners’ factory premises located in Castillejos, Zambales, and ordered to transfer to
T&H Shopfitters’ warehouse at Subic Bay Freeport Zone (SBFZ) purportedly because of its
expansion. Afterwards, the said seventeen (17) employees were repeatedly ordered to go on forced
leave due to the unavailability of work. Alleging that the subsequent acts of petitioners were
purported as a hindrance to respondent’s right to self-organization, the latter were left with no
other recourse but to lodge a complaint against the former for Unfair Labor Practice (ULP) by
way of union busting, and illegal lockout, with moral and exemplary damages and attorney’s fees.
The questioned acts of petitioners were the following: 1) sponsoring a field trip to Zambales for
its employees, to the exclusion of union members, before the scheduled certification election; 2)
the active campaign by the sales officer of petitioners against the union prevailing as a bargaining
agent during the field trip; 3) escorting its employees after the field trip to the polling center; 4)
the continuous hiring of subcontractors performing respondents’ functions; 5) assigning union
members to the Cabangan site to work as grass cutters; and 6) the enforcement of work on a
rotational basis for union members, all reek of interference on the part of petitioners. The Labor
Arbiter ruled that there has been no ULP committed by petitioners as the transfer of workers was
effected long before the union was organized. The NLRC reversed the LA decision and ruled in
favor of respondents. The said decision was sustained by the CA. Hence, this petition was filed.
Issue:
Whether petitioners committed ULP acts against respondents
Ruling:
The instant petition is not meritorious. Petitioners committed ULP acts against respondents.
Unfair Labor Practice relates to the commission of acts that transgress the workers’ right to
organize. It has been settled in the case of Insular Life Assurance Co., Ltd. Employees Association
– NATU v. Insular Life Assurance Co. Ltd., that the test of whether an employer has interfered
with and coerced employees in the exercise of their right to self-organization, is, whether the
employer has engaged in conduct which, it may reasonably be said, tends to interfere with the
free exercise of employees’ rights; and that it is not necessary that there be direct evidence that
any employee was in fact intimidated or coerced by statements of threats of the employer if there
is a reasonable inference that the anti-union conduct of the employer does have an adverse effect
on self-organization and collective bargaining.
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The various acts of petitioners, taken together, reasonably support an inference that, indeed, such
were all orchestrated to restrict respondents’ free exercise of their right to self-organization. The
Court is of the considered view that petitioners’ undisputed actions prior and immediately before
the scheduled certification election, while seemingly innocuous, unduly meddled in the affairs of
its employees in selecting their exclusive bargaining representative. In Holy Child Catholic
School v. Hon. Patricia Sto. Tomas,17 the Court ruled that a certification election was the sole
concern of the workers, save when the employer itself had to file the petition x x x, but even after
such filing, its role in the certification process ceased and became merely a bystander. Thus,
petitioners had no business persuading and/or assisting its employees in their legally protected
independent process of selecting their exclusive bargaining representative. The fact and peculiar
timing of the field trip sponsored by petitioners for its employees not affiliated with THS-GQ
Union, although a positive enticement, was undoubtedly extraneous influence designed to
impede respondents in their quest to be certified. This cannot be countenanced.
ALLAN M. MENDOZA vs. OFFICERS OF MANILA

WATER EMPLOYEES UNION (MWEU)
G.R. No. 201595, January 25, 2016
FACTS
Petitioner was a member of the Manila Water Employees Union (MWEU), a Department of Labor
and Employment (DOLE)-registered labor organization consisting of rank-and-file employees
within Manila Water Company (MWC). The respondents herein named – Eduardo B. Borela
(Borela), Buenaventura Quebral (Quebral), Elizabeth Cometa (Cometa), Alejandro Torres
(Torres), Amorsolo Tierra (Tierra), Soledad Yeban (Yeban), Luis Rendon (Rendon), Virginia
Apilado (Apilado), Teresita Bolo (Bolo), Rogelio Barbero (Barbero), Jose Casañas (Casañas),
Alfredo Maga (Maga), Emilio Fernandez (Fernandez), Rosita Buenaventura (Buenaventura),
Almenio Cancino (Cancino), Adela Imana, Mario Mancenido (Mancenido), Wilfredo Mandilag
(Mandilag), Rolando Manlapaz (Manlapaz), Efren Montemayor (Montemayor), Nelson
Pagulayan, Carlos Villa, Ric Briones, and Chito Bernardo – were MWEU officers during the period
material to this Petition, with Borela as President and Chairman of the MWEU Executive Board,
Quebral as First Vice-President and Treasurer, and Cometa as Secretary.
In an April 11, 2007 letter, MWEU through Cometa informed petitioner that the union was unable
to fully deduct the increased P200.00 union dues from his salary due to lack of the required
December 2006 check-off authorization from him. Petitioner was warned that his failure to pay
the union dues would result in sanctions upon him. Quebral informed Borela, through a May 2,
2007 letter, that for such failure to pay the union dues, petitioner and several others violated
Section 1(g), Article IX of the MWEU’s Constitution and By-Laws. In turn, Borela referred the
charge to the MWEU grievance committee for investigation.
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On May 21, 2007, a notice of hearing was sent to petitioner, who attended the scheduled hearing.
On June 6, 2007, the MWEU grievance committee recommended that petitioner be suspended
for 30 days.
In a June 20, 2007 letter, Borela informed petitioner and his corespondents of the MWEU
Executive Board’s "unanimous approval"of the grievance committee’s recommendation and
imposition upon them of a penalty of 30 days suspension, effective June 25, 2007.
In a June 26, 2007 letter to Borela, petitioner and his co-respondents took exception to the
imposition and indicated their intention to appeal the same to the General Membership
Assembly in accordance with Section 2(g), Article V of the union’s Constitution and By-Laws,
which grants them the right to appeal any arbitrary resolution, policy and rule promulgated by
the Executive Board to the General Membership Assembly. In a June 28, 2007 reply, Borela denied
petitioner’s appeal, stating that the prescribed period for appeal had expired.
Petitioner and his co-respondents sent another letter on July 4, 2007, reiterating their arguments
and demanding that the General Membership Assembly be convened in order that their appeal
could be taken up. The letter was not acted upon.
Petitioner was once more charged with non-payment of union dues, and was required to attend
an August 3, 2007 hearing. Thereafter, petitioner was again penalized with a 30-day suspension
through an August 21, 2007 letter by Borela informing petitioner of the Executive Board’s
"unanimous approval" of the grievance committee recommendation to suspend him effective
August 24, 2007, to which he submitted a written reply, invoking his right to appeal through the
convening of the General Membership Assembly. However, the respondents did not act on
petitioner’s plea.
Meanwhile, MWEU scheduled an election of officers on September 14, 2007. Petitioner filed his
certificate of candidacy for Vice-President, but he was disqualified for not being a member in
good standing on account of his suspension.
On October 2, 2007, petitioner was charged with non-payment of union dues for the third time.
He did not attend the scheduled hearing. This time, he was meted the penalty of expulsion from
the union, per "unanimous approval" of the members of the Executive Board. His pleas for an
appeal to the General Membership Assembly were once more unheeded.
In 2008, during the freedom period and negotiations for a new collective bargaining agreement
(CBA) with MWC, petitioner joined another union, the Workers Association for Transparency,
Empowerment and Reform, All-Filipino Workers Confederation (WATER-AFWC). He was
elected union President. Other MWEU members were inclined to join WATER-AFWC, but
MWEU director Torres threatened that they would not get benefits from the new CBA.
The MWEU leadership submitted a proposed CBA which contained provisions to the effect that
in the event of retrenchment, non-MWEU members shall be removed first, and that upon the
signing of the CBA, only MWEU members shall receive a signing bonus.
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ISSUE
Whether or not the respondents are guilty of unfair labor practice.
RULING
It is true that some of petitioner’s causes of action constitute intra-union cases cognizable by the
BLR under Article 226 of the Labor Code.
An intra-union dispute refers to any conflict between and among union members, including
grievances arising from any violation of the rights and conditions of membership, violation of or
disagreement over any provision of the union’s constitution and by-laws, or disputes arising from
chartering or disaffiliation of the union. Sections 1 and 2, Rule XI of Department Order No. 40-
03, Series of 2003 of the DOLE enumerate the following circumstances as inter/intra-union
disputes x x x.
However, petitioner’s charge of unfair labor practices falls within the original and exclusive
jurisdiction of the Labor Arbiters, pursuant to Article 217 of the Labor Code. In addition, Article
247 of the same Code provides that "the civil aspects of all cases involving unfair labor practices,
which may include claims for actual, moral, exemplary and other forms of damages, attorney’s
fees and other affirmative relief, shall be under the jurisdiction of the Labor Arbiters."
Unfair labor practices may be committed both by the employer under Article 248 and by labor
organizations under Article 249 of the Labor Code.
Petitioner contends that respondents committed acts constituting unfair labor practices – which
charge was particularly laid out in his pleadings, but that the Labor Arbiter, the NLRC, and the
CA ignored it and simply dismissed his complaint on the ground that his causes of action were
intra- or inter-union in nature. Specifically, petitioner claims that he was suspended and expelled
from MWEU illegally as a result of the denial of his right to appeal his case to the general
membership assembly in accordance with the union’s constitution and by-laws. On the other
hand, respondents counter that such charge is intra-union in nature, and that petitioner lost his
right to appeal when he failed to petition to convene the general assembly through the required
signature of 30% of the union membership in good standing pursuant to Article VI, Section 2(a)
of MWEU’s Constitution and By-Laws or by a petition of the majority of the general membership
in good standing under Article VI, Section 3.
Under Article VI, Section 2(a) of MWEU’s Constitution and By-Laws, the general membership
assembly has the power to "review revise modify affirm or repeal [sic] resolution and decision of
the Executive Board and/or committees upon petition of thirty percent (30%) of the Union in
good standing," and under Section 2(d), to "revise, modify, affirm or reverse all expulsion cases."
Under Section 3 of the same Article, "[t]he decision of the Executive Board may be appealed to
the General Membership which by a simple majority vote reverse the decision of said body. If the
general Assembly is not in session the decision of the Executive Board may be reversed by a
petition of the majority of the general membership in good standing." And, in Article X, Section
5, "[a]ny dismissed and/or expelled member shall have the right to appeal to the Executive Board
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within seven days from notice of said dismissal and/or expulsion which, in [turn] shall be referred
to the General membership assembly. In case of an appeal, a simple majority of the decision of
the Executive Board is imperative. The same shall be approved/disapproved by a majority vote of
the general membership assembly in a meeting duly called for the purpose."
In regard to suspension of a union member, MWEU’s Constitution and By-Laws provides under
Article X, Section 4 thereof that "[a]ny suspended member shall have the right to appeal within
three (3) working days from the date of notice of said suspension. In case of an appeal a simple
majority of vote of the Executive Board shall be necessary to nullify the suspension."
Thus, when an MWEU member is suspended, he is given the right to appeal such suspension
within three working days from the date of notice of said suspension, which appeal the MWEU
Executive Board is obligated to act upon by a simple majority vote. When the penalty imposed is
expulsion, the expelled member is given seven days from notice of said dismissal and/or
expulsion to appeal to the Executive Board, which is required to act by a simple majority vote of
its members. The Board’s decision shall then be approved/ disapproved by a majority vote of the
general membership assembly in a meeting duly called for the purpose.
The documentary evidence is clear that when petitioner received Borela’s August 21, 2007 letter
informing him of the Executive Board’s unanimous approval of the grievance committee
recommendation to suspend him for the second time effective August 24, 2007, he immediately
and timely filed a written appeal. However, the Executive Board – then consisting of respondents
Borela, Tierra, Bolo, Casañas, Fernandez, Rendon, Montemayor, Torres, Quebral, Pagulayan,
Cancino, Maga, Cometa, Mancenido, and two others who are not respondents herein – did not
act thereon. Then again, when petitioner was charged for the third time and meted the penalty
of expulsion from MWEU by the unanimous vote of the Executive Board, his timely appeal was
again not acted upon by said board – this time consisting of respondents Borela, Quebral, Tierra,
Imana, Rendon, Yeban, Cancino, Torres, Montemayor, Mancenido, Mandilag, Fernandez,
Buenaventura, Apilado, Maga, Barbero, Cometa, Bolo, and Manlapaz.
Thus, contrary to respondents’ argument that petitioner lost his right to appeal when he failed
to petition to convene the general assembly through the required signature of 30% of the union
membership in good standing pursuant to Article VI, Section 2(a) of MWEU’s Constitution and
By-Laws or by a petition of the majority of the general membership in good standing under
Article VI, Section 3, this Court finds that petitioner was illegally suspended for the second time
and thereafter unlawfully expelled from MWEU due to respondents’ failure to act on his written
appeals. The required petition to convene the general assembly through the required signature
of 30% (under Article VI, Section 2[a]) or majority (under Article VI, Section 3) of the union
membership does not apply in petitioner’s case; the Executive Board must first act on his two
appeals before the matter could properly be referred to the general membership. Because
respondents did not act on his two appeals, petitioner was unceremoniously suspended,
disqualified and deprived of his right to run for the position of MWEU Vice-President in the
September 14, 2007 election of officers, expelled from MWEU, and forced to join another union,
WATER-AFWC. For these, respondents are guilty of unfair labor practices under Article 249 (a)
and (b) – that is, violation of petitioner’s right to self-organization, unlawful discrimination, and
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illegal termination of his union membership – which case falls within the original and exclusive
jurisdiction of the Labor Arbiters, in accordance with Article 217 of the Labor Code.
The primary concept of unfair labor practices is stated in Article 247 of the Labor Code, which
states:
Article 247. Concept of unfair labor practice and procedure for prosecution thereof. –– Unfair
labor practices violate the constitutional right of workers and employees to self-organization, are
inimical to the legitimate interests of both labor and management, including their right to
bargain collectively and otherwise deal with each other in an atmosphere of freedom and mutual
respect, disrupt industrial peace and hinder the promotion of healthy and stable labor-
management relations.
"In essence, [unfair labor practice] relates to the commission of acts that transgress the workers’
right to organize." "[A]ll the prohibited acts constituting unfair labor practice in essence relate to
the workers’ right to self-organization." "[T]he term unfair labor practice refers to that gamut of
offenses defined in the Labor Code which, at their core, violates the constitutional right of
workers and employees to self-organization."
Guaranteed to all employees or workers is the ‘right to self-organization and to form, join, or
assist labor organizations of their own choosing for purposes of collective bargaining.’ This is
made plain by no less than three provisions of the Labor Code of the Philippines. Article 243 of
the Code provides as follows:
ART. 243. Coverage and employees’ right to self-organization. — All persons employed in
commercial, industrial and agricultural enterprises and in religious, charitable, medical, or
educational institutions whether operating for profit or not, shall have the right to self-
organization and to form, join, or assist labor organizations of their own choosing for purposes
or collective bargaining. Ambulant, intermittent and itinerant workers, self-employed people,
rural workers and those without any definite employers may form labor organizations for their
mutual aid and protection.
Article 248 (a) declares it to be an unfair labor practice for an employer, among others, to
‘interfere with, restrain or coerce employees in the exercise of their right to self-organization.’
Similarly, Article 249 (a) makes it an unfair labor practice for a labor organization to ‘restrain or
coerce employees in the exercise of their rights to self-organization . . .’
xxxx
The right of self-organization includes the right to organize or affiliate with a labor union or
determine which of two or more unions in an establishment to join, and to engage in concerted
activities with co-workers for purposes of collective bargaining through representatives of their
own choosing, or for their mutual aid and protection, i.e., the protection, promotion, or
enhancement of their rights and interests.
As members of the governing board of MWEU, respondents are presumed to know, observe, and
apply the union’s constitution and by-laws. Thus, their repeated violations thereof and their
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disregard of petitioner’s rights as a union member – their inaction on his two appeals which
resulted in his suspension, disqualification from running as MWEU officer, and subsequent
expulsion without being accorded the full benefits of due process – connote willfulness and bad
faith, a gross disregard of his rights thus causing untold suffering, oppression and, ultimately,
ostracism from MWEU. "Bad faith implies breach of faith and willful failure to respond to plain
and well understood obligation." This warrants an award of moral damages in the amount of
P100,000.00. Moreover, the Civil Code provides:
Art. 32. Any public officer or employee, or any private individual, who directly or indirectly
obstructs, defeats, violates or in any manner impedes or impairs any of the following rights and
liberties of another person shall be liable to the latter for damages:
xxxx
(12) The right to become a member of associations or societies for purposes not contrary to law;
In Vital-Gozon v. Court of Appeals, this Court declared, as follows:
Moral damages include physical suffering, mental anguish, fright, serious anxiety, besmirched
reputation, wounded feelings, moral shock, social humiliation, and similar injury. They may be
recovered if they are the proximate result of the defendant’s wrongful act or omission. The
instances when moral damages may be recovered are, inter alia, ‘acts and actions referred to in
Articles 21, 26, 27, 28, 29, 30, 32, 34 and 35 of the Civil Code,’ which, in turn, are found in the
Chapter on Human Relations of the Preliminary Title of the Civil Code. x x x
Under the circumstances, an award of exemplary damages in the amount of P50,000.00, as prayed
for, is likewise proper. "Exemplary damages are designed to permit the courts to mould behavior
that has socially deleterious consequences, and their imposition is required by public policy to
suppress the wanton acts of the offender." This should prevent respondents from repeating their
mistakes, which proved costly for petitioner.
Under Article 2229 of the Civil Code, ‘[e]xemplary or corrective damages are imposed, by way of
example or correction for the public good, in addition to the moral, temperate, liquidated or
compensatory damages.’ As this court has stated in the past: ‘Exemplary damages are designed
by our civil law to permit the courts to reshape behaviour that is socially deleterious in its
consequence by creating negative incentives or deterrents against such behaviour.’
Finally, petitioner is also entitled to attorney’s fees equivalent to 10 per cent (10%) of the total
award. The unjustified acts of respondents clearly compelled him to institute an action primarily
to vindicate his rights and protect his interest. Indeed, when an employee is forced to litigate and
incur expenses to protect his rights and interest, he is entitled to an award of attorney’s fees.
TABANGAO SHELL REFINERY EMPLOYEES ASSOCIATION vs.PILIPINAS SHELL

PETROLEUM CORPORATION
G.R. No. 170007, April 7, 2014, J. Leonardo-De Castro
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As there was no bad faith on the part of Shell in its bargaining with the union, deadlock was
possible and did occur. Thus, because of the unresolved issue on wage increase, there was actually
a complete stoppage of the ongoing negotiations between the parties and the union filed a Notice
of Strike. A mutual declaration would neither add to nor subtract from the reality of the deadlock
then existing between the parties. Thus, the absence of the parties’ mutual declaration of deadlock
does not mean that there was no deadlock. At most, it would have been simply a recognition of the
prevailing status quo between the parties. Further, there was already an actual existing deadlock
between the parties. What was lacking was the formal recognition of the existence of such a
deadlock because the union refused a declaration of deadlock.
Facts:
In anticipation of the expiration of the 2001-2004 Collective Bargaining Agreement (CBA)

between the petitioner, Tabangao Shell Refinery Employees Assoc. and the respondent Pilipinas
Shell Petroleum Corporation, started negotiations for a new CBA. The union proposed a 20o/o
annual across-the-board basic salary increase for the next three years that would be covered by
the new CBA. In lieu of the annual salary increases, the company made a counter-proposal to
grant all covered employees a lump sum amount of P80,000.00 yearly for the three-year period
of the new CBA.
The union lowered its proposal to 12% annual across-the-board increase for the next three
years. For its part, the company increased its counter-proposal to a yearly lump sum payment
of P88,000.00 for the next three years. The union requested financial data for the manufacturing
class of business in the Philippines. The company reiterated that its counter-offer is based on its
affordability for the company, comparison with the then existing wage levels of allied industry,
and the then existing total pay and benefits package of the employees.
However, the union remained unconvinced and asked for additional documents to justify
the company’s counter-offer. Alleging failure on the part of the company to justify its offer, the
union manifested that the company was bargaining in bad faith. The company, in turn, expressed
its disagreement with the union’s manifestation.
On that same day, the union filed a Notice of Strike in the National Conciliation and
Mediation Board (NCMB), alleging bad faith bargaining on the part of the company. The NCMB
immediately summoned the parties for the mandatory conciliation-mediation proceedings but
the parties failed to reach an amicable settlement.
Upon being aware of this development, the company filed a Petition for Assumption of
Jurisdiction with the Secretary of Labor and Employment which the latter granted. The Secretary
of Labor and Employment took notice of the Notice of Strike filed by the union in the NCMB.
Thereafter, SOLE found that the intended strike would likely affect the company’s capacity to
provide petroleum products to the company’s various clientele, including the transportation
sector, the energy sector, and the manufacturing and industrial sectors.
The union thereafter filed a petition for certiorari in the Court of Appeals. It alleged in its
petition that the Secretary of Labor and Employment acted with grave abuse of discretion in
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grossly misappreciating the facts and issue of the case. However, The Court of Appeals dismissed
it.
During the pendency of the union’s petition for certiorari in the Court of Appeals, the
Secretary of Labor and Employment rendered a Decision stating that there was already deadlock
although the ground for the first Notice of Strike was unfair labor practice for bargaining in bad
faith. Furthermore, the Company is not guilty of bargaining in bad faith. The duty to bargain
does not compel any party to accept a proposal, or make any concession, as recognized by Article
252 of the Labor Code, as amended
The union now comes to this Court to press its contentions. It insists that Shell is guilty
of unfair labor practice through bad faith bargaining. According to the union, bad faith
bargaining and a CBA deadlock cannot legally co-exist because an impasse in negotiations can
only exist on the premise that both parties are bargaining in good faith.
Issues:
1) Whether or not decision of SOLE became final & Executory.

2) Whether or not the Company is guilty for unfair labor practice bad faith bargaining.
3) Whether or not there was deadlock between the parties regarding the negotiation of
CBA.
Ruling:
1) Yes, the decision of SOLE became final & Executory.
Petition is barred by res judicata in the concept of conclusiveness of judgment.The

doctrine states that a fact or question which was in issue in a former suit, and was there judicially
passed on and determined by a court of competent jurisdiction, is conclusively settled by the
judgment therein, as far as concerns the parties to that action and persons in privity with them,
and cannot be again litigated in any future action between such parties or their privies, in the
same court or any other court of concurrent jurisdiction on either the same or a different cause
of action, while the judgment remains unreversed or unvacated by proper authority. The only
identities thus required for the operation of the judgment as an estoppel x xx are identity of
parties and identity of issues.
It has been held that in order that a judgment in one action can be conclusive as to a
particular matter in another action between the same parties or their privies, it is essential that
the issues be identical. If a particular point or question is in issue in the second action, and the
judgment will depend on the determination of that particular point or question, a former
judgment between the same parties [or their privies] will be final and conclusive in the second if
that same point or question was in issue and adjudicated in the first suit.
The Decision of the Secretary of Labor and Employment in the labor dispute over which
he assumed jurisdiction has long attained finality. The union never denied this.In this
connection, Article 263(i) of the Labor Code is clear:
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ART. 263. Strikes, picketing, and lockouts. – The Secretary of Labor and Employment, the
Commission or the voluntary arbitrator shall decide or resolve the dispute within thirty (30)
calendar days from the date of the assumption of jurisdiction or the certification or submission
of the dispute, as the case may be. The decision of the President, the Secretary of Labor and
Employment, the Commission or the voluntary arbitrator shall be final and executory ten (10)
calendar days after receipt thereof by the parties.
Pursuant to Article 263(i) of the Labor Code, therefore, the Decision of the Secretary of
Labor and Employment became final and executory after the lapse of the period provided under
the said provision.The Decision of the Secretary of Labor and Employment already considered
and ruled upon the issues being raised by the union in this petition.
2) No, Shell is not guilty for unfair labor practice.
The decision of SOLE correctly characterized the nature of the duty to bargain, that is, it
does not compel any party to accept a proposal or to make any concession. While the purpose of
collective bargaining is the reaching of an agreement between the employer and the employee’s
union resulting in a binding contract between the parties, the failure to reach an agreement after
negotiations continued for a reasonable period does not mean lack of good faith. The laws invite
and contemplate a collective bargaining contract but do not compel one. For after all, a CBA, like
any contract is a product of mutual consent and not of compulsion. As such, the duty to bargain
does not include the obligation to reach an agreement. In this light, the corporation’s unswerving
position on the matter of annual lump sum payment in lieu of wage increase did not, by itself,
constitute bad faith even if such position caused a stalemate in the negotiations.
3) Yes, there was deadlock between the parties regarding the negotiation of CBA.
As there was no bad faith on the part of the company in its bargaining with the union,
deadlock was possible and did occur. Thus, because of the unresolved issue on wage increase,
there was actually a complete stoppage of the ongoing negotiations between the parties and the
union filed a Notice of Strike. A mutual declaration would neither add to nor subtract from the
reality of the deadlock then existing between the parties. Thus, the absence of the parties’ mutual
declaration of deadlock does not mean that there was no deadlock. At most, it would have been
simply a recognition of the prevailing status quo between the parties.
Further, there was already an actual existing deadlock between the parties. What was
lacking was the formal recognition of the existence of such a deadlock because the union refused
a declaration of deadlock. Thus, the union’s view that, at the time the Secretary of Labor and
Employment exercised her power of assumption of jurisdiction, the issue of deadlock was neither
an incidental issue to the matter of unfair labor practice nor an existing issue is incorrect.
While the first Notice of Strike is indeed significant in the determination of the existing
labor dispute between the parties, it is not the sole criterion. Law provides that the Secretary of
the DOLE has been explicitly granted by Article 263(g) of the Labor Code the authority to assume
jurisdiction over a labor dispute causing or likely to cause a strike or lockout in an industry
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indispensable to the national interest, and decide the same accordingly. And, as a matter of
necessity, it includes questions incidental to the labor dispute; that is, issues that are necessarily
involved in the dispute itself, and not just to that ascribed in the Notice of Strike or otherwise
submitted to him for resolution
A "labor dispute" is defined under Article 212(l) of the Labor Code as follows:
ART. 212. Definitions. – x xxx(l) "Labor dispute" includes any controversy or matter concerning
terms or conditions of employment or the association or representation of persons in negotiating,
fixing, maintaining, changing or arranging the terms and conditions of employment, regardless
of whether the disputants stand in the proximate relation of employer and employee.
In this case, there was a dispute, an unresolved issue on several matters, between the
union and the company in the course of the negotiations for a new CBA. Among the unsettled
issues was the matter of compensation.
Thus, the labor dispute between the union and the company concerned the unresolved
matters between the parties in relation to their negotiations for a new CBA. The power of the
Secretary of Labor and Employment to assume jurisdiction over this dispute includes and extends
to all questions and controversies arising from the said dispute, such as, but not limited to the
union’s allegation of bad faith bargaining. It also includes and extends to the various unresolved
provisions of the new CBA such as compensation, particularly the matter of annual wage increase
or yearly lump sum payment in lieu of such wage increase, whether or not there was deadlock in
the negotiations.
Article 263(g) is both an extraordinary and a preemptive power to address an

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

WATER EMPLOYEES UNION (MWEU)
G.R. No. 201595, January 25, 2016
Facts
Petitioner was a member of the Manila Water Employees Union (MWEU), a Department of Labor
and Employment (DOLE)-registered labor organization consisting of rank-and-file employees
within Manila Water Company (MWC). The respondents herein named – Eduardo B. Borela
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(Borela), Buenaventura Quebral (Quebral), Elizabeth Cometa (Cometa), Alejandro Torres
(Torres), Amorsolo Tierra (Tierra), Soledad Yeban (Yeban), Luis Rendon (Rendon), Virginia
Apilado (Apilado), Teresita Bolo (Bolo), Rogelio Barbero (Barbero), Jose Casañas (Casañas),
Alfredo Maga (Maga), Emilio Fernandez (Fernandez), Rosita Buenaventura (Buenaventura),
Almenio Cancino (Cancino), Adela Imana, Mario Mancenido (Mancenido), Wilfredo Mandilag
(Mandilag), Rolando Manlapaz (Manlapaz), Efren Montemayor (Montemayor), Nelson
Pagulayan, Carlos Villa, Ric Briones, and Chito Bernardo – were MWEU officers during the period
material to this Petition, with Borela as President and Chairman of the MWEU Executive Board,
Quebral as First Vice-President and Treasurer, and Cometa as Secretary.
In an April 11, 2007 letter, MWEU through Cometa informed petitioner that the union was unable
to fully deduct the increased P200.00 union dues from his salary due to lack of the required
December 2006 check-off authorization from him. Petitioner was warned that his failure to pay
the union dues would result in sanctions upon him. Quebral informed Borela, through a May 2,
2007 letter, that for such failure to pay the union dues, petitioner and several others violated
Section 1(g), Article IX of the MWEU’s Constitution and By-Laws. In turn, Borela referred the
charge to the MWEU grievance committee for investigation.
On May 21, 2007, a notice of hearing was sent to petitioner, who attended the scheduled hearing.
On June 6, 2007, the MWEU grievance committee recommended that petitioner be suspended
for 30 days.
In a June 20, 2007 letter, Borela informed petitioner and his corespondents of the MWEU
Executive Board’s "unanimous approval"of the grievance committee’s recommendation and
imposition upon them of a penalty of 30 days suspension, effective June 25, 2007.
In a June 26, 2007 letter to Borela, petitioner and his co-respondents took exception to the
imposition and indicated their intention to appeal the same to the General Membership
Assembly in accordance with Section 2(g), Article V of the union’s Constitution and By-Laws,
which grants them the right to appeal any arbitrary resolution, policy and rule promulgated by
the Executive Board to the General Membership Assembly. In a June 28, 2007 reply, Borela denied
petitioner’s appeal, stating that the prescribed period for appeal had expired.
Petitioner and his co-respondents sent another letter on July 4, 2007, reiterating their arguments
and demanding that the General Membership Assembly be convened in order that their appeal
could be taken up. The letter was not acted upon.
Petitioner was once more charged with non-payment of union dues, and was required to attend
an August 3, 2007 hearing. Thereafter, petitioner was again penalized with a 30-day suspension
through an August 21, 2007 letter by Borela informing petitioner of the Executive Board’s
"unanimous approval" of the grievance committee recommendation to suspend him effective
August 24, 2007, to which he submitted a written reply, invoking his right to appeal through the
convening of the General Membership Assembly. However, the respondents did not act on
petitioner’s plea.
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Meanwhile, MWEU scheduled an election of officers on September 14, 2007. Petitioner filed his
certificate of candidacy for Vice-President, but he was disqualified for not being a member in
good standing on account of his suspension.
On October 2, 2007, petitioner was charged with non-payment of union dues for the third time.
He did not attend the scheduled hearing. This time, he was meted the penalty of expulsion from
the union, per "unanimous approval" of the members of the Executive Board. His pleas for an
appeal to the General Membership Assembly were once more unheeded.
In 2008, during the freedom period and negotiations for a new collective bargaining agreement
(CBA) with MWC, petitioner joined another union, the Workers Association for Transparency,
Empowerment and Reform, All-Filipino Workers Confederation (WATER-AFWC). He was
elected union President. Other MWEU members were inclined to join WATER-AFWC, but
MWEU director Torres threatened that they would not get benefits from the new CBA.
The MWEU leadership submitted a proposed CBA which contained provisions to the effect that
in the event of retrenchment, non-MWEU members shall be removed first, and that upon the
signing of the CBA, only MWEU members shall receive a signing bonus.
Issue
Whether or not the respondents are guilty of unfair labor practice.
Ruling
It is true that some of petitioner’s causes of action constitute intra-union cases cognizable by the
BLR under Article 226 of the Labor Code.
An intra-union dispute refers to any conflict between and among union members, including
grievances arising from any violation of the rights and conditions of membership, violation of or
disagreement over any provision of the union’s constitution and by-laws, or disputes arising from
chartering or disaffiliation of the union. Sections 1 and 2, Rule XI of Department Order No. 40-
03, Series of 2003 of the DOLE enumerate the following circumstances as inter/intra-union
disputes x x x.
However, petitioner’s charge of unfair labor practices falls within the original and exclusive
jurisdiction of the Labor Arbiters, pursuant to Article 217 of the Labor Code. In addition, Article
247 of the same Code provides that "the civil aspects of all cases involving unfair labor practices,
which may include claims for actual, moral, exemplary and other forms of damages, attorney’s
fees and other affirmative relief, shall be under the jurisdiction of the Labor Arbiters."
Unfair labor practices may be committed both by the employer under Article 248 and by labor
organizations under Article 249 of the Labor Code.
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Petitioner contends that respondents committed acts constituting unfair labor practices – which
charge was particularly laid out in his pleadings, but that the Labor Arbiter, the NLRC, and the
CA ignored it and simply dismissed his complaint on the ground that his causes of action were
intra- or inter-union in nature. Specifically, petitioner claims that he was suspended and expelled
from MWEU illegally as a result of the denial of his right to appeal his case to the general
membership assembly in accordance with the union’s constitution and by-laws. On the other
hand, respondents counter that such charge is intra-union in nature, and that petitioner lost his
right to appeal when he failed to petition to convene the general assembly through the required
signature of 30% of the union membership in good standing pursuant to Article VI, Section 2(a)
of MWEU’s Constitution and By-Laws or by a petition of the majority of the general membership
in good standing under Article VI, Section 3.
Under Article VI, Section 2(a) of MWEU’s Constitution and By-Laws, the general membership
assembly has the power to "review revise modify affirm or repeal [sic] resolution and decision of
the Executive Board and/or committees upon petition of thirty percent (30%) of the Union in
good standing," and under Section 2(d), to "revise, modify, affirm or reverse all expulsion cases."
Under Section 3 of the same Article, "[t]he decision of the Executive Board may be appealed to
the General Membership which by a simple majority vote reverse the decision of said body. If the
general Assembly is not in session the decision of the Executive Board may be reversed by a
petition of the majority of the general membership in good standing." And, in Article X, Section
5, "[a]ny dismissed and/or expelled member shall have the right to appeal to the Executive Board
within seven days from notice of said dismissal and/or expulsion which, in [turn] shall be referred
to the General membership assembly. In case of an appeal, a simple majority of the decision of
the Executive Board is imperative. The same shall be approved/disapproved by a majority vote of
the general membership assembly in a meeting duly called for the purpose."
In regard to suspension of a union member, MWEU’s Constitution and By-Laws provides under
Article X, Section 4 thereof that "[a]ny suspended member shall have the right to appeal within
three (3) working days from the date of notice of said suspension. In case of an appeal a simple
majority of vote of the Executive Board shall be necessary to nullify the suspension."
Thus, when an MWEU member is suspended, he is given the right to appeal such suspension
within three working days from the date of notice of said suspension, which appeal the MWEU
Executive Board is obligated to act upon by a simple majority vote. When the penalty imposed is
expulsion, the expelled member is given seven days from notice of said dismissal and/or
expulsion to appeal to the Executive Board, which is required to act by a simple majority vote of
its members. The Board’s decision shall then be approved/ disapproved by a majority vote of the
general membership assembly in a meeting duly called for the purpose.
The documentary evidence is clear that when petitioner received Borela’s August 21, 2007 letter
informing him of the Executive Board’s unanimous approval of the grievance committee
recommendation to suspend him for the second time effective August 24, 2007, he immediately
and timely filed a written appeal. However, the Executive Board – then consisting of respondents
Borela, Tierra, Bolo, Casañas, Fernandez, Rendon, Montemayor, Torres, Quebral, Pagulayan,
Cancino, Maga, Cometa, Mancenido, and two others who are not respondents herein – did not
act thereon. Then again, when petitioner was charged for the third time and meted the penalty
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of expulsion from MWEU by the unanimous vote of the Executive Board, his timely appeal was
again not acted upon by said board – this time consisting of respondents Borela, Quebral, Tierra,
Imana, Rendon, Yeban, Cancino, Torres, Montemayor, Mancenido, Mandilag, Fernandez,
Buenaventura, Apilado, Maga, Barbero, Cometa, Bolo, and Manlapaz.
Thus, contrary to respondents’ argument that petitioner lost his right to appeal when he failed
to petition to convene the general assembly through the required signature of 30% of the union
membership in good standing pursuant to Article VI, Section 2(a) of MWEU’s Constitution and
By-Laws or by a petition of the majority of the general membership in good standing under
Article VI, Section 3, this Court finds that petitioner was illegally suspended for the second time
and thereafter unlawfully expelled from MWEU due to respondents’ failure to act on his written
appeals. The required petition to convene the general assembly through the required signature
of 30% (under Article VI, Section 2[a]) or majority (under Article VI, Section 3) of the union
membership does not apply in petitioner’s case; the Executive Board must first act on his two
appeals before the matter could properly be referred to the general membership. Because
respondents did not act on his two appeals, petitioner was unceremoniously suspended,
disqualified and deprived of his right to run for the position of MWEU Vice-President in the
September 14, 2007 election of officers, expelled from MWEU, and forced to join another union,
WATER-AFWC. For these, respondents are guilty of unfair labor practices under Article 249 (a)
and (b) – that is, violation of petitioner’s right to self-organization, unlawful discrimination, and
illegal termination of his union membership – which case falls within the original and exclusive
jurisdiction of the Labor Arbiters, in accordance with Article 217 of the Labor Code.
The primary concept of unfair labor practices is stated in Article 247 of the Labor Code, which
states:
Article 247. Concept of unfair labor practice and procedure for prosecution thereof. –– Unfair
labor practices violate the constitutional right of workers and employees to self-organization, are
inimical to the legitimate interests of both labor and management, including their right to
bargain collectively and otherwise deal with each other in an atmosphere of freedom and mutual
respect, disrupt industrial peace and hinder the promotion of healthy and stable labor-
management relations.
"In essence, [unfair labor practice] relates to the commission of acts that transgress the workers’
right to organize." "[A]ll the prohibited acts constituting unfair labor practice in essence relate to
the workers’ right to self-organization." "[T]he term unfair labor practice refers to that gamut of
offenses defined in the Labor Code which, at their core, violates the constitutional right of
workers and employees to self-organization."
Guaranteed to all employees or workers is the ‘right to self-organization and to form, join, or
assist labor organizations of their own choosing for purposes of collective bargaining.’ This is
made plain by no less than three provisions of the Labor Code of the Philippines. Article 243 of
the Code provides as follows:
ART. 243. Coverage and employees’ right to self-organization. — All persons employed in
commercial, industrial and agricultural enterprises and in religious, charitable, medical, or
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educational institutions whether operating for profit or not, shall have the right to self-
organization and to form, join, or assist labor organizations of their own choosing for purposes
or collective bargaining. Ambulant, intermittent and itinerant workers, self-employed people,
rural workers and those without any definite employers may form labor organizations for their
mutual aid and protection.
Article 248 (a) declares it to be an unfair labor practice for an employer, among others, to
‘interfere with, restrain or coerce employees in the exercise of their right to self-organization.’
Similarly, Article 249 (a) makes it an unfair labor practice for a labor organization to ‘restrain or
coerce employees in the exercise of their rights to self-organization . . .’
xxxx
The right of self-organization includes the right to organize or affiliate with a labor union or
determine which of two or more unions in an establishment to join, and to engage in concerted
activities with co-workers for purposes of collective bargaining through representatives of their
own choosing, or for their mutual aid and protection, i.e., the protection, promotion, or
enhancement of their rights and interests.
As members of the governing board of MWEU, respondents are presumed to know, observe, and
apply the union’s constitution and by-laws. Thus, their repeated violations thereof and their
disregard of petitioner’s rights as a union member – their inaction on his two appeals which
resulted in his suspension, disqualification from running as MWEU officer, and subsequent
expulsion without being accorded the full benefits of due process – connote willfulness and bad
faith, a gross disregard of his rights thus causing untold suffering, oppression and, ultimately,
ostracism from MWEU. "Bad faith implies breach of faith and willful failure to respond to plain
and well understood obligation." This warrants an award of moral damages in the amount of
P100,000.00. Moreover, the Civil Code provides:
Art. 32. Any public officer or employee, or any private individual, who directly or indirectly
obstructs, defeats, violates or in any manner impedes or impairs any of the following rights and
liberties of another person shall be liable to the latter for damages:
xxxx
(12) The right to become a member of associations or societies for purposes not contrary to law;
In Vital-Gozon v. Court of Appeals, this Court declared, as follows:
Moral damages include physical suffering, mental anguish, fright, serious anxiety, besmirched
reputation, wounded feelings, moral shock, social humiliation, and similar injury. They may be
recovered if they are the proximate result of the defendant’s wrongful act or omission. The
instances when moral damages may be recovered are, inter alia, ‘acts and actions referred to in
Articles 21, 26, 27, 28, 29, 30, 32, 34 and 35 of the Civil Code,’ which, in turn, are found in the
Chapter on Human Relations of the Preliminary Title of the Civil Code. x x x
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Under the circumstances, an award of exemplary damages in the amount of P50,000.00, as prayed
for, is likewise proper. "Exemplary damages are designed to permit the courts to mould behavior
that has socially deleterious consequences, and their imposition is required by public policy to
suppress the wanton acts of the offender." This should prevent respondents from repeating their
mistakes, which proved costly for petitioner.
Under Article 2229 of the Civil Code, ‘[e]xemplary or corrective damages are imposed, by way of
example or correction for the public good, in addition to the moral, temperate, liquidated or
compensatory damages.’ As this court has stated in the past: ‘Exemplary damages are designed
by our civil law to permit the courts to reshape behaviour that is socially deleterious in its
consequence by creating negative incentives or deterrents against such behaviour.’
Finally, petitioner is also entitled to attorney’s fees equivalent to 10 per cent (10%) of the total
award. The unjustified acts of respondents clearly compelled him to institute an action primarily
to vindicate his rights and protect his interest. Indeed, when an employee is forced to litigate and
incur expenses to protect his rights and interest, he is entitled to an award of attorney’s fees.
PROCEDURE AND JURISDICTION

ALEJANDRO CEPRADO, JR., RONILO SEBIAL, NICANOR OLIVAR, ALVIN VILLEGAS, AND
EDGAR MANATO v. NATIONWIDE SECURITY AND ALLIED SERVICES, INC/ROMEO T.
NOLASCO
G.R. No. 175198 September 23, 2015, LEONEN, J.
Motions for reconsideration not served on the other party are pro forma and shall
not be acted upon. It will also not toll the filing of an appeal, and the judgment sought to
be reconsidered becomes final and executory upon the lapse of the reglementary period.
Facts:
In 2000, the Office of the Regional Director of DOLE Region IV conducted
a regular inspection of Uniden Philippines’ Cabuyao plant pursuant to Art. 128 (b) of
the Labor Code. It found that both Uniden and Nationwide Security committed
multiple violations of labor standard laws. The Regional Director thereafter ordered
Uniden and Nationwide Security to pay the security personnel their wage differentials
and other benefits.
Respondents filed a motion for reconsideration before the Regional

Director but did not serve a copy to petitioners. Petitioners appealed to the SOLE
through a letter of appeal.
Issue:
Whether the decision of the Regional Director became final and executory
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Ruling:
Yes. Rule II, Section 19 of the Rules on the Disposition of Labor Standards
Cases in the Regional Offices allows an aggrieved party to file a motion for
reconsideration of the Order of the Regional Office. Nevertheless, Sec. 2, Rule 37 of
the Rules of Court, which applies suppletorily to labor standards cases, requires that a
written motion must be served upon the adverse party. Respondents failed to
furnish a copy of their motion for reconsideration to petitioners. Hence, their pro
forma motion did not toll the filing of an appeal, and the decision of the Regional
Director became final and executory after the lapse of the reglementary period.
Petitioners are equally guilty of failure to comply with due process. Appeal
is a purely statutory privilege that "may be exercised only in the manner and in
accordance with the provisions of law.” Here, Rule IV, Section 4 of the Rules on the
Disposition of Labor Standards Cases in the Regional Offices requires that the appeal
shall be accompanied by a Memorandum of Appeal, not just a mere letter of appeal. In
any case, the original order of the Regional Director still stands because the SOLE
likewise did not acquire jurisdiction over the appeal of Petitioners.
MARIAN NAVARETTE v. MANILA INTERNATIONAL FREIGHT FORWARDERS INC.

G.R. No. 200580, February 11, 2015, VELASCO, J.
The ruling on the legality of MBI and MIFFI’s contractual relationship, being one of
permissible job contracting, can no longer be disturbed. All the requisites of res judicata by
conclusiveness of judgment are present.
Facts:
Manila International Freight Forwarders Inc. (MIFFI) entered into a

contract with MBI Millennium Experts, Inc. (MBI) for the provision of production
of workers and technical personnel for MIFFI. MBI then hired Navarette and
assigned her as temporary project employee of MIFFI. She was hired for a fixed
period of three months, used MIFFI’s equipment, and was supervised by its
employees. Subsequent contracts were entered into between petitioner and
respondent transferring the former to other departments. Petitioner and other
employees filed a petition for inspection against MIFFI, MCLI, and MBI with the
DOLE which found that there was indeed violations of certain labor laws. MBI then
called petitioner and other employees to sign a document purporting to be the
minutes of the meeting which turns out to be erroneous since it was not the
agreement they entered into. This angered petitioner causing her to throw the
documents. That actuation, to MBI, constituted serious misconduct causing it to
terminate petitioner.
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Issue:
Whether Petitioner’s dismissal is illegal
Ruling:
Yes, as to MIFFI but not as to MBI. Manlangit, et al. v. MIFFI, et al., (G.R. No. 196175,
August 31, 2011) involved a complaint for regularization, illegal deduction, wage
distortion and attorney’s fees, later amended to include illegal dismissal, filed by
Gabriel Manlangit and 36 other workers against MIFFI, MLCI, and MBI. Like Navarette,
Manlangit, et al. were also hired by MBI and assigned to MIFFI. Since all the requisites of
res judicata by conclusiveness of judgment are present, the Court applies Manlangit
to the instant petition.
With the finding that MBI is a legitimate labor contractor and is the employer
of petitioner Navarette, the Court cannot, however, pass upon the issue of whether
MBI is guilty of illegal dismissal. The antecedents show that while the MBI is a party
respondent in NLRC-NCR Case No. 00- 10-11705-03 together with respondents MIFFI
and MLCI, the ruling of the LA is to dismiss petitioner’s complaint upon a finding of a
valid dismissal grounded on serious misconduct. Petitioner appealed said adverse
decision to the NLRC against the MBI and herein respondents in NLRC CA No. 040934-
04, and the NLRC found MIFFI and MLCI liable but not MBI. MBI did not join
said respondents since it was not adjudged liable by the NLRC. On the other hand,
petitioner did not file a petition with the CA questioning the NLRC decision declaring
MIFFI and MLCI liable but absolving MBI. Thus, the NLRC decision dated February 27,
2004 excluding MBI from any liability to petitioner became final when petitioner no
longer challenged said ruling before the CA.
ISLAND OVERSEAS TRANSPORT CORPORATION v. ARMANDO M. BEJA

G.R. No. 203115, December 7, 2015, DEL CASTILLO, J.
The Court is not precluded to examine and admit evidence, even if presented only
on appeal before the NLRC, if only to dispense substantial justice.
Facts:
Beja was employed by Island Overseas as a Second Assistant Engineer for Vessel
M/V Atsuta for nine months. During the course of his employment, he suffered
continuous knee injury which caused his medical repatriation. He contended that the
injury was due to an accident while performing his duty. He filed a complaint with
the LA contending that the CBA entered into by the parties stipulates that a seafarer
who suffers permanent disability while in the performance of function as an employee
shall be entitled to permanent disability benefits. This contention was not disputed
by Island Overseas before the LA, but only on appeal to the NLRC. Beja contended that
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since it was not timely disputed, Island Overseas shall abide the CBA.
Issue:
Whether Island Overseas, on appeal with the NLRC, is estopped from

disputing Beja’s contention
Ruling:
No. Island Overseas did not dispute before the LA the fact that Beja met an
accident while performing his duties. It 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.
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.
CLUB FILIPINO, INC. and ATTY. ROBERTO F. DE LEON v. BENJAMIN BAUTISTA, et al.
Although the cases have substantially identical parties and subject matter of the
dismissal of respondents, the cause of action for declaration of illegal strike and the
cause of action for illegal dismissal are different.
Facts:
CLUFEA, a union, had made several demands on Club Filipino, Inc. to

negotiate a new agreement. However, for failure to come up with an agreement,
CLUFEA staged a strike on the ground of bargaining deadlock. Club Filipino Inc.,
filed before the NLRC a petition to declare the strike illegal. The LA declared CLUFEA’s
strike "procedurally infirm." The appeal filed was denied. On appeal before the CA, the
latter held that the LA gravely abused his discretion in declaring CLUFEA’s strike illegal.
Club Filipino, Inc. filed a Petition for Review on Certiorari with the SC which agreed
with the CA’s decision. Club Filipino, Inc. filed a Motion for Reconsideration, which the
court denied with finality. Limpingco and Fajardo entered its appearance for Club
Filipino, Inc. and simultaneously filed a Motion for Leave to file and admit the attached
Supplemental Motion for Reconsideration. Club Filipino, Inc. filed its Motion for Leave
to File and Admit further Pleading/Motion, alleging that the court failed to consider
its Supplemental Motion for Reconsideration. Hence, Club Filipino, Inc. prayed that
the court resolve the Supplemental Motion for Reconsideration.
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Issue:
Whether the NLRC’s Decision on the illegal dismissal case was res judicata on
the illegal strike case
Ruling:
No. The first three elements of res judicata are present herein, (1) the
judgment sought to bar the new action must be final; (2) the decision must have
been rendered by a court having jurisdiction over the subject matter and the
parties; and (3) the disposition of the case must be a judgment on the merits. The
NLRC’s judgment on the illegal dismissal case is already final with respondents not
having appealed the Decision within the reglementary period. The LA, who has the
exclusive original jurisdiction to hear, try, and decide illegal dismissal cases, decided
the case. The LA’s Decision was heard on appeal by the NLRC, which has exclusive
appellate jurisdiction over all cases decided by LAs. The LA’s judgment was on the
merits. Based on the facts presented by the parties, the LA ruled that Club Filipino,
Inc.’s retrenchment program was valid. The fourth element of res judicata however, is
absent.
There is no res judicata in this case. Club Filipino, Inc. filed the illegal
strike because members of CLUFEA allegedly disrupted Club Filipino, Inc.’s business
when they staged a strike without complying with the requirements of the law. For
their part, respondents filed the illegal dismissal case to question the validity of
petitioner Club Filipino, Inc.’s retrenchment program.
J. BETIA v. MA. JOPETTE M. REBESENCIO, et al.

Forum non conveniens relates to forum, not to the choice of governing law. That
forum non conveniens may ultimately result in the application of foreign law is merely
an incident of its application.
Facts:
Rebesencio, et al. were hired by Saudia as Temporary Flight Attendants.
Respondents continued their employment with Saudia until they were separated
from service on various dates in 2006. Respondents contended that the termination
of their employment was illegal as it was made solely because they were pregnant.
Saudia anchored its disapproval of respondents' maternity leaves and demand for
their resignation on its Unified Contract which provides that the employment of a
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Flight Attendant who becomes pregnant is rendered void. Respondents filed a
Complaint against Saudia and its officers for illegal dismissal. Saudia assailed the
jurisdiction of the LA. It claimed that all the determining points of contact referred
to foreign law and insisted that the Complaint ought to be dismissed on the ground
of forum non conveniens. It added that respondents had no cause of action as they
resigned voluntarily.
Issue:
Whether the LA and the NLRC may exercise jurisdiction over Saudi
Arabian Airlines
Ruling:
Yes. Forum non conveniens finds no application and does not operate to
divest Philippine tribunals of jurisdiction and to require the application of foreign
law. As the present dispute relates to the illegal termination of respondents'
employment, this case is a matter of public interest and public policy. Consistent
with law and jurisprudence, Philippine laws properly govern this case. Even if we were
to assume that it is the laws of Saudi Arabia which should apply, it does not follow
that Philippine tribunals should refrain from exercising jurisdiction. To recall our
pronouncements in Puyat (G.R. No. 141536, February 26, 2001), as well as in Bank of
America, NT&SA (G.R. No. 120135, March 31, 2003), it is not so much the mere
applicability of foreign law which calls into operation forum non conveniens. What
justifies a court's desistance from exercising jurisdiction is
"[t]he difficulty of ascertaining foreign law" or the inability of a

"Philippine Court to make an intelligent decision as to the law[.]"
Even a further consideration of the applicability of forum non conveniens on

the incidental matter of the law governing respondents' relation with Saudia
concludes that it is improper for Philippine tribunals to divest themselves of
jurisdiction. As the intent to relinquish must concur with the overt act of
relinquishment, the acts of the employee before and after the alleged resignation
must be considered in determining whether he or she intended to sever his or her
employment.
ERIC GODFREY STANLEY LIVESEY vs. BINSWANGER PHILIPPINES, INC. AND KEITH
ELLIOT
G.R. No. 177493. March 19, 2014
J. Brion
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Piercing the veil of corporate fiction is an equitable doctrine developed to address
situations where the separate corporate personality of a corporation is abused or used for wrongful
purposes. Under the doctrine, the corporate existence may be disregarded where the entity is formed
or used for non-legitimate purposes, such as to evade a just and due obligation, or to justify a wrong,
to shield or perpetrate fraud or to carry out similar or inequitable considerations, other unjustifiable
aims or intentions, in which case, the fiction will be disregarded and the individuals composing it
and the two corporations will be treated as identical.
Facts:
Petitioner Eric Godfrey Stanley Livesey filed a complaint for illegal dismissal with money
claims against CBB Philippines Strategic Property Services, Inc. ( CBB) and Paul Dwyer. CBB
was a domestic corporation engaged in real estate brokerage and Dwyer was its President.
Livesey alleged that on April 12, 2001, CBB hired him as Director and Head of Business Space
Development. Allegedly, despite the several deals for CBB he drew up, CBB failed to pay him a
significant portion of his salary. For this reason, he was compelled to resign on December 18,
2001. He claimed CBB owed him US$23,000.00 in unpaid salaries.
The LA found that Livesey had been illegally dismissed. Thereafter, the parties entered into a
compromise agreement which LA approved. Under the agreement, Livesey was to receive
US$31,000.00 in full satisfaction of LA’s decision, broken down into US$13,000.00 to be paid by
CBB to Livesey; US$9,000.00 on or before June 30, 2003; and US$9,000.00 on or before September
30, 2003. CBB paid Livesey the initial amount of US$13,000.00, but not the next two installments
as the company ceased operations. Livesey moved for the issuance of a writ of execution. LA
granted the writ, but it was not enforced. Livesey then filed a motion for the issuance of an alias
writ of execution, alleging that in the process of serving respondents the writ, he learned that
respondents, in a clear and willful attempt to avoid their liabilities to complainant have organized
another corporation, Binswanger Philippines, Inc. He claimed that there
was evidence showing that CBB and Binswanger Philippines, Inc. (Binswanger) are one and the
same corporation, pointing out that CBB stands for Chesterton Blumenauer Binswanger.
Invoking the doctrine of piercing the veil of corporate fiction, Livesey prayed that an alias writ of
execution be issued against respondents Binswanger and Keith Elliot, CBB’s former President,
and now Binswanger’s President and Chief Executive Officer (CEO).
Issue:
Whether or not the doctrine of piercing the veil of corporate fiction applies to the case
Ruling:
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It has long been settled that the law vests a corporation with a personality distinct and
separate from its stockholders or members. In the same vein, a corporation, by legal fiction and
convenience, is an entity shielded by a protective mantle and imbued by law with a character
alien to the persons comprising it. Nonetheless, the shield is not at all times impenetrable
and cannot be extended to a point beyond its reason and policy. Circumstances might deny a
claim for corporate personality, under the “doctrine of piercing the veil of corporate fiction.”
Piercing the veil of corporate fiction is an equitable doctrine developed to address situations
where the separate corporate personality of a corporation is abused or used for wrongful
purposes. Under the doctrine, the corporate existence may be disregarded where the entity is
formed or used for non-legitimate purposes, such as to evade a just and due obligation, or to
justify a wrong, to shield or perpetrate fraud or to carry out similar or inequitable considerations,
other unjustifiable aims or intentions, in which case, the fiction will be disregarded and the
individuals composing it and the two corporations will be treated as identical.
In the present case, we see an indubitable link between CBB’s closure and Binswanger’s
incorporation. CBB ceased to exist only in name; it re-emerged in the person of Binswanger for
an urgent purpose — to avoid payment by CBB of the last two installments of its monetary
obligation to Livesey, as well as its other financial liabilities. Freed of CBB’s liabilities, especially
that owing to Livesey, Binswanger can continue, as it did continue, CBB’s real estate brokerage
business.
THE NATIONAL WAGES AND PRODUCTIVITY COMMISSION (NWPC), ET AL. vs. THE
ALLIANCE OF PROGESSIVE LABOR (APL), ET AL.
G.R. No. 150326. March 12, 2014
J. Bersamin
The NWPC had the authority to prescribe the rules and guidelines for the determination of
the minimum wage and productivity measures, and the RTWPB-NCR had the power to issue wage
orders. The RTWPB has also the power to issue exemptions from the application of the wage orders
subject to the guidelines issued by the NWPC..
Facts:
On June 9, 1989, Republic Act No. 6727 was enacted into law. In order to rationalize wages
throughout the Philippines, Republic Act No. 6727 created the NWPC and the RTWPBs of the
different regions.
Consequently, the RTWPB-NCR issued Wage Order No. NCR-07 on October 14, 1999 imposing
an increase of P25.50/day on the wages of all private sector workers and employees in the NCR
and pegging the minimum wage rate in the NCR at P223.50/day. However, Section 2 and Section
9 of Wage Order No. NCR-07 exempted certain sectors and industries from its coverage.
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Feeling aggrieved by their non-coverage by the wage adjustment, the Alliance of Progressive
Labor (APL) and the Tunay na Nagkakaisang Manggagawa sa Royal (TNMR) filed an appeal with
the NWPC assailing Section 2(A) and Section 9(2) of Wage Order No. NCR-07. They contended
that neither the NWPC nor the RTWPB-NCR had the authority to expand the non-coverage and
exemptible categories under the wage order; hence, the assailed sections of the wage order should
be void.
The NWPC upheld the validity of Section 2(A) and Section 9(2) of Wage Order No. NCR-07. The
CA upheld that the powers and functions of the NWPC and RTWPB-NCR as set forth in Republic
Act No. 6727 did not include the power to grant additional exemptions from the adjusted
minimum wage. Hence, this petition.
Issue:
1. Whether or not the RTWPB-NCR had the authority to provide additional exemptions
from the minimum wage adjustments embodied in Wage Order No. NCR-07
2. Whether or not Wage Order No. NCR-07 complied with the requirements set by NWPC
Guidelines No. 01, Series of 1996
Ruling:
Indisputably, the NWPC had the authority to prescribe the rules and guidelines for the
determination of the minimum wage and productivity measures, and the RTWPB-NCR had the
power to issue wage orders.
Pursuant to its statutorily defined functions, the NWPC promulgated NWPC Guidelines No. 001-
95 (Revised Rules of Procedure on Minimum Wage Fixing) to govern the proceedings in the
NWPC and the RTWPBs in the fixing of minimum wage rates by region, province and industry.
Section 1 of Rule VIII of NWPC Guidelines No. 001-95 recognized the power of the RTWPBs to
issue exemptions from the application of the wage orders subject to the guidelines issued by the
NWPC.
The NWPC also issued NWPC Guidelines No. 01, Series of 1996, to fix the rules on the exemption
from compliance with the wage increases prescribed by the RTWPBs.
Under the guidelines, the RTWPBs could issue exemptions from the application of the wage
orders as long as the exemptions complied with the rules of the NWPC. In its rules, the NWPC
enumerated four exemptible establishments, but the list was not exclusive. The RTWPBs had the
authority to include in the wage orders establishments that belonged to, or to exclude from the
four enumerated exemptible categories. If the exempted category was one of the listed ones, the
RTWPB issuing the wage order must see to it that the requisites stated in Section 3 and Section
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4 of the NWPC Guidelines No. 01, Series of 1996 were complied with before granting fully or
partially the application of an establishment seeking to avail of the exemption.
On the other hand, if the exemption was outside of the four exemptible categories, like here, the
exemptible category should be: (1) in accord with the rationale for exemption; (2)
reviewed/approved by the NWPC; and (3) upon review, the RTWPB issuing the wage order must
submit a strong and justifiable reason or reasons for the inclusion of such category. It is the
compliance with the second requisite that is at issue here.
The wage orders issued by the RTWPBs could be reviewed by the NWPC motu proprio or upon
appeal. Any party aggrieved by the wage order issued by the RTWPBs could appeal. Here, APL
and TNMR appealed on October 26, 1999, submitting to the NWPC precisely the issue of the
validity of the Section 2(A) and Section 9(2) of Wage Order No. NCR-07. The NWPC, in arriving
at its decision, weighed the arguments of the parties and ruled that the RTWPB-NCR had
substantial and justifiable reasons in exempting the sectors and establishments enumerated in
Section 2(A) and Section 9(2) based on the public hearings and consultations, meetings,
social-economic data and informations gathered prior to the issuance of Wage Order No.
NCR-07. The very fact that the validity of the assailed sections of Wage Order No. NCR-07
had been already passed upon and upheld by the NWPC meant that the NWPC had
already given the wage order its necessary legal imprimatur. Accordingly, the requisite
approval or review was complied with.
DIAMOND TAXI and/or BRYAN ONG vs. FELIPE LLAMAS, JR.

G.R. No. 190724, March 12, 2014
J. BRION
The respondent’s failure to attach the required certification of non-forum shopping does
not render the immediate dismissal of the petition. Llamas adequately explained, in his motion for
reconsideration, the inadvertence and presented a clear justifiable ground to warrant the relaxation
of the rules. The SC ruled that indeed, while the requirement as to the certificate of non-forum
shopping is mandatory, this requirement should not, however, be interpreted too literally and thus
defeat the objective of preventing the undesirable practice of forum-shopping.
Facts:
Felipe Llamas, Jr. (Llamas) worked as a taxi driver for petitioner Diamond Taxi, owned and
operated by petitioner Bryan Ong. Llamas filed before the Labor Arbiter (LA) a complaint for
illegal dismissal against the petitioners, however, Llamas failed to seasonably file his position
paper. LA held that Llamas was not dismissed, legally or illegally, rather, the LA declared that
Llamas left his job and had been absent for several days without leave.
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In his position paper, Llamas claimed that he failed to seasonably file his position paper because
his previous counsel, hence, he was forced to secure the services of another counsel in order to
comply with the LA’s directive. On the merits of his complaint, Llamas alleged that he had a
misunderstanding with Aljuver Ong, Bryan’s brother and operations manager of Diamond Taxi.
Stating that when he reported for work the next day, Bryan refused to give him the key to his
assigned taxi cab unless he would sign a prepared resignation letter. Thus, he filed the illegal
dismissal complaint.
On January 16, 2006, Llamas filed before the LA a motion for reconsideration of its November 29,
2005 decision. The LA treated Llamas’ motion as an appeal per Section 15, Rule V of the 2005
Revised Rules of Procedure of the NLRC (2005 NLRC Rules) (the governing NLRC Rules of
Procedure at the time Llamas filed his complaint before the LA). The NLRC dismissed for non-
perfection Llamas’ motion for reconsideration treated as an appeal. The NLRC pointed out that
Llamas failed to attach the required certification of non-forum shopping per Section 4, Rule VI
of the 2005 NLRC Rules. Llamas moved to reconsider the May 30, 2006 NLRC resolution; he
attached the required certification of non-forum shopping. When the NLRC denied his motion
for reconsideration in its August 31, 2006 resolution, Llamas filed before the CA a petition for
certiorari. CA reversed and set aside NLRC’s resolution.
Issue:
Whether NLRC committed grave abuse of discretion in dismissing Llamas’ appeal on mere
technicality
Whether Llamas was constructively dismissed.
Ruling:
SC does not find the petition meritorious.
The NLRC committed grave abuse of discretion in dismissing Llamas’ appeal on mere technicality
The requirement for a sworn certification of non-forum shopping was prescribed by the Court
under Revised Circular 28-91, as amended by Administrative Circular No. 04-94, to prohibit and
penalize the evils of forum shopping. Revised Circular 28-91, as amended by Administrative
Circular No. 04-94, requires a sworn certificate of non-forum shopping to be filed with every
petition, complaint, application or other initiatory pleading filed before the Court, the CA, or the
different divisions thereof, or any other court, tribunal or agency.
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Ordinarily, the infirmity in Llamas’ appeal would have been fatal and would have justified an end
to the case. A careful consideration of the circumstances of the case, however, convinces us that
the NLRC should, indeed, have given due course to Llamas’ appeal despite the initial absence of
the required certificate. We note that in his motion for reconsideration of the NLRC’s May 30,
2006 resolution, Llamas attached the required certificate of non-forum shopping.
Llamas adequately explained, in his motion for reconsideration, the inadvertence and presented
a clear justifiable ground to warrant the relaxation of the rules. To recall, Llamas was able to file
his position paper, through his new counsel, only on December 20, 2005. He hired the new
counsel on December 19, 2005 after several repeated, albeit failed, pleas to his former counsel to
submit, on or before October 25, 2005 per the LA’s order, the required position paper. On
November 29, 2005, however, the LA rendered a decision that Llamas and his new counsel
learned and received a copy of only on January 5, 2006. Evidently, the LA’s findings and
conclusions were premised solely on the petitioners’ pleadings and evidence. And, while not the
fault of the LA, Llamas, nevertheless, did not have a meaningful opportunity to present his case,
refute the contents and allegations in the petitioners’ position paper and submit controverting
evidence.
Faced with these circumstances, i.e., Llamas’ subsequent compliance with the certification-
against-forum-shopping requirement; the utter negligence and inattention of Llamas’ former
counsel to his pleas and cause, and his vigilance in immediately securing the services of a new
counsel; Llamas’ filing of his position paper before he learned and received a copy of the LA’s
decision; the absence of a meaningful opportunity for Llamas to present his case before the LA;
and the clear merits of his case (that our subsequent discussion will show), the NLRC should
have relaxed the application of procedural rules in the broader interests of substantial justice.
Indeed, while the requirement as to the certificate of non-forum shopping is mandatory, this
requirement should not, however, be interpreted too literally and thus defeat the objective of
preventing the undesirable practice of forum-shopping.
Llamas did not abandon his work; he was constructively dismissed
"Abandonment is the deliberate and unjustified refusal of an employee to resume his

employment." It is a form of neglect of duty that constitutes just cause for the employer to dismiss
the employee.
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To constitute abandonment of work, two elements must concur: "(1) x x x the employee must
have failed to report for work or must have been absent without valid or justifiable reason; and
(2) x x x there must have been a clear intention [on the part of the employee] to sever the
employer-employee relationship manifested by some overt act." The employee’s absence must be
accompanied by overt acts that unerringly point to the employee’s clear intention to sever the
employment relationship. And, to successfully invoke abandonment, whether as a ground for
dismissing an employee or as a defense, the employer bears the burden of proving the employee’s
unjustified refusal to resume his employment. Mere absence of the employee is not enough.
Guided by these parameters, we agree that the petitioners unerringly failed to prove the alleged
abandonment. They did not present proof of some overt act of Llamas that clearly and
unequivocally shows his intention to abandon his job. We note that, aside from their bare
allegation, the only evidence that the petitioners submitted to prove abandonment were the
photocopy of their attendance logbook and the July 15, 2005 memorandum that they served on
Llamas regarding the July 13, 2005 incident. These pieces of evidence, even when considered
collectively, indeed failed to prove the clear and unequivocal intention, on Llamas’ part, that the
law requires to deem as abandonment Llamas’ absence from work. Quite the contrary, the
petitioners’ July 15, 2005 memorandum, in fact, supports, if not strengthens, Llamas' version of
the events that led to his filing of the complaint, i.e., that as a result of the July 13, 2005 incident,
the petitioners refused to give him the key to his assigned taxi cab unless he would sign the
resignation letter.
The CA, therefore, correctly regarded Llamas as constructively dismissed for the petitioners'
failure to prove the alleged just cause -abandonment - for his dismissal. Constructive dismissal
exists when there is cessation of work because continued employment is rendered impossible,
unreasonable or unlikely. Constructive dismissal is a dismissal in disguise or an act amounting
to dismissal but made to appear as if it were not. In constructive dismissal cases, the employer is,
concededly, charged with the burden of proving that its conduct and action were for valid and
legitimate grounds. The petitioners' persistent refusal to give Llamas the key to his assigned taxi
cab, on the condition that he should first sign the resignation letter, rendered, without doubt,
his continued employment impossible, unreasonable and unlikely; it, thus, constituted
HIJO RESOURCES CORPORATION vs. EPIFANIO P. MEJARES, REMEGIO C. BAL URAN,

JR., DANTE SAYCON, and CECILIO CUCHARO, represented by NAMABDJERA-HRC
G.R. No. 208986, January 13, 2016
FACTS
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Respondents Epifanio P. Mejares, Remegio C. Baluran, Jr., Dante Saycon, and Cecilio Cucharo
(respondents) were among the complainants, represented by their labor union named
"Nagkahiusang Mamumuo ng Bit, Djevon, at Raquilla Farms sa Hijo Resources Corporation"
(NAMABDJERA-HRC), who filed with the NLRC an illegal dismissal case against petitioner Hijo
Resources Corporation (HRC).
Complainants (which include the respondents herein) alleged that petitioner HRC, formerly
known as Hijo Plantation Incorporated (HPI), is the owner of agricultural lands in Madum,
Tagum, Davao del Norte, which were planted primarily with Cavendish bananas. In 2000, HPI
was renamed as HRC. In December 2003, HRC’s application for the conversion of its agricultural
lands into agri-industrial use was approved. The machineries and equipment formerly used by
HPI continued to be utilized by HRC.
Complainants claimed that they were employed by HPI as farm workers in HPI’s plantations
occupying various positions as area harvesters, packing house workers, loaders, or labelers. In
2001, complainants were absorbed by HRC, but they were working under the contractor-growers:
Buenaventura Tano (Bit Farm); Djerame Pausa (Djevon Farm); and Ramon Q. Laurente (Raquilla
Farm). Complainants asserted that these contractor-growers received compensation from HRC
and were under the control of HRC. They further alleged that the contractor-growers did not
have their own capitalization, farm machineries, and equipment.
On 1 July 2007, complainants formed their union NAMABDJERA-HRC, which was later registered
with the Department of Labor and Employment (DOLE). On 24 August 2007, NAMABDJERA-
HRC filed a petition for certification election before the DOLE.
When HRC learned that complainants formed a union, the three contractor-growers filed with
the DOLE a notice of cessation of business operations. In September 2007, complainants were
terminated from their employment on the ground of cessation of business operations by the
contractor-growers of HRC. On 19 September 2007, complainants, represented by
NAMABDJERA-HRC, filed a case for unfair labor practices, illegal dismissal, and illegal
deductions with prayer for moral and exemplary damages and attorney’s fees before the NLRC.
On 19 November 2007, DOLE Med-Arbiter Lito A. Jasa issued an Order, dismissing

NAMABDJERA-HRC’s petition for certification election on the ground that there was no
employer-employee relationship between complainants (members of NAMABDJERA-HRC) and
HRC. Complainants did not appeal the Order of Med-Arbiter Jasa but pursued the illegal
dismissal case they filed.
On 4 January 2008, HRC moved to dismiss the complaint for illegal dismissal. The motion to
dismiss was anchored on the following arguments: (1) Lack of jurisdiction under the principle of
res judicata; and (2) The Order of the Med-Arbiter finding that complainants were not employees
of HRC, which complainants did not appeal, had become final and executory.
ISSUE
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Whether or not the Labor Arbiter, in the illegal dismissal case, is bound by the ruling of the Med-
Arbiter regarding the existence or non-existence of employer-employee relationship between the
parties in the certification election case
RULING
There is no question that the Med-Arbiter has the authority to determine the existence of an
employer-employee relationship between the parties in a petition for certification election. As
held in M.Y. San Biscuits, Inc. v. Acting Sec. Laguesma:
Under Article 226 of the Labor Code, as amended, the Bureau of Labor Relations (BLR), of which
the med-arbiter is an officer, has the following jurisdiction –
"ART. 226. Bureau of Labor Relations. – The Bureau of Labor Relations and the Labor Relations
Division[s] in the regional offices of the Department of Labor shall have original and exclusive
authority to act, at their own initiative or upon request of either or both parties, on all inter-
union and intra-union conflicts, and all disputes, grievances or problems arising from or affecting
labor-management relations in all workplaces whether agricultural or non-agricultural, except
those arising from the implementation or interpretation of collective bargaining agreements
which shall be the subject of grievance procedure and/or voluntary arbitration.
The Bureau shall have fifteen (15) working days to act on labor cases before it, subject to extension
by agreement of the parties." (Italics supplied)
From the foregoing, the BLR has the original and exclusive jurisdiction to inter alia, decide all
disputes, grievances or problems arising from or affecting labor-management relations in all
workplaces whether agricultural or non-agricultural. Necessarily, in the exercise of this
jurisdiction over labor-management relations, the med-arbiter has the authority, original and
exclusive, to determine the existence of an employer-employee relationship between the parties.
Apropos to the present case, once there is a determination as to the existence of such a
relationship, the med-arbiter can then decide the certification election case. As the authority to
determine the employer-employee relationship is necessary and indispensable in the exercise of
jurisdiction by the med-arbiter, his finding thereon may only be reviewed and reversed by the
Secretary of Labor who exercises appellate jurisdiction under Article 259 of the Labor Code, as
amended, which provides –
"ART. 259. Appeal from certification election orders. – Any party to an election may appeal the
order or results of the election as determined by the Med-Arbiter directly to the Secretary of
Labor and Employment on the ground that the rules and regulations or parts thereof established
by the Secretary of Labor and Employment for the conduct of the election have been violated.
Such appeal shall be decided within fifteen (15) calendar days."
In this case, the Med-Arbiter issued an Order dated 19 November 2007, dismissing the
certification election case because of lack of employer-employee relationship between HRC and
the members of the respondent union. The order dismissing the petition was issued after the
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members of the respondent union were terminated from their employment in September 2007,
which led to the filing of the illegal dismissal case before the NLRC on 19 September 2007.
Considering their termination from work, it would have been futile for the members of the
respondent union to appeal the Med-Arbiter’s order in the certification election case to the DOLE
Secretary. Instead, they pursued the illegal dismissal case filed before the NLRC.
The Court is tasked to resolve the issue of whether the Labor Arbiter, in the illegal
dismissal case, is bound by the ruling of the Med-Arbiter regarding the existence or non-
existence of employer-employee relationship between the parties in the certification
election case.
The Court rules in the negative. As found by the Court of Appeals, the facts in this case are
very similar to those in the Sandoval case, which also involved the issue of whether the ruling in
a certification election case on the existence or non-existence of an employer-employee
relationship operates as res judicata in the illegal dismissal case filed before the NLRC. In
Sandoval, the DOLE Undersecretary reversed the finding of the Med-Arbiter in a certification
election case and ruled that there was no employer-employee relationship between the members
of the petitioner union and Sandoval Shipyards, Inc. (SSI), since the former were employees of
the subcontractors. Subsequently, several illegal dismissal cases were filed by some members of
the petitioner union against SSI. Both the Labor Arbiter and the NLRC ruled that there was no
employer-employee relationship between the parties, citing the resolution of the DOLE
Undersecretary in the certification election case. The Court of Appeals reversed the NLRC ruling
and held that the members of the petitioner union were employees of SSI. On appeal, this Court
affirmed the appellate court’s decision and ruled that the Labor Arbiter and the NLRC erred in
relying on the pronouncement of the DOLE Undersecretary that there was no employer-
employee relationship between the parties. The Court cited the ruling in the Manila Golf case
that the decision in a certification election case, by the very nature of that proceeding, does not
foreclose all further dispute between the parties as to the existence or non-existence of an
employer-employee relationship between them.
This case is different from the Chris Garments case cited by the NLRC where the Court held that
the matter of employer-employee relationship has been resolved with finality by the DOLE
Secretary, whose factual findings were not appealed by the losing party. As mentioned earlier,
the Med-Arbiter’s order in this case dismissing the petition for certification election on
the basis of non-existence of employer-employee relationship was issued after the
members of the respondent union were dismissed from their employment. The purpose
of a petition for certification election is to determine which organization will represent the
employees in their collective bargaining with the employer. The respondent union, without
its member-employees, was thus stripped of its personality to challenge the Med-
Arbiter’s decision in the certification election case. Thus, the members of the respondent
union were left with no option but to pursue their illegal dismissal case filed before the
Labor Arbiter. To dismiss the illegal dismissal case filed before the Labor Arbiter on the basis of
the pronouncement of the Med-Arbiter in the certification election case that there was no
employer-employee relationship between the parties, which the respondent union could not
even appeal to the DOLE Secretary because of the dismissal of its members, would be tantamount
to denying due process to the complainants in the illegal dismissal case. This, we cannot allow.
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AMECOS INNOVATIONS, INC. AND ANTONIO F. MATEO vs. ELIZA R. LOPEZ
The Court holds that as between the parties, Article 217 (a) (4) of the Labor Code is
applicable. Said provision bestows upon the Labor Arbiter original and exclusive jurisdiction over
claims for damages arising from 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, petitioners’ claims should have been
referred to the labor tribunals. In this connection, it 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.
At the same time, it cannot be assumed that since the dispute concerns the payment of SSS
premiums, petitioners’ claim should be referred to the Social Security Commission (SSC) pursuant
to Republic Act No. 1161, as amended by Republic Act No. 8282. As far as SSS is concerned, there is
no longer a dispute with respect to petitioners’ accountability to the System; petitioners already
settled their pecuniary obligations to it. Since there is no longer any dispute regarding coverage,
benefits, contributions and penalties to speak of, the SSC need not be unnecessarily dragged into
the picture. Besides, it cannot be made to act as a colleting agency for petitioners’ claims against
[Lopez]; the Social Security Law should not be so interpreted, lest the SSC be swamped with cases
of this sort.
Facts:
In May 2003, Petitioner Amecos Innovations, Inc., a domestic corporation engaged in the
business of selling various products created by its President and herein Co-petitioner Antonio
Mateo, received a subpoena from the Office of the City Prosecutor of Quezon City in connection
with a complaint filed by the Social Security System (SSS) for alleged delinquency in the
remittance of SSS contributions and penalty liabilities in violation of Section 22(a) and 22(d) in
relation to Section 28 of the SSS law, as amended.
Amecos, in its counter-affidavit, asserted that its failure to remit SSS contributions was
attributable to the employee herself herein Respondent Lopez who refused to provide the
company with her SSS Number and to be deducted of her share in the contributions. Amecos
eventually settled its obligations with SSS which led to the withdrawal of the complaint.
Subsequently, Amecos sent a demand letter to Lopez, claiming the amount of PhP
27,791.65 representing her share in the SSS contributions and expenses for processing, which the
latter ignored. This compelled Amecos to institute a civil action for sum of money and damages
against Lopez. In her Answer with Motion to Dismiss, Lopez argues among others that the regular
courts do not have jurisdiction over the case as it arose out of their employer-employee
relationship. The MeTC, RTC and CA all ruled in favor of Lopez and dismissed the action of
Amecos for lack of jurisdiction.
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In the foregoing petition, Amecos contends that the complaint against Lopez is one for
recovery of a sum of money and damages based on Articles 19, 22 and 2154 of the Civil Code and
that its cause of action is based on unjust enrichment. Amecos likewise theorize that the
employer-employee relationship with Lopez is merely incidental and does not necessarily place
their dispute within the exclusive jurisdiction of the labor tribunals.
Issue:
Whether or not the civil suit instituted by Amecos is within the competence of the labor
tribunals and not the regular courts.
Ruling:
Yes, the civil action filed by Amecos against Lopez should have been instituted with a
labor tribunal.
The Court holds that as between the parties, Article 217(a)(4) of the Labor Code is
applicable. Said provision bestows upon the Labor Arbiter original and exclusive jurisdiction over
claims for damages arising from 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, petitioners’ claims should have
been referred to the labor tribunals. In this connection, it 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.
At the same time, it cannot be assumed that since the dispute concerns the payment of
SSS premiums, petitioners’ claim should be referred to the Social Security Commission (SSC)
pursuant to Republic Act No. 1161, as amended by Republic Act No. 8282. As far as SSS is
concerned, there is no longer a dispute with respect to petitioners’ accountability to the System;
petitioners already settled their pecuniary obligations to it. Since there is no longer any dispute
regarding coverage, benefits, contributions and penalties to speak of, the SSC need not be
unnecessarily dragged into the picture. Besides, it cannot be made to act as a colleting agency for
petitioners’ claims against Lopez; the Social Security Law should not be so interpreted, lest the
SSC be swamped with cases of this sort.
Despite the assertions of Amecos, the Court is constrained to rule on this case based on
the evidence which shows that Amecos failed to remit premium contributions to SSS. In
particular, its payroll reveals that no deductions for SSS contributions were being made from
respondent’s salaries. This can only mean that during the period of employment of Lopez,
Amecos was not remitting SSS contributions. As such, during her employment with Amecos,
Lopez was never covered under the System as SSS did not know in the first instance that Amecos
employer her.
Hence, it is clear that Amecos has no cause of action against Lopez. Since Amecos did not
remit Lopez’s full SSS contributions, the latter was never covered by and protected under the
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System. If she was never covered by the System, certainly there is no sense in making her
answerable for the required contributions during the period of her employment.
INDOPHIL TEXTILE MILLS, INC. vs.ENGR. SALVADOR ADVIENTO

The "reasonable causal connection rule," provides that if there is a reasonable causal
connection between the claim asserted and the employer-employee relations, then the case is within
the jurisdiction of the labor courts; and in the absence thereof, it is the regular courts that have
jurisdiction. True, the maintenance of a safe and healthy workplace is ordinarily a subject of labor
cases. More, the acts complained of appear to constitute matters involving employee-employer
relations since Adviento used to be the Civil Engineer of Indophil. However, it should be stressed
that Adviento’s claim for damages as can be gleaned in his complaint is specifically grounded on
Indophil’s gross negligence to provide a safe, healthy and workable environment for its employees
− a case of quasi-delict. Hence, the jurisdiction over the case is within the regular courts.
Facts:
Petitioner Indophil Textile Mills, Inc. hired respondent Engr. Salvador Adviento as Civil
Engineer to maintain its facilities. Subsequently, Adviento consulted a physician due to recurring
weakness and dizziness. Few days later, he was diagnosed with Chronic Poly Sinusitis, and
thereafter, with moderate, severe and persistent Allergic Rhinitis. Accordingly, Adviento was
advised by his doctor to totally avoid house dust mite and textile dust as it will transmute into
health problems.
Distressed, Adviento filed a complaint against Indopihil with the National Labor
Relations Commission (NLRC) for alleged illegal dismissal and for the payment of backwages,
separation pay, actual damages and attorney’s fees. The said case is still pending resolution with
the NLRC at the time the instant petition was filed. Thereafter, Adviento filed another
Complaint with the Regional Trial Court (RTC) alleging that he contracted such occupational
disease by reason of the gross negligence of Indophil to provide him with a safe, healthy and
workable environment.
In reply, Indophil filed a Motion to Dismiss on the ground that: (1) the RTC has no
jurisdiction over the subject matter of the complaint because the same falls under the original
and exclusive jurisdiction of the Labor Arbiter (LA) under Article 217(a)(4) of the Labor Code;
and (2) there is another action pending with the Regional Arbitration Branch III of the NLRC,
involving the same parties for the same cause.
Issue:
Whether or not the RTC has jurisdiction over the subject matter of Adviento’s complaint
praying for damages anchored on Indophil’s alleged gross negligence in failing to provide a safe
and healthy working environment for Adviento.
Ruling:
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Yes. While the Court had upheld the present trend to refer worker-employer
controversies to labor courts in light of the Article 217 of the Labor Code, as amended by Section
9 of Republic Act (R.A.) No. 6715, the Court had also recognized that not all claims involving
employees can be resolved solely by our labor courts, specifically when the law provides
otherwise. For this reason, we have formulated the "reasonable causal connection rule," wherein
if there is a reasonable causal connection between the claim asserted and the employer-employee
relations, then the case is within the jurisdiction of the labor courts; and in the absence thereof,
it is the regular courts that have jurisdiction. Such distinction is apt since it cannot be presumed
that money claims of workers which do not arise out of or in connection with their employer-
employee relationship, and which would therefore fall within the general jurisdiction of the
regular courts of justice, were intended by the legislative authority to be taken away from the
jurisdiction of the courts and lodged with Labor Arbiters on an exclusive basis. Indeed,
jurisprudence has evolved the rule that claims for damages under Article 217(a)(4) of the Labor
Code, to be cognizable by the LA, must have a reasonable causal connection with any of the
claims provided for in that article. Only if there is such a connection with the other claims can a
claim for damages be considered as arising from employer-employee relations.
True, the maintenance of a safe and healthy workplace is ordinarily a subject of labor
cases. More, the acts complained of appear to constitute matters involving employee-employer
relations since Adviento used to be the Civil Engineer of Indophil. However, it should be stressed
that Adviento’s claim for damages as can be gleaned in his complaint is specifically grounded on
Indophil’s gross negligence to provide a safe, healthy and workable environment for its
employees −a case of quasi-delict.
It also bears stressing that Adviento is not praying for any relief under the Labor Code of
the Philippines. He neither claims for reinstatement nor backwages or separation pay resulting
from an illegal termination. The cause of action herein pertains to the consequence of Indophil’s
omission which led to a work-related disease suffered by respondent, causing harm or damage
to his person. Such cause of action is within the realm of Civil Law, and jurisdiction over the
controversy belongs to the regular courts.
RICARDO N. AZUELO vs. ZAMECO II ELECTRIC COOPERATIVE, INC.

G.R. No. 192573, October 22, 2014, J. Peralta
The illegal dismissal case filed by Azuelo against Zameco II Electric Cooperative was
dismissed on the ground of lack of interest of the complainant to prosecute the case. Azuelo then
filed another case for illegal dismissal which contains the same allegations in the first complaint,
hence, Azeco Cooperative filed a motion to dismiss on the ground of res judicata. In ruling against
Azuelo the Court ruled that the dismissal of a case for failure to prosecute has the effect of
adjudication on the merits, and is necessarily understood to be with prejudice to the filing of another
action, unless otherwise provided in the order of dismissal.
Facts:
Petitioner Ricardo N. Azuelo was employed by the respondent ZAMECO II Electric

Cooperative, Inc. as a maintenance worker. It appears that sometime in March 2006, Azuelo filed
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with the Regional Arbitration Branch of the NLRC in San Fernando City, Pampanga a Complaint
for illegal dismissal and non-payment of benefits against ZAMECO. This case was dismissed by
the Labor Arbiter on the ground of lack of interest of the complainant to prosecute the case.
Azuelo received a copy of LA Bactin's Order dated November 6, 2006 on November 17, 2006.
On November 21, 2006, Azuelo again filed a complaint with the RAB of the NLRC in San
Fernando City, Pampanga for illegal dismissal with money claims against ZAMECO, containing
the same allegations in his first complaint. On March 12, 2007, LA Abdon issued an Order, which
dismissed Azuelo's second complaint for illegal dismissal on the ground of res judicata. On
appeal, the NLRC, in its Decision dated September 22, 2008, affirmed the Order issued on March
12, 2007 by LA Abdon. Azuelo then filed a petition for certiorari with the CA, alleging that the
NLRC gravely abused its discretion in ruling that the dismissal of his first complaint was with
prejudice, thus constituting a bar to the filing anew of his complaint for illegal dismissal against
ZAMECO. On February 26, 2010, the CA rendered the herein assailed Decision, which denied the
petition for certiorari filed by Azuelo. Hence, this petition.
Issue:
Whether the dismissal of his first complaint for illegal dismissal, on the ground of lack of
interest on his part to prosecute the same, bars the filing of another complaint for illegal dismissal
against ZAMECO based on the same allegations
Ruling:
The 2005 Revised Rules of Procedure of the NLRC , the rules applicable at the time of the
controversy, is silent as to the nature of the dismissal of a complaint on the ground of
unreasonable failure to submit a position paper by the complainant. Nevertheless, the 2005
Revised Rules, particularly Section 3, Rule I thereof, provides for the suppletory application of
the Rules of Court to arbitration proceedings before the LAs and the NLRC in the absence of any
applicable provisions therein, viz:
Section 3. Suppletory Application of the Rules of Court. - In the absence of any

applicable provisions in these Rules, and in order to effectuate the objectives of the Labor
Code, the pertinent provisions of the Rules of Court of the Philippines may, in the interest
of expeditious dispensation of labor justice and whenever practicable and convenient, be
applied by analogy or in a suppletory character and effect.
The unjustified failure of a complainant in arbitration proceedings before the LA to

submit his position paper is akin to the case of a complainant's failure to prosecute his action for
an unreasonable length of time in ordinary civil proceedings. In both cases, the complainants are
remiss, sans reasonable cause, to prove the material allagations in their respective complaints.
Accordingly, the Court sees no reason not to apply the rules relative to unreasonable failure to
prosecute an action in ordinary civil proceedings to the unjustified failure of a complainant to
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submit his position paper in arbitration proceedings before the LA. In this regard, Section 3, Rule
17 of the Rules of Court provides that:
Section 3. Dismissal due to fault of plaintiff. -If, for no justifiable cause, the
plaintiff fails to appear on the date of the presentation of his evidence in chief on the
complaint, or to prosecute his action for an unreasonable length of time, or to comply
with these Rules or any order of the court, the complaint may be dismissed upon motion
of the defendant or upon the court's own motion, without prejudice to the right of the
defendant to prosecute his counterclaim in the same or in a separate action. This
dismissal shall have the effect of an adjudication upon the merits, unless otherwise
declared by the court. (Emphases ours)
The dismissal of a case for failure to prosecute has the effect of adjudication on the merits,
and is necessarily understood to be with prejudice to the filing of another action, unless otherwise
provided in the order of dismissal. Stated differently, the general rule is that dismissal of a case
for failure to prosecute is to be regarded as an adjudication on the merits and with prejudice to
the filing of another action, and the only exception is when the order of dismissal expressly
contains a qualification that the dismissal is without prejudice. Thus, in arbitration proceedings
before the LA, the dismissal of a complaint on account of the unreasonable failure of the
complainant to submit his position paper is likewise regarded as an adjudication on the merits
and with prejudice to the filing of another complaint, except when the LA's order of dismissal
expressly states otherwise.

As a general rule, therefore, a claim only need to be sufficiently connected to the labor issue
raised and must arise from an employer-employee relationship for the labor tribunals to have
jurisdiction. In this case, respondent Solid Mills claims that its properties are in petitioners’
possession by virtue of their status as its employees. Solid Mills allowed petitioners to use its
property as an act of liberality. Put in other words, it would not have allowed petitioners to use its
property had they not been its employees. The return of its properties in petitioners’ possession by
virtue of their status as employees is an issue that must be resolved to determine whether benefits
can be released immediately.
Facts:
As Solid Mills’ employees, petitioners and their families were allowed to occupy SMI
Village, a property owned by respondent Solid Mills. According to Solid Mills, this was “out of
liberality and for the convenience of its employees and on the condition that the employees
would vacate the premises anytime the Company deems fit.”
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Alfredo Jingco, sent to petitioners individual notices to vacate SMI Village. Petitioners were as a
consequence no longer allowed to report for work. They were required to sign a memorandum
and separation pay.
Petitioners also points out that the NLRC has no jurisdiction to declare that petitioners’
act of withholding possession of respondent Solid Mills’ property is illegal. The regular courts
have jurisdiction over this issue. It is independent from the issue of payment of petitioners’
monetary benefits.
Issue:
Whether or not the NLRC has jurisdiction to declare that petitioners’ possession of
Solid Mills’s property is illegal.
Ruling:
Yes. The National Labor Relations Commission has jurisdiction to determine,

preliminarily, the parties’ rights over a property, when it is necessary to determine an issue
related to rights or claims arising from an employer-employee relationship.
Article 217 provides that the Labor Arbiter, in his or her original jurisdiction, and the
National Labor Relations Commission, in its appellate jurisdiction, may determine issues
involving claims arising from employer-employee relations. Petitioners’ claim that they have the
right to the immediate release of their benefits as employees separated from respondent Solid
Mills is a question arising from the employer-employee relationship between the parties. Claims
arising from an employer-employee relationship are not limited to claims by an
employee. Employers may also have claims against the employee, which arise from the same
relationship.
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As a general rule, therefore, a claim only need to be sufficiently connected to the labor
issue raised and must arise from an employer-employee relationship for the labor tribunals to
have jurisdiction.
In this case, respondent Solid Mills claims that its properties are in petitioners’ possession
by virtue of their status as its employees. Respondent Solid Mills allowed petitioners to use its
property as an act of liberality. Put in other words, it would not have allowed petitioners to use
its property had they not been its employees. The return of its properties in petitioners’
possession by virtue of their status as employees is an issue that must be resolved to determine
whether benefits can be released immediately. The issue raised by the employer is, therefore,
connected to petitioners’ claim for benefits and is sufficiently intertwined with the parties’
employer-employee relationship. Thus, it is properly within the labor tribunals’ jurisdiction.
EFFECT OF NLRC REVERSAL OF LABOR ARBITER’S ORDER OF REINSTATEMENT
FROILAN M. BERGONIO, et al. vs. SOUTH EAST ASIAN AIRLINES and IRENE DORNIER,
A dismissed employee whose case was favorably decided by the LA is entitled to receive
wages pending appeal upon reinstatement, which reinstatement is immediately executory. After the
LA’s decision is reversed by a higher tribunal, the employer’s duty to reinstate the dismissed
employee is effectively terminated. The employee, in turn, is not required to return the wages that
he had received prior to the reversal of the LA’s decision.
By way of exception, an employee may be barred from collecting the accrued wages if shown
that the delay in enforcing the reinstatement pending appeal was without fault on the part of the
employer and not when it was due to the employer’s unjustified act or omission by filling several
pleadings to suspend the execution of the LA’s reinstatement order and not notifying the petitioners
of their intent to actually reinstate them.
Facts:
On April 30, 2004, the petitioners filed before the LA a complaint for illegal dismissal and
illegal suspension with prayer for reinstatement against respondents South East Asian Airlines
(SEAIR) and Irene Dornier as SEAIR’s President (collectively, the respondents).
The LA found the petitioners illegally dismissed and ordered the respondents, among
others, to immediately reinstate the petitioners with full backwages.
On May 31, 2005, the LA rendered the decision finding the petitioners illegally dismissed
and ordering their immediate reinstatement. Per the records, the respondents received copy of
this decision on July 8, 2005. On August 20, 2005, the petitioners filed before the LA a Motion for
Issuance of Writ of Execution for their immediate reinstatement. The LA issued the Writ of
Execution on October 7, 2005.
The respondents then issued a Memorandum directing the petitioners to report for work
but petitioners failed to report for work on the appointed date. As a result, the respondents
moved before the LA to suspend the order for the petitioners’ reinstatement.
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The NLRC dismissed the respondents’ appeal for non-perfection which was later on
declared in a resolution as final and executory. The LA thereafter issued another writ of execution
and a Notice of Garnishment to the respondents’ depositary bank – Metrobank-San Lorenzo
Village Branch, Makati City – in the amount of P1,900,000.00. However, the CA declared the
petitioners’ dismissal valid and awarded them P30,000.00 as nominal damages for the
respondents’ failure to observe due process.
The petitioners, however, filed with the LA an Urgent Ex-Parte Motion for the Immediate
Release of the Garnished Amount which was granted by LA. It directed Metrobank-San Lorenzo
to release the P1,900,000.00 garnished amount. The NLRC affirmed in toto the LA’s order.
However, the CA reversed and set aside the resolution of the NLRC. The CA agreed that
while the reinstatement aspect of the LA’s decision is immediately executory even pending
appeal, petitioners are barred from collecting their accrued wages because of petitioners’ refusal
to comply with the February 21, 2006 return-to-work Memorandum that the respondents issued
and personally delivered to them (the petitioners) which prevented the enforcement of the
reinstatement order.
Issue:
Whether or not petitioners may recover the accrued wages prior to the CA’s reversal of
the LA’s May 31, 2005 decision.
Ruling:
Yes, they can. Under paragraph 3, Article 223 of the Labor Code, the LA’s order for the
reinstatement of an employee found illegally dismissed is immediately executory even during
pendency of the employer’s appeal from the decision. Under this provision, the employer must
reinstate the employee – either by physically admitting him under the conditions prevailing prior
to his dismissal, and paying his wages; or, at the employer’s option, merely reinstating the
employee in the payroll until the decision is reversed by the higher court. Failure of the employer
to comply with the reinstatement order, by exercising the options in the alternative, renders him
liable to pay the employee’s salaries.
In short, therefore, with respect to decisions reinstating employees, the law itself has
determined a sufficiently overwhelming reason for its immediate and automatic execution even
pending appeal. The employer is duty-bound to reinstate the employee, failing which, the
employer is liable instead to pay the dismissed employee’s salary. The Court’s consistent and
prevailing treatment and interpretation of the reinstatement order as immediately enforceable,
in fact, merely underscores the right to security of tenure of employees that the Constitution
protects.
By way of exception to the above rule, an employee may be barred from collecting the
accrued wages if shown that the delay in enforcing the reinstatement pending appeal was without
fault on the part of the employer. To determine whether an employee is thus barred, two tests
must be satisfied: (1) actual delay or the fact that the order of reinstatement pending appeal was
not executed prior to its reversal; and (2) the delay must not be due to the employer’s unjustified
act or omission. Note that under the second test, the delay must be without the employer’s fault.
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If the delay is due to the employer’s unjustified refusal, the employer may still be required to pay
the salaries notwithstanding the reversal of the LA’s decision.
In applying the first test, it is clear that there was actual delay in the execution of the
reinstatement aspect of the LA’s May 31, 2005 decision before it was reversed in the CA’s decision.
From the time the respondents received copy of the LA’s decision, and the issuance of the
writ of execution, until the CA reversed this decision on December 17, 2008, the respondents had
not reinstated the petitioners, either by actual reinstatement or in the payroll. This continued
non-execution of the reinstatement order in fact moved the LA to issue an alias writ of execution
on February 16, 2006 and another writ of execution on April 24, 2007.
In applying the second test, the cause of the delay – whether the delay was not due to the
employer’s unjustified act or omission, we find that the delay in the execution of the
reinstatement pending appeal was due to the respondents’ unjustified acts.
The Court’s careful consideration of the facts and the circumstances that surrounded the
case convinced us that the delay in the reinstatement pending appeal was due to the respondents’
fault. For one, the respondents filed several pleadings to suspend the execution of the LA’s
reinstatement order, i.e., the opposition to the petitioners’ motion for execution filed on October
3, 2005; the motion to quash the October 7, 2005 writ of execution with prayer to hold in abeyance
the implementation of the reinstatement order; and the motion to suspend the order for the
petitioners’ reinstatement filed on February 28, 2006 after the LA issued the February 16, 2006
alias writ of execution. These pleadings, to our mind, show a determined effort on the
respondents’ part to prevent or suspend the execution of the reinstatement pending appeal.
Another reason is that the respondents, contrary to the CA’s conclusion, did not
sufficiently notify the petitioners of their intent to actually reinstate them; neither did the
respondents give them ample opportunity to comply with the return-to-work directive. We note
that the respondents delivered the February 21, 2006 Memorandum (requiring the petitioners to
report for work on February 24, 2006) only in the afternoon of February 23, 2006. Worse, the
respondents handed the notice to only one of the petitioners – Pelaez – who did not act in
representation of the others. Evidently, the petitioners could not reasonably be expected to
comply with a directive that they had no or insufficient notice of.
Lastly, the petitioners continuously and actively pursued the execution of the
reinstatement aspect of the LA’s decision, i.e., by filing several motions for execution of the
reinstatement order, and motion to cite the respondents in contempt and re-computation of the
accrued wages for the respondents’ continued failure to reinstate them.
These facts altogether show that the respondents were not at all sincere in reinstating the
petitioners. These facts – when taken together with the fact of delay – reveal the respondents’
obstinate resolve and willful disregard of the immediate and self-executory nature of the
reinstatement aspect of the LA’s decision.
A further and final point that the Court considered in concluding that the delay was due
to the respondents’ fault is the fact that per the 2005 Revised Rules of Procedure of the NLRC
(2005 NLRC Rules), employers are required to submit a report of compliance within ten (10)
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calendar days from receipt of the LA’s decision, noncompliance with which signifies a clear
refusal to reinstate. Arguably, the 2005 NLRC Rules took effect only on January 7, 2006; hence,
the respondents could not have been reasonably expected to comply with this duty that was not
yet in effect when the LA rendered its decision (finding illegal dismissal) and issued the writ of
execution in 2005. Nevertheless, when the LA issued the February 16, 2006 alias writ of execution
and the April 24, 2007 writ of execution, the 2005 NLRC Rules was already in place such that the
respondents had become duty-bound to submit the required compliance report; their
noncompliance with this rule all the more showed a clear and determined refusal to reinstate.
APPEAL
ANDY D. HALITE, DELFIN M. ANZALDO AND MONALIZA DL. BIHASA v. SS

VENTURES INTERNATIONAL, INC., SUNG SIK LEE AND EVELYN RAYALA
G.R. No. 195109, February 4, 2015, PEREZ, J.
With the employer's demonstrated good faith in filing the motion to reduce
the bond on demonstrable grounds, coupled with the posting of the appeal bond in the
requested amount, as well as the filing of the memorandum of appeal, the right of the
employer to appeal must be upheld.
Facts:
Andy Balite, Monaliza Bihasa and Delfin Anzaldo filed a complaint against
respondents for illegal dismissal and recovery of backwages, 13th month pay and
attorney’s fees before the LA. The LA rendered a decision holding respondents liable
for illegal dismissal. Respondents filed a notice of appeal and paid the corresponding
appeal fee. However, instead of filing the required appeal bond equivalent to the
total amount of the monetary award which is P490,308.00, they filed a motion to
reduce the appeal bond to P100,000.00 and appended therein a manager’s check
bearing the said amount. They cited financial difficulty as justification for their
inability to post the appeal bond in full owing to the partial shutdown of respondent
company’s operations.
The NLRC dismissed the appeal filed by the respondents for non-perfection.
Respondent's motion for reconsideration was denied. On certiorari, the CA reversed the
NLRC decision and allowed the relaxation of the rule on posting of the appeal bond.
Issue:
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Whether the appeal was perfected
Ruling:
Yes. An appeal from the LA to the NLRC must be perfected within ten calendar
days from receipt of such decisions, awards or orders of the LA. In a judgment involving
a monetary award, the appeal shall be perfected only upon (1) proof of payment of the
required appeal fee; (2) posting of a cash or surety bond issued by a reputable
bonding company; and (3) filing of a memorandum of appeal. The appeal bond posted
by the respondent in the amount of P100,000.00 which is equivalent to around 20% of
the total amount of monetary bond is sufficient to perfect an appeal.
MARISSA B. QUIRANTE v. OROPORT CARGO HANDLING SERVICES INC., et al.

GR No. 209689, December 2, 2015, REYES, J.
The posting of a bond is indispensable to the perfection of an appeal in cases

involving monetary awards from the decision of the LA. The word “only” makes it perfectly
plain that the lawmakers intended the posting of a cash or surety bond by the employer to
be the essential and exclusive means by which an employer’s appeal may be perfected.
Fact
s:
Quirante was employed by Oroport as claim staff. During the course of its
employment, she
committed serious misconduct which led to her dismissal. Quirante then filed a
complaint for illegal
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dismissal against Oroport in the LA which was granted in her favor and award for
separation pay. However, on appeal Oroport without filing a bond but only a
certificate of bank appealed and contended that award for separation pay was not
properly computed which the NLRC later on granted such. Quirante contended that
the appeal was not perfected because there was no bond filed.
Issu
e:
Whether the appeal was perfected despite the fact that there was no bond filed
Rulin
g:
No. Article 223 of the Labor Code provides that an appeal by the employer to
the NLRC from a judgment of a labor arbiter which involves a monetary award may
be perfected only upon the posting of a cash or surety bond issued by a reputable
bonding company duly accredited by the NLRC, in an amount equivalent to the
monetary award in the judgment appealed from. Further, Sec. 6 of the New Rules of
Procedure of the NLRC provides that in case the decision of the LA or the Regional
Director involves a monetary award, an appeal by the employer may be perfected only
upon the posting of a cash or surety bond. The appeal bond shall either be in cash
or surety in an amount equivalent to the monetary award, exclusive of damages and
attorney’s fees.
QUANTUM FOODS, INC. v. MARCELINO ESLOYO AND GLEN MAGSILA

To justify the reduction of the appeal bond, the merit referred to may pertain
to (a) an appellant's lack of financial capability to pay the full amount of the bond, or (b)
the merits of the main appeal such as when there is a valid claim that there was no illegal
dismissal to justify the award.
Facts:
Quantum Foods, Inc. (QFI) hired Esloyo as Major Accounts
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Representative and was promoted to a Regional Sales Manager while Magsila was
the Key Accounts Representative for the Panay Area. Esloyo and Magsila were
required to post a cash bond in the amount of P10,000 and P7,000, respectively.
QFI reorganized its sales force due to a drop in net income and Magsila was
retrenched. However, Magsila's final pay and benefits were not released due to the
discovery of unauthorized deductions. Meanwhile, QFI's auditor Almendrala
conducted an investigation and submitted her report against Esloyo, due to several
complaints against the latter. Esloyo denied the charges and he was informed of his
termination on the ground of loss of trust and confidence due to his violations.
Esloyo and Magsila filed complaints for illegal dismissal with money claims. The LA
found that they were illegally dismissed, and ordered QFI to pay them their money
claims. QFI filed its appeal with Motion to Reduce Bond averring that it was
encountering difficulty raising the amount of the bond and partial cash bond of
P400,000.00. However, the LA’s decision was reversed by the NLRC. The CA reversed
the NLRC and ruled that QFI's failure to post the required bond in an amount
equivalent to the monetary judgment impeded the perfection of its appeal, and
rendered the LA's Decision final and executory. The CA ruled that the NLRC was
bereft of jurisdiction and that the posting of the partial bond did not stop the running
of the period to perfect the appeal.
Issue:
Whether QFI’s failure to post the required bond impeded its appeal
Ruling:
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No. The posting of a P400,000.00 cash bond equivalent to more than 20% of
the monetary judgment, together with the Motion to Reduce Bond within the
reglementary period was sufficient to suspend the period to perfect the appeal. The
posting of the said partial bond coupled with the subsequent posting of a surety
bond in an amount equivalent to the monetary judgment also signified QFI's
good faith and willingness to recognize the final outcome of its appeal.
The NLRC has full discretion to grant or deny the motion to reduce bond, and
its ruling will not be disturbed unless tainted with grave abuse of discretion. An act of
a court or tribunal can only be considered to be tainted with grave abuse of discretion
when such act is done in a capricious or whimsical exercise of judgment as is
equivalent to lack of jurisdiction, which clearly is not extant with respect to the
NLRC's cognizance of QFI's appeal. The NLRC correctly preferred substantial justice
over the rigid and stringent application of procedural rules.
SARA LEE PHILIPPINES, INC. ET. AL v. EMILINDA D. MACATLANG, ET AL.
G.R. No. 180147, January 14, 2015, PEREZ, J.
The 10% is based on the judgment award and should in no case be construed as
the minimum amount of bond to be posted in order to perfect appeal.
Facts:
Aris Philippines permanently ceased operations displacing 5,984 rank-and-

file employees. Later, Fashion Accessories Phils. Inc. (FAPI) was incorporated,
prompting former Aris employees to file a case for illegal dismissal on the allegations
that FAPI was a continuing business of Aris. Sarah Lee Corporation, et al. were the
major stockholders of FAPI and officers of Aris. The LA found the dismissal of the
employees illegal and awarded them monetary benefits. The Corporations filed a
Notice of Appeal with Motion to Reduce Appeal Bond. They posted a P4.5 Million bond.
The NLRC granted the reduction of the appeal bond and ordered the Corporations
to post an additional P4.5 Million bond. Macatlang filed a petition for review before
the CA insisting that the appeal was not perfected due to failure of the Corporations
to post the correct amount of the bond which is equivalent to the judgment award.
While the case was pending before the CA, the NLRC prematurely issued an order
setting aside the decision of the LA for being procedurally infirmed. The CA ordered
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the Corporations to post an additional appeal bond of P1 Billion. Petitioners contended
that the filing of the motion to reduce the bond and the posting of the bond of P4.5M,
roughly equivalent to 10% of the original judgment award, is enough to perfect an
appeal.
Issues:
Whether the appeal bond of roughly P4.5M is enough to perfect an appeal
Ruling:
No. The Corporations should have followed the direction of the Court and filed
the additional amount for the perfection of the appeal so that the NLRC may proceed
to try the merits of the case for illegal dismissal. The 10% requirement pertains to the
reasonable amount which the NLRC would accept as the minimum of the bond that
should accompany the motion to reduce bond in order to suspend the period to
perfect an appeal under the NLRC rules. Should the NLRC, after considering the merit
of the Motion to Reduce Appeal Bond determine that a greater amount or the full
amount of the bond needs to be posted by the appellant, then the party shall comply
accordingly. The appellant shall be given a period of 10 days from notice of the NLRC
order within which to perfect the appeal by posting the required appeal bond. The
Petitioners are directed to post the amount of PHP 725M in cash or surety bond within
10 days of the decision to continue with the determination of the merits of the alleged
illegally dismissed Respondents through the NLRC.
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EMMANUEL OLORES vs. MANILA DOCTORS COLLEGE AND/OR TERESITA TURLA
G.R. No. 201663. March 31, 2014
J. Peralta
The posting of a bond is indispensable to the perfection of an appeal in cases involving

monetary awards from the decisions of the Labor Arbiter. Moreover, the filing of the bond is not
only mandatory, but a jurisdictional requirement as well, that must be complied with in order to
confer jurisdiction upon the NLRC. Non-compliance therewith renders the decision of the Labor
Arbiter final and executory.
Facts:
Respondent is a private higher educational institution dedicated to providing academic

degrees and certificate courses related to Allied Medical Services and Liberal A1is and Sciences.
Petitioner was hired as a full-time instructor of respondent. He was assigned at the Humanities
Department of the College of Arts and Sciences.
Petitioner submitted the final grades of his students to Mr. Jacinto Bernardo, Jr. (Bernardo), the
chair of the Humanities Area. On 13 April 2010, Bernardo charged the petitioner with gross
misconduct and gross inefficiency in the performance of duty. Petitioner was accused of
employing a grading system not in accordance with the system because he: a) added 50 pts to the
final examination raw scores; b) added 50 pts to students who have not been attending classes;
c) credited only 40% instead of 60% of the final examination; d) did not credit the essay
questions; and e) added further incentives (1-4 pts) aside from 50 pts. In so doing, petitioner gave
grades not based solely on scholastic records. After the investigation, respondent terminated the
services of petitioner for grave misconduct and gross inefficiency and incompetence.
Aggrieved by the decision of respondent, petitioner filed a case for illegal dismissal with a claim
for reinstatement. The Labor Arbiter found merit in petitioner’s charge for illegal dismissal.
Respondent appealed from the aforesaid decision to the NLRC. However, the same was denied.
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The NLRC reasoned that respondent’s appeal was not accompanied by neither a cash nor surety
bond, thus, no appeal was perfected from the decision of the Labor Arbiter.
Issue:
Whether respondent’s appeal with the NLRC was perfected despite its failure to post a bond
Ruling:
At the outset, it must be emphasized that Article 223 of the Labor Code states that an appeal by
the employer to the NLRC from a judgment of a Labor Arbiter, which involves a monetary award,
may be perfected only upon the posting of a cash or surety bond issued by a reputable bonding
company duly accredited by the NLRC, in an amount equivalent to the monetary award in the
judgment appealed from.
The posting of a bond is indispensable to the perfection of an appeal in cases involving monetary
awards from the decisions of the Labor Arbiter. The lawmakers clearly intended to make the
bond a mandatory requisite for the perfection of an appeal by the employer as inferred from the
provision that an appeal by the employer may be perfected “only upon the posting of a cash or
surety bond.” The word “only” makes it clear that the posting of a cash or surety bond by the
employer is the essential and exclusive means by which an employer’s appeal may be perfected.
Moreover, the filing of the bond is not only mandatory, but a jurisdictional requirement as well,
that must be complied with in order to confer jurisdiction upon the NLRC. Non-compliance
therewith renders the decision of the Labor Arbiter final and executory. This requirement is
intended to assure the workers that if they prevail in the case, they will receive the money
judgment in their favor upon the dismissal of the employer’s appeal. It is intended to discourage
employers from using an appeal to delay or evade their obligation to satisfy their employees’ just
and lawful claims.
Here, it is undisputed that respondent’s appeal was not accompanied by any appeal bond despite
the clear monetary obligation to pay petitioner his separation pay in the amount of P100,000.00.
Since the posting of a bond for the perfection of an appeal is both mandatory and jurisdictional,
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the decision of the Labor Arbiter sought to be appealed before the NLRC had already become
final and executory. Therefore, the NLRC had no authority to entertain the appeal, much less to
reverse the decision of the Labor Arbiter.
LEPANTO CONSOLIDATED MINING CORPORATION

vs. BELIO ICAO
G.R. No. 196047, January 15, 2014
CJ. SERENO
The CA upheld the Order of the National Labor and Relations Commission (NLRC) First
Division dismissing petitioner’s appeal for allegedly failing to post an appeal bond as required by
the Labor Code. Petitioner had instead filed a motion to release the cash bond it posted in another
NLRC case which had been decided with finality in its favor with a view to applying the bond to the
appealed case before the NLRC First Division. Under the Rule VI, Section 6 of the 2005 NLRC Rules,
"[a] cash or surety bond shall be valid and effective from the date of deposit or posting, until the
case is finally decided, resolved or terminated, or the award satisfied." Hence, it is clear that a bond
is encumbered and bound to a case only for as long as 1) the case has not been finally decided,
resolved or terminated; or 2) the award has not been satisfied. Therefore, once the appeal is finally
decided and no award needs to be satisfied, the bond is automatically released. Since the money is
now unencumbered, the employer who posted it should now have unrestricted access to the cash
which he may now use as he pleases – as appeal bond in another case, for instance.
Facts:
Belio C. Icao (Icao) was an employee of petitioner Lepanto Consolidated Mining Company
(LCMC) assigned as a lead miner in its underground mine in Paco, Mankayan, Benguet. He was
charged with "highgrading" or the act of concealing, possessing or unauthorized extraction of
highgrade material/ore without proper authority. Private respondent vehemently denied the
charge. Consequently, he was dismissed from his work.
Icao claimed that his dismissal from work was without just or authorized cause since petitioners
failed to prove by ample and sufficient evidence that he stole gold bearing highgrade ores from
the company premises. On January 9, 2008, a hearing was held where private respondent,
together with the officers of his union as well as the apprehending guards appeared. On February
4, 2008, private respondent received a copy of the resolution of the company informing him of
his dismissal from employment due to breach of trust and confidence and the act of highgrading.
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Labor Arbiter ruled that LCMC is liable for illegal dismissal. On appeal to NLRC, the Commission
dismissed the appeal for failure to post the appeal bond. CA affirmed the Decision of NLRC which
had dismissed the appeal of petitioner and the latter’s CEO. According to the CA, they failed to
comply with the requirements of law and consequently lost the right to appeal.
Issue:
Whether petitioner complied with the appeal bond requirement under the Labor Code and the
NLRC Rules
Ruling:
The Petition is meritorious. The Court finds that petitioner substantially complied with the
appeal bond requirement.
There is no question that the appeal was filed within the 10-day reglementary period. Except for
the alleged failure to post an appeal bond, the appeal to the NLRC was therefore in order.
It is also undisputed that petitioner has an unencumbered amount of money in the form of cash
in the custody of the NLRC. To reiterate, petitioner had posted a cash bond of P401,610.84 in the
separate case Dangiw Siggaao, which was earlier decided in its favor. As claimed by petitioner
and confirmed by the Judgment Division of the Judicial Records Office of this Court, the Decision
of the Court in Dangiw Siggaao had become final and executory as of 28 April 2008, or more than
seven months before petitioner had to file its appeal in the present case. This fact is shown by
the Entry of Judgment on file with the aforementioned office. Hence, the cash bond in that case
ought to have been released to petitioner then.
Under the Rule VI, Section 6 of the 2005 NLRC Rules, "[a] cash or surety bond shall be valid and
effective from the date of deposit or posting, until the case is finally decided, resolved or
terminated, or the award satisfied." Hence, it is clear that a bond is encumbered and bound to a
case only for as long as 1) the case has not been finally decided, resolved or terminated; or 2) the
award has not been satisfied. Therefore, once the appeal is finally decided and no award needs to
be satisfied, the bond is automatically released. Since the money is now unencumbered, the
employer who posted it should now have unrestricted access to the cash which he may now use
as he pleases – as appeal bond in another case, for instance. This is what petitioner simply did.
The cash bond in the amount of P401,610.84 posted in Dangiw Siggaao is more than enough to
cover the appeal bond in the amount of P345,879.45 required in the present case.
This ruling remains faithful to the spirit behind the appeal bond requirement which is to ensure
that workers will receive the money awarded in their favor when the employer’s appeal eventually
fails. There was no showing at all of any attempt on the part of petitioner to evade the posting of
the appeal bond. On the contrary, petitioner’s move showed a willingness to comply with the
requirement. Hence, the welfare of Icao is adequately protected.
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Having complied with the appeal bond requirement, petitioner s appeal before the NLRC must
therefore be reinstated.
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PRINCESS JOY PLACEMENT AND GENERAL SERVICES, INC. vs. GERMAN A. BINALLA
G.R. No. 197005, June 4, 2014, J. Brion
Princess Joy questions the decision of the CA setting aside the decision of the NLRC on the
ground that failure on the part of Petitioner to post a surety bond equal to the monetary award of
the Labor Arbiter, its appeal was not deemed perfected. There being no perfected appeal, it opined,
the labor arbiter’s judgment had become final and executory. Ruling in favor of the Petitioner the
SC held that the Court takes a liberal approach on the appeal bond requirement in "the broader
interest of justice and with the desired objective of deciding cases on the merits." Thus, the Court
finds the initial bond posted by Petitioner reasonable, considering that it is questioning the
unusually large amount of the awarded damages.
Facts:
Respondent Binalla, a registered nurse, applied for employment with petitioner Princess
Joy. Thereafter, the latter referred him to Reginaldo Paguio and Cynthia Latea for the processing
of his papers. After completing his documentary requirements, he was told that he would be
deployed to one Al Adwani. Binalla then signed a four-year contract with Al Adwani as staff nurse.
Later, he was given a telegram notifying him of his departure on April 19, 2002.
On the day of his departure, Paguio met Binalla at the airport and gave him a copy of his
employment contract, plane ticket, passport and other documents. It was only after boarding the
plane that Binalla discovered that CBM was his deploying agency and that under the contract
certified by the POEA his salary was supposed to be US$550 and only for a of period two years.
Binalla also saw that under the four-year contract he signed, his monthly salary was only 1,500
Saudi Riyals (SR) equivalents to $400. Left with no choice, he worked under his contract for only
two years and returned to the Philippines in April 2004 after posting a bond of SR 3,000.00,
supposedly to guarantee that he would come back to finish his contract.
Upon his return to the Philippines, Binalla verified his employment contract with the
POEA. He learned that the POEA indeed certified a different contract for him, with CBM as his
recruiting or deploying agency. He disowned the contract, claiming that his supposed signature
appearing in the document was a forgery. Out of frustration, he opted not to return to Saudi
Arabia to complete his four-year contract.
Thereafter, Binalla filed a complaint against CBM, a local manning agent, and Princess
Joy for various money claims arising from his employment in Saudi. Binalla argued that he was
“re-processed” - arrangements where Princess Joy recruited and deployed him, but made it
appear that it was undertaken by CBM under a different contract submitted to and certified by
the POEA. Binalla further complained that he was made to work under an inferior contract.
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Despite the service of summons to Princess Joy and CBM, it was only Princess Joy which
made submissions to the labor arbiter.
The LA ruled in favor of Binalla and held Princess Joy and CBM jointly and severally liable
to Binalla for the monetary award of P800, 875. Princess Joy appealed with the NLRC and likewise
filed a Motion to Reduce and Fix Bond, accompanied by a surety bond of P 250, 000. Thereafter,
the NLRC issued an order allowing Princess Joy to post the balance of the appeal bond to make
it equal to the monetary award. After Princess Joy posted the required additional bond, the NLRC
acted on the appeal and reversed the decision of the Labor Arbiter. The CA however set aside the
ruling of the NLRC and held that failure on the part of Princess Joy to post a surety bond equal
to the monetary award of the Labor Arbiter, its appeal was not deemed perfected. There being
no perfected appeal, it opined, the labor arbiter’s judgment had become final and executory.
Issues:
1. Whether or not the NLRC committed grave abuse of discretion in taking cognizance of
petitioner’s motion to reduce the appeal bond.
2. Whether or not petitioner Princess Joy is liable to respondent Binalla.
Ruling:
1. No, the NLRC committed no grave abuse of discretion in taking cognizance of and
acting on Princess Joy’s motion to reduce the appeal bond as it is allowed under Rule VI, Section
6 of the NLRC 2005 Revised Rules of Procedure, and the motion was filed within the ten-day
appeal period, together with the notice of appeal and the memorandum of appeal. Also, the
motion was accompanied by a surety bond of P250,000.00, an indication of a genuine effort on
the part of the agency to comply with the bond requirement.
Compared with LA Aurellano’s award of P800,875.00 to Binalla, the Court finds the initial
bond posted by Princess Joy reasonable, considering that it is questioning the unusually large
amount of the awarded damages. Significantly, the agency posted an additional bond as required
by the NLRC in its May 12, 2006 order, thus, bringing the amount equal to the labor arbiter’s
monetary award.
The Court takes this occasion to impress upon the parties that the Court takes a liberal
approach on the appeal bond requirement in "the broader interest of justice and with the desired
objective of deciding cases on the merits."In Inter tranz Container Lines, Inc. v. Bautista, the
Court reiterated its call for a liberal application of the law and the rules on the appeal bond
requirement "with an eye on the interest of substantial justice and the merits of the case."
2. Yes, petitioner Princess Joy is liable to respondent Binalla.
Binalla was a victim of contract substitution. He worked under an employment contract

whose terms were inferior to the terms certified by the POEA. Under the four-year contract he
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signed and implemented by his employer, Al Adwani, he was paid only SR1500.00 or US$400 a
month; whereas, under the POEA- certified two-year contract, he was to be paid $550.00.
The POEA-certified contract – for all intents and purposes and despite his claim that his signature
on the certified contract was forged – was the contract that governed Binalla’s employment with
Al Adwani as it was the contract that the Philippine government officially recognized and which
formed the basis of his deployment to Saudi Arabia. Clearly, the four-year contract signed by
Binalla substituted for the POEA-certified contract.
Under Article 34 (i) of the Labor Code on prohibited practices, "it shall be unlawful for
any individual, entity, licensee, or holder of authority to substitute or alter employment contracts
approved and verified by the Department of Labor and Employment from the time of actual
signing thereof by the parties up to and including the periods of expiration of the same without
the approval of the Secretary of Labor." Further, contract substitution constitutes "illegal
recruitment" under Article 38 (I) of the Code.
Under the circumstances, Princess Joy is as liable as CBM and Al Adwani for the contract
substitution, no matter how it tries to avoid liability by disclaiming any participation in the
recruitment and deployment of Binalla to Al Adwani.
LEI SHERYLL FERNANDEZ vs. BOTICA CLAUDIO represented by GUADALUPE JOSE

While Article 223 of the Labor Code and Section 3(a), Rule VI of the then New Rules of
Procedure of the NLRC require the party intending to appeal from the LA’s ruling to furnish the
other party a copy of his memorandum of appeal, the Court has held that the mere failure to serve
the same upon the opposing party does not bar the NLRC from giving due course to an appeal. Such
failure is only treated as a formal lapse, an excusable neglect, and, hence, not a jurisdictional defect
warranting the dismissal of an appeal. Instead, the NLRC should require the appellant to provide
the opposing party copies of the notice of appeal and memorandum of appeal.
Facts:
Fernandez was hired as a trainee at Botica Claudio, a drugstore which is owned and
operated by Jose. In January 2003, she was promoted as sales clerk whom she held until the
termination of her services on January 15, 2006.
Fernandez filed a complaint for illegal dismissal with prayer for the payment of her
statutory benefits against Jose before the NLRC alleging that: (a) during her employment, she
was paid a salary of 180.00 per day, and worked from 8a.m until 8p.m, and sometimes, even up
to 10p.m, but was never paid any overtime pay, (b) Jose merely fabricated the charges against her
in order to justify her dismissal; and (c) she did not go on absence without official leave (AWOL).
Jose denied the allegations, and contended that Fernandez’s dismissal was valid given
that she went on AWOL; in addition to the various infractions she committed during her
employment, (a) dispensing wrong medicines, (b) allowing some clients to buy medicines on
credit without her employer’s consent, and (c) dishonesty.
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The LA held that while just cause attended Fernandez’s dismissal from work based on the
finding that she went on AWOL, it was effected without procedural due process. Thus, the LA
ordered Jose to pay Fernandez 11,700.00 as separation pay as well as14,040.00 representing three
(3) years of her unpaid 13th month pay, but denied her claims for overtime pay and
moral/exemplary damages for lack of factual and legal bases.
Fernandez filed a Notice of Appeal with Memorandum of Appeal before the NLRC. Copies
of the same were purportedly sent by registered mail to one Atty. Ramon E. Solis, Jr., Counsel for
respondents.
The NLRC rendered a Resolution (NLRC Resolution) granting Fernandez’s appeal, and
thereby reversing the LA’s ruling. It found Fernandez to have been illegally dismissed by Jose
without a valid cause and observance of procedural due process; that the evidence presented by
Jose to substantiate Fernandez’s infractions were merely fabricated, and that there was no
indication that Fernandez was apprised of her supposed offenses before her dismissal. It ordered
Jose to pay Fernandez the aggregate amount of P297,522.45, consisting of P254,831.85 as
backwages, P42,120.00 as separation pay,and P570.60 as overtime pay.
An Entry of Judgment was issued by the NLRC, declaring its Resolution to have become
final and executory on May 18, 2010. The LA issued an Order dated August 17, 2010 (LA Order)
granting Fernandez’s motion for execution.
Without disclosing the date when the resolution was received, Jose filed a motion for
reconsideration dated January 20, 2011 before the NLRC, insisting that just causes attended
Fernandez’s dismissal. Despite the fact that the NLRC had yet to act on the motion for
reconsideration, Jose filed a second motion for reconsideration dated February 2, 2011 before the
same tribunal.
Notwithstanding the pendency of the motions for reconsideration, Jose filed a petition
for certiorari before the CA, claiming to have secured a copy of the NLRC Resolution and LA
Order only upon personal verification on February 8, 2010 and filed a motion for reconsideration
therefrom on April 12, 2011, referring to her second motion for reconsideration dated February 2,
2011.
The CA granted Jose’s petition for certiorari, holding that the NLRC gravely abused its
discretion in taking cognizance of Fernandez’s appeal despite the latter’s failure to furnish Jose
copies of her notice of appeal and appeal memorandum in violation of Article 223 of the Labor
Code and the NLRC Rules of Procedure. Said pronouncement was based on the CA’s finding that
copies of Fernandez’s notice of appeal and appeal memorandum were sent to one Atty. Ramon
E. Solis, Jr., who was her (Fernandez’s) own former counsel, and not Jose’s. Thus, Jose was
deprived of her right to due process.
Issue:
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Whether or not the CA erred in holding that the NLRC gravely abused its discretion in
giving due course to Fernandez’s appeal.
Ruling:
Yes, the petition is meritorious.
The Court notes that the CA gravely abused its discretion in giving due course to
respondent’s Rule 65 certiorari petition despite its finding that the latter still had a pending
motion for reconsideration from the Decision before the NLRC. It is settled that the filing of a
motion for reconsideration from the order, resolution or decision of the NLRC is an indispensable
condition before an aggrieved party can avail of a petition for certiorari. To afford the NLRC an
opportunity to rectify its errors if any. The more prudent recourse for Jose should have been to
move for the immediate resolution of its motion for reconsideration before the NLRC instead of
filing a petition for certiorari before the CA. Having failed to do so, her petition for certiorari was
prematurely filed, and the CA should have dismissed the same.
The Court finds that the CA erred in declaring that the failure of Fernandez to furnish
Jose with copies of her notice of appeal and memorandum of appeal before the NLRC deprived
the latter of her right to due process.
While Article 223 of the Labor Code and Section 3(a), Rule VI of the then New Rules of
Procedure of the NLRC require the party intending to appeal from the LA’s ruling to furnish the
other party a copy of his memorandum of appeal, the Court has held that the mere failure to
serve the same upon the opposing party does not bar the NLRC from giving due course to an
appeal. Such failure is only treated as a formal lapse, an excusable neglect, and, hence, not a
jurisdictional defect warranting the dismissal of an appeal. Instead, the NLRC should require the
appellant to provide the opposing party copies of the notice of appeal and memorandum of
appeal.
In this case, however, the NLRC could not be expected to require compliance from
Fernandez, the appellant, since it was not aware that the opposing party, Jose, was not notified
of her appeal. Hence, it cannot be faulted in relying on Fernandez’s representation that she had
sent Jose, through her counsel, a copy of her memorandum of appeal by registered mail, as
evidenced by Registry Receipt No. 006511.
It is undisputed that Jose eventually participated in the appeal proceedings by filing not
only one but two motions for reconsideration from the NLRC Resolution, thereby negating any
supposed denial of due process on her part. As held in the case of Angeles v. Fernandez, the
availment of the opportunity to seek reconsideration of the action or ruling complained of in
labor cases amounts to due process. The essence of due process is simply the opportunity to be
heard or as applied in administrative proceedings, an opportunity to explain one’s side or an
opportunity to seek a reconsideration of the action or ruling complained of. What the law
prohibits is absolute absence of the opportunity to be heard, thus, an aggrieved party cannot
feign denial of due process where he had been afforded the opportunity to ventilate his side, as
Jose was in this case.
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The Court finds that the CA erred in ascribing grave abuse of discretion on the part of the
NLRC in taking cognizance of Fernandez’s appeal.
PHILIPPINE TOURISTERS, INC. and/or ALEJANDRO R. YAGUE, JR. vs. MAS TRANSIT
WORKERS UNION-ANGLO-KMU and is members, represented by ABRAHAM TUMALA,
JR.
While it has been settled that the posting of a cash or surety bond is indispensable to the
perfection of an appeal in cases involving monetary awards from the decision of the LA, the Rules
of Procedure of the NLRC nonetheless allows the reduction of the bond upon a showing of (a) the
existence of a meritorious ground for reduction, and (b) the posting of a bond in a reasonable
amount in relation to the monetary award. Thus, when the appellant employer prayed for the
reduction of the bond in view of serious liquidity problems evidenced by audited financial
statements, while simultaneously posting a surety bond which is more than 10% of the full judgment
award, the bond may be reduced and the appeal is considered perfected.
Facts:
Respondent MAS Transit Workers Union (the Union) filed a complaint for illegal
dismissal against MAS Transit, Inc. (MTI) and petitioners Philippine Touristers, Inc.. (PTI)
and/or Yague, Jr., when PTI terminated the employment of some of the Union’s members in view
of the sale of its busses to PTI. The LA ruled in favor of the Union, finding MTI and PTI guilty of
unfair labor practice.
The petitioners appealed before the NLRC, and moved that the bond of P 12,833, 210.00
be reduced in favor of PTI’s liquidity problems. Simultaneously, petitioners posted P 5 million as
partial bond and prayed that the same be considered as substantial compliance for purposes of
perfecting their appeal. Later, petitioners submitted to the NLRC audited financial statements
showing PTI’s liquidity problem. The Union opposed the motion, and prayed that the NLRC
dismiss the petitioners’ appeal.
Pending the NLRC’s action, petitioners subsequently withdrew its initial motion and,
instead, submitting for approval their additional surety bond, SSSICI Surety Bond No.G (16)
002066 in the amount of P 7,833,210.00, tocover the full judgment award. This was followed by
another motionseeking to substitute SSSICI Surety Bond No. G (21)002718 in the amount of
P5,000,000.00 with that of SSSICI Surety Bond No. G (16) 003459 for the same amount as the
former bond was found to have been erroneouslyand inadvertently issued in favor of MTI and
not PTI.
The NLRC dismissed the appealfor petitioners’ failure to post the required bond equal to
the full judgmentaward within the ten (10)-day reglementary period prescribed under theNLRC
Rules of Procedure. It also pointed out that the partial bondpetitioners posted was invalid since
it was not signed by an authorizedsignatory of the insurance company as advised by the NLRC in
aMemorandum dated January 5, 2004, and that the ground relied upon for thereduction of the
bond was not substantiated. The CA set aside the NLRC ruling, holding that liquidity problems
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cannot be considered as meritorious grounds to reduce bond, and that the partial bond was
defective.
Issue:
Whether or not the petitioners substantially comply with the requirement of posting of
bond for the perfection of its appeal to the NLRC.
Ruling:
The petition is granted. For an appeal from the LA’s ruling to the NLRC to be perfected,
Article 223 (now Article 229) of the Labor Code requires the posting of acash or surety bond in
an amount equivalent to the monetary award in thejudgment appealed from.
While it has been settled that the posting of a cash or surety bond isindispensable to the
perfection of an appeal in cases involving monetaryawards from the decision of the LA, the Rules
of Procedure of the NLRC (the Rules), particularly Section 6, Rule VI thereof, nonetheless allows
thereduction of the bond upon a showing of (a) the existence of a meritoriousground for
reduction, and (b) the posting of a bond in a reasonable amountin relation to the monetary
award.
In this regard, it bears stressing that the reduction of the bond provided thereunder is
not a matter of right on the part of the movant and its grant still lies within the sound discretion
of the NLRC upon a showing ofmeritorious grounds and the reasonableness of the bond tendered
under thecircumstances.
In Nicol v. Footjoy Industrial Corp., the Court held that“meritorious cases” for said
purpose would include “instances in which:
1) circumstances constitute meritorious grounds to reduce the bond,
2) surrounding facts and circumstances constitute meritorious grounds to reduce
the bond,
3) a liberal interpretation of the requirement of an appeal bond would serve the
desired objective of resolving controversies on the merits, or
4) the appellants, at the very least exhibited their willingness and/or good faith by
posting a partial bond during the reglementary period.”
Notably, in determining whether the arguments raised by the petitioners in their

motionto reduce bond is a “meritorious ground,” the NLRC is not precluded fromconducting a
preliminary determination of the merits of the appellant’scontentions. And since the intention is
merely to give the NLRC an idea ofthe justification for the reduced bond, the evidence for the
purpose wouldnecessarily be less than the evidence required for a ruling on the merits.
Here, it is not disputed that petitioners filed an appeal memorandum and complied with
the other requirements for perfecting an appeal, save forthe posting of the full amount equivalent
to the monetary award of P12,833,210.00. Instead, petitioners filed a motion to reduce bond
claimingthat they were suffering from liquidity problems and, in support of theirclaim, submitted
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PTI’s audited financial statements which showed a deficit in income. Since thisclaim was not
amply controverted by respondents, and considering furtherthe significance of petitioners’
argument raised in their appeal, i.e., that there exists no employer-employee relationship
between PTI and the individualrespondents, on the basis of which lies their non-liability, the
Court deemsthat the NLRC did not gravely abuse its discretion in deciding that
thesecircumstances constitute meritorious grounds for the reduction of the bond.
The absence of grave abuse of discretion in this case is bolstered bythe fact that
petitioners’ motion to reduce bond was accompanied by a P5,000,000.00 surety bond which was
seasonably posted within the reglementary period to appeal. For purposes of compliance with
the bond requirement under the 2011 NLRC Rules of Procedure, a motion shall be accompanied
by theposting of a provisional cash or surety bond equivalent to ten percent (10%)of the monetary
award subject of the appeal, exclusive of damages, and attorney’s fees. TheCourt deems that the
posting of the aforesaid partial bond, being evidentlymore than ten percent (10%) of the full
judgment award of P12,833,000.00, already constituted substantial compliance with the
governing rules at theonset.
In this relation, it must be clarified that while the partial bond wasinitially tainted with
defects, i.e., that it was initially issued in favor of MTIand not PTI, and that the bonding company,
SSSICI, had no authority totransact business in all courts of the Philippines at that time, these
defects had already been cured by the petitioners’ posting of Supersedeas Bond No.SS-B-10150, in
the full amount of P12,833,000.00, issued on November 8,2004 by the Far Eastern Surety &
Insurance Company, Inc., in timelycompliance with the NLRC’s September 30, 2004 Order.
Verily, thesubsequent completion of the bond, in addition to the reasons above-stated,behooves
this Court to hold that the NLRC actually had sound bases to takecognizance of petitioners’
appeal. As the Court sees it, the NLRC’sreinstatement of petitioners’ appeal in this case was
merely impelled by thedoctrine that letter-perfect rules must yield to the broader interest
ofsubstantial justice, as well as the Labor Code’s mandate to “use every andall reasonable means
to ascertain the facts in each case speedily andobjectively, without regard to technicalities of law
or procedure, all in theinterest of due process.” It is important to emphasize that an act of a
courtor tribunal can only be considered to be tainted with grave abuse ofdiscretion when such
act is done in a capricious or whimsical exercise ofjudgment as is equivalent to lack of
jurisdiction, which clearly is not extantwith respect to the NLRC’s cognizance of petitioners’
appeal before it.
MOUNT CARMEL COLLEGE EMPLOYEES UNION (MCCEU)/RUMOLO S. BASCAR,

MARIBEL TESALUNA, ROLANDO TESALUNA, KENNETH BENIGNOS, MARILYN
MANGULAGNAN, EMELINA I. NACIONAL, JODELYN REBOTON, EVERSITA S. BASCAR,
MAE BAYLEN, ERNA E. MAHILUM, EVELYN R. ANTONES vs. MOUNT CARMEL
COLLEGE, INCORPORATED
In this case, it was not disputed that at the time CBIC issued the appeal bond, it was already
blacklisted by the NLRC. The latter, however, opined that “MCCI should not be faulted if the Bacolod
branch office of the bonding company issued the surety bond” and that “MCCI acted in good faith
when they transacted with the bonding company for the issuance of the surety bond.”
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Good faith, however, is not an excuse for setting aside the mandatory and jurisdictional
requirement of the law. In Cawaling v. Menese, the Court categorically ruled that the defense of
good faith does not render the issued bond valid.
The condition of posting a cash or surety bond is not a meaningless requirement – it is

meant to assure the workers that if they prevail in the case, they will receive the money judgment
in their favor upon the dismissal of the former’s appeal. Such aim is defeated if the bond issued
turned out to be invalid due to the surety company’s expired accreditation. Much more in this case
where the bonding company was blacklisted at the time it issued the appeal bond. The blacklisting
of a bonding company is not a whimsical exercise. When a bonding company is blacklisted, it meant
that it committed certain prohibited acts and/or violations of law, prescribed rules and regulations.
Trivializing it would release a blacklisted bonding company from the effects sought to be achieved
by the blacklisting and would make the entire process insignificant.
Facts:
The petitioners were academic and non-academic personnel employed by Mount Carmel
College, Inc. (MCCI). In April 1999, they were informed of their retrenchment due to the closure
of the elementary and high school departments of MCCI. The petitioners contend this closure
was merely a subterfuge of their termination due to their union activities and as they were in fact
in the process of negotiating with MCCI as regards the CBA when it decided to retrench. The
petitioners were claiming for their remaining separation pay differentials since what they
received was only computed at 15 days for every year of service when they were retrenched.
MCCI counters that it did not commit any act of ULP and alleged that the retrenchment
was valid since it was reeling from financial headwinds brought about by declining enrolment.
Consequently, in the labor case filed by the petitioners, the Labor Arbiter (LA) declared
that they were illegally dismissed, among others, because the alleged losses of MCCI were not
serious as its financial statements showed otherwise. The LA ordered MCCI to pay the petitioners
separation pay in lieu of reinstatement, plus attorney’s fees.
Before the NLRC, the petitioners questioned the appeal bond posted by MCCI.
Nonetheless, the NLRC reversed the LA decision, and in particular held that MCCI’s failure to
attach a copy of the appeal bond and other documents to its appeal is a minor defect and that
MCCI cannot be faulted in procuring the bond from the blacklisted Country Bankers and
Insurance Corporation (CBIC). The CA affirmed this decision by the NLRC.
Issue:
Whether or not the CA and the NLRC are both correct in finding that Mount Carmel
posted a satisfactory and/or legally acceptable bond.
Ruling:
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No, the courts a quo erred in finding the CBIC bond acceptable as an appeal bond.
Art. 223 of the Labor Code, provides that “an appeal by the employer may be perfected only
upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited
by the Commission in the amount equivalent to the monetary award in the judgment appealed
from.”
At the time of the MCCI’s filing of its appeal … in 2004, the rules of procedure in force
was the New Rules of Procedure of the NLRC, as amended by NLRC Resolution No. 01-02, Series
of 2002, [Sec. 6, 2nd par.] of which states “[i]n case of surety bond, the same shall be issued by a
reputable bonding company duly accredited by the Commission or the Supreme Court xxx.”
Sec. 6 requiring the issuance of a bond by a reputable bonding company duly accredited
by the NLRC or the [SC] was substantially carried over to the 2005 Revised Rules of Procedure of
the NLRC and the 2011 NLRC Rules of Procedure. In this regard, the Court has ruled that in a
judgment involving a monetary award, the appeal shall be perfected only upon: (1) proof of
payment of the required appeal fee; (2) posting of a cash or surety bond issued by a reputable
bonding company; and (3) filing of a memorandum of appeal.
In this case, it was not disputed that at the time CBIC issued the appeal bond, it was
already blacklisted by the NLRC. The latter, however, opined that “MCCI should not be faulted if
the Bacolod branch office of the bonding company issued the surety bond” and that “MCCI acted in
good faith when they transacted with the bonding company for the issuance of the surety bond.”
Good faith, however, is not an excuse for setting aside the mandatory and jurisdictional
requirement of the law. In Cawaling v. Menese, the Court categorically ruled that the defense of
good faith does not render the issued bond valid. The Court further ruled that:
“It was improper to honor the appeal bond issued by a surety company which
was no longer accredited by this Court. Having no authority to issue judicial
bonds not only does Intra Strata cease to be a reputable surety company — the
bond it likewise issued was null and void.
“xxx It is not within respondents’ discretion to allow the filing of the appeal bond
issued by a bonding company with expired accreditation regardless of its pending
application for renewal of accreditation. xxx.”
The condition of posting a cash or surety bond is not a meaningless requirement – it is

meant to assure the workers that if they prevail in the case, they will receive the money judgment
in their favor upon the dismissal of the former’s appeal. Such aim is defeated if the bond issued
turned out to be invalid due to the surety company’s expired accreditation. Much more in this
case where the bonding company was blacklisted at the time it issued the appeal bond. The
blacklisting of a bonding company is not a whimsical exercise. When a bonding company is
blacklisted, it meant that it committed certain prohibited acts and/or violations of law,
prescribed rules and regulations. Trivializing it would release a blacklisted bonding company
from the effects sought to be achieved by the blacklisting and would make the entire process
insignificant.
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MICHELIN ASIA APPLICATION CENTER, INC vs. MARIO J. ORTIZ et al
It is clear that the NLRC in due observance of its own procedural rules- had amply justified
its dismissal of Ortiz's appeal in view of his numerous procedural infractions, namely: (a) his failure
to attach to his Memorandum of Appeal a certificate of non-forum shopping in violation of Section
4, Rule VI of the NLRC Rules;(b) his filing of a motion for reconsideration of the NLRC's March 24,
2008 Resolution beyond the 10 day reglementary period in violation of Section 15, Rule VII of the
NLRC Rules; and (c) his filing of a second motion for reconsideration in violation of Section 15, Rule
VII of the NLRC Rules.Time and again, this Court has been emphatic in ruling that the seasonable
filing of a motion for reconsideration within the 10-day reglementary period following the receipt
by a party of any order, resolution or decision of the NLRC, is a mandatory requirement to forestall
the finality of such order, resolution or decision.
Facts:
On March 1, 2003, Ortiz was employed by Michelin Asia Pacific Application Support
Center, Inc. (Michelin ASC) as Personnel Manager and was thereby involved in the processes of
recruitment, probation and employee contract monitoring, medical claims, and payroll, among
others. Later, Michelin ASC sent Ortiz a letter informing him of the termination of his
employment effective the close of business on December 31, 2006 on the ground of redundancy.
It also notified the Department of Labor and Employment - Regional Office about Ortiz's
intended termination and submitted an Establishment Termination Report.
On December 6, 2006, Ortiz accepted a separation package in the amount of

P2,225,561.66 and executed a Release, Waiver and Quitclaim (quitclaim) in favor of Michelin ASC.
Ortiz also signed a Final Pay Computation evidencing payment of the said amount.This
notwithstanding, Ortiz, on February 27, 2007, filed a complaint for illegal dismissal against
Michelin ASC.
The Labor Arbiter (LA) dismissed the illegal dismissal complaint. The NLRC dismissed
Ortiz's appeal for not having been duly perfected, observing that his Memorandum of Appeal
was not accompanied by a certificate of non-forum shopping in violation of Section 4, Rule VI of
the New Rules of Procedure of the NLRC. Undeterred, Ortiz, on December 12, 2008, filed a
petition for certiorari before the CA. The CA annulled the NLRC's Resolutions, thus directing the
NLRC to give due course to Ortiz's appeal. Mainly, the CA ruled that there was prima facie merit
in Ortiz's contention and found it fitting to relax the procedural rules.
Issue:
Whether or not the CA properly granted Ortiz's petition for certiorari and annulled the
NLRC Resolutions
Ruling:
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No, the SC reversed the CA Decision and reinstates the NLRC Resolutions dismissing
Ortiz's appeal.
To justify the grant of the extraordinary remedy of certiorari, Ortiz must satisfactorily
show that the court or quasi-judicial authority gravely abused the discretion conferred upon
them. Grave abuse of discretion connotes judgment exercised in a capricious and whimsical
manner that is tantamount to lack of jurisdiction. To be considered "grave," the discretionary
authority must be exercised in a despotic manner by reason of passion or personal hostility, and
must be so patent and gross as to amount to an evasion of positive duty or to a virtual refusal to
perform the duty enjoined by or to act at all in contemplation of law.
After evaluating the relevant antecedents of this case, the Court comes to the conclusion
that no grave abuse of discretion, in the sense above-described, was committed by the NLRC in
dismissing Ortiz's appeal. As seen from the preceding factual narration, it is clear that the NLRC
- in due observance of its own procedural rules - had amply justified its dismissal of Ortiz's appeal
in view of his numerous procedural infractions, namely: (a) his failure to attach to his
Memorandum of Appeal a certificate of non-forum shopping in violation of Section 4, Rule VI of
the NLRC Rules;(b) his filing of a motion for reconsideration of the NLRC's March 24, 2008
Resolution beyond the 10 day reglementary period in violation of Section 15, Rule VII of the NLRC
Rules; and (c) his filing of a second motion for reconsideration in violation of Section 15, Rule VII
of the NLRC Rules
Of significant consideration is Ortiz's violation of the mandatory requirement on the

timely filing of a motion for reconsideration, which thus rendered the NLRC's initial March 24,
2008 Resolution final and executory.
Time and again, this Court has been emphatic in ruling that the seasonable filing of a
motion for reconsideration within the 10-day reglementary period following the receipt by a party
of any order, resolution or decision of the NLRC, is a mandatory requirement to forestall the
finality of such order, resolution or decision. The statutory base for this is found in Article 223 of
the Labor Code and Section 14, Rule VII of the New Rules of Procedure of the National Labor
Relations Commission.
A definitive final judgment such as the NLRC's March 24, 2008 Resolution however
erroneous, is no longer subject to change or revision." Settled is the rule that "a decision that has
acquired finality becomes immutable and unalterable. This quality of immutability precludes the
modification of a final judgment, even if the modification is meant to correct erroneous
conclusions of fact and law." Hence, by the foregoing consideration alone, the CA should have
dismissed Ortiz's certiorari petition. But this is not all.
To compound his mistakes, Ortiz even filed a second motion for reconsideration, which
is a prohibited pleading under the NLRC Rules. As a prohibited pleading, the filing of said motion
could not have tolled the running of the 60-day reglementary period for the filing of a petition
for certiorari under Rule 65 of the Rules of Court before the CA. Thus, since the NLRC's June 24,
2008 Resolution assailed by Ortiz's second motion for reconsideration was received by him on
July 8, 2008, while his petition for certiorari before the CA was filed more than 60 days thereafter,
688 | P a g
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or on December 12, 2008, his certiorari petition should have been dismissed outright for having
been filed out of time.
ANDY D. BALITE, DELFIN M. ANZALDO AND MONALIZA DL. BIHASA vs. SS VENTURES
INTERNATIONAL, INC., SUNG SIK LEE AND EVELYN RAYALA
G.R. No. 195109, February 04, 2015, J. Perez
Section 6, Rule VI of the NLRC Rules of Procedure provides that in case the decision of the
Labor Arbiter, or the Regional Director involves a monetary award, an appeal by the employer shall
be perfected only upon the posting of a bond, which shall either be in the form of cash deposit or
surety bond equivalent in amount to the monetary award, exclusive of damages and attorney’s fees.
However, in line with Sara Lee Case and the objective that the appeal on the merits to be threshed
out soonest by the NLRC, the Court holds that the appeal bond posted by the respondents in the
amount of P100,000.00 which is equivalent to around 20% of the total amount of monetary bond is
sufficient to perfect an appeal. With the employer’s demonstrated good faith in filing the motion to
reduce the bond on demonstrable grounds coupled with the posting of the appeal bond in the
requested amount, as well as the filing of the memorandum of appeal, the right of the employer to
appeal must be upheld.
Facts:
SS Ventures International, Inc. is engaged in the business of manufacturing footwear

products. It is represented by respondents Sung Sik Lee and Evelyn Rayala. Petitioners Balite,
Bihasa and Anzaldo were regular employees of the respondent company until their employments
were severed for violation of various company policies. The three employees charged respondents
with illegal dismissal and recovery of backwages, 13th month pay before the Labor Arbiter.
The Labor Arbiter ruled in favor of petitioners. Aggrieved, respondents interposed an

appeal by filing a Notice of Appeal and paying the corresponding appeal fee. However, instead of
filing the required appeal bond equivalent to the total amount of the monetary award which is
P490,308.00, respondents filed a Motion to Reduce the Appeal Bond to P100,000.00 and
appended therein a manager’s check bearing the said amount. Respondents cited financial
difficulty as justification for their inability to post the appeal bond in full due to partial shutdown
of respondent company.
In a Resolution, the NLRC dismissed the appeal filed by the respondents for non-
perfection. The NLRC ruled that posting of an appeal bond equivalent to the monetary award is
indispensable for the perfection of the appeal and the reduction of the appeal bond, absent any
showing of meritorious ground to justify the same, is not warranted in the instant case.
On certiorari, the Court of Appeals reversed the NLRC Decision and allowed the
relaxation of the rule on posting of the appeal bond. According to the appellate court, there was
substantial compliance with the rules for the perfection of an appeal because respondents
seasonably filed their Memorandum of Appeal and posted an appeal bond in the amount of
P100,000.00. While the amount of the appeal bond posted was not equivalent to the monetary
689 | P a g
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award, the Court of Appeals ruled that respondents were able to sufficiently prove their
incapability to post the required amount of bond.
Issue:
Whether or not the honorable CA committed grave abuse of discretion amounting to lack
or in excess of jurisdiction when it reversed the resolution of the NLRC dismissing respondents’
appeal for non-perfection thereof.
Ruling:
No. Section 6, Rule VI of the NLRC Rules of Procedure provides:
Section 6. Bond. - In case the decision of the Labor Arbiter, or the Regional Director involves a
monetary award, an appeal by the employer shall be perfected only upon the posting of a bond,
which shall either be in the form of cash deposit or surety bond equivalent in amount to the
monetary award, exclusive of damages and attorney’s fees.
Taking into consideration the circumstances in Sara Lee Case, this determined what is
the reasonable amount of appeal bond. This court in Sara Lee Case underscored the fact that the
amount of 10% of the award is not a permissible bond but is only such amount that shall be
deemed reasonable in the meantime that the appellant’s motion is pending resolution by the
Commission. The actual reasonable amount yet to be determined is necessarily a bigger amount.
In an effort to strike a balance between the constitutional obligation of the state to afford
protection to labor on the one hand, and the opportunity afforded to the employer to appeal on
the other, this court considered the appeal bond in the amount of P725M which is equivalent to
25% of the monetary award sufficient to perfect the appeal. By reducing the amount of the appeal
bond in this case, the employees would still be assured of at least substantial compensation, in
case a judgment award is affirmed. On the other hand, management will not be effectively denied
of its statutory privilege of appeal.
In line with Sara Lee and the objective that the appeal on the merits to be threshed out
soonest by the NLRC, the Court holds that the appeal bond posted by the respondents in the
amount of P100,000.00 which is equivalent to around 20% of the total amount of monetary bond
is sufficient to perfect an appeal. With the employer’s demonstrated good faith in filing the
motion to reduce the bond on demonstrable grounds coupled with the posting of the appeal
bond in the requested amount, as well as the filing of the memorandum of appeal, the right of
the employer to appeal must be upheld. This is in recognition of the importance of the remedy
of appeal, which is an essential part of our judicial system and the need to ensure that every party
litigant is given the amplest opportunity for the proper and just disposition of his cause freed
from the constraints of technicalities.
COURT OF APPEALS
CLUB FILIPINO, INC. and ATTY. ROBERTO F. DE LEON v. BENJAMIN

BAUTISTA, et al.
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The grant of leave to file the second Motion for Reconsideration does not toll the 15-
day period.
Facts:
CLUFEA, a union, had made several demands on Club Filipino, Inc. to

negotiate a new agreement. However, for failure to come up with an agreement,
CLUFEA staged a strike on the ground of bargaining deadlock. Club Filipino Inc.,
filed before the NLRC a petition to declare the strike illegal. The LA declared CLUFEA’s
strike "procedurally infirm." The appeal filed was denied. On appeal before the CA, the
latter held that the LA gravely abused his discretion in declaring CLUFEA’s strike illegal.
Club Filipino, Inc. filed a Petition for Review on Certiorari with the SC which agreed
with the CA’s decision. Club Filipino, Inc. filed a Motion for Reconsideration, which the
court denied with finality. Limpingco and Fajardo entered its appearance for Club
Filipino, Inc. and simultaneously filed a Motion for Leave to file and admit the attached
Supplemental Motion for Reconsideration. Club Filipino, Inc. filed its Motion for Leave
to File and Admit further Pleading/Motion, alleging that the court failed to consider
its Supplemental Motion for Reconsideration. Hence, Club Filipino, Inc. prayed that
the court resolve the Supplemental Motion for Reconsideration.
Issue:
Whether the filing of the Supplemental Motion for Reconsideration prevented

this Court’s previous Resolution from becoming final and executory
Ruling:
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No. As a general rule, the filing of second Motions for Reconsideration of a
judgment or final resolution is prohibited. For this court to entertain second Motions
for Reconsideration, the second Motions must present "extraordinarily persuasive
reasons and only upon express leave first obtained." The grant of leave to file the
motion, however, did not prevent this court’s previous Resolution from becoming
final and executory. A decision or resolution of this court is deemed final and executory
after the lapse of 15 days from the parties’ receipt of a copy of the decision or
resolution. The grant of leave to file the second Motion for Reconsideration does not
toll this 15-day period. It only means that the Entry of Judgment first issued may be
lifted should the second Motion for Reconsideration be granted. Since the court did
not issue any TRO to enjoin the execution of the CA’s Decision, the NLRC correctly
implemented the CA’s Decision in the illegal strike case.
ANTONIO M. MAGTALAS v. ISIDORO A. ANTE, RAUL C. ADDATU, NICANOR B.

PADILLA, JR., DANTE Y. CENIDO, AND RHAMIR C. DALIOAN
Consolidation of cases will no longer be acted upon if the respondents already

executed a waiver of their claims, as such waiver renders the case moot and academic.
Facts:
Respondents were engaged by the Philippine School of Business

Administration (PSBA) as professional reviewers at its CPA Review Center and were
paid on an hourly basis. However, for one school year, they were not given any review
load. They sent a letter to Jose Peralta, the President of PSBA, requesting for the
payment of termination or retirement benefits for such failure to give them review
load. Antonio Magtalas, the Review Director, and Peralta, on separate letters, replied
that they were not entitled to retirement or termination benefits because there exists
no employer-employee relationship between them, but a professional-client
relationship. Respondent filed a complaint for constructive illegal dismissal. The LA
ruled in favor of the respondents. Magtalas alone then filed with the NLRC a separate
appeal with a motion to reduce bond. PSBA and Peralta, on the other hand, separately
posted a cash bond with a motion to reduce bond. The NLRC dismissed both appeals
on the ground of non-perfection as the cash bonds posted were not reasonable
amounts. Magtalas, filed a Petition for Certiorari with the CA, separately from PSBA
and Peralta. The same was dismissed by the CA, and affirmed the ruling of the NLRC.
The parties filed their respective petitions before the Court, and during the pendency
of these petitions, a Release, Waiver, and Quitclaim and an Addendum were executed
692 | P a g
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before the LA, stating that the claims of the respondents have already been fully
satisfied. In view thereof, PSBA and Peralta filed a motion to dismiss the petitions,
which the Court granted accordingly. However, another division of the Court issued
a resolution directing another division to study whether the petition of Magtalas
should be consolidated with the petitions of PSBA and Peralta, despite having already
been closed and terminated.
Issue:
Whether the petition of Magtalas should be consolidated with the

petitions of PSBA and
P
eralta.
Rulin
g:
No. The Release, Waiver, and Quitclaim and the Addendum executed by the
parties have rendered the case moot and academic. Not one of the respondents
has assailed the validity and enforceability of the two documents. None of the
respondents also filed any opposition when PSBA
693 | P a g
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and Peralta filed a motion to dismiss petitions in view of the execution of both
documents Also, there was no opposition from respondents when the Court granted
the motion to dismiss.
PHILIPPINE TRANSMARINE CARRIERS, INC., CARLOS C. SALINAS, and NORWEGIAN

CREW MANAGEMENT A/S v. CESAR C. PELAGIO
G.R. No. 211302, August 12, 2015, PERLAS-

BERNABE, J.
A conditional Satisfaction of Judgment, although deemed as a compromise

agreement, does not render the certiorari proceedings before the CA moot and academic.
Facts:
A claim for permanent disability benefits was filed by the respondent. The
LA ruled that respondent was suffering from a permanent partial disability.
Dissatisfied, respondent appealed to the NLRC which held that he is entitled to
permanent total disability benefits. The MR was denied. Aggrieved, petitioners filed
a petition for certiorari before the CA. During the pendency of the certiorari
proceedings before the CA, the parties executed a Satisfaction of Judgment stating
that petitioners had already given respondent the amount of 3.3M as full and complete
satisfaction of the NLRC ruling. However, it is likewise stated therein that such
satisfaction of judgment “is without prejudice to petitioners’ petition for certiorari
pending with the CA,” and that the same was “being
694 | P a g
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made only to prevent imminent execution being undertaken by the

NLRC and respondent.” Subsequently, the NLRC issued an Order approving the
settlement and considered the case closed.
Issue:
Whether the execution of the Satisfaction of Judgment between the parties

rendered the certiorari proceedings before the CA moot and academic
Ruling:
No. The parties had entered into a Satisfaction of Judgment signifying that
petitioners had already given the respondent the amount of 3.3M as full and complete
satisfaction of the NLRC ruling. While this document may be properly deemed as a
compromise agreement, it is conditional in nature, considering that it is without
prejudice to the certiorari proceedings pending before the CA, i.e., it obliges respondent
to return the aforesaid proceeds to petitioners should the CA ultimately rule in the
latter’s favor. The documents do not have any clause prohibiting either of the parties
from seeking further redress against each other. Thus, both petitioners and Pelagio may
pursue any of the available legal remedies should any eventuality arise in their dispute,
i.e., when the CA renders a ruling adverse to their respective interests. The agreement
entered into by the petitioners and respondent is fair and is not prejudicial to either
party, and thus, such agreement did not render the certiorari proceedings before the CA
moot and academic.
VETYARD TERMINALS & SHIPPING SERVICES, INC./

MIGUEL S. PEREZ, SEAFIX, INC.
vs. BERNARDINO D. SUAREZ
G.R. No. 199344, March 5, 2014
J. ABAD
Where the accused incurred cataract and pseudophakia during his employment, the Court
cannot grant the awarding of disability benefits where Suarez did not present substantial proof that
his eye ailment was work-related. Other than his bare claim that paint droppings accidentally
splashed on an eye causing blurred vision, he adduced no note or recording of the supposed accident.
Nor did he present any record of some medical check-up, consultation, or treatment that he had
undergone. Besides, while paint droppings can cause eye irritation, such fact alone does not ipso facto
establish compensable disability. Awards of compensation cannot rest on speculations or
presumptions; Suarez must prove that the paint droppings caused his blindness.
Facts:
Page 695 of 827

Bernardino D. Suarez was hired by petitioners Vetyard Terminals and Shipping Services, Inc.,
Miguel S. Perez, and Seafix, Inc. (collectively referred to here as the Company) to work as
Welder/Fitter on board MV "1st Lt. Baldomero Lopez". Suarez began to work on January 9, 2007 but
was repatriated home four months later in May 2007. When examined at the Medical City,
respondent Suarez was found to be suffering from posterior cataract and pseudophakia. On the
next day, Dr. Victor Caparas examined him anew and gave a more specific diagnosis: "right eye-
posterior subs capsular cataract" and "left eye- pseudophakia, posterior capsule opacification." Dr.
Caparas issued a certification that Suarez's ailment, which commonly occurs after cataract
operation, is not associated with his claim that paint injured an eye while he was working on board
the vessel.
On August 23, 2007, Suarez filed against the Company a complaint for total and permanent
disability benefits, sickness allowance, and reimbursement of medical expenses, alleging that he
was painting the vessel’s ceiling in February 2007 when paint accidentally hit his eye for which he
suffered pain. He claimed that he afterwards experienced blurred vision, yet the Company refused
to give him medical and financial assistance. The Company countered that Suarez was not entitled
to disability benefits since his illness was not work-related and he deliberately concealed a prior
cataract operation. Still the Company paid for his emergency and consultation fees.
Labor Arbiter (LA) dismissed Suarez’s claim, holding that cataract was the primary cause of his
ailment, not paint droppings. Suarez failed to prove that his illness was work-related. National
Labor Relations Commission (NLRC) affirmed the LA’s ruling. CA ruled in favor if Suarez and
reversed the ruling of NLRC, hence, the instant petition.
Issue:
Whether the CA erred in failing to hold that the NLRC gravely abused its discretion when it found
that Suarez’s eye ailment is compensable.
Ruling:
SC grants the petition.
An injury or illness is compensable when, first, it is work-related and, second, the injury or illness
existed during the term of the seafarer’s employment contract. Section 32(A) of the 2000 POEA
Amended Standard Terms and Condition further provides that for an occupational disease and the
resulting disability to be compensable, the following need to be satisfied: (1) the seafarer's work
must involve the risks described; (2) the disease was contracted as a result of the seafarer's exposure
to the described risks; (3) the disease was contracted within a period of exposure and under such
other factors necessary to contract it; and (4) there was no notorious negligence on the part of the
seafarer.
Suarez had been diagnosed to suffer from posterior subscapsular cataract on his right eye and
pseudophakia, and posterior capsule opacification on his left eye. For these to be regarded as
occupational diseases, Suarez had to prove that the risk of contracting the disease was increased by
the conditions under which he worked. The evidence must be real and substantial, and not merely
apparent. It must constitute a reasonable basis for arriving at a conclusion that the conditions of
Page 696 of 827

his employment caused the disease or that such conditions aggravated the risk of contracting the
illness.
Here, Suarez did not present substantial proof that his eye ailment was work-related. Other than
his bare claim that paint droppings accidentally splashed on an eye causing blurred vision, he
adduced no note or recording of the supposed accident. Nor did he present any record of some
medical check-up, consultation, or treatment that he had undergone. Besides, while paint
droppings can cause eye irritation, such fact alone does not ipso facto establish compensable
disability. Awards of compensation cannot rest on speculations or presumptions; Suarez must
prove that the paint droppings caused his blindness.
The Court is inclined to accept the findings of Dr. Caparas, the company-designated physician, that
it was cataract extraction, not paint droppings that caused Suarez’s ailment. The definitions of the
imputed medical conditions plainly do not indicate work-relatedness.
Thus, posterior subscapsular cataract is the most common abnormality affecting the lens
epithelium. Such illness may be age-related or occur as a complication of other conditions such as
intraocular inflammation, steroid administration, vitreoretinal surgery, and trauma and may also
be related to irradiation and systemic conditions such as diabetes mellitus. Pseudophakia indicates
presence of artificial intraocular lens (IOL) replacing normal human lens and posterior capsule
opacification is the most frequent complication of cataract surgery. By their nature, these ailments
are more the result of eye disease than of one’s kind of work.
Besides, even if the Court were to assume that Suarez’s eye ailment was work-related, he still cannot
claim disability benefits since he concealed his true medical condition. The records show that when
Suarez underwent pre-employment medical examination (PEME), he represented that he was
merely wearing corrective lens. He concealed the fact that he had a cataract operation in 2005. He
told the truth only when he was being examined at the Medical City on May 18, 2007. This willful
concealment of a vital information in his PEME disqualifies him from claiming disability benefits
pursuant to Section 20(E) of the POEA-SEC which provides that "a seafarer who knowingly conceals
and does not disclose past medical condition, disability and history in the pre-employment medical
examination constitutes fraudulent misrepresentation and shall disqualify him from any
compensation and benefits."
FRANCIS C. CERVANTES vs.CITY SERVICE CORPORATION

and VALENTIN PRIETO, JR.,
G.R. No. 191616, April 18, 2016
FACTS
The instant petition stemmed from a Complaint for illegal dismissal dated December 19, 2007 filed
before the National Labor Relations Commission (NLRC) by petitioner Francis C. Cervantes against
respondents City Service Corporation and/or Valentin Prieto, Jr. for illegal dismissal, underpayment
of salaries/wages, overtime pay, holiday pay, holiday premium, rest day premium, service incentive
leave, separation pay, ECOLA, moral and exemplary damages, and attorney's fees.
Page 697 of 827

On June 30, 2008, the Labor Arbiter, in NLRC-NCR-12-14080-07, dismissed the complaint for lack
of merit. It found that it was Cervantes who refused to work after he was transferred to another
client of City Service. The Labor Arbiter stressed that employees of local manpower agencies, which
are assigned to clients, do not become employees of the client.
Cervantes appealed the Labor Arbiter's decision, but was denied in a Resolution dated February 5,
2008. Undaunted, Cervantes moved for reconsideration, but was denied anew in a Resolution dated
July 22, 2009.
Thus, on October 6, 2009, Cervantes, through counsel Atty. Angelito R. Villarin, filed before the CA
a Petition for Certiorari under Rules 65 of the Rules of Court, alleging grave abuse of discretion
amounting to lack or excess of jurisdiction on the part of the NLRC in affirming the assailed
Resolutions dated February 9, 2009 and July 22, 2009 which dismissed Cervantes' complaint for
illegal dismissal and denied his motion for reconsideration, respectively.
In the assailed Resolution dated October 30, 2009, the CA dismissed Cervantes' petition for
certiorari for having been filed out of time. The appellate court argued that, by petitioner's
admission, his mother received the assailed Resolution of the NLRC denying his motion for
reconsideration on July 30, 2009. Thus, counting sixty (60) days therefrom, petitioner had only until
September 28, 2009 within which to file the petition. However, the petition for certiorari was filed
only on October 7, 2009, or nine (9) days late.
Cervantes moved for reconsideration, but was denied in Resolution dated March 11, 2010.
ISSUES
Whether the CA erred in reckoning the period for filing a petition for certiorari from the date of
receipt by petitioner’s mother of the assailed resolution of the NLRC.
Whether petitioner was illegally dismissed.
RULING
In practice, service means the delivery or communication of a pleading, notice or some other paper
in a case, to the opposite party so as to charge him with receipt of it and subject him to its legal
effect. The purpose of the rules on service is to make sure that the party being served with the
pleading, order or judgment is duly informed of the same so that he can take steps to protect his
interests; i.e., enable a party to file an appeal or apply for other appropriate reliefs before the
decision becomes final.
The rule is – where a party appears by attorney in an action or proceeding in a court of record, all
notices required to be given therein must be given to the attorney of record; and service of the
court's order upon any person other than the counsel of record is not legally effective and binding
upon the party, nor may it start the corresponding reglementary period for the subsequent
procedural steps that may be taken by the attorney. Notice should be made upon the counsel of
record at his exact given address, to which notice of all kinds emanating from the court should be
sent in the absence of a proper and adequate notice to the court of a change of address.
Page 698 of 827

When a party is represented by counsel of record, service of orders and notices must be made upon
said attorney; and notice to the client and to any other lawyer, not the counsel of record, is not
notice in law.
The NLRC Rules governing the issuance and service of notices and resolutions is, likewise, no
different:
SECTION 4. SERVICE OF NOTICES, RESOLUTIONS, ORDERS AND DECISIONS. - a) Notices

and copies of resolutions or orders, shall be served personally upon the parties by the bailiff or
duly authorized public officer within three (3) days from his/her receipt thereof or by registered
mail or by private courier;
b) In case of decisions and final awards, copies thereof shall be served on both parties
and their counsel or representative by registered mail or by private courier; Provided
that, in cases where a party to a case or his/her counsel on record personally seeks service
of the decision upon inquiry thereon, service to said party shall be deemed effected as herein
provided. Where parties are numerous, service shall be made on counsel and upon such
number of complainants, as may be practicable and shall be considered substantial
compliance with Article 224 (a) of the Labor Code, as amended. For purposes of appeal,
the period shall be counted from receipt of such decisions, resolutions, or orders by
the counsel or representative of record.
c) The bailiff or officer serving the notice, order, or resolution shall submit his/her return
within two (2) days from date of service thereof, stating legibly in his/her return his/her
name, the names of the persons served and the date of receipt, which return shall be
immediately attached and shall form part of the records of the case. In case of service by
registered mail or by private courier, the name of the addressee and the date of receipt of
the notice, order or resolution shall be written in the return card or in the proof of service
issued by the private courier. If no service was effected, the reason thereof shall be so stated.
Also, in Ginete v. Sunrise Manning Agency, et al., the Court held that "the period for filing a petition
for certiorari should be reckoned from the time the counsel of record received a copy of the
Resolution denying the motion for reconsideration." The Court further clarified that the period or
manner of "appeal" from the NLRC to the Court of Appeals is governed by Rule 65, pursuant to the
ruling of the Court in the case of St. Martin Funeral
Homes v. NLRC in light of Section 4 of Rule 65, as amended, which states that the "petition may be
filed not later than sixty (60) days from notice of the judgment, or resolution sought to be assailed."
The Court further expounded therein, to wit:
Corollarily, Section 4, Rule III of the New Rules of Procedure of the NLRC expressly
mandates that "(F)or the purpose(s) of computing the period of appeal, the same
shall be counted from receipt of such decisions, awards, or orders by the counsel of
record. "Although this rule explicitly contemplates an appeal before tile Labor Arbiter
and tile NLRC, we do not see any cogent reason why tile same rule should not apply to
petitions for certiorari filed with the Court of Appeals from decisions of the NLRC.
This procedure is in line with the established rule that notice to counsel is notice to
party and when a party is represented by counsel, notices should be made upon the
Page 699 of 827

counsel of record at his given address to which notices of all kinds emanating from the
court should be sent. It is to be noted also that Section 7 of the NLRC Rules of
Procedure provides that "(A)ttorneys and other representatives of parties shall have
authority to bind their clients in all matters of procedure"' a provision which is
similar to Section 23, Rule 138 of the Rules of Court. More importantly, Section 2,
Rule 13 of the 1997 Rules of Civil Procedure analogously provides that if any party
has appeared by counsel, service upon him shall be made upon his counsel.
In Bello v. NLRC, citing anew Ginete v. Sunrise Manning Agency, et al., the Court held that "the
period for filing a petition for certiorari should be reckoned from the time the counsel of record
received a copy of the Resolution denying the motion for reconsideration."
Thus, based on the foregoing, while in cases of decisions and final awards, copies thereof shall be
served on both parties and their counsel/representative by registered mail, for purposes of appeal,
however, the period shall be counted from receipt of such decisions, resolutions, or orders by the
counsel or representative of record.
In the instant case, it is not disputed that during the NLRC proceedings, petitioner was represented
by counsel, Atty. Romeo S. Occena, as in fact the NLRC albeit belated, furnished a copy of its July
29, 2009 Resolution to Atty. Occena on November 19, 2009. Petitioner's several motions during the
proceedings before the NLRC were likewise all signed by Atty. Occena as counsel. Consequently,
following the policy that the period to appeal shall be counted from receipt of resolution by the
counsel of record, considering that petitioner is represented by a counsel, the latter is considered
to have received notice of the NLRC Resolution dated July 22, 2009 on November 19, 2009, the date
when his representative and counsel, Atty. Occena was served notice thereof and not on July 30,
2009, or the date when petitioner's mother received the same decision.
Accordingly, the 60-day period for filing the petition for certiorari with the CA should be counted
from the receipt by the petitioner's counsel of a copy of the NLRC Decision dated July 22, 2009 on
November 19, 2009. It should be stressed that the NLRC sent the notice of Resolution to petitioner's
counsel only on November 19, 2009. While there was a notice of Resolution dated July 22, 2009,
said notice was not served upon petitioner's counsel. Thus, strictly speaking, the running of the 60-
day period to appeal should be counted from November 19, 2009 when the notice of Resolution
dated July 22, 2009 was served on petitioner's counsel. Considering that petitioner filed his petition
for certiorari on October 7, 2009, the same was well within the prescribed period to appeal. The
petition for certiorari was filed on time.
However, the foregoing discussion notwithstanding, we have reviewed the records of the case at
bar and find no reversible error committed by the NLRC concerning the merits of the present
petition. While the petition for certiorari was timely filed with the CA, the instant petition would
still suffer the same verdict of dismissal in view of the identical findings of the Labor Arbiter and
the NLRC. The findings of fact made by Labor Arbiters and affirmed by the NLRC are not only
entitled to great respect, but even finality, and are considered binding if the same are supported by
We find that the NLRC correctly upheld petitioner's dismissal to be valid. Records show that
petitioner was relieved from his post in UST due to his poor work performance and attitude.
However, while petitioner was removed from UST, private respondent immediately reassigned him
Page 700 of 827

to Mercury Drug Fairview which he refused to accept. Despite notices requiring him to report back
to work, petitioner refused to heed. Considering that it was petitioner who went on absence without
official leave (AWOL), the same negates the allegation of illegal dismissal.
SUGARSTEEL INDUSTRIAL, INC. AND MR. BEN YAPJOCO v. VICTOR ALBINA, VICENTE
UY AND ALEX VELASQUEZ
G.R. No. 168749, June 06, 2016
FACTS:
Respondents Victor Albina, Vicente Uy and Alex Velasquez charged the petitioners in the Regional
Arbitration Branch of the National Labor Relations Commission (NLRC) in Cebu City with having
illegally dismissed them as kettleman, assistant kettleman, and inspector, respectively.
At around 4:00 a.m. of August 16, 1996, a clog-up occurred at the kettle sheet guide. At that time,
the petitioners were on duty working in their assigned areas. As a consequence, twenty (20) GI
sheets were clogged-up inside the kettle, causing damage to the private respondent. On the same
day, a memorandum was issued by Mr. Ben S. Yapjoco, manager of the private respondent,
requiring all the petitioners to submit written explanation on the aforesaid incident and why no
action shall be taken against them for gross negligence. In response to the memorandum, the
petitioners submitted their respective explanations.
Subsequently, in a memorandum dated August 20, 1996, Mr. Yapjoco informed all the petitioners
to attend a conference in connection with the aforesaid incident. On August 26, 1996, individual
notices of suspension were sent to the petitioners pending final decision relative to the incident.
On August 29, 1996, Mr. Yapjoco again sent individual notices of termination of employment to all
petitioners, stating that after the management conducted an investigation on the circumstances
surrounding the incident, the petitioners were found guilty of gross neglect of duty and by reason
thereof, they were terminated from their employment.
In the decision rendered on April 27, 1998, the Labor Arbiter (LA) ruled that although the dismissal
of the respondents was justified because of their being guilty of gross negligence, the petitioners
should pay them their separation pay at the rate of 1/2 month per year of service.
On appeal, the NLRC, observing that the ground stated in support of the respondents' appeal - that
"the decision with all due respect, is not supported by evidence and is contrary to the facts
obtaining" - was not among those expressly enumerated under Article 223 of the Labor Code, upheld
the LA's decision on December 23, 1998.
On May 8, 2000, the NLRC denied the respondents’ motion for reconsideration.
In the judgment promulgated on January 9, 2004, the CA granted the petition for certiorari. It ruled
that the NLRC's affirmance of the LA's decision did not accord with the evidence on record and the
applicable law and jurisprudence; that the dismissal of the respondents' appeal constituted grave
abuse of discretion amounting to lack or excess of jurisdiction; and that based on its review the
respondents had been illegally dismissed considering that the petitioners did not establish that the
respondents were guilty of gross and habitual neglect.
Page 701 of 827

ISSUE
The crux of this appeal is the extent of the authority of the Court of Appeals (CA) to review in a
special civil action for certiorari the findings of fact contained in the rulings of the National Labor
Relations Commission (NLRC). The petitioners insist that the CA's review is limited to the
determination of whether or not the NLRC committed grave abuse of discretion amounting to lack
or excess of jurisdiction; hence, it cannot disregard the findings of fact of the NLRC to resolve the
issue of illegal dismissal. The respondents maintain the contrary.
RULING
The CA did not exceed its jurisdiction by reviewing the evidence and deciding the case on the merits
despite the judgment of the NLRC already being final. We have frequently expounded on the
competence of the CA in a special civil action for certiorari to review the factual findings of the
NLRC. In Univac Development, Inc. v. Soriano, for instance, we have pronounced that the CA is
"given the power to pass upon the evidence, if and when necessary, to resolve factual issues,"
without contravening the doctrine of the immutability of judgments. The power of the CA to pass
upon the evidence flows from its original jurisdiction over the special civil action for certiorari, by
which it can grant the writ of certiorari to correct errors of jurisdiction on the part of the NLRC
should the latter's factual findings be not supported by the evidence on record; or when the granting
of the writ of certiorari is necessary to do substantial justice or to prevent a substantial wrong; or
when the findings of the NLRC contradict those of the LA; or when the granting of the writ of
certiorari is necessary to arrive at a just decision in the case. The premise is that any decision by the
NLRC that is not supported by substantial evidence is a decision definitely tainted with grave abuse
of discretion. Should the CA annul the decision of the NLRC upon its finding of jurisdictional error
on the part of the latter, then it has the power to fully lay down whatever the latter ought to have
decreed instead as the records warranted. The judicial function of the CA in the exercise of its
certiorari jurisdiction over the NLRC extends to the careful review of the NLRC's evaluation of the
evidence because the factual findings of the NLRC are accorded great respect and finality only when
they rest on substantial evidence. Accordingly, the CA is not to be restrained from revising or
correcting such factual findings whenever warranted by the circumstances simply because the
NLRC is not infallible. Indeed, to deny to the CA this power is to diminish its corrective jurisdiction
through the writ of certiorari.
The policy of practicing comity towards the factual findings of the labor tribunals does not preclude
the CA from reviewing the findings, and from disregarding the findings upon a clear showing of the
NLRC's capricious, whimsical or arbitrary disregard of the evidence or of circumstances of
considerable importance crucial or decisive of the controversy. In such eventuality, the writ of
certiorari should issue, and the CA, being also a court of equity, then enjoys the leeway to make its
own independent evaluation of the evidence of the parties as well as to ascertain whether or not
substantial evidence supported the NLRC's ruling.
We uphold the CA's setting aside of the decision of the NLRC.
To start with, the NLRC affirmed the decision of the LA based on its observation that the alleged
ground for the respondents' appeal - that "the decision with all due respect, is not supported by
Page 702 of 827

evidence and is contrary to the facts obtaining" - was not one of those expressly enumerated under
Article 223 of the Labor Code.
We cannot sustain the NLRC's basis for its affirmance of the LA's decision. Article 223 of the Labor
Code pertinently states:
Art. 223. Appeal - Decisions, awards, or orders of the Labor Arbiter are final and
executory unless appealed to the Commission by any or both parties within ten (10)
calendar days from receipt of such decisions, awards, or orders. Such appeal may be
entertained only on any of the following grounds:
(a) If there is prima facie evidence of abuse of discretion on the part of the Labor
Arbiter;
(b) If the decision, order or award was secured through fraud or coercion, including
graft and corruption;
(c) If made purely on questions of law; and
(d) If serious errors in the findings of facts are raised which would cause grave or
irreparable damage or injury to the appellant.
x x x x.
In our view, the CA acted judiciously in undoing the too literal interpretation of Article 223 of the
Labor Code by the NLRC. The enumeration in the provision of the grounds for an appeal actually
encompassed the ground relied upon by the respondents in their appeal. Their phrasing of the
ground, albeit not hewing closely (or literally) to that of Article 223, related to the first and the last
grounds under the provision. In dismissing the appeal on that basis, the NLRC seemed to prefer
form and technicality to substance and justice. Thereby, the NLRC acted arbitrarily, for its dismissal
of the appeal became entirely inconsistent with the constitutional mandate for the protection to
labor.
Secondly, the CA's overturning of the NLRC's ruling was based on its finding that the petitioners
did not sufficiently establish the just and valid cause to dismiss the respondents from their
employment. As the assailed judgment indicates, the CA's review was thorough and its ruling
judicious. The CA thereby enforced against the petitioners the respected proposition that it was the
employer who bore the burden to show that the dismissal was for just and valid cause. The failure
of the petitioners to discharge their burden of proof as the employers necessarily meant that the
dismissal was illegal. The outcome could not be any other way.
In order to warrant the dismissal of the employee for just cause, Article 282 (b) of the Labor Code
requires the negligence to be gross and habitual. Gross negligence is the want of even slight care,
acting or omitting to act in a situation where there is duty to act, not inadvertently but willfully and
intentionally, with a conscious indifference to consequences insofar as other persons may be
affected. Habitual neglect connotes repeated failure to perform one's duties for a period of time,
depending upon the circumstances. Obviously, a single or isolated act of negligence does not
constitute a just cause for the dismissal of the employee.
The ground for dismissal, according to the LA, was gross negligence. Considering, however, that
the petitioners did not refute the respondents' claim that the incident was their first offense, and
that the petitioners did not present any evidence to establish the supposed habitual neglect on the
part of the respondents, like employment or other records indicative of the service and personnel
Page 703 of 827

histories of the respondents during the period of their employment, the CA reasonably found and
concluded that the just cause to dismiss them was not established by substantial evidence.
OMNI HAULING SERVICES, INC., LOLITA FRANCO and ANICETO FRANCO vs.
BERNARDO BON, et al.
findings and the conclusions reached thereby are not supported by substantial evidence. The CA
correctly granted respondents’ certiorari petition since the NLRC gravely abused its discretion when
it held that respondents were project employees despite petitioners’ failure to establish their project
employment status through substantial evidence.
Facts:
Petitioner Omni Hauling Services, Inc. (Omni), a company owned by petitioners Lolita and
Aniceto Franco (petitioners), was awarded a one (1) year service contract by the local government
of Quezon City to providegarbage hauling services for the period July 1, 2002 to June 30, 2003.
Forthis purpose, Omni hired respondents Bon, et al. as garbage truck drivers and paleros who were
then paid on a per trip basis.
When the service contract was renewed for another year,or for theperiod July 1, 2003 to June
30, 2004, petitioners required each of therespondents to sign employment contracts which provided
that they will be“re-hired” only for the duration of the same period. However, respondentsrefused
to sign the employment contracts, claiming that they were regularemployees since they were
engaged to perform activities which werenecessary and desirable to Omni’s usual business or trade.
For this reason,Omni terminated the employment of respondents which, in turn, resulted inthe
filing of cases for illegal dismissal, nonpayment of Emergency Cost ofLiving Allowance (ECOLA)
and 13th month pay, and actual, moral, andexemplary damages.
The LA ruled in favor of petitioners, finding that respondents were not illegally dismissed,
as at the time of their engagement, the latter were informed that their employment will be limited
for a specific period of oneyear and was co-terminus with the service contract with the Quezon
Citygovernment. The NLRC affirmed the LA ruling in toto, finding that respondents were project
employees. The CA reversed and set aside the NLRC, holding that the NLRC failed to consider the
glaring fact that nocontract of employment exists to support petitioners’ allegation thatrespondents
are fixed-term (or properly speaking, project) employees.Petitioners’ claim that respondents were
properly apprised regarding thefixed period of their employment at the time of their engagement
is nothingbut a mere allegation which is bereft of substantiation. The respondents were regular
employees and were thus illegally dismissed.
Issue:
Whether or not the CA gravely abused its discretion when it reversed the NLRC.
Page 704 of 827

Ruling:
To justify the grant of the extraordinary remedy of certiorari, petitioners must satisfactorily
show that the court or quasi-judicial authoritygravely abused the discretion conferred upon it.
Grave abuse of discretionconnotes judgment exercised in a capricious and whimsical manner that
istantamount to lack of jurisdiction. To be considered “grave,” discretion mustbe exercised in a
despotic manner by reason of passion or personal hostility, and must be so patent and gross as to
amount to an evasion of positive dutyor to a virtual refusal to perform the duty enjoined by or to
act at all in contemplation of law.
In labor disputes, grave abuse of discretion may be ascribed to theNLRC when, inter alia, its
findings and the conclusions reached thereby arenot supported by substantial evidence. This
requirement of substantialevidence is clearly expressed in Section 5, Rule 133 of the Rules of
Courtwhich provides that “[i]n cases filed before administrative or quasi-judicialbodies, a fact may
be deemed established if it is supported by substantialevidence, or that amount of relevant evidence
which a reasonable mindmight accept as adequate to justify a conclusion.”
Guided by these considerations, the Court finds that the CA correctlygranted respondents’
certiorari petition since the NLRC gravely abused itsdiscretion when it held that respondents were
project employees despitepetitioners’ failure to establish their project employment status through
MA. CHARITO C. GADIA, ERNESTO M. PENAS, GEMMABELLE B. REMO, LORENA S.

QUESEA, MARIE JOY FRANCISCO, BEVERLY A. CABINGAS, IVEE U. BALINGIT, ROMA
ANGELICA 0. BORJA, MARIE JOAN RAMOS, KIM GUEVARRA, LYNN S. DE LOS SANTOS,
CAREN C. ENCANTO, EIDEN BALDOVINO, JACQUELINE B. CASTRENCE,MA.ESTRELLA V.
LAPUZ, JOSELITO L. LORD, RAYMOND SANTOS, VILORIA, ABIGAIL G. M. ROMMEL C.
ACOSTA, FRANCIS JAN S. BAYLON, ERIC 0. PADIERNOS, MA. LENELL P. AARON,
CRISNELL P. AARON, and LAWRENCE CHRISTOPHER F. PAPA vs. SYKES ASIA, INC.,
CHUCK SYKES, MIKE HINDS, MICHAEL HENDERSON
G.R. No. 209499, January 28, 2015, J. Perlas-Bernabe
findings and the conclusions reached thereby are not supported by substantial evidence. Tested
against these considerations, the Court finds that the CA correctly granted respondents’ certiorari
petition before it, since the NLRC gravely abused its discretion in ruling that petitioners were regular
employees of Sykes Asia when the latter had established by substantial evidence that they were merely
project-based.
Facts:
Sykes Asia is a corporation engaged in Business Process Outsourcing (BPO) which provides
support to its international clients from various sectors by carrying on some of their operations,
governed by service contracts that it enters with them. On September 2, 2003, Alltel
Communications, Inc. (Alltel), a United States-based telecommunications firm, contracted Sykes
Page 705 of 827

Asia’s services to accommodate the needs and demands of Alltel clients for its postpaid and prepaid
services (Alltel Project). Thus, on different dates, Sykes Asia hired petitioners as customer service
representatives, team leaders, and trainers for the Alltel Project. Services for the said project went
on smoothly until Alltel sent two (2) letters to Sykes Asia dated August 7, 2009 and September 9,
2009 informing the latter that it was terminating all support services provided by Sykes Asia related
to the Alltel Project. In view of this development, Sykes Asia sent each of the petitioners end-of-life
notices, informing them of their dismissal from employment due to the termination of the Alltel
Project.
Aggrieved, petitioners filed separate complaints for illegal dismissal against respondents
Sykes Asia, Chuck Sykes, the President and Chief Operating Officer of Sykes Enterprise, Inc., and
Mike Hinds and Michael Henderson, the President and Operations Director, respectively, of Sykes
Asia (respondents). In their complaints, petitioners alleged that their dismissal from service was
unjust as the same was effected without substantive and procedural due process. In their defense,
respondents averred that petitioners were not regular employees but merely project-based
employees, and as such, the termination of the Alltel Project served as a valid ground for their
dismissal.
The LA ruled in favor of respondents, and accordingly, dismissed petitioners’ complaints

for lack of merit. The NLRC modified the LA Decision, ruling that petitioners are regular employees
but were validly terminated due to redundancy. In a Decision dated April 29, 2013, the CA granted
the petition for certiorari and annulled and set aside the ruling of the NLRC, and accordingly,
reinstated that of the LA. Hence, this petition.
Issue:
Whether or not the CA erred in granting the extraordinary remedy of certiorari.
Ruling:
The petition is without merit.
At the outset, it must be stressed that to justify the grant of the extraordinary remedy of
certiorari, petitioners must satisfactorily show that the court or quasi-judicial authority gravely
abused the discretion conferred upon it. Grave abuse of discretion connotes judgment exercised in
a capricious and whimsical manner that is tantamount to lack of jurisdiction. To be considered
“grave,” discretion must be exercised in a despotic manner by reason of passion or personal
hostility, and must be so patent and gross as to amount to an evasion of positive duty or to a virtual
refusal to perform the duty enjoined by or to act at all in contemplation of law.
In labor disputes, grave abuse of discretion may be ascribed to the NLRC when, inter alia,
its findings and the conclusions reached thereby are not supported by substantial evidence. This
requirement of substantial evidence is clearly expressed in Section 5, Rule 133 of the Rules of Court
which provides that “in cases filed before administrative or quasi-judicial bodies, a fact may be
deemed established if it is supported by substantial evidence, or that amount of relevant evidence
which a reasonable mind might accept as adequate to justify a conclusion.”
Page 706 of 827

Tested against these considerations, the Court finds that the CA correctly granted
respondents’ certiorari petition before it, since the NLRC gravely abused its discretion in ruling that
petitioners were regular employees of Sykes Asia when the latter had established by substantial
evidence that they were merely project-based.
MOOT AND ACADEMIC CASES
ANTONIO M. MAGTALAS vs. ISIDORO A. ANTE, RAUL CADDATU, NICANOR B.PADILLA,

JR., DANTE Y.CENIDO, and RHAMIR C. DALIOAN
G.R. No. 187240, October 15, 2014, J.Villarama Jr.
The Release, Waiver, and Quitclaim and the Addendum (to Release, Waiver and Quitclaim)
executed has now therefore rendered this case moot and academic.
Facts:
Magtalas is the Certified Public Accountant (CPA) Review Director of the CPA Review
Center of the Philippine School of BusinessAdministration-Manila (PSBA-Manila). He was
impleaded in this case in his official capacity.
Respondents Isidoro A. Ante, Raul C. Addatu, Nicanor B. Padilla, Jr.,Dante Y. Ceñido and
Rhamir C. Dalioan were engaged by PSBA-Manila asprofessional reviewers at its CPA Review Center
and were paid on an hourlybasis. However, for the school year 2005-2006, they were not given any
review load. Respondents then sent a letter to the President of PSBA-Manila,Jose F. Peralta
(Peralta), requesting for the payment of terminationor retirement benefits for failure of PSBA-
Manila to give them review loadfor the said school year. Petitioner and Peralta sent respondents
individualreplies stating that they were not entitled to retirement or terminationbenefits because
they do not have an employer-employee relationship, but aprofessional-client relationship.
Consequently, respondents filed a complaint for constructive illegaldismissal, non-payment

of overtime pay, holiday pay, premium for holidaypay, vacation and sick leave pay, 13th month pay,
separation pay andretirement benefits, as well as for moral, exemplary, actual, nominal
andtemperate damages and attorney’s fees against PSBA-Manila, Peralta andherein petitioner with
the Labor Arbitration Branch of the NLRC.
Labor Arbiter Fe Superiaso-Cellan found Magtalas, PSBA-Manila and the other persons
named in thecomplaint liable for illegal dismissal. Finding that respondents are regular employees
of PSBA-Manila, the Labor Arbiter ordered PSBA-Manila,Peralta and petitioner to pay respondents
back wages, separation pay andother benefits and damages.
In a Memorandum on Appeal, Magtalas alone filed with the NLRC a separate appeal with a
simultaneousMotion to Reduce Bond.PSBA-Manila and Peralta, on the other hand, separately
posted a cashbond of P50,000.00 with Motion to Reduce Bond.
The NLRC jointly resolved and dismissed the separate appeals of Magtalas on onehand, and PSBA-
Manila and Peralta on the other, on the ground of non-perfection. It held that the cash bonds
posted by the separate appeals ofpetitioner, as well as PSBA-Manila and Peralta, were not
reasonableamounts, and did not interrupt the running of the period to perfect an appeal.
Page 707 of 827

Magtalas then filed a Petition for Certiorari – separately fromPSBA-Manila and Peralta –
with the CA.
The CA affirmed the ruling of the NLRC and dismissed the consolidated petitions.
Magtalas sought reconsideration in a motion dated July15, 2010, but the motion was denied
by the appellate court.
Magtalas seeks recourse to this Court via the instantpetition for review filed on October 8,
2010 and assigned this docketnumber. The instant petition assails the dismissal of his appeal by
theNLRC due to his failure to post a sufficient bond. Petitioner also reiterateshis argument that he
is not covered by the rule of the NLRC on appeal bondsbecause he was not the employer of
respondents. He also questions thefindings of the NLRC that respondents were regular employees
of PSBA-Manilaand that they were illegally dismissed.
PSBA-Manila and Peralta, for their part, separately filed an appealfrom the same CA
decision with this Court.
During the pendency of the three petitions, a Release, Waiver, and Quitclaim was executed
before Labor Arbiter Cellan. The Release, Waiver, and Quitclaim executed included the release,
waiver and quitclaim of any and all claims that we may have against Philippine School of Business
Administration, Inc. Quezon City.
In view of the execution of the above Release, Waiver, and Quitclaimand the Addendum (to
Release, Waiver and Quitclaim) on March 23, 2011, PSBA-Manila and Peralta filed a Manifestation
with Motion to Dismiss on April 14, 2011. They moved for the dismissal of the petitions.
On June 8, 2011, the Court, acting through the Third Division, issueda Resolution granting
the Manifestation with Motion to Dismiss.
Despite the issuance by the Third Division closed and terminated, the Court’s First Division
issued a Resolution directing the First Division Clerk of Court to study whether the case at bar
should be consolidated, and to make a Report thereon within ten days from receipt of notice.
In its Memorandum Report, the Acting Assistant Division Clerk of Court of the First
Division recommended that Magtalas petition be not consolidated with Peralta and PSBA-Manila
petition.
Issue:
Whether or not Magtalas’ petition should be given due course despite the execution of a
Release, Waiver, and Quitclaim of the respondents.
Ruling:
No. The petition of Magtalas should not be given due course.
Page 708 of 827

In the case at bar, petitioner Magtalas was impleaded in the originalcomplaint in his official
capacity as then Review Director of the CPAReview Center of PSBA-Manila. The Release, Waiver,
and Quitclaim andthe Addendum (to Release, Waiver and Quitclaim) with the negotiated amount
of Nine Million Philippine Pesos (PHP 9,000,000.00) was signed byall five of the respondents in
this case as full and final settlement of all oftheir claims for remuneration, wages and/or benefits of
whatever nature from PSBA and its directors, officers, agents and/or employees clearly including
herein petitioner. The Release, Waiver, and Quitclaim and the Addendum (to Release, Waiver and
Quitclaim) executed has now therefore rendered this case moot and academic. To be sure, not one
of the respondents herein has assailed the validity and enforceability of the two documents
executed - either in this petition or in the consolidated cases of. None of the respondents also filed
any opposition when PSBA-Manila and Peralta filed a Manifestation with Motion to Dismiss for the
dismissal of the consolidated petitions in view of the execution of both documents pertaining to
the release, waiver and quitclaim. Further, there was no opposition from respondents when the
Third Division of the Court issued a Resolution granting such motion to dismiss.
SEACREST MARITIME MANAGEMENT, INC., ROLANDO B. MAGCALE, AND SEALION

SHIPPING LIMITED – UNITED KINGDOM vs. MAURICIO G. PICAR, JR.,
G.R. No. 209383, March 11, 2015, J. Mendoza
The issue in this case is whether or not the issue has become moot and academic due to
payment of award which constituted as compromise agreement. The Court ruled that the petition
for certiorari was not rendered moot despite petitioner’s satisfaction of the judgment award, as the
respondent had obliged himself to return the payment if the petition would be granted. Verily in this
case, petitioners satisfied the judgment award in strict compliance with a duly issued writ of execution
and pursuant to terms fair to both parties. Thus, the equitable ruling in Career Philippines would
certainly be unfair to petitioners in this case as they still have a remedy under the rules. The CA,
therefore, was in error in dismissing the petition for being moot and academic.
Facts:
Respondent Mauricio Picar, Jr. (Picar) was employed by petitioner Sealion Shipping Limited
– United Kingdom through its vocal manning agent Seacrest Maritime Management, Inc.
(petitioners), as Chief Cook continuously for several contracts from April 2005 until his last
employment contract in 2010, on board the vessel, “MV Toisa Paladin”. Picar experienced high fever,
chilling, lumbar back pain, and difficulty in urinating accompanied with blood. Picar consulted Dr.
Efren R. Vicaldo (Dr. Vicaldo) who also diagnosed him to be suffering from Right Renal Calculus,
Essential Hypertension. Dr. Vicaldo considered his illness as work aggravated/related and declared
him unfit to resume work as a seafarer in any capacity.
Picar then filed a complaint for permanent disability compensation, balance of sick wages,
reimbursement of medical expenses, moral and exemplary damages, and attorney’s fees. On June
22, 2011, the Labor Arbiter (LA) rendered judgment in favor of Picar. The LA found that his illness
was work-related and that the nature of his work as a chief cook contributed to the aggravation of
his condition. On appeal, the NLRC affirmed in toto the decision of the LA. The NLRC ruled that
Picar’s disability was permanent as he was totally unable to perform his job for more than 120 days
from his repatriation. In support of its ruling, it cited the case of Remigio v. NLRC where it was held
that if an employee was unable to perform his customary job for more than 120 days and did not
come within the coverage of Rule X of the Amended Rules on Employees Compensability (which,
Page 709 of 827

in more detailed manner, describes what constitutes temporary total disability), then the said
employee undoubtedly suffered from permanent total disability regardless of whether or not he lost
the use of any part of his body.
Aggrieved, petitioners elevated the matter to the CA. In the meantime, Picar moved for the
execution of the LA decision. On July 3, 2012, the LA issued a Writ of Execution for the enforcement
and full satisfaction of its decision. Consequently, petitioners paid the judgment award as
evidenced by the Satisfaction of Judgment pursuant to a Writ of Execution with Acknowledgment
Receipt executed by the NLRC-NCR Sheriff on August 13, 2012.In its assailed Decision, dated May
2, 2013, the CA dismissed the petition. Citing the case of Career Philippines Ship Management, Inc.
v. Madjus, the CA ruled that the payment by petitioners of the judgment award constituted an
amicable settlement that had rendered the petition moot and academic.
Issue:
Whether or not the issue raised by the petitioner has already become moot and academic.
Ruling:
No, the issue did not became moot and academic
The petition for certiorari before the CA was not rendered moot and academic by their
satisfaction of the judgment award in compliance with the writ of execution issued by the LA
The CA cited Career Philippines, but it finds no application here. Career Philippines was
resolved on equitable considerations. In the said case, while petitioner employer had the luxury of
having other remedies available to it such as its petition for certiorari pending before the CA and
an eventual appeal to this Court, respondent seafarer could no longer pursue other claims,
including for interests that may accrue during the pendency of the case. Thus, it was held that the
LA and the CA could not be faulted for interpreting petitioner’s "conditional settlement" to be
tantamount to an amicable settlement of the case resulting in the mootness of the petition
for certiorari.
In this case, no such document was executed between the parties. The payment of the
judgment award without prejudice by petitioners required no obligations whatsoever on the part
of Picar.
In the landmark case of St. Martin Funeral Home v. NLRC, we ruled that judicial review of
decisions of the NLRC is sought via a petition for certiorari under Rule 65 of the Rules of Court, and
the petition should be filed before the CA, following the strict observance of the hierarchy of courts.
Under Rule 65, Section 4, petitioners are allowed sixty (60) days from notice of the assailed order
or resolution within which to file the petition. Thus, although the petition was not filed within the
10-day period, petitioners seasonably filed their petition for certiorari before the CA within the 60-
day reglementary period under Rule 65.
Further, a petition for certiorari does not normally include an inquiry into the correctness
of its evaluation of the evidence. Errors of judgment, as distinguished from errors of jurisdiction,
are not within the province of a special civil action for certiorari, which is merely confined to issues
of jurisdiction or grave abuse of discretion. It is, thus, incumbent upon petitioners to satisfactorily
Page 710 of 827

establish that the NLRC acted capriciously and whimsically in order that the extraordinary writ
of certiorari will lie. By grave abuse of discretion is meant such capricious and whimsical exercise
of judgment as is equivalent to lack of jurisdiction, and it must be shown that the discretion was
exercised arbitrarily or despotically
In the present case, the Receipt of the Judgment Award with Undertaking was fair to both the
employer and the employee. As in Leonis Navigation, the said agreement stipulated that
respondent should return the amount to petitioner if the petition for certiorari would be granted
but without prejudice to respondent’s right to appeal. The agreement, thus, provided available
remedies to both parties. It is clear that petitioner paid respondent subject to the terms and
conditions stated in the Receipt of the Judgment Award with Undertaking. Both parties signed
the agreement. Respondent neither refuted the agreement nor claimed that he was forced to sign
it against his will. Therefore, the petition for certiorari was not rendered moot despite petitioner’s
satisfaction of the judgment award, as the respondent had obliged himself to return the payment
if the petition would be granted. Verily in this case, petitioners satisfied the judgment award in
strict compliance with a duly issued writ of execution and pursuant to terms fair to both parties.
Thus, the equitable ruling in Career Philippines would certainly be unfair to petitioners in this
case as they still have a remedy under the rules. The CA, therefore, was in error in dismissing the
petition for being moot and academic.
PRESCRIPTION OF ACTIONS
GEORGE A. ARRIOLA vs. PILIPINO STAR NGAYON, INC. and/or MIGUEL G. BELMONTE
G.R. No. 175689, August 13, 2014, J. Leonen
The prescriptive period for filing an illegal dismissal complaint is four years from the time the
cause of action accrued. This four-year prescriptive period, not the three-year period for filing money
claims under Article 291 of the Labor Code, applies to claims for backwages and damages due to illegal
dismissal. We find that Arriola’s claims for backwages, damages, and attorney’s fees arising from his
claim of illegal dismissal have not yet prescribed when he filed his complaint with the NLRC. The
prescriptive period for filing an illegal dismissal complaint is four years from the time the cause of
action accrued. Since an award of backwages is merely consequent to a declaration of illegal dismissal,
a claim for backwages likewise prescribes in four years.
Facts:
In July 1986, Pilipino Star Ngayon, Inc. employed George A. Arriola. He is assigned in
Olongapo City and Zambales and had held various positions before becoming a writer of its
newspaper. He wrote "Tinig ng Pamilyang OFWs" until his column was removed from publication
on November 15, 1999. Since then, Arriola never returned for work.
On November 15, 2002, Arriola filed a complaint for illegal dismissal, non-payment of
salaries, actual damages, and full backwages with the NLRC. Arriola alleged that Pilipino Star
Ngayon, Inc. "arbitrarily dismissed" him on November 15, 1999. Arguing that his rights to security
of tenure and due process were violated.
Page 711 of 827

Pilipino Star Ngayon, Inc. and Miguel G. Belmonte denied Arriola’s allegations. They alleged
that around the third week of November 1999, Arriola suddenly absented himself from work and
never returned despite Belmonte’s phone calls. They learned that Arriola transferred to a rival
newspaper, Imbestigador, to write "Boses ng Pamilyang OFWs."
Arriola denied that he abandoned his employment. He maintained that Pilipino Star
Ngayon, Inc. ordered him to stop reporting for work and to claim his separation pay. To prove his
allegation, Arriola presented a statement of account allegedly faxed to him by Pilipino Star Ngayon,
Inc.’s accounting head. This statement of account showed a computation of his separation pay.
The Labor Arbiter ruled that laches had set in, emphasizing that Arriola took three years
and one day to file his complaint. Arriola abandoned his employment with Pilipino Star Ngayon,
Inc. to write for a rival newspaper publisher. On Arriola’s money claims, it ruled that they have
already prescribed.
The NLRC sustained the Labor Arbiter’s findings and affirmed in toto its decision.
The Court of Appeals ruled that Arriola was not illegally dismissed. Pilipino Star Ngayon,
Inc. had the management prerogative to determine which columns to maintain in its newspaper.
Its removal of "Tinig ng Pamilyang OFWs" from publication did not mean that it illegally dismissed
Arriola.
Similar to the ruling of the Labor Arbiter and the NLRC, the Court of Appeals ruled that it
was Arriola who abandoned his employment. The Court of Appeals likewise ruled that his money
claims have all prescribed based on Article 291 of the Labor Code.
Issues:
1. Whether or not Arriola’s money claims have prescribed.

2. Whether or not Pilipino Star Ngayon,Inc. illegally dismissed Arriola.
Ruling:
The petition lacks merit.
1. Arriola’s claims for backwages and damages have not yet prescribed when he filed his
complaint with the National Labor Relations Commission
The LA, the NLRC, and the CA all ruled that Arriola’s claims for unpaid salaries, backwages,
damages, and attorney’s fees have prescribed. They cited Article 291 of the Labor Code, which
requires that money claims arising from employer-employee relations be filed within three years
from the time the cause of action accrued:
Art. 291. MONEY CLAIMS. All money claims arising from employer-employee
relations accruing during the effectivity of this Code shall be filed within three (3)
years from the time the cause of action accrued; otherwise they shall be forever
barred.
Page 712 of 827

Article 291 covers claims for overtime pay, holiday pay, service incentive leave pay, bonuses,
salary differentials, and illegal deductions by an employer. It also covers money claims arising from
seafarer contracts.
The provision does not cover "money claims" consequent to an illegal dismissal such as
backwages. It also does not cover claims for damages due to illegal dismissal. These claims are
governed by Article 1146 of the Civil Code of the Philippines, which provides:
Art. 1146. The following actions must be instituted within four years:
(1) Upon injury to the rights of the plaintiff.
Although illegal dismissal is a violation of the Labor Code, it is not the "offense"
contemplated in Article 290. Article 290 refers to illegal acts penalized under the Labor Code,
including committing any of the prohibited activities during strikes or lockouts, unfair labor
practices, and illegal recruitment activities. The three-year prescriptive period under Article 290,
therefore, does not apply to complaints for illegal dismissal.
Instead, "by way of supplement," Article 1146 of the Civil Code of the Philippines governs
complaints for illegal dismissal. Under Article 1146, an action based upon an injury to the rights of
a plaintiff must be filed within four years. This court explained:
. . . when one is arbitrarily and unjustly deprived of his job or means of livelihood, the action
instituted to contest the legality of one's dismissal from employment constitutes, an action
predicated "upon an injury to the rights of the plaintiff," as contemplated under Art. 1146 of the New
Civil Code, which must be brought within four [4] years.
This four-year prescriptive period applies to claims for backwages, not the three-year
prescriptive period under Article 291 of the Labor Code. A claim for backwages, may be a money
claim "by reason of its practical effect." Legally, however, an award of backwages "is merely one of
the reliefs which an illegally dismissed employee prays the labor arbiter and the NLRC to render in
his favor as a consequence of the unlawful act committed by the employer." Though it results "in
the enrichment of the individual [illegally dismissed], the award of backwages is not in redress of a
private right, but, rather, is in the nature of a command upon the employer to make public
reparation for his violation of the Labor Code."
Actions for damages due to illegal dismissal are likewise actions "upon an injury to the rights
of the plaintiff." Article 1146 of the Civil Code of the Philippines, therefore, governs these actions.
However, the Court finds that Arriola’s claims for backwages, damages, and attorney’s fees
arising from his claim of illegal dismissal have not yet prescribed when he filed his complaint with
the NLRC. The prescriptive period for filing an illegal dismissal complaint is four years from the
time the cause of action accrued. Since an award of backwages is merely consequent to a declaration
of illegal dismissal, a claim for backwages likewise prescribes in four years.
The four-year prescriptive period under Article 1146 also applies to actions for damages due
to illegal dismissal since such actions are based on an injury to the rights of the person dismissed.
In this case, Arriola filed his complaint three years and one day from his alleged illegal dismissal.
Page 713 of 827

He, therefore, filed his claims for backwages, actual, moral and exemplary damages, and attorney’s
fees well within the four-year prescriptive period.
All told, the Court of Appeals erred in finding that Arriola’s claims for damages have already
prescribed when he filed his illegal dismissal complaint.
2. Arriola abandoned his employment with Pilipino Star Ngayon, Inc.
In his petition for review on certiorari, Arriola raises questions of fact. He invites us to
examine the probative value of a faxed letter containing a computation of his separation pay, and a
certification from Imbestigador’s Managing Editor, stating that Arriola started writing for
Imbestigador only on February 17, 2003. These pieces of documentary evidence allegedly prove that
Pilipino Star Ngayon, Inc. illegally dismissed Arriola and that he did not abandon his employment.
This Court has ruled that the issues of illegal dismissal and abandonment of employment
are factual issues which cannot be raised in a petition for review on certiorari. Arriola also failed to
persuade us why we should make an exception in this case.
The Court agrees that Pilipino Star Ngayon, Inc. did not illegally dismiss Arriola. As the
Court of Appeals ruled, "the removal of Arriola’s column from private respondent Pilipino Star
Ngayon, Inc.’s newspaper is not tantamount to a termination of his employment as his job is not
dependent on the existence of the column ‘Tinig ng Pamilyang OFWs.’" When Pilipino Star Ngayon,
Inc. removed "Tinig ng Pamilyang OFWs" from publication, Arriola remained as section editor. A
newspaper publisher has the management prerogative to determine what columns to print in its
newspaper.
Arriola abandoned his employment with Pilipino Star Ngayon, Inc. Abandonment is the
"clear, deliberate and unjustified refusal of an employee to continue his employment, without any
intention of returning." It has two elements: first, the failure to report for work or absence without
valid or justifiable reason and, second, a clear intention to sever employer-employee relations exists.
The second element is "the more determinative factor and is manifested by overt acts from
which it may be deduced that the employee has no more intention to work." Assuming that Arriola
started writing for Imbestigador only on February 17, 2003, he nonetheless failed to report for work
at Pilipino Star Ngayon, Inc. after November 15, 1999 and only filed his illegal dismissal complaint
on November 15, 2002. He took three years and one day to remedy his dismissal. This shows his
clear intention to sever his employment with Pilipino Star Ngayon, Inc.
Considering the foregoing, the Court will not disturb the Labor Arbiter’s findings that
Arriola was not illegally dismissed and that he abandoned his employment. This is true especially
since the National Labor Relations Commission and the Court of Appeals affirmed these factual
findings.
ONOFRE V. MONTERO, EDGARDO N. ESTRANERO, RENING P. PADRE, GABRIEL A.

MADERA, HERMINIO T. TACLA, NELSON C. VILORIA, DEMETRIO Q. PAJARILLO,
ALFREDO R. AGANON, REYNALDO AVILA, ALBERT T. RUIZ, NESTOR Y. YAGO, HARTY M.
TUPASI, AGUSTIN R.
Page 714 of 827

A VILA, JR. or MARCOS R. AVILA, BONIFACIO B. GAANO, JOSELITO D. CUENTA, JONAS P.

ESTILONG, DOMINADOR C. CANARIA, GENARO C. RONDARIS, HERARDO M. DULAY,
FRANKLIN A. RAVINA, JR., and RUBEN C. CABELLO vs. TIMES TRANSPORTATION CO.,
INC., and SANTIAGO RONDARIS, MENCORPTRANSPORT SYSTEMS, INC., VIRGINIA R.
MENDOZA and REYNALDO MENDOZA
G .R. No. 190828, March 16, 2015, J. Reyes
The filing of a complaint for illegal dismissal stops the running of the prescriptive period.
However, when the complainant withdraws the case, he shall be considered to have not filed any case
at all and the statute of limitations shall apply.
Facts:
Times Transportation Co., Inc., (TTCI) is a company engaged in the business of land
transportation for passengers and goods serving the Ilocos Region to Metro Manila route. TTCI
employed the herein 21 petitioners as bus drivers, conductors, mechanics, welders, security guards
and utility personnel. Due to heavy losses and rising costs of operation, Times was forced to sell its
buses and employ a retrenchment program for the employees. Several employees received notice
of retrenchment on September 16, 1997 and when other employees went on a strike (despite the
return to work order), the number of terminated workers increased.
The petitioners filed complaints against Times on May 14, 1998 but it was subsequently
withdrawn on March 4, 1999. Four years later, petitioners filed complaints for illegal dismissal,
unfair labor practice, money claims and damages against Times before the Labor Arbiter in June
and July 2002.
In their defense, Times raised that the petitioners were barred by prescription, only raising
their claims beyond 4 years after the accrual of the action. The LA dismissed the some claims due
to prescription and the others ratiocinating that they have received separation pays and backwages.
The NLRC disagreed with the LA and held that all of the claims were barred by prescription which
was affirmed by the CA.
Issue:
Whether or not the claims of the petitioners are barred by prescription.
Ruling:
Yes. Settled is the rule that when one is arbitrarily and unjustly deprived of his job or means
of livelihood, the action instituted to contest the legality of one’s dismissal from employment
constitutes, in essence, an action predicated upon an injury to the rights of the plaintiff, as
contemplated under Article 114635 of the New Civil Code, which must be brought within four years.
The petitioners contend that the period when they filed a labor case on May 14, 1998 but
withdrawn on March 22, 1999 should be excluded from the computation of the four-year
prescriptive period for illegal dismissal cases. However, the Court had already ruled that the
prescriptive period continues even after the withdrawal of the case as though no action has been
filed at all. The applicability of Article 1155 of the Civil Code in labor cases was upheld in the case of
Page 715 of 827

Intercontinental Broadcasting Corporation v. Panganiban where the Court held that “although the
commencement of a civil action stops the running of the statute of prescription or limitations, its
dismissal or voluntary abandonment by plaintiff leaves the parties in exactly the same position as
though no action had been commenced at all.”
In like manner, while the filing of the complaint for illegal dismissal before the LA
interrupted the running of the prescriptive period, its voluntary withdrawal left the petitioners in
exactly the same position as though no complaint had been filed at all. The withdrawal of their
complaint effectively erased the tolling of the reglementary period. A prudent review of the
antecedents of the claim reveals that it has in fact prescribed due to the petitioners’ withdrawal of
their labor case docketed as NLRC RAB-I-01-1007.40 Hence, while the filing of the said case could
have interrupted the running of the four-year prescriptive period, the voluntary withdrawal of the
petitioners effectively cancelled the tolling of the prescriptive period within which to file their
illegal dismissal case, leaving them in exactly the same position as though no labor case had been
filed at all. The running of the four-year prescriptive period not having been interrupted by the
filing of NLRC RAB-I-01-1007, the petitioners’ cause of action had already prescribed in four years
after their cessation of employment on October 26, 1997 and November 24, 1997. Consequently,
when the petitioners filed their complaint for illegal dismissal, separation pay, retirement benefits,
and damages in 2002, their claim, clearly, had already been barred by prescription.
Page 716 of 827

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LABOR LAW DIGESTS 2014-June 2016

RECRUITMENT AND PLACEMENT

REPUBLIC OF THE PHILIPPINES, REPRESENTED BY HONORABLE LOURDES M.

Renelson Carlos applied at Worldview Internation Services Corporation as a heavy

POEA Adjudication Office found Carlos’ assertions credible. POEA cancelled

d. Persons, partnerships or corporations which have derogatory records, such as but

f. Persons or partners, officers and Directors of corporations whose licenses have

ABOSTA SHIP MANAGEMENT and/or ARTEMIO CORBILLA vs. WILHILM M. HILARIO

On 24 October 2002, an employment contract was executed by Abosta Ship Management,

Whether or not such breach in the employment contract (promotion of a seaman as a

Yes, Hilario is entitled to damages.

ASIAN INTERNATIONAL MANPOWER SERVICES, INC., vs. DEPARTMENT OF LABOR

On November 8, 2006, the Anti-Illegal Recruitment Branch of the POEA, pursuant to

Whether AIMS’s right to due process was violated.

EDILBERTO P. ETOM, JR. v. AROMA LODGING HOUSE THROUGH EDUARDO G. LEM,

Whether the affidavit executed by an employee sufficiently proves payment by employer

MONCHITO R. AMPELOQUIO vs. JAKA DISTRIBUTION, INC

Ampeloquio resumed work as merchandiser at JAKA and reported at JAKA’s outlets

In a Letter addressed to JAKA’s general manager, Ampeloquio requested for salary

Whether or not Ampeloquio is entitled to all benefits or privileges received by other

Ampeloquio is correct in asserting that he is a senior employee compared to the other

As the sole regular merchandiser of JAKA, Ampeloquio’s reinstatement entitles him, at

OUR HAUS REALTY DEVELOPMENT CORPORATION vs. ALEXANDER PARIAN, JAY C.

No, the legal requirements for creditability apply to both.

A. The facility must be customarily furnished by the trade

B. The provision of deductible facilities must be voluntarily accepted in writing by the

C. The facility must be charged at fair and reasonable value.

EMER MILAN, RANDY MASANGKAY, WILFREDO JAVIER, RONALDO DAVID,

PMI-FACULTY AND EMPLOYEES UNION v. PMI COLLEGES BOHOL

(Union) is the collective bargaining representative of the respondent's rank-and-file faculty

MONCHITO R. AMPELOQUIO vs. JAKA DISTRIBUTION, INC

Ampeloquio resumed work as merchandiser at JAKA and reported at JAKA’s outlets

In a Letter addressed to JAKA’s general manager, Ampeloquio requested for salary

Whether or not Ampeloquio is entitled to all benefits or privileges received by other

Ampeloquio is correct in asserting that he is a senior employee compared to the other

As the sole regular merchandiser of JAKA, Ampeloquio’s reinstatement entitles him, at

OUR HAUS REALTY DEVELOPMENT CORPORATION vs. ALEXANDER PARIAN, JAY C.

No, the legal requirements for creditability apply to both.

A. The facility must be customarily furnished by the trade

B. The provision of deductible facilities must be voluntarily accepted in writing by the

C. The facility must be charged at fair and reasonable value.

EMER MILAN, RANDY MASANGKAY, WILFREDO JAVIER, RONALDO DAVID,

ONE SHIPPING CORP., AND/OR ONE SHIPPING KABUSHIKI KAISHA/JAPAN v. IMELDA

No. At the time of Ildefonso's repatriation, the employer-employee relationship

FLOR G. DAYO v. STATUS MARITIME CORPORATION and/or NAFTO TRADE SHIPPING

the 1996 POEA-SEC.

DOHLE-PHILMAN MANNING AGENCY, INC., DOHLE (IOM) LIMITED AND/OR CAPT.

The 2000 POEA-SEC has created a presumption of compensability for those

MA. SUSANA A. AWATIN, and on behalf of the heirs/beneficiaries of deceased

Whether Awatin is entitled to death benefits

Respondent failed to discharge his burden. Respondent relies on the alleged

JAY H. LICAYAN v. SEACREST MARITIME MANAGEMENT, INC., CLIPPER FLEET

Whether Licayan's illness is compensable

PHILIPPINE TRANSMARINE CARRIERS, INC. AND NORTHERN MARINE MANAGEMENT v.

For a disease to be compensable, it is enough that the employment had contributed,

Whether Cristino's illness is compensable

Yes. Sun exposure as an occupational necessity particularly holds true in this

NORIEL R. MONTIERRO v. RICKMERS MARINE AGENCYPHILS., INC.

In case of conflict between the disability assessment of the company-designated physician

1. Whether the 240-day rule applies

ROMMEL B. DARAUG v. KGJS FLEET MANAGEMENT MANILA, INC., KRISTIAN

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AL O. EYANA v. PHILIPPINE TRANSMARINE CARRIERS, INC., ALAIN A. GARILLOS,