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Republic of the Philippines

SOUTHERN LEYTE STATE UNIVERSITY


Sogod, Southern Leyte
Philippines

LABOR AND MANAGEMENT DISPUTES AT PHILEX MINING


CORPORATION: ITS RESOLUTIONS AND THE IMPLICATION IN
THE BUSINESS OPERATION
A Final Paper presented to
The Faculty of the Graduate Studies
Southern Leyte State University
In partial fulfilment of the course
MM 505 : Management and the Law
Summer 2015

ORLANDO PAAS
Master in Management Student

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TABLE OF CONTENT
Cover Page

Page

Table of Content

Page

I.

Name of Company and Its profile


A. introduction
B. Company Profile, Mission & Vision

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Page

II.

Antecedent facts of the case

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III.

Resolutions, Findings and Decision of the Labor Management Problem

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IV.

Recommendation and Observation

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V.

Appendices

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Whole Case citation

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References

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I. NAME OF COMPANY AND ITS PROFILE


A. INTRODUCTION
Workplace health promotion interventions that are comprehensive, well-designed and
successfully implemented will have a positive return-on-investment. It will help reduce the costs
associated with absenteeism and a high staff turnover and help create a work-life effectiveness
for employees. Workplace health issues impose costs on employers such as worker's
compensation claims, medical costs and absenteeism
More and more organizations are looking at the link between employee health and
productivity and adopting workplace programs that support healthy diet, regular exercise, social
connectedness and healthy lifestyles. Mental and physical health is fundamentally linked. Those
who eat well and exercise are generally healthier and probably going to have less time off work.
They also have more energy to contribute while at work. Taking a holistic approach to the care of
employees and considering both physical and mental health together, can make a big difference
to their overall well-being, quality of life, job satisfaction and productivity.
Here is a case which the respondents are the NATIONAL LABOR RELATIONS COMMISSION
and PHILEX MINING CORPORATION

B. Name of the corporation, Its Vision and Mission and its current profile
Philex Mining Corporation and its subsidiaries are organized into two main business groupings:
the metals business under Philex Mining and the energy and hydrocarbon business under Philex
Petroleum Corporation.
Philex Mining was incorporated in the Philippines in 1955 and was listed on the Philippine Stock
Exchange on Nov. 23, 1956. Philex Mining, Philex Gold Philippines, Inc. (PGPI), Silangan
Mindanao Exploration Co., Inc. (SMECI), and Silangan Mindanao Mining Co., Inc. (SMMCI)
are primarily engaged in large-scale exploration, development, and utilization of mineral
resources. PGPI is a wholly owned subsidiary of Philex Mining through a holding company and
incorporated in the Philippines while SMECI is a wholly owned subsidiary of Philex Mining
through a holding company and PGPI, and incorporated in the Philippines. Philex Mining
operates the Padcal Mines in Benguet while PGPI operated the Bulawan mine in Negros
Occidental between January 1996 and June 2002. SMECI, through its subsidiary SMMCI, owns
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the Silangan Project covering the Boyongan and Bayugo deposits, which are currently under
prefeasibility stage.
Philex Petroleum and its subsidiaries Forum Energy plc (FEP) and FEC Resources, Inc. (FEC)
are engaged primarily in oil and gas operation and exploration, holding participating interest in
serveral oil and gas production and exploration activities through their investee companies.
Philex Petroleum, which is 64.79 percent-owned by Philex Mining and incorporated in the
Philippines, has a 64.5 percent stake in FEP (registered in England and Wales) and a 51.2 percent
stake in FEC (incorporated in Canada). Philex Petroleum also owns 100 percent of Brixton
Energy & Mining Corporation (BEMC), which is engaged in coal operation in Diplahan,
Zamboanga Sibugay, and started commercial production during 2012. As of Dec. 31, 2011,
Philex Mining has 45,085 stockholders, with 38.71 percent of its outstanding shares owned by
foreign nationals and institutions.
Philex Mining's exploration strategy in the late 1980s was focused on gold exploration, resulting
in the acquisition and staking of a number of primarily gold claimholdings throughout the
Philippines. In July 1996, these gold assets, including the Bulawan Project, were spun off to
PGPI. Situated in Negros Occidental, the Bulawan mines commenced commercial production in
Jan. 1996 and continued until June 2002, when it was decommissioned due to unfavorable metal
prices. It has since been placed on a care-and-maintenance phase.

Through swap of shares, ownership in PGPI was subsequently transferred to Philex Gold Inc.
(PGI), then an 81 percent-owned Canadian subsidiary. PGI was initially listed on the Toronto
Stock Exchange, in Oct. 1996, following a public offering to primarily North American and
European investors. From 2001, PGPI focused on its North Property, where the Boyongan
copper-gold porphyry deposit in Surigao del Norte was discovered in Aug. 2000 under SMMCI,
a joint venture with Anglo American Exploration (Philippines) BV (Anglo). On Feb. 6, 2009,
Philex Mining acquired Anglos 50 percent interest in the Silangan Project, under SMMCI, for
$55 million. In April 2010, Philex Mining undertook to buyback the minority shareholdings of
PGI, which was thereafter delisted from the TSX Venture Exchange. This transaction made the
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Silangan companies now owned jointly by the Parent Company and a wholly-owned subsidiary
holding company.

Philex Mining has long been a silent investor in oil properties, owning participation in several
service contracts. In 2007, Philex Mining incorporated Philex Petroleum to engage in
petroenergy business, of which 49 percent was subsequently acquired by Anatolian Property BV,
a Dutch company whose shareholders are funds-managed by Ashmore Investment Management
Limited. In July 2009, Philex Mining repurchased the 49 percent interest of Anatolian Property
BV, giving back to Philex Mining full control over Philex Petroleum. In Sept. 2010, Philex
Mining transferred its investments in energy and hydrocarbon assets to Philex Petroleum, which
currently holds 38.82 percent of FEP, a UK-based company listed at the Alternative Investment
Market of the London Stock Exchange.
FEP is an oil exploration company owning participation interests in several service contracts in
the Philippines, principally Service Contract 72 (previously GSEC 101) covering the Sampaguita
natural gas discovery in Northwest Palawan. Philex Petroleum also holds 51.24 percent of FEC,
which owns 25.63 percent of FEP, 40 percent of Lascogon Mining Corporation (under a joint
venture agreement with PGPI in 2005), 18.46 percent of Pitkin Petroleum Corporation, and 100
percent of BEMC. Philex Mining controls 64.45 percent of FEP through the direct holdings of
Philex Petroleum and FEC. Pitkin Petroleum is a UK-based company that has various
exploration activities principally in Vietnam, Peru, and the Philippines.
Philex Mining Corp.'s Vision and Mission and Core Values, which get reviewed annually, were
last updated in 2011 by the management and approved by the Board of Directors on Jan. 25,
2012. The goal is to develop a global mindset while keeping a Filipino heart.
Having expanded its Vision and Mission and geared this toward Philex Mining becoming a
premier mining company as well as a highly-respected and world-class business entity, it is
important for the company to keep its Core Values alive in the hearts and actions of its
employees and key partners.

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Vision, Our vision is to be a highly respected, world-class natural-resource company committed


to

deliver

excellent

value

to

its

investors,

employees,

and

other

stakeholders.

Mission, We are a responsible mining corporation that discovers and processes minerals and
energy resources for the use of society.

II. ANTECEDENT FACTS OF THE CASE


Petitioner Solis was employed as an underground miner by Philex. Due to constant
exposure to the elements in the mining area, Solis became ill and was medically diagnosed to be
afflicted with Kochs infection. The examining physicians recommended that Solis be assigned
to surface work to facilitate his speedy recovery from the illness. This recommendation,
however, was not heeded by Philex.
The illness of Solis aggravated. He was later diagnosed to be suffering from tuberculosis
(along with other diseases) and was declared unfit to continue working for underground mine.
Solis was accordingly dismissed by Philex and was paid his separation pay, which Solis
accepted.
Less than six months after his dismissal, Solis submitted himself for medical examination
in another hospital, which issued a medical certificate declaring him physically fit. Armed with
this new medical certificate, he went back to Philex demanding reinstatement, but to no avail.
Solis then sued Philex for illegal dismissal. Philex claimed that the dismissal is valid since Solis
was suffering from contagious diseases.
The Labor Arbiter found that Solis dismissal was illegal and ordered Philex to reinstate
him and pay him backwages. Philex appealed to the NLRC which also ruled that Solis was
illegally dismissed, albeit it disallowed reinstatement in view of the alleged voluntary acceptance
by Solis of his separation pay.

III. RESOLUTION, FINDINGS, and DECISION OF THE LABORMANAGEMENT PROBLEM


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The decision of the NLRC promulgated April 29, 1994, is ANNULLED, and the decision
of the Labor Arbiter dated March 25, 1993, is REINSTATED subject to the above modification
on the proper computation of backwages and separation pay by the Labor Arbiter.

IV.RECOMMENDATION AND OBSERVATION


An employer may terminate the services of an employee who has been found to be
suffering from any disease and whose continued employment is prohibited by law or is
prejudicial to his health as well as the health of his co-employees. (Art. 284, LC)
An

illegally

dismissed

employee,

like

Solis,

is

entitled

to

reinstatement. Philex, however, contends that Solis was estopped from claiming reinstatement
when he accepted his "separation pay". This argument is bereft of merit. Acceptance of
separation pay does not necessarily amount to estoppel nor would it connote waiver of the right
to press for reinstatement considering that the acceptance by Solis of the alleged separation pay
was made due to a dire financial necessity of having to pay for his hospitalization and medical
expenses. His receipt of said pay does not relieve the company of its legal obligations. Indeed, a
dismissed employee who has accepted his separation pay is not necessarily estopped from
assailing the illegality of his dismissal. With more reason should Solis, in the case of bench,
cannot be deemed estopped from asserting reinstatement which is just a legal consequence of his
illegal dismissal. In fact, he filed the complaint for illegal dismissal with prayer for reinstatement
a month after his separation from service a fact which strongly indicates that he never waived
his right to reinstatement.
Nevertheless, despite the lack of the required certification and the absence of estoppel, it
cannot be ignored that Solis was afflicted with tuberculosis, a contagious disease. His continued
employment as underground miner would be harmful to his health and his co-workers. Hence,
although Solis is legally entitled to reinstatement such reinstatement must be subject not only to
his physical fitness, but also to his fitness to work underground, requirements which have to be
certified by competent public health authority.

V.

APPENDICES
A. The Whole Case Citation

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Republic of the Philippines


SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 116175 October 28, 1996
PEDRO V. SOLIS, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and PHILEX MINING
CORPORATION, respondents.
RESOLUTION

FRANCISCO, J.:p
This case involves illegal dismissal.
Petitioner, Pedro Solis was employed since August of 1972 as an underground miner by private
respondent Philex. Due to constant exposure to the elements in the mining area, Solis became ill
and was medically diagnosed sometime in 1983 to be afflicted with "Koch's infection, exudative
type, minimal (R)". 1 The examining physicians 2 recommended that Solis be assigned to surface
work to facilitate his speedy recovery from the illness. 3 This recommendation, including the
intercession of petitioner's union on October 1990, that Solis be reassigned temporarily to
surface work, were not heeded by Philex. 4 The illness of Solis aggravated. 5 In his medical
check-up at the Baguio General Hospital and Medical Center, on March 21, 1991, Solis was
diagnosed to be suffering from:
Koch's pulmonary bronchiectasis (PTB) commonly known as
tuberculosis.
Bronchial, asthma, and
Arthraglia, right shoulder 6

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and was declared "unfit to continue working for underground mine". 7 Solis was
accordingly dismissed by Philex from service on April 5, 1991, and given the amount of
P55,121.85 as "separation pay". 8
After his dismissal from service, Solis submitted himself for medical examination in another
hospital, the Baguio Filipino Chinese Hospital, which issued a medical certificate declaring him
physically fit. 9 Armed with this new medical certificate, he went back to Philex demanding
reinstatement, but to no avail. On May 6, 1991, Solis sued Philex for illegal dismissal. In its
position paper, Philex alleged that the dismissal is valid since Solis was suffering from
contagious diseases. 10 The Labor Arbiter found that Solis' dismissal was illegal and ordered
Philex to reinstate him with backwages.11 Philex appealed to the NLRC which also ruled that
Solis was illegally dismissed, albeit it disallowed reinstatement in view of the alleged voluntary
acceptance by Solis of his "separation pay". 12
Petitioner Solis now comes to us on certiorari alleging that the NLRC committed grave abuse of
discretion in setting aside the Labor Arbiter's decision ordering his reinstatement. Philex in its
comment counters that the instant petition should be dismissed for the failure of Solis to seek
reconsideration of the NLRC ruling before filing this petition and reiterates that Solis' dismissal
was for a valid cause. The Office of the Solicitor General for its part disputes the NLRC ruling
and prays for the reinstatement of Solis.
First, on the procedural lapse. Under Sec. 1 of Rule 65, a petition for certiorari will lie if there is
"no plain, speedy and adequate remedy in the ordinary course of law". A motion for
reconsideration of an assailed decision is deemed a plain and adequate remedy provided by
law. 13 In this case, Solis failed to file any motion for reconsideration before elevating the case to
the court; hence, ordinarily this petition should have been dismissed outright. However, such
procedural technicality, if strictly adhered to, may cause injustice to an employee with a valid
claim. To prevent this miscarriage of justice, we deemed it necessary to gloss over petitioner's
failure to move for reconsideration 14and rule, instead, on the more important issues attendant in
this case, viz.: 15 (1) whether or not Solis was dismissed for a valid cause, and (2) whether or not
Solis was estopped from demanding reinstatement due to his acceptance of the "separation pay".
Proceeding to the merits of the case.
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It is Philex's contention that the dismissal of Solis is in accordance with Article 284 of the Labor
Code. Solis was allegedly afflicted with tuberculosis, a contagious disease, which poses danger
not only to himself but also to his fellow employees. This argument raises a factual issue
contrary to the findings of the Labor Arbiter and the NLRC on appeal. It is a settled rule that this
Court gives due deference to the factual findings of the Labor Arbiter especially when supported
by substantial evidence. 16 In the case at bench, no cogent reason appears from the records that
would justify our departure from the factual findings below.
Be that as it may, Article 284 of the Labor Code provides:
Disease as ground for termination. An employer may terminate the services of
an employee who has been found to be suffering from any disease and whose
continued employment is prohibited by law or is prejudicial to his health as well
as to the health of his co-employees: Provided, That he is paid separation pay
equivalent to at least one (1) month salary or to one-half (1/2) month salary for
every year of service, whichever is greater, a fraction of at least six (6) months
being considered as one (1) whole year.
The implementing rule states:
Disease as a ground for dismissal. Where the employee suffers from a disease
and his continued employment is prohibited by law or prejudicial to his health or
to the health of his co-employees, the employer shall not terminate his
employment unless there is a certification by a competent public health authority
that the disease is of such nature or at such a stage that it cannot be cured within
a period of six (6) months even with proper medical treatment. If the disease or
ailment can be cured within the period, the employer shall not terminate the
employee but shall ask the employee to take a leave. The employer shall reinstate
such employee to his former position immediately upon the restoration of his
normal health. (Book VI, Rule 1, Sec. 8 of the Implementing Rules)
The above rule states several requirements before the dismissal of an employee due to
disease will be considered valid. Two of which are: (a) the employee is afflicted with a
disease that cannot be cured within six (6) months, and (b) a certification to that effect
must be issued by a competent public health authority.

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We find nothing in the medical certificate issued by the Baguio General Hospital which states
that Solis' ailment cannot be cured within six months. The statement that Solis was "unfit to work
underground" does not mean that his ailment cannot be cured within six months. In fact, a
subsequent medical examination from another hospital 17less than six months from the first
medical check-up showed that Solis was still physically fit. This negates Philex's assertion that
the dismissal is valid. In dismissal cases, the employer has the burden of proving that the
termination from service of an employee is for a valid or authorized cause. 18 Philex failed to
discharged that burden in the case at bench.
An

illegally

dismissed

employee,

like

Solis,

is

entitled

to

reinstatement. 19 Philex, however, contends that Solis was estopped from claiming reinstatement
when he accepted his "separation pay". This argument is bereft of merit. Acceptance of
separation pay does not necessarily amount to estoppel20 nor would it connote waiver of the right
to press for reinstatement 21 considering that the acceptance by Solis of the alleged separation pay
was made due to a dire financial necessity of having to pay for his hospitalization and medical
expenses. His receipt of said pay does not relieve the company of its legal obligations. 22 Indeed,
a dismissed employee who has accepted his separation pay is not necessarily estopped from
assailing the illegality of his dismissal. 23 With more reason should Solis, in the case of bench,
cannot be deemed estopped from asserting reinstatement which is just a legal consequence of his
illegal dismissal. In fact, he filed the complaint for illegal dismissal with prayer for reinstatement
a month after his separation from service a fact which strongly indicates that he never waived
his right to reinstatement.
Nevertheless, despite the lack of the required certification and the absence of estoppel, it cannot
be ignored that Solis was afflicted with tuberculosis, a contagious disease. His continued
employment as underground miner would be harmful to his health and his co-workers. Hence,
although Solis is legally entitled to reinstatement such reinstatement must be subject not only to
his physical fitness, but also to his fitness to work underground, requirements which have to be
certified by competent public health authority. We have imposed the same condition on prior
cases. 24

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Finally, we note that the Labor Arbiter deducted the P55,121.85 "separation pay" from the
backwages to which Solis is entitled. Separation pay is not deductible from backwages because
both are "distinct and separate from each other." 25 If Solis will be reinstated, then he should not
be entitled to separation pay. Philex, instead, will have to pay him backwages, but less the
P55,121.85, which should be credited as part of his backwages. If reinstatement is no longer
possible, Philex will pay him backwages and separation pay. 26 However, the amount he received
should be deducted from his separation pay instead of from the backwages.
WHEREFORE, the decision of the NLRC promulgated April 29, 1994, is ANNULLED, and the
decision of the Labor Arbiter dated March 25, 1993, is REINSTATED subject to the above
modification on the proper computation of backwages and separation pay by the Labor Arbiter.
SO ORDERED.
Narvasa, C.J., Davide, Jr., Melo and Panganiban, JJ., concur.
Footnotes
1 Rollo, pp. 27, 130.
2 Dr. Micu and Dr. Untalan.
3 Rollo, pp. 130-131.
4 Rollo, p. 27.
5 Rollo, p. 20.
6 Rollo, p. 28, 131; Annex "1"; Rollo, p. 72.
7 Medical Certificate, Annex "1", Rollo, p. 72.
8 Rollo, p. 14.
9 Rollo, p. 28.
10 Rollo, p. 15.
11 Rollo, pp. 41-42.
12 Rollo, p. 24; Two NLRC commissioners voted to grant the appeal with one
commissioner voting to affirm the Labor Arbiter's decision.
13 Antonio vs. NLRC, G.R. 101755, January 27, 1992.
14 Caete vs. NLRC, 250 SCRA 259.
15 Villarama vs. NLRC, 236 SCRA 280.
16 Morales vs. NLRC, 311 Phil. 121; Ilocos Sur Electric Coop., Inc. vs. NLRC,
311 Phil. 43; Hydro Resources Contractors Corp. vs. Pagalilawan, 172 SCRA
399; Industrial Timber Corp. vs. NLRC, 169 SCRA 341.
17 Baguio Filipino Chinese Hospital.
18 See Golden Donuts, Inc. vs. NLRC, 230 SCRA 153; Magnolia Corp. vs.
NLRC, 250 SCRA 332.
19 Article 279 (formerly Art. 280) of the Labor Code; Carandang vs. Dulay, 188
SCRA 792; Morales vs. NLRC, 188 SCRA 295; Torillo vs. Leogardo, Jr., 197
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SCRA 471; Oania vs. NLRC, supra.; Balasbas vs. NLRC, 212 SCRA 803;
Spartan Security and Detective Agency vs. NLRC, 213 SCRA 528; Alhambra
Industries vs. NLRC, 238 SCRA 232; Manipon, Jr. vs. NLRC, 239 SCRA 451.
20 De Leon vs. NLRC, 100 SCRA 691 citing Mercury Drug Co. vs. CIR, 56
SCRA 694.
21 See Imperial Vegetable Workers Union vs. Vega, 167 SCRA 599.
22 Octaviano vs. NLRC, 202 SCRA 332.
23 San Miguel Corporation vs. Javate, Jr., 205 SCRA 469; Blue Bar Coconut
Phils., Inc. vs. NLRC, 208 SCRA 371; De Leon vs. NLRC, 100 SCRA 691.
24 General Textile, Inc. vs. NLRC, 313 Phil. 26; Cebu Royal Plant vs. Deputy
Minister of Labor, 153 SCRA 38.
25 "Backwages and separation pay are reliefs distinct and separate from each
other. Payment of backwages in the form of relief that restores the income that
was lost by reason of unlawful dismissal is distinguished from separation pay
which provides the employee money during the period in which he is locating a
new job." Octaviano vs. NLRC, supra.; Santos vs. NLRC, 154 SCRA 166; Lim
vs. NLRC, 171 SCRA 388; JAM Transportation Co., Inc. vs. Flores, 220 SCRA
114.
26 Kingsize Manufacturing Corp. vs. NLRC, 238 SCRA 349.

B. Referrences
http://www.laborlaw.usc-law.org/2011/09/06/termination-of-employment-for-health-reasonsdisease/
http://www.philexmining.com.ph/about-us/corporate-profile

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