LABOR - Consolidated Case Digests 2012-2017

LABOR LAW DIGESTS 2012-2017
RECRUITMENT AND PLACEMENT AND PLACEMENT

RECRUITMENT
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:
Page 51 of 1699
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.
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.
Page 52 of 1699
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 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.
Page 53 of 1699
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
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.
Page 54 of 1699
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 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.
Page 55 of 1699
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.”
Page 56 of 1699
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.
Page 57 of 1699
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 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.
PEOPLE OF THE PHILIPPINES vs. MARIA JENNY REA Y GUEVARRA AND

ESTRELLITA TENDENILLA
G.R. No. 197049. June 10, 2013
Illegal recruitment is committed by persons who, without authority from the

government, give the impression that they have the power to send workers abroad for
employment purposes. To prove illegal recruitment, it must be shown that appellant gave
complainants the distinct impression that he had the power or ability to send complainants
abroad for work such that the latter were convinced to part with their money in order to be
employed.
Facts:
Appellants and Ginette Azul were charged with illegal recruitment before RTC.
Private complainants alleged that they met Tendenilla through Azul. Tendenilla
personally, or through Azul, assured them that she has the power and capacity to deploy
workers to London. Private complainants paid Tendenilla, directly or through Azul,
placement fees in the amounts ranging from P100,000.00 to P200,000.00 each. They were
sent first to Thailand while waiting for the processing of their working visas to London.
They travelled to Penang, Malaysia to obtain a non-immigrant Thailand visa to validate
their stay in Thailand. Thereafter, they were arrested and deported back to the
Philippines by the Thailand immigration office.
The RTC rendered judgment convicting appellants of the crime of illegal

recruitment in large scale. The trial court found that all elements of illegal recruitment
in large scale were established through the testimonies of the private complainants and
that appellants conspired to commit the crime. The Court of Appeals affirmed the trial
court's decision. Hence, this petition.
Page 58 of 1699
Issue:
Whether or not appellants are liable for the crime of illegal recruitment in large
scale
Ruling:
The crime of illegal recruitment in large scale is committed upon concurrence of

these (3) elements, namely: (1) the offenders undertake any activity within the meaning
of recruitment and placement defined in Article 13(b) or any prohibited practices
enumerated in Article 34 of the Labor Code; (2) the offenders have no valid license or
authority required by law to enable them to lawfully engage in the recruitment and
placement of workers; and (3) the offenders commit the acts against three or more
persons, individually or as a group.
Recruitment and placement is defined in Article 13(b) of the Labor Code as “any
act of canvassing, enlisting, contracting, transporting, utilizing, hiring, or procuring
worker; and includes referrals, contract services, promising or advertising for
employment, locally or abroad, whether for profit or not.”
Simply put, illegal recruitment is committed by persons who, without authority

from the government, give the impression that they have the power to send workers
abroad for employment purposes.
That Tendenilla made misrepresentations concerning her purported power to

recruit for overseas employment; and personally, or through Azul but on her behalf,
collected placement fees from private complainants were clearly established from the
testimonies of private complainants.
To prove illegal recruitment, it must be shown that appellant gave complainants

the distinct impression that he had the power or ability to send complainants abroad for
work such that the latter were convinced to part with their money in order to be
employed.
The first element of large scale illegal recruitment was proven by the testimonies
of the private complainants which the trial court found to be credible and convincing.
We find that they were given in a clear, positive and straightforward manner. Between
the positive and categorical testimonies of private complainants and the unsubstantiated
denials of appellants, we give more weight to the former.
Page 59 of 1699
The certification issued by the Philippine Overseas Employment Administration

that Tendenilla is not licensed to recruit workers for overseas employment constitutes
the second element of the crime of illegal recruitment.
The third element is likewise satisfied when at least six (6) individuals filed the
case, claimed and in fact, were found to have been defrauded by appellants.
We reiterate the findings of the Court of Appeals, to wit:
In the case at bar, it cannot be doubted that both accused-appellants

indispensably cooperated and coordinated in illegally recruiting the private
complainants. From the evidence, it can be seen that the success of the scheme depended
on accused-appellants’ joint efforts. Estrellita Tendenilla directly dealt with the private
complainants, promising them employment, demanding money from them, conducting
dubious trainings, and sending them to Thailand. Maria Jenny Rea, on the other hand,
covered the next phase of the process that is, travelling with the private complainants to
Thailand, bringing them to the border of Thailand and Malaysia, securing their
fraudulent non-immigrant visas, and accompanying them back to the Philippines.
Based on the foregoing, appellants were correctly found guilty of large scale illegal
recruitment tantamount to economic sabotage.
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
Page 60 of 1699
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
Page 61 of 1699
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
Page 62 of 1699
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
Page 63 of 1699
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 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
Page 64 of 1699
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 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.
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.
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.
Page 65 of 1699
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 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.
Page 66 of 1699
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.
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.
Page 67 of 1699
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
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.
Page 68 of 1699
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.
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
Page 69 of 1699
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:
Page 70 of 1699
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.
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 ceased. Thus, respondent Solid
Mills has the right to withhold petitioners’ wages and benefits because of this existing
debt or liability.
Page 71 of 1699
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 (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
Page 72 of 1699
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
Page 73 of 1699
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 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
Page 74 of 1699
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
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
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:
Page 75 of 1699
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 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.
Page 76 of 1699
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.
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
Page 77 of 1699
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
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
Page 78 of 1699
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:
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

Page 79 of 1699
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’
Page 80 of 1699
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 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.”
individual notices to vacate SMI Village. As a consequence, petitioners were no longer
Page 81 of 1699
operations.
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.
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.
Page 82 of 1699
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 ceased. Thus, respondent Solid Mills has the right
to withhold petitioners’ wages and benefits because of this existing debt or liability.
BENEFITS
Genaro G. Calimlim vs. Wallem Maritime Services, Inc., et al.

G.R. No. 220629
November 23, 2016
Facts:
Respondent Wallem Maritime Services, Inc., for and in behalf of its foreign principal,
Wallem GMBH & Co. KG, represented by its President, Mr. Reginaldo Oben
(respondents), hired petitioner Genaro G. Calimlim (Calimlim) to work as Bosun on board
the vessel, Johannes Wulff. Prior to deployment, Calimlim underwent the required Pre-
employment Medical Examination (PEME) on June 18, 2010 and was declared fit for sea
duty.
On December 25, 2010, while doing his duties on board, Calimlim felt a severe pain in his
stomach causing him to feel weak and go to the comfort room. While emptying his
bowels, he noticed that there was fresh blood in his stool. As his stomach pain and
bleeding persisted, he reported his condition to the Ship Captain who advised him to
seek medical attention upon reaching the nearest port.
When the vessel reached the port of Xingang, China, Calimlim was brought to the
Xingang Hospital where he underwent several laboratory tests. The tests revealed that
he was suffering from Hemorrhage of the Upper Digestive Tract and Hypertension. The
doctor recommended that he should not be given any duty on board due to his sensitive
health condition and should be confined in a hospital. After seven days or on January 17,
2011, when the vessel reached the port of Indonesia, he was medically repatriated.
Page 83 of 1699
Upon arrival in Manila, Calimlim immediately reported to respondents. He was referred

to the Manila Doctor's Hospital (MDH) for examination and treatment. He was confined
at MDH for four (4) days and was treated as an out-patient after his discharge.
Issue:
Whether or not Calimlim is entitled to permanent disability compensation and benefits
on account of his medical condition.
Ruling:
No.
In this case, after receiving treatment in Xingang, China, at respondents' expense,

Calimlim underwent blood transfusion and radioscopy. The said treatment proved
effective as there was no recurrence of the dark-colored stools and his abdominal pain
had already subsided as of his February 16, 2011 consultation with the company-
designated physician. Such positive results led to a declaration that he was fit to work
and even to travel on February 17, 2011. As correctly opined by the CA, such declaration
by the company-designated physician alone sufficed to rule that he was not entitled to
any disability benefits.
A 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. 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 compliance with the parties' contractual duties and
obligations as laid down in the POEA-SEC and/or their CBA.
In the recent case of Magsaysay, Maritime Corporation v. Simbajon, the Court mentioned
that an amendment to Section 20-A(6) of the POEA SEC, contained in POEA
Memorandum Circular No. 10, series of 2010, 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."
Page 84 of 1699
At any rate, there was no referral to a third doctor. The rule is that 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. This procedure must be strictly
followed, otherwise, if not availed of or followed strictly by the seafarer, the assessment
of the company-designated physician stands.
Here, upon his repatriation back to the Philippines, Calimlim was referred to the
company-designated physician on January 19, 2011. After receiving treatment, he was
declared fit to work and to travel on February 17, 2011. Acting within his rights, he
disagreed with the findings of the company-designated physician and sought the opinion
of Dr. Jacinto who arrived at a contrary assessment.
The Court notes, however, that Calimlim sought consultation of Dr. Jacinto only on July
9, 2012, more than sixteen (16) months after he was declared fit to work and interestingly
four (4) days after he had filed the complaint on July 5, 2012. Thus, as aptly ruled by the
NLRC, at the time he filed his complaint, he had no cause of action for a disability claim
as he did not have any sufficient basis to support the same. The Court also agrees with
the CA that seeking a second opinion was a mere afterthought on his part in order to
receive a higher compensation.
Maureen P. Perez vs. Comparts Industries, Inc.

G.R. No. 197557
October 05, 2016
Facts:
[Perez] started her employment with [CII] on 16 July 1988 and became a regular employee
thereof on 01 September 1988. After years of working and after several promotions, she
was eventually appointed as Marketing Manager. She held this position from 1998 up to
10 January 2009, the date when she resigned from her work.
[CII] has a retirement program for its managerial employees or officers covered by
"Comparts Industries, Inc. Employees Retirement Plan" (Retirement Plan) which took
effect on 01 June 1999 and was amended on 25 January 2001. Included therein are
provisions relating to optional or early retirement and optional retirement benefits.
Page 85 of 1699
Prior to her resignation, [Perez] manifested to [CII] sometime in November 2007 her
intention to avail of the optional retirement program since she was already qualified to
retire under it. Her application was denied. In January 2008, while vacationing in the
United States of America (USA), she again filed an application for optional retirement to
take advantage of a job offered to her in the said country. Still, her application was
denied. [CII] justified its denial of [Perez's] application saying that, under the Retirement
Plan, it has the option to grant or deny her application for optional retirement and
considering that it is experiencing financial crisis, it has no choice but to disallow her
intention.
In April 2008, [Perez] asked for reconsideration of the denial of her application for
optional retirement. She also requested to be included in the retrenchment that [CII] was
planning to implement. Again, her application was declined and she was not one of those
employees who were retrenched. In December 2008, [Perez] needed to go to the USA to
attend to her mother who suffered a mild stroke. Thus, she applied for optional
retirement again to be effective on 10 January 2009. She also claimed the benefits
concomitant to it as provided by the Retirement Plan.
In response, [Perez] was informed by [CII] that it could only give her Php100,000.00 as
gratuity for her twenty years of service as this was the only amount it could afford. [Perez]
refused the offer.
On 08 January 2001, [Perez] received a letter from [CII] which contained the, acceptance
of her resignation effective 10 January 2009. The letter likewise contained [CIFs] denial
of [Perez's] claim for optional retirement benefits or separation pay for the following
reasons: 1) [CII] has no policy or rules on optional retirement benefits; 2) [CII] has been
so affected by the global crisis and has been suffering financial losses; 3) there is no
provision in the Labor Code which grants separation pay to voluntarily resigning
employees; and 4) [Perez] cannot invoke the provisions of the Collective Bargaining
Agreement (CBA) on optional retirement benefits because the CBA is for rank-and-file
employees.
[Perez] e-mailed [CII] on 09 January 2009 to counter the latter's reasons and she cited
therein rulings of the Supreme Court which supposedly supported her claim for optional
retirement benefits or separation pay. [CII] was not persuaded. She, again e-mailed [CII]
to reconsider its stand and she cited names of former employees of [CII] who were
Page 86 of 1699
allowed to optionally retire and who were given separation pays even if they were
managerial employees. Still, [CII] was not convinced.
Issue:
Whether or not Perez is entitled to optional retirement benefits.
Ruling:
No.
As a managerial employee, Perez is covered by the Retirement Plan for CII Officers which
took effect in 1999 and was amended in 2001. We find incorrect the reliance of Perez on
her self-serving reading of our ruling in the two (2) Eastern Shipping cases.
In Eastern Shipping v. Antonio,16 we specifically distinguished provisions on optional

retirement at the election of the employee upon reaching the minimum age of sixty (60)
years from the exercise of the option to retire exclusively lodged with the employer when
the employee has rendered the required minimum number of years of service coupled
with manifestation of intent to retire, thus:
Respondent is not entitled to optional retirement benefits. Under the Labor Code, it is
provided that:
ART. 287. Retirement. - Any employee may be retired upon reaching the retirement age
established in the collective bargaining agreement or other applicable employment
contract.
In case of retirement, the employee shall be entitled to receive such retirement benefits
as he may have earned under existing laws and any collective bargaining agreement and
other agreements: Provided, however, That an employee's retirement benefits under any
collective bargaining and other agreements shall not be less than those provided herein.
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
Page 87 of 1699
whole } ear.
Clearly, the age of retirement is primarily determined by the existing agreement

or employment contract. In the absence of such agreement, the retirement age
shall be fixed by law. Under the aforecited law, the mandated compulsory
retirement age is set at 65 years, while the minimum age for optional retirement
is set at 60 years.
Contrary to the stance of Perez, she has not acquired a vested right to optional retirement
benefits by the mere fact of her rendering at least fifteen (15) years of credited service.
Further, while Section 2 on Optional/Early Retirement of CII's Retirement Plan did not
use the specific language of the Retirement Plan in the Eastern Shipping cases,
i.e. exclusive prerogative and sole option of the employer, the provision in the herein
subject Retirement Plan still contained a condition for the allowance and grant of
optional retirement benefits—consent of the Company. Perez cannot disregard the
stipulated condition.
Philippine Transmarine Carriers, Inc. (PTCI), Stealth Maritime Corporation

(SMC) and Carlos Salinas vs. Casiano F. Saladas, Jr.
G.R. No. 208089, September 28, 2016
Facts:
Pursuant to a nine-month POEA standard employment contract dated July 9, 2008, the
petitioners hired Casiano F. Saladas, Jr. (Saladas) as Chief Cook on board M/V Gas
Defiance. He joined the vessel crew on July 29, 2008, after having been declared fit to
work with restriction by the PTC Health Metrics, Inc.
Sometime in March 2009, while doing his chores, Saladas allegedly lost his balance and
fell when the vessel changed speed. His chest hit a trash can, but he ignored the pain.
Another on-board incident occurred when Saladas slipped from a ladder with his hip
hitting the deck. After two (2) days, he felt numbness and weakness in his right leg,
thighs, chest, and neck areas. He claimed that he requested from the Captain a medical
checkup.
The petitioners claim that, while on board the vessel, Saladas did not experience any
illness or injury which hampered his functions as Chief Cook. He also did not report any
unusual incident concerning his health which could have indicated any illness or injury.
Page 88 of 1699
On April 6, 2009, Saladas disembarked at Brisbane, Australia because his contract had
already ended. While he was in Brisbane, Australia, Saladas underwent a medical check-
up with Dr. David Bartholomeusz (Dr. Bartholomeusz). The foreign doctor diagnosed
that Saladas' pain from the accident has been symptomatic for two (2) weeks; found that
his blood pressure was high but became normal after two (2) hours; made him go through
an electrocardiogram test (ECG); and prescribed him maintenance drugs.
Saladas alleged that he asked Dr. Bartholomeusz for a copy of his findings, with
assessment and diagnosis. Dr. Bartholomeusz, in turn, advised him that the results would
be given through SMC's agent. However, Saladas never received his medical results
before he left for the Philippines.
When Saladas arrived in the Philippines, he immediately reported to PTCI and informed
them of the accidents he suffered on board the vessel. Despite repeated requests for
compensation, PTCI denied these because there was no endorsement from SMC
regarding this matter.
On November 12, 2009, Saladas consulted Dr. Efren Vicaldo (Dr. Vicaldo), an internist-
cardiologist at the Philippine Heart Center, who diagnosed him with diabetes mellitus,
essential hypertension, rib fracture with impediment Grade VII (41.80%). Dr. Vicaldo,
nonetheless, declared him unfit to resume work as a seaman in any capacity.
On October 16, 2009, Saladas filed a complaint for disability benefits, illness allowance,
reimbursement of medical expenses, and damages against the petitioners.
Issue:
Whether or not Saladas is entitled to permanent/total disability benefits.
Ruling:
No.
First, the CA erroneously relied on the 120-day period because Saladas failed to prove
that his medical condition is work-related. The continuing reliance on the number of
days that a seafarer is unable to work has attracted much doubt as regards it fairness and
relevance. We have reminded that this period cannot be used as a panacea for all
maritime compensation cases as labor tribunals should always take into account the
contractual duties between the parties.
Page 89 of 1699
The frequent reliance on the 120-day period diverts the attention of labor tribunals from
other equally important doctrines in granting a disability claim. Such diversion creates
the risk of giving due course to otherwise premature claims; or worse, it may lead to an
award of benefits to claims that are entirely without merit based on the degree of proof
required.
In this respect, one important doctrine that should be considered in this case is the
element of work relatedness between an illness or disability and the seafarer's duties —
a relation that is explicitly required under the POEA-SEC. The focus on the length of time
during which the seafarer is unable to work may diminish the importance of establishing
this connection. In effect, it undermines an essential principle in labor cases, which is
the need to prove allegations and claims with substantial evidence.
We must always remember that whether a seaman is entitled to disability benefits or not
is a matter governed not only by medical findings, but by law and by contract. Deemed
incorporated in every Filipino seafarer's contract of employment is a set of standard
provisions established and implemented by the POEA, which contain the minimum
requirements prescribed by the government for the employment of Filipino seafarers.
Under these standards, we held that two (2) elements must concur for an injury or illness
to be compensable: (a) the condition must be work-related, and (b) it must have existed
during the term of the seafarer's employment contract.
In this case, Saladas failed to submit proof that his illness was work-related. In other
words, the evidence on record misses essential facts on how he contracted or developed
his illness, and how and why his working conditions aggravated this illness. In the
absence of substantial evidence, we cannot just presume that Saladas' job caused his
injury or aggravated any preexisting condition he might have had.
As for his heart condition, Saladas did not present evidence that the condition worsened
during his employment.
While the POEA-SEC considers a heart disease as occupational, Saladas failed to satisfy
by substantial evidence the condition laid down in the contract that if the heart disease
was known to have been present during employment, there must be proof that an acute
exacerbation was clearly precipitated by the unusual strain brought about by the nature
of his work.
Page 90 of 1699
Second, the CA failed to consider the fact that Saladas was NOT repatriated for medical
reasons. His nine-month contract with the petitioners started on July 9, 2008, which
would have ended sometime in April 2009. True enough, and as admitted by Saladas, he
disembarked the vessel because his employment had already ceased. In other words, it is
logical to conclude that Saladas was repatriated to the Philippines due to the completion
of his employment contract and not on account of his alleged accident and heart
condition.
Third, the CA, as well as the labor tribunals, prematurely considered the medical
assessment of Saladas' own doctors without taking into account that Saladas did not
undergo the mandatory post-medical examination. A seafarer must submit himself
within three (3) days after repatriation due to disability for the post-employment
examination and treatment by the company-designated physician. Failure to report
within such time will result in the forfeiture of benefits.
Leonis Navigation Co., Inc. and World Marine Panama S.A. vs. Eduardo C.
Obrero and Mercedita P. Obrero
G.R. No. 192754. September 07, 2016
Facts:
Petitioner Leonis Navigation Company, Inc. (LNCI), for and on behalf of its foreign
principal co-petitioner World Marine Panama S.A. (World Marine), hired Obrero as a
messman onboard M/V Brilliant Arc on October 3, 2003. The governing contract between
the parties was the 2000 Philippine Overseas Employment Agency-Standard
Employment Contract (POEA-SEC). This was the fourth time that LNCI, for and on
behalf of World Marine, hired Obrero since 2000.
Obrero was deployed onboard M/V Brilliant Arc on February 20, 2004. Sometime in
October 2004, Obrero's crewmates observed him acting strangely. The Master Report
noted that Obrero's normal manner changed and that he was unable to sleep well. It
added that Obrero could no longer perform his daily tasks and showed signs "of
abnormality towards his daily gestures especially to the crew and other things."
Upon the vessel's arrival at Tubarao, Brazil, Obrero was seen by Dr. Jose Carlos Soares
Da Silva (Dr. Da Silva) and was confined in a psychiatric clinic for a month in Victoria,
Brazil. He was later diagnosed with "bipolar disturbance (acute phase)" and given
appropriate medications. Dr. Da Silva recommended Obrero's repatriation upon his
discharge.
Page 91 of 1699
Dr. Nicomedes Cruz (Dr. Cruz), the company-designated physician, examined Obrero
shortly after he arrived in the Philippines. Dr. Cruz initially diagnosed him with major
depression and referred him to a psychiatrist. Obrero was confined at the Manila Doctors
Hospital and his diagnosis was updated to "schizophreniform disorder."
On December 14, 2004, Dr. Cruz issued a certification upon the request of LNCI's counsel
stating that "[s]chizophreniform disorder appears to be related to abnormalities in the
structure and chemistry of the brain, and appears to have strong genetic links" and
"[c]ategorically speaking schizophreniform disorder is not work-related." Thus, LNCI
refused to pay Obrero's total disability benefits.
Obrero filed a complaint with the NLRC claiming that he is entitled to total disability
benefits because he has previously been declared fit to work by LNCI, following a rigid
pre-employment medical examination (PEME), and, therefore, his worsening mental
state was work-related. LNCI denied this, maintaining that his illness is not work-related
as declared by Dr. Cruz.
In the meantime, Obrero also sought the opinion of a psychiatrist, Dr. Pacita Ramos-
Salceda. The latter diagnosed Obrero as suffering from "[p]sychotic [d]isorder, [n]ot
otherwise specified." In her psychiatric evaluation, Dr. Salceda noted that although
Obrero was initially able to cope with the rigors and stress of his occupation, his coping
abilities were eventually taxed "as he was continuously exposed to the adverse situation
of repeatedly being at sea for prolonged periods of time." Additionally, he was not able
to handle the stress of being demoted from seaman to messman as a result of the
discovery of his color blindness.
Issue:
Whether or not Obrero's illness was work-related.
Ruling:
Yes.
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. There is no question that the second element is present, since Obrero's
psychological disorder manifested itself while onboard M/V Brilliant Arc. The sole
question is whether his illness is work-related.
The POEA-SEC defines a work-related injury as "injury(ies) resulting in disability or

death arising out of and in the course of employment," and a work-related illness as "any
Page 92 of 1699
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 illnesses not
mentioned under Section 32, the POEA-SEC creates a disputable presumption in favor of
the seafarer that these illnesses are work-related. Notwithstanding the presumption, we
have held that on due process grounds, the claimant-seafarer must still prove by
substantial evidence that his work conditions caused or at least increased the risk of
contracting the disease. This is because awards of compensation cannot rest entirely on
bare assertions and presumptions. In order to establish compensability of a non-
occupational disease, reasonable proof of work-connection is sufficient—direct causal
relation is not required. Thus, probability, not the ultimate degree of certainty, is the test
of proof in compensation proceedings.
Here, we agree with the CA and NLRC that Obrero has successfully proved that his illness
was work-related. Taken together, Dr. Salceda's diagnosis and Obrero's previous
unremarkable stints as a seaman reasonably support the conclusion that his work
environment increased his risk of developing or triggering schizophrenia. As detailed in
Dr. Salceda's diagnosis, Obrero's demotion to messman—which is inherently work-
related and was conveniently ignored by LNCI in its pleadings—appears to be the event
that precipitated his mental disorder. Prior to this, he was able to accomplish his tasks
without any issue as an ordinary seaman (OS) from January 20, 2000 to February 3, 2001,
and as an able seaman (AB) from August 12, 2001 to June 27, 2002 and May 14, 2003 to
June 11, 2003. It was only after he was deployed as messman onboard M/V Brilliant Arc
that he began experiencing sleep interruptions and started having persecutory delusions,
ultimately leading to the erratic behavior detailed in the Master Report. Applying the
standard of substantial evidence, i.e., that amount of relevant evidence which a
reasonable mind might accept as adequate to support a conclusion, we find Dr. Salceda's
explanation—that Obrero's prolonged stint at sea eventually taxed his coping abilities
which rendered him incapable of handling the stress of being demoted—to be reasonable
and highly probable.
Eduardo C. Silagan vs. Southfield Agencies, Inc., et al

G.R. No. 202808
August 24, 2016
Facts:
On 16 October 2003, petitioner was hired by Hyundai Merchant Maritime Co., Ltd. thru
its manning agent, Southfield Agencies, Inc. as Third Mate on board ocean-going vessel,
M/V "Eternal Clipper". His employment was to run for a period of ten (10) months and
he was to receive, inter alia, a basic monthly salary of US$679.00 with an overtime pay of
US$461.00, as evidenced by his Contract of Employment. Under this contract, petitioner
Page 93 of 1699
is covered by the Collective Bargaining Agreement (CBA) between the Federation of

Korean Seafarer's Union/Associated Marine Officers' and Seamen's Union of the
Philippines and herein respondents.
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 28 October 2003, petitioner joined the ship M/V "Eternal Clipper" and commenced
his work on board the sea going vessel. While the ship was en route to Japan from Mexico
on 4 January 2004, petitioner's right hand was slammed by a wooden door while he was
performing his duties. As a result thereof, petitioner suffered a wrist injury causing him
extreme physical pain on the right hand area of his body. The incident was immediately
reported to petitioner's superior who gave him medication and advised him to perform
light duties while his condition was being treated.
Upon arrival of the vessel in Pyeongtaek, Korea on 29 January 2004, petitioner was
brought to the hospital upon complaints of persistent pain where he was diagnosed with
"fracture, closed, distal third radius and comminuted, with ulna head dislocation." To
alleviate the pain, an oral medication was prescribed for petitioner and he was advised
to undergo surgery. Due to the progression of his condition's symptoms, petitioner was
repatriated back to the Philippines on 2 February 2004.
Upon arrival in Manila, petitioner was immediately seen by Dr. Natalio G. Alegre, II (Dr.
Alegre), the company designated physician, who initially assessed petitioner's physical
condition. Dr. Alegre came out with the diagnosis that petitioner suffered "fracture,
closed, distal third, radius comminuted, with ulna head dislocation." A surgery to correct
his condition was recommended.
On 13 February 2004, petitioner underwent "Open Reduction, Plating with Bone Grafting
(Synthetic Bone Graft-Osteopore, Right) and Application of External Fixator Right" at St.
Lukes Medical Center with Dr. Antonio Tanchuling, Jr. (Dr. Tanchuling) as his surgeon.
The surgery proved to be successful and he was discharged from confinement on 18
February 2004. On 1 April 2004, petitioner underwent another surgery for the removal of
the external fixator and was discharged the following day. After the second surgery,
petitioner underwent physical therapy to facilitate for the complete rehabilitation of his
injured hand.
On 1 June 2004, petitioner was declared "fit to resume former work" by Dr. Alegre.
Page 94 of 1699
For failure of the company designated physician to assess his disability grading,
petitioner sought an independent orthopedic surgeon, Dr. Marciano F. Almeda, Jr. (Dr.
Almeda), to evaluate the condition of his injury. In a Medical Report dated 3 August 2004,
Dr. Almeda found that petitioner was "partially and permanently disabled with Grade II
(14.93%) impediment."
Issue:
Whether or not petitioner is entitled to the disability benefits.
Ruling:
No.
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 3 2-A of this contract with the conditions set therein satisfied."
The ultimate question that needs to be addressed in the case at bar is whether or not the
petitioner is entitled to disability benefits under the circumstances.
Page 95 of 1699
First, Dr. Almeda's assessment was merely based on the physical examination he
conducted on the petitioner and on the medical records brought by the latter on the
occasion of his consultation. No diagnostic tests or any medical procedure was conducted
by Dr. Almeda to support his disability grade finding. As aptly observed by the appellate
court, Dr. Almeda examined the petitioner only once and could not possibly form a
reliable opinion of petitioner's fitness to work based on a single consultation. In contrast,
Dr. Alegre was able to closely monitor the condition of petitioner's injury from the day
after he was repatriated on 2 February 2004 up to the time that he underwent surgery
and rehabilitation and until his disability rating was issued on 4 June 2004. On the basis
of the recession of symptoms, the progress of which the company designated physician
has observed for four months, he has a reasonable basis to arrive at the conclusion that
the petitioner is already fit to render work of similar nature as he was previously engaged.
Second, petitioner 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. This
referral to a third doctor has been held by this Court to be a mandatory procedure as a
consequence of the provision that it is the company-designated doctor whose assessment
should prevail. In other words, the company can insist on its disability rating even against
the contrary opinion by another doctor, unless the seafarer expresses his disagreement
by asking for a referral to a third doctor who shall make his or her determination and
whose decision is final and binding on the parties.
In fine, given that petitioner's permanent disability was not established through
substantial evidence for the reasons above-stated, the Court of Appeals did not err in
reversing the NLRC ruling for having been rendered with grave abuse of discretion.
Verily, while the Court adheres to the principle of liberality in favor of the seafarer in
construing the POEA-SEC, when the evidence presented negates compensability, the
claim for disability benefits must necessarily fail, as in this case.
Jakerson G. Gargallo vs. DOHLE Seafront Crewing, Inc., et al.

G.R. No. 215551
August 17, 2016
Facts:
On July 20, 2012, petitioner filed a complaint for permanent total disability benefits
against respondents before the National Labor Relations Commission (NLRC). The
Page 96 of 1699
complaint stemmed from his claim that: (a) he accidentally fell on deck while lifting
heavy loads of lube oil drum, with his left arm hitting the floor first, bearing his full body
weight; (b) he has remained permanently unfit for further sea service despite major
surgery and further treatment by the company-designated physicians; and (c) his
permanent total unfitness to work was duly certified by his chosen physician whose
certification must prevail over the palpably self-serving and biased assessment of the
company-designated physicians.
For their part, respondents countered that the fit-to-work findings of the company-
designated physicians must prevail over that of petitioner's independent doctor,
considering that: (a) they were the ones who continuously treated and monitored
petitioner's medical condition; and (b) petitioner failed to comply with the conflict-
resolution procedure under the Philippine Overseas Employment Administration-
Standard Employment Contract (POEA-SEC). Respondents further averred that the filing
of the disability claim was premature since petitioner was still undergoing medical
treatment within the allowable 240-day period at the time the complaint was filed.
The CA disagreed with the conclusions of the LA and the NLRC, and dismissed
petitioner's complaint. It ruled that the claim was premature because at the time the
complaint was filed: (a) petitioner was still under medical treatment by the company-
designated physicians; (b) no medical assessment has yet been issued by the company-
designated physicians as to his fitness or disability since the allowable 240-day treatment
period during which he is considered under temporary total disability has not yet lapsed;
and (c) petitioner has not yet consulted his own doctor, hence, had no sufficient basis to
prove his incapacity. The CA likewise gave more credence to the fit to work assessment
of the company-designated physician who treated and closely monitored petitioner's
condition, over the contrary declaration of petitioner's doctor who attended to him only
once, two (2) months after the filing of the complaint.
Issue:
Whether or not petitioner is entitled to permanent total disability benefits.
Ruling:
No.
It is undisputed that petitioner was repatriated on March 11, 2012 and immediately
subjected to medical treatment. Despite the lapse of the initial 120-day period on July 9,
2012, such treatment continued due to persistent pain complained of by petitioner, which
Page 97 of 1699
was observed until his 180th day of treatment on September 7, 2012. In this relation, the
CA correctly ruled that the tiling of the complaint for permanent total disability benefits
on July 20, 2012 was premature, and should have been dismissed for lack of cause of
action.
Moreover, petitioner failed to comply with the prescribed procedure under the afore-
quoted Section 20 (A) (3) of the 2010 POEA-SEC on the joint appointment by the parties
of a third doctor, in case the seafarer's personal doctor disagrees with the company-
designated physician's fit-to-work assessment.
In the recent case of Veritas Maritime Corporation v. Gepanaga, Jr. [(see G.R. No. 206285,
February 4, 2015, 750 SCRA 104, 117-118)], involving an almost identical provision of the
CBA, the Court reiterated the well-settled rule that 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.
Nonetheless, the Court concurs with petitioner's asseveration that it was erroneous to
absolve Padiz from joint and several liability with Dchle Seafront and Dohle Manning for
the payment of the income benefit arising from his temporary total disability, in view of
Section 10 of Republic Act No. (RA) 8042, otherwise known as the "Migrant Workers and
Overseas Filipinos Act of 1995," as amended by RA 1002227 (RA 8042, as amended).
Section 10 of RA 8042, as amended, expressly provides for joint and solidary liability of
corporate directors and officers with the recruitment/placement agency for all money
claims or damages that may be awarded to Overseas Filipino Workers (OFWs).
C.F. Sharp Crew Management, Inc., et al. vs. William C. Alivio

G.R. No. 213279
July 11, 2016
Facts:
On August 18, 2010, the respondent William Alivio filed a complaint for disability
benefits, reimbursement of medical expenses, damages, and attorney's fees, against the
petitioners C.F. Sharp Crew Management, Inc. (agency), its Sr. Crew Manager William
Malaluan and its principal Blue Ocean Ship Management, Ltd. The petitioners re-hired
Alivio as bosun for nine months starting January 7, 2009 for the vessel Phyllis N. He had
Page 98 of 1699
been under successive contracts with Blue Ocean since November 1991, starting as
General Purpose (GP) I, then Able Seaman (AB), until he was made bosun in 1999.
Alivio alleged that prior to boarding Blue Ocean’s vessels (including the Phyllis N), in the
course of his employment with the petitioners, he passed all his pre-employment medical
examinations (PEMEs), although sometime in October 2006, he was diagnosed to have
high blood pressure. He claimed he was prescribed medications for it. He further claimed
that he had been continuously hired as bosun because of his fitness to work.
Alivio signed off from the Phyllis N on October 3, 2009 for “finished contract,” but before
he disembarked, he allegedly experienced undue fatigue and weakness, with nape pains.
On October 5, 2009, he consulted a Dr. Raymund Jay Sugay who diagnosed him with
hypertension. Dr. Sugay advised him to “rest at home for one or two days to prevent
further morbidity.”
On January 8, 2010, the agency asked Alivio to undergo a PEME, prior to a possible re-
deployment. The PEME revealed that he was suffering from cardiomegaly or enlarged
heart and his electrocardiography (ECG) showed that he had left ventricular hypertrophy
with strain. He was diagnosed with hypertensive cardiovascular disease and was declared
“unfit for sea duty.” The petitioners did not engage Alivio due to his delicate health
condition. He also consulted with occupational health specialist Dr. Li-Ann Orencia who
certified that his illness is work-related, permanent in nature, and compensable. He then
demanded permanent total disability compensation from the petitioners, but they
refused, leaving him no option but to file his present complaint.
The petitioners denied liability, contending that Alivio is not entitled to his claim because
(1) his disability resulted from an illness which is not work-related and therefore not
compensable under the Philippine Overseas Employment Standard Contract (POEA-
SEC), as he acquired the illness after the expiration of his contract with them; (2) his
failure to submit himself to a post-employment medical examination by the company
doctor disqualified him from claiming disability benefits; and (3) he is not entitled to
damages and attorney’s fees since their denial of his claim was in good faith.
Issue:
Whether or not Alivio’s claimed cardio-vascular disease was work-related and therefore
compensable.
Ruling:
Page 99 of 1699
No.
First. Alivio was repatriated for “finished contract,” not for medical reasons. He chose to
complete his employment contract with the petitioners instead of being medically
repatriated, even as he claimed he experienced fatigue, weakness and nape pains shortly
before his disembarkation on October 3, 2009. Yet, he did not report his “discomforts,”
as the CA put it, to the ship authorities for onboard examination and treatment, if
necessary, or to the agency for post-employment medical examination, as required by
the POEA-SEC. Alivio’s omission to report his health problem at the time could only
mean that it was not serious or grave enough to require medical attention. In Villanueva,
Sr. v. Baliwag Navigacion, Inc., the Court noted with approval the CA conclusion that the
fact that the seafarer was repatriated for finished contract and not for medical reasons
weakened, if not belied, his claim of illness on board the vessel.
Second. Alivio’s claimed cardio-vascular disease was not work-related and therefore not
compensable. Although considered as an occupational disease, his heart ailment did not
satisfy the conditions under the POEA-SEC to be considered occupational, as quoted
above. These conditions provide for two possibilities (1) the heart disease is present
during employment and there is proof that an acute exacerbation was precipitated by the
unusual strain of the seafarer’s work and was followed within 24 hours by the clinical
signs of a cardiac arrest or, (2) the seafarer, who is asymptomatic before being subjected
to the strain of work, shows signs and symptoms of cardiac injury during the performance
of his work, and such symptoms persist. Nowhere in the case record does it appear that
any of the above conditions were present during the whole term of Alivio’s previous
engagements up to the last employment with the petitioners. The evidence showed that
his cardiomegaly was discovered three months after he finished his last contract with
Phyllis N.
In the same Villanueva, Sr. case, the Court said: “We find no reversible error in the CA
ruling affirming the denial of Villanueva’s claim for disability benefits. We find it
undisputed that he was repatriated for finished contract, not for medical reasons. More
importantly, while the 2000 POEA-Standard Employment Contract (Section 32-A [11])
considers a heart disease as occupational, Villanueva failed to satisfy by substantial
evidence the condition laid down in the Contract if the heart disease was known to have
been present during employment, there must be proof that an acute exacerbation was
clearly precipitated by the unusual strain brought by the nature of his work.”
Page 100 of 1699

The circumstances leading to Alivio’s disembarkation and shortly thereafter, lend

credence to the petitioners’ submission that his medical condition was pre-existing and
could not have developed during his employment with them. This is supported by his
own admission that even after being diagnosed with hypertension in October 2009, he
had been continuously engaged as bosun because of his continuing fitness to work.
In this light, especially the failure to satisfy the conditions laid down under the POEA-
SEC, we find that Alivio’s cardiomegaly, discovered three months after his repatriation
for “finished contract,” is not work-related and is therefore not compensable. Alivio’s
argument that the work-connection of his heart ailment is a non-issue because it was not
raised before the labor tribunals is of no moment as the POEA-SEC which governs his
employment expressly provides that the employer is liable only for a work-related injury
or illness suffered by the seafarer.
Third. Even if we were to consider that Alivio was repatriated for health reasons, his
failure to submit himself to a post-employment medical examination by a company-
designated physician within three working days upon his return militates against his
claim for disability benefits. It results in the forfeiture of his right to the 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
Page 101 of 1699
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
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
Page 102 of 1699

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 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
Page 103 of 1699

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.
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.
Page 104 of 1699

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
Page 105 of 1699
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 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
Page 106 of 1699

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 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
Page 107 of 1699

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 108 of 1699

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
Page 109 of 1699
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
Page 110 of 1699

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,
Page 111 of 1699

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
Page 112 of 1699
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:
Page 113 of 1699

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
Page 114 of 1699
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.
Page 115 of 1699
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
Page 116 of 1699
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
Page 117 of 1699
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
Page 118 of 1699

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

Page 119 of 1699
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
Page 120 of 1699
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.
Page 121 of 1699

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
Page 122 of 1699

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
Page 123 of 1699

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

Page 124 of 1699
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
Page 125 of 1699
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.
Page 126 of 1699

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.
Page 127 of 1699
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.
Page 128 of 1699
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.
Page 129 of 1699

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
Page 130 of 1699
(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.
Page 131 of 1699

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
Page 132 of 1699
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
Page 133 of 1699
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
Page 134 of 1699
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
Page 135 of 1699

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
Page 136 of 1699
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.
Page 137 of 1699

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
Page 138 of 1699
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.
JEBSENS MARITIME, INC., ESTANISLAO SANTIAGO, and/or HAPAG-LLOYD

AKTIENGESELL SCHAFT vs. ELENO A. BABOL
G.R. No. 204076, December 4, 2013
J. MENDOZA
In case of disability of seafarers, where the company contends the entitlement of

disability benefits, in the absence of any certification, the law presumes that the employee
remains in a state of temporary disability. Should no certification be issued within the 240
day maximum period, as in this case, the pertinent disability becomes permanent in nature.
Considering that respondent has suffered for more than the maximum period of 240 days
in light of the uncompleted process of evaluation, and the fact that he has been certified to
work again or otherwise, the Court affirms his entitlement to the permanent total disability
benefits awarded him by the CA, the NLRC and the LA.
Facts:
Heed Eleno Babol (Babol), after being diagnosed of Nasopharyngeal Cancer (NPC)
received an expensive company-sponsored treatment, demanded the payment of
disability benefits from the petitioners. His demand being unheeded, respondent filed a
claim before the Labor Arbiter (LA) for the payment disability benefits, sickness
allowance and medical reimbursement.
The petitioners opposed the work-relation argument of respondent in light of a contrary

finding made by the company-designated oncologist thatNPC was caused by genetic
factors; and that full and expensive medical assistance had been generously extended, on
top of the medical attention provided to respondent.
Page 139 of 1699
LA rendered a decision awarding respondent total disability benefits plus 10% thereof as
attorney’s fees. It ruled that there existed a causal relationship between respondent’s
cancer and his diet on board the vessel; and that the petitioners failed to overcome the
presumption of the work-relatedness of respondent’s disease. NLRC affirmed the LA’s
ruling but deleted the awards for attorney;s fees. CA affirmed the decision of NLRC and
LA, thus, the instant petition.
Issues:
Whether the respondent is entitled to disability benefits.
Ruling:
The petition is denied.
In ECC v. Sanico, GSIS v. CA and Bejerano v. ECC, the Court held that disability should be
understood not more on its medical significance, but on the loss of earning capacity.
Permanent total disability means disablement of an employee to earn wages in the same
kind of work or work of similar nature that he was trained for or accustomed to perform,
or any kind of work which a person of his mentality and attainment could do. It does not
mean absolute helplessness. Evidence of this condition can be found in a certification of
fitness/unfitness to work issued by the company-designated physician.
In this case, records reveal that the medical report issued by the company-designated
oncologist was bereft of any certification that respondent remained fit to work as a
seafarer despite his cancer. This is important since the certification is the document that
contains the assessment of his disability which can be questioned in case of disagreement
as provided for under Section 20(B)(3). Of the POEA-SEC.
In the absence of any certification, the law presumes that the employee remains in a state
of temporary disability. Should no certification be issued within the 240 day maximum
period, as in this case, the pertinent disability becomes permanent in nature.
Considering that respondent has suffered for more than the maximum period of 240 days
in light of the uncompleted process of evaluation, and the fact that he has been certified
to work again or otherwise, the Court affirms his entitlement to the permanent total
disability benefits awarded him by the CA, the NLRC and the LA.
In the same way that the seafarer has duty to faithfully comply with and observer the
terms and conditions of the POEA-SEC, including the provisions governing the
procedure for claiming disability benefit, the employer also has the duty to provide proof
Page 140 of 1699
that the procedures were also complied with, including the issuance of the fit/unfit to
work certification. Failure to do so has the duty to provide proof that the procedures were
also complied with, including the issuance of the fit/unfit to work certification. Failure
to do so will necessarily cast doubt on the true nature of the seafarer’s condition.
When such doubts exist, the scales of justice must tilt in his favor.
RE: APPLICATION FOR SURVIVORSHIP PENSION BENEFITS UNDER REPUBLIC

ACT NO. 9946 OF MRS. PACITA A. GRUBA, SURVIVING SPOUSE OF THE LATE
MANUEL K. GRUBA, FORMER CTA ASSOCIATE JUDGE.
A.M. No. 14155-Ret., November 19, 2013
J. LEONEN
Where a judge of the Court of Tax Appeals who died while in service and prior to the
enactment of Republic Act No. 9946, which substantially amended the benefits provided in
Republic Act No. 910, the SC grants the applicability of RA 9946 to Judge Gruba. Providing
retroactivity to judges and justices who died while in service conforms with the doctrine
that retirement laws should be liberally construed and administered in favor of persons
intended to be benefited. “[T]he liberal approach aims to achieve the humanitarian
purposes of the law in order that the efficiency, security, and well-being of government
employees may be enhanced.”
Facts:
Manuel K. Gruba (Judge Gruba) was born on April 19, 1941. He began his government
service on December 3, 1979 at the Bureau of Internal Revenue. He rose from the ranks
at the Bureau of Internal Revenue until he was appointed as an Associate Judge of the
Court of Tax Appeals on September 17, 1992. On June 25, 1996, Judge Gruba passed away.
The cause of his death was natural. He was 55 years old when he died. He was in
government service for a total of 16 years, six (6) months, and 21 days. In those years, he
rendered service for three (3) years, nine (9) months, and eight (8) days in the Judiciary.
The surviving spouse of Judge Gruba, Mrs. Pacita A. Gruba (Mrs. Gruba), applied for
retirement/gratuity benefits under Republic Act No. 910. Upon the grant of the Court of
retirement benefits under RA 910, Congress amended Republic Act No. 910 and passed
Republic Act No. 9946 which provides for more benefits, including survivorship pension
benefits, among others. The law also provides a retroactivity provision.
Mrs. Gruba now applies for survivorship pension benefits under Republic Act No. 9946.
Issue:
Page 141 of 1699

Whether Republic Act No. 9946 applies to Judge Gruba
Ruling:
Republic Act No. 9946 provides for a retroactivity clause in Section 4, adding Section 3-
B to Republic Act No. 910:
SEC. 3-B. The benefits under this Act shall be granted to all those who have retired prior
to the effectivity of this Act: Provided, That the benefits shall be applicable only to the
members of the Judiciary: Provided, further, That the benefits to be granted shall be
prospective.
An initial look at the law might suggest that the retroactivity of Republic Act No. 9946 is
limited to those who retired prior to the effectivity of the law. However, a holistic
treatment of the law will show that the set of amendments provided by Republic Act No.
9946 is not limited to justices or judges who retired after reaching a certain age and a
certain number of years in service. The changes in the law also refer to justices or judges
who "retired" due to permanent disability or partial permanent disability as well as
justices or judges who died while in active service. In light of these innovations provided
in the law, the word "retired" in Section 3-B should be construed to include not only those
who already retired under Republic Act No. 910 but also those who retired due to
permanent disability. It also includes judges and justices who died or were killed while
in service.
Providing retroactivity to judges and justices who died while in service conforms with
the doctrine that retirement laws should be liberally construed and administered in favor
of persons intended to be benefited."[T]he liberal approach aims to achieve the
humanitarian purposes of the law in order that the efficiency, security, and well-being of
government employees may be enhanced." Ensuring the welfare of families dependent
on government employees is achieved in the changes made in Republic Act No. 9946. It
will be consistent with the humanitarian purposes of the law if the law is made retroactive
to benefit the heirs of judges and justices who passed away prior to the effectivity of
Republic Act No. 9946.
Judge Gruba who passed away prior to the effectivity of Republic Act No. 9946 is still
covered by the law by virtue of Section 3-B. "Retired" here is not construed in the strict
dictionary definition but in its more rational sense of discontinuance of service due to
causes beyond one’s control. It should include the cessation of work due to natural causes
such as death. Therefore, the death of Judge Gruba produces effects under Republic Act
No. 9946 for his family.
Page 142 of 1699

In the past, this Court has liberally granted benefits to surviving heirs of deceased
members of the Judiciary despite incomplete compliance with the requisites of Republic
Act No. 910. Since there was a gap in the law, this Court’s Resolution dated September
30, 2003 in Re: Resolution Granting Permanent Total Disability Benefits to Heirs of
Justices and Judges Who Die In Actual Service provided for benefits of judges and justices
who died in actual service but were not able to comply with the age and service
requirements stated in Republic Act No. 910.30This Resolution was incorporated in
This Court also applied the survivorship pension benefits to surviving spouses of justices
and judges who died prior to the enactment of Republic Act No. 9946 in 2010. For
example, Chief Justice Enrique M. Fernando passed away in 2004, but his widow, Mrs.
Emma Q. Fernando, was given survivorship pension benefits despite the fact that Chief
Justice Fernando’s death occurred prior to the enactment of Republic Act No. 9946.
Congress has been liberal in according retirement and death benefits to justices and
judges. These benefits are incentives for talented individuals to join the Judiciary. For
current members, these benefits assure them that the government will continue to
ensure their welfare even in their twilight years. These benefits allow the best and the
brightest lawyers to remain in the Judiciary despite its risks because they know that their
family’s welfare will be addressed even in their passing.
GERSIP ASSOCIATION, INC., LETICIA ALMAZAN, ANGELA NARVAEZ, MARIA B.

PINEDA, LETICIA DE MESA AND ALFREDO D. PINEDA
vs. GOVERNMENT INSURANCE SERVICE SYSTEM
G.R. No. 189827, October 16, 2013
J. VILLARAMA
The established GSIS Provident Fund Plan got the benefit of GSIS employees, there
is no doubt that respondent intended to establish a trust fund from the employees’
contributions (5% of monthly salary) and its own contributions (45% of each member’s
monthly salary and all unremitted Employees Welfare contributions).SC cannot accept
petitioners’ submission that respondent could not impose terms and conditions on the
availment of benefits from the Fund on the ground that members already own respondent’s
contributions from the moment such was remitted to their account. Petitioners’ assertion
that the Plan was a purely contractual obligation on the part of respondent is likewise
mistaken.
Facts:
Page 143 of 1699

On March 19, 1981, the GSIS Board of Trustees (GSIS Board) approved the proposed GSIS
Provident Fund Plan (Plan) to provide supplementary benefits to GSIS employees upon
their retirement, disability or separation from the service, and payment of definite
amounts to their beneficiaries in the event of death. Under the Plan, employees who are
members of the Provident Fund (Fund) contribute through salary deduction a sum
equivalent to five percent (5%) of their monthly salary while respondent’s monthly
contribution is fixed at 45% of each member’s monthly salary. A Committee of Trustees
(Committee) appointed by respondent administers the Fund by investing it "in a prudent
manner to ensure the preservation of the Fund capital and the adequacy of its earnings."
Petitioners filed a Petition with the GSIS Board alleging that they have not been paid
their portion of the GRF upon their retirement, to which they are entitled as "co-owners"
of the Fund. In its Answer, respondent asserted that petitioners as retiring members of
the Fund were entitled only to the benefits provided in Section 1(b), Article V of the PFRR
and that their claim is not covered by Section 8(a) to (d), Article IV which enumerates
the purposes for which the GRF is allocated. Respondent further contended that there is
no legal basis for petitioners’ theory that they are co-owners and not just beneficiaries of
the Fund.
On October 27, 2004, the GSIS Board denied the petition for lack of merit. It held that
the execution of the Trust Agreement between respondent and the Committee is a clear
indication that the parties intended to establish an express trust, not a co-ownership,
with respondent as Trustor, the Committee as Trustee of the Fund and the members as
Beneficiaries. As to the GRF, the Board said that it answers only for the contingent claims
mentioned in Section 8, Article IV and there is no requirement in the PFRR for the
accounting and partition of GRF. The CA affirmed the ruling of the GSIS Board.
Petitioners’ motion for reconsideration was likewise denied.
Issue:
Whether the GSIS Provident fund is not a "trust" but a co-ownership.
Ruling:
We sustain the rulings of the GSIS Board and CA.
Trust is the legal relationship between one person having an equitable ownership in
property and another person owning the legal title to such property, the equitable
ownership of the former entitling him to the performance of certain duties and the
exercise of certain powers by the latter. A trust fund refers to money or property set aside
as a trust for the benefit of another and held by a trustee. Under the Civil Code, trusts
Page 144 of 1699

are classified as either express or implied. An express trust is created by the intention of
the trustor or of the parties, while an implied trust comes into being by operation of law.
There is no doubt that respondent intended to establish a trust fund from the employees’
contributions (5% of monthly salary) and its own contributions (45% of each member’s
monthly salary and all unremitted Employees Welfare contributions). We cannot accept
petitioners’ submission that respondent could not impose terms and conditions on the
availment of benefits from the Fund on the ground that members already own
respondent’s contributions from the moment such was remitted to their account.
Petitioners’ assertion that the Plan was a purely contractual obligation on the part of
respondent is likewise mistaken.
In Development Bank of the Philippines v. Commission on Audit, this Court recognized

DBP’s establishment of a trust fund to cover the retirement benefits of certain employees.
We noted that as the trustor, DBP vested in the trustees legal title over the Fund as well
as control over the investment of the money and assets of the Fund. The Trust Agreement
therein also stated that the principal and income must be used to satisfy all of the
liabilities to the beneficiary officials and employees under the Gratuity Plan.
BENITO E. LORENZO vs. GOVERNMENT SERVICE INSURANCE SYSTEM

(GSIS) and DEPARTMENT OF EDUCATION (DepEd)
G.R. No. 188385, October 2, 2013
J. PEREZ
Where the accused was diagnosed of leukemia and died because of the said illness,
the surviving spouse cannot claim death benefits as a member of the Government Service
Insurance System under Employees’ Compensation death benefits. Though the said illness
is occupational, it, however, does not thereby result in compensability in view of the fact
that petitioner’s wife was not an operating room personnel, as provided under the
Implementing Rules of P.D. No. 626.
Facts:
Rosario D. Lorenzo, during her lifetime, served as Elementary Teacher I of the

Department of Education (DepEd) from October 1984-December 2001. On October 2001,
she was admitted at the Medical City Hospital due to Hematoma on the Tongue, Left
Inner Lip and Right Cheek with Associated Gingival Bleeding. Prior to her
hospitalization, she was diagnosed by the same hospital with leukimia and was confined
therein because of pneumonia. On December 2001, Rosario died of Cardio-Respiratory
Arrest due to Terminal Leukemia. Her surviving spouse now claims for Employees’
Compensation death benefits as a Government Service Insurance System (GSIS) member.
Page 145 of 1699
It was denied on the ground that the GSIS Medical Evaluation and Underwriting
Department (MEUD) found Rosario’s ailments and cause of death, Cardio-respiratory
Arrest Secondary to Terminal Leukemia, a non-occupational diseases contemplated
under P.D. No. 626, as amended.
Unconvinced, petitioner elevated his Employee’s Compensation claim to the Employees

Compensation Commission (ECC) for review and reconsideration under the Amended
Rules on Employees’ Compensation provided in P.D. No. 626. Upon review, the ECC
found the denial of petitioner’s claim to be in order. Aggrieved, petitioner filed a petition
for review of the decision of the ECC with the CA. The CA affirmed the decision of ECC.
Issue:
Whether the ailment of the late Rosario Lorenzo is compensable under the present law
on employees’ compensation.
Ruling:
SC finds the Petition unmeritorious.
Sickness, as defined under Article 167 (1) Chapter I, Title II, Book IV of the Labor Code of
the Philippines refers to "any illness definitely accepted as an occupational disease listed
by the Employees’ Compensation Commission, or any illness caused by employment,
subject to proof that the risk of contracting the same is increased by working conditions.
In cases of death, such as in this case, Section 1(b), Rule III of the Rules Implementing
P.D. No. 626, as amended, requires that for the sickness and the resulting disability or
death to be compensable, the claimant must show: (1) that it is the result of an
occupational disease listed under Annex "A" of the Amended Rules on Employees’
Compensation with the conditions set therein satisfied; or (2) that the risk of contracting
the disease is increased by the working conditions.
Section 2(a), Rule III of the said Implementing Rules, on the other hand, defines
occupational diseases as those listed in Annex "A" when the nature of employment is as
described therein. The listed diseases are therefore qualified by the conditions as set forth
in the said Annex "A," hereto quoted:
OCCUPATIONAL DISEASES
For an occupational disease and the resulting disability or death to be compensable, all
of the following conditions must be satisfied:
Page 146 of 1699
(1) The employee’s work must involve the risks described herein;
(2) The disease was contracted as a result of the employee’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 employee.
xxxx
Occupational Disease Nature of Employment
xxx
15. Leukemia and Lymphoma Among operating room personnel due to anesthetics
Gauging from the above, the ECC was correct in stating that, contrary to the earlier
finding of the MEUD of the GSIS, Rosario’s disease is occupational, which fact, however,
does not thereby result in compensability in view of the fact that petitioner’s wife was
not an operating room personnel.
As correctly pointed out by the ECC, the coverage of leukemia as an occupational disease
relates to one’s employment as an operating room personnel ordinarily exposed to
anesthetics. In the case of petitioner’s wife, the nature of her occupation does not indicate
exposure to anesthetics nor does it increase the risk of developing Chronic Myelogenous
Leukemia. There was no showing that her work involved frequent and sufficient exposure
to substances established as occupational risk factors of the disease. Thus, the need for
the petitioner to sufficiently establish that his wife’s job as a teacher exposed her to
substances similar to anesthetics in an environment similar to an "operating room." This
leans on the precept that the awards for compensation cannot rest on speculations and
presumptions.
Indeed, following the specific mandate of P.D. No. 626, as amended, and its
Implementing Rules, the petitioner must have at least provided sufficient basis, if not
medical information which could help determine the causal connection between
Rosario’s ailment and her exposure to muriatic acid, floor wax and paint as well as the
rigors of her work. Instead, petitioner merely insists on the supposition that the disease
might have been brought about by the harmful chemicals of floor wax and paint
aggravated by the fact that the Manggahan Elementary School is just along the highway
which exposed Rosario to smoke belched by vehicles, all contributing to her acquisition
of the disease.
We find such factors insufficient to demonstrate the probability that the risk of
contracting the disease is increased by the working conditions of Rosario as a public
school teacher; enough to support the claim of petitioner that his wife is entitled to
employees compensation. Petitioner failed to show that the progression of the disease
Page 147 of 1699
was brought about largely by the conditions in Rosario’s work. Not even a medical history
or records was presented to support petitioner’s claim.
SEA POWER SHIPPING ENTERPRISES, INC., ET AL. vs. NENITA P. SALAZAR, IN

BEHALF OF DECEASED ARMANDO L. SALAZAR
G.R. No. 188595. August 28, 2013
CJ. Sereno
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
proofs.
Section 20(A) of the POEA Contract require in granting death benefits, seafarer
must have suffered a work-related death during the term of his contract. Here, the seafarer
died six months after his repatriation. Thus, on the basis of Section 20(A), his beneficiaries
are precluded from receiving death benefits.
Facts:
Armando was employed' as an Able Seaman by petitioner Sea Power Shipping

Enterprises, Inc. (agency) on behalf of its principal, Atlantic Bulk Carriers Limited,
for a term of nine months plus a three month-consented extension. At the time of his
employment, he had already passed his pre-employment medical examination and had
been declared “fit to work.”
On 20 April 2003, Armando boarded the M/V Magellan. After 17 months, his contract
ended, and on 8 September 2004, he returned to our shores. Two days after, he was taken
to the Tanza Family General Hospital, where he was confined in the Intensive Care Unit
(ICU) for three days. According to medical reports, he suffered from pneumonia.
Because of his confinement, Armando was unable to see the agency’s physician for a post-
employment medical examination (PEME) that was supposed to be conducted within 72
hours from his repatriation. Nevertheless, on the 7th or 8thday of Armando’s
confinement, Salazar informed petitioners of her husband’s condition and even asked
Page 148 of 1699
them for the insurance proceeds. The agency denied her claims. It reasoned that without
the requisite PEME required by the 2005 Philippine Overseas Employment
Administration Standard Employment Contract for Seafarers (POEA Contract), his
beneficiaries could not avail themselves of the sickness allowance.
Armando checked in and out of several hospitals thereafter. At the Philippine General
Hospital where he was transferred in October 2004, he was diagnosed as suffering from
lung carcinoma with brain metastases. On 1 March 2005, he died of cardio-respiratory
arrest, secondary to acute respiratory failure, and secondary to multi-organ failure.
Subsequently, his widow instituted before the labor arbiter (LA) a collection suit against
petitioners for seafarer benefits under Section 20 of the POEA Contract. The LA denied
all of respondent’s monetary claims. The LA explained that for the benefits under the
POEA Contract to arise, a claimant must show that the death of the seafarer, as well as
the illness that caused his death, (1) transpired during his service and (2) resulted from
his work conditions. Respondent obtained a favorable ruling from the NLRC, which
awarded her illness benefits. However, the NLRC did not award death benefits to
respondent. The CA granted respondent’s additional claim for death benefits, thereby
reversing the rulings of both the LA and the NLRC.
Issue:
Whether or not respondent is entitled to death benefits
Ruling:
In compensation proceedings for seafarers, this Court refers to the provisions of the
POEA Contract as it memorializes the minimum rights of a seafarer and the concomitant
obligations of an employer. Section 20(A) thereof pertinently discusses the rules on
granting death benefits. Nevertheless, on account of the liberal interpretation
permeating seafarer’s agreements, we also consider the possibility of compensation for
the death of the seafarer under Section 32-A of the POEA Contract.
Page 149 of 1699

Section 20(A) of the POEA Contract, and a long line of jurisprudence explaining the
provision, require that for respondent to be entitled to death benefits, Armando must
have suffered a work-related death during the term of his contract.
Here, it is undisputed that Armando died on 1 March 2005 or six months after his
repatriation. Thus, on the basis of Section 20(A), his beneficiaries are precluded from
receiving death benefits. In relying upon this provision, both the LA and the NLRC
correctly exercised their discretion in denying respondent’s claims for death benefits.
The NLRC and the CA were excessively fixated on the proximity of the time between the
repatriation and the death of the seafarer to automatically conclude that he contracted a
fatal illness during his service. The CA even stressed in its ruling that it was safe to make
that presumption. This approach to case disposition by the CA – 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. As we have ruled
in Gabunas, Sr. v. Scanmar Maritime Services, Inc., citing Government Service Insurance
System v. Cuntapay, 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 proofs. Thus, since the CA crafted a legal conclusion out
of conjectures and without substantial evidence, we rule that a reversible error of law
attended its award of death benefits, minor child’s allowance, and burial expenses. For
this reason, we delete the grant thereof to respondent.
PHILMAN MARINE AGENCY, INC., ET AL. vs. ARMANDO S. CABANBAN

G.R. No. 186509. July 29, 2013
J. Brion
Section 20-B of the POEA-SEC, in plain terms, laid out two primary conditions which
the seafarer must meet in order for him to claim disability benefits – that the injury or
illness is work-related and that it occurred during the term of the contract.
In this case, the seafarer sought the opinion of four private physicians who arrived
at a contrary finding. However, he did so only after he had already filed his complaint with
the labour arbiter. Thus, the seafarer had no grounds for a disability claim at the time he
filed his complaint, as he had insufficient evidence to support his claim. The court found
Page 150 of 1699

that the seafarer was not entitled to disability benefits and was entitled to only 92 days of
sick pay.
Facts:
On September 15, 2002, Armando entered into a nine-month contract of employment

with DOHLE, through its local agent PTCI. He was assigned to work as a 2nd mate on
board the vessel “INGA-S.” On September 9, 2002, Armando underwent the requisite pre-
employment medical examination (PEME) at PTCI’s accredited medical clinic, which
found him fit for sea service. During his medical examination, he declared that he had
no history of high blood pressure and heart trouble, and had not previously consulted
any doctor relative to any disease. Armando was deployed on October 14, 2002.
On February 9, 2003, while on board the vessel “INGA-S,” Armando felt dizzy and
complained of chest pain. He was immediately brought to the Fujairah Port Clinic, UAE,
and was admitted to the Coronary Care Unit after an initial diagnosis of “Unstable
Angina.” Thereafter, the petitioners repatriated Armando on medical ground.
After the three-month close monitoring, treatment and consultation with the company-
designated physician, Armando was declared “fit to work” on May 12, 2003.
Despite the certification of the company-designated physician as to Armando’s fitness to

resume work, Armando nevertheless claimed otherwise. Armando demanded from PTCI
payment of permanent disability benefits under the Philippine Overseas Employment
Agency Standard Employment Contract (POEA-SEC). The petitioners did not heed
Armando’s demand, prompting Armando to file a complaint.
Issue:
Whether or not respondent is entitled to permanent disability benefits under the POEA-
SEC despite the certification of the physician as to his fitness to resume work
Ruling:
The results of our consideration of the records compel us to rule in the negative.
Page 151 of 1699

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

by the medical findings, by law and by the parties’ contract. By law, the governing
provisions are Articles 191 to 193, Chapter VI (Disability Benefits) of the Labor Code, in
relation to Section 2, Rule X of the Rules and Regulations Implementing Book IV of the
Labor Code. By contract, the provisions of the POEA-SEC incorporating Employment
(the POEA-SEC) govern.
Section 20-B of the POEA-SEC, in plain terms, laid out two primary conditions which the
seafarer must meet in order for him to claim disability benefits – that the injury or illness
is work-related and that it occurred during the term of the contract. It also spelled out
the procedure to be followed in assessing the seafarer’s disability - whether total or partial
and whether temporary or permanent - resulting from either injury or illness during the
term of the contract, in addition to specifying the employer’s liabilities on account of
such injury or illness.
The seafarer is not, of course, irretrievably bound by the findings of the company-
designated physician as the above provisions allow him 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 appointed physician, the parties shall
jointly agree to refer the matter to a third doctor whose findings shall be final and binding
on both.
In the present petition, the petitioners’ designated physician declared Armando fit for
sea service on May 12, 2003 or 92 days from the time he disembarked or signed off from
the vessel on February 10, 2003. As defined under Article 192(c)(1) of the Labor Code,
total and permanent disability means total temporary disability lasting for more than 120
days (unless the seafarer is still under treatment up to a maximum period of 240 days as
the Court held in Vergara v. Hammonia Maritime Services, Inc.). While Armando was
initially under temporary total disability, Dr. Alegre declared him fit to work well within
the 120-day mark. Viewed in this light, we find the LA and the NLRC legally correct when
they refused to recognize any disability on Armando’s part as the petitioners’ designated
physician had already declared his fitness to resume work. Consequently, absent any
disability after his temporary disability was dealt with, he is therefore not entitled to
compensation benefits under Section 20 of the POEA-SEC.
Page 152 of 1699

Armando, acting well within his rights, disagreed with the assessment of the company-
designated physician and sought the opinion of four private physicians who arrived at a
contrary finding. We note, however, that he did so only after he had already filed his
complaint with the LA. Thus, Armando, in fact, had no ground for a disability claim at
the time he filed his complaint, as he did not have any sufficient evidentiary basis to
support his claim.
More than this, the disagreement between the findings of the company-designated
physician and Armando’s chosen physicians was never referred to a third doctor chosen
by both the petitioners and Armando, following the procedure outlined in Section 20-B,
paragraph 3 of the POEA-SEC. Had this been done, Armando’s medical condition could
have been easily clarified and finally determined.
Considering the absence of findings coming from a third doctor, we sustain the findings
of the NLRC and hold that the certification of the company-designated physician should
prevail. We do so for the following reasons: first, the records show that the medical
certifications issued by Armando’s chosen physician were not supported by such
laboratory tests and/or procedures that would sufficiently controvert the “normal”
results of those administered to Armando at the St. Luke’s Medical Center. And second,
majority of these medical certificates were issued after Armando consulted these private
physicians only once.
Armando is entitled to sickness allowance only until the company-designated physician

declared him fit to work.
CIRILA MANOTA, FOR HERSELF AND IN BEHALF OF HER CHILDREN, CLAIRE,

ET AL. vs. AVANTGARDE SHIPPING CORPORATION, ET AL.
G.R. No. 179607, July 24, 2013
J. Peralta
The employment of seafarers, including claims for death and disability benefits, is
governed by the contracts they sign every time they are hired or rehired, and as long as the
stipulations therein are not contrary to law, morals, public order, or public policy, they have
the force of law between the parties. Since the mandatory reporting is a requirement for a
Page 153 of 1699

disability claim to prosper, seafarer's non-compliance thereto forfeits his right to claim the
benefits.
Facts:
Avantgarde Shipping Corporation, the local manning agent Sembawang Johnson Mgt.
Pte. Ltd. (respondents), hired Enrique Manota (Enrique) as an able seaman for a period
of 7 months. Their employment contract incorporated the Standard Terms and
Conditions Governing the Employment of Filipino Seafarers on Board Ocean-Going
Vessels as prescribed by the Philippine Overseas Employment Administration (POEA).
On April 23, 1996, Enrique departed from the Philippines to join his vessel “Henriette
Kosan.” He was repatriated on November 30, 1996 and arrived in the Philippines on
December 2, 1996.
On November 4, 1999, Enrique went to the Seamen's Hospital for an examination where
he was diagnosed as suffering from Diabetes Mellitus II, PTB cavitary class 3, and
movement disorder (Ataxia) affecting the left side upper and lower extremities. Based on
such condition, he was deemed to have impediment Grade 1 disability and was deemed
unfit for sea duty. Thus, Enrique claimed from respondents disability and other benefits
which were all denied. Consequently, Enrique filed with the LA a complaint for disability
benefits, illness allowance, reimbursement of medical expenses, damages and attorney's
fees.
The LA grant Enrique Manota's claim for disability benefits. The NLRC reversed the
decision of LA. The CA affirmed in toto the decision of the NLRC. Hence, this petition.
Issue:
Page 154 of 1699

Whether or not petitioners are entitled to claim disability benefits from respondents
Ruling:
The employment of seafarers, including claims for death and disability benefits, is
governed by the contracts they sign every time they are hired or rehired, and as long as
the stipulations therein are not contrary to law, morals, public order, or public policy,
they have the force of law between the parties (Crew and Ship Management
International, Inc. v. Soria, G.R. No. 175491, December 10, 2012).
Based on the foregoing provision, it must be shown that the injury or illness was
contracted during the term of the employment contract. The unqualified phrase “during
the term” covered all injuries or illnesses occurring during the lifetime of the contract
(Wallem Maritime Services, Inc. v. Tanawan, G.R. No. 160444, August 29, 2012).
A review of the records shows that petitioners failed to prove by substantial evidence that
Enrique's illness which resulted to his disability was acquired during the term of his
employment contract.
It is mandatory for a seaman to submit himself to a post employment medical

examination within three (3) working days from his arrival in the Philippines before his
right to a claim for disability or death benefits can prosper. The provision, however,
admits of exception, i.e., when the seafarer is physically incapacitated to do so, but there
must be a written notice to the agency within the same period for the seaman to be
considered to have complied with the 3-day rule. The 3-day mandatory reporting
requirement must be strictly observed since within 3 days from repatriation, it would be
fairly manageable for the physician to identify whether the disease for which the seaman
died was contracted during the term of his employment or that his working conditions
Page 155 of 1699

increased the risk of contracting the ailment (Crew and Ship Management International,
Inc. v. Soria, supra.)
In this case, Enrique admitted that he had his physical examination at the UDMC on
January 6, 1997, which was more than a month from his arrival in the Philippines, and his
x-ray result showed that he had pneumonia/tuberculosis foci. Clearly, Enrique failed to
comply with the required post-employment medical examination within 3 days from his
arrival and there was no showing that he was physically incapacitated to do so to justify
his non-compliance. Since the mandatory reporting is a requirement for a disability
claim to prosper, Enrique's non-compliance thereto forfeits petitioners' right to claim the
benefits as to grant the same would not be fair to respondents.
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,
Page 156 of 1699

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.
Page 157 of 1699

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
Page 158 of 1699

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
Page 159 of 1699
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
Page 160 of 1699
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.
Page 161 of 1699
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.
Page 162 of 1699

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
Page 163 of 1699
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.
Page 164 of 1699

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.
recent case of Philippine Hammonia Ship Agency, Inc. v. Dumadag (Dumadag) that a
CBA militates against his claims. In Dumadag, the Court explained:The POEA-SEC and
Page 165 of 1699
is the law between them and as such, its provisions bind both of them." Dumadag,
determination.
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.
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.
Page 166 of 1699
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
Page 167 of 1699
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.
Page 168 of 1699
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.
Page 169 of 1699

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:
Page 170 of 1699
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.awlibrary
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.
Page 171 of 1699

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
Page 172 of 1699
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.
Page 173 of 1699

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
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.
Page 174 of 1699

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.

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
Page 175 of 1699
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

Page 176 of 1699
contract, the POEA-SEC, as provided under Department Order No. 4, series of 2000 of
contracted.

under Section 32-A of this contract with the conditions set therein 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.
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.
Page 177 of 1699
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
Page 178 of 1699
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
Page 179 of 1699
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
Page 180 of 1699

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.
Page 181 of 1699

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
Page 182 of 1699
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
Page 183 of 1699
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
Page 184 of 1699
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
Page 185 of 1699
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
Page 186 of 1699

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.
Page 187 of 1699

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."
Page 188 of 1699

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.
Page 189 of 1699

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
Page 190 of 1699
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:

Page 191 of 1699
2. The disease was contracted as a result of the seafarer's exposure to the described risks;
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.
DOEHLE-PHILMAN MANNING AGENCY INC., DOHLE (IOM) LIMITED AND

CAPT. MANOLO T. GACUTAN vs. HENRY C. HARO
G.R. No. 206522
FACTS
On May 30, 2008, Doehle-Philman, in behalf of its foreign principal, Dohle Ltd., hired
respondent as oiler aboard the vessel MV CMA CGM Providenciafor a period of nine
months with basic monthly salary of US$547.00 and other benefits. Before deployment,
respondent underwent pre-employment medical examination (PEME) and was declared
fit for sea duty.
Page 192 of 1699

Respondent stated that on June 1, 2008, he boarded the vessel and assumed his duties as
oiler; however, in November 2008, he experienced heartache and loss of energy after
hammering and lifting a 120-kilogram machine; thereafter, he was confined at a hospital
in Rotterdam where he was informed of having a hole in his heart that needed medical
attention.
After his repatriation on December 6, 2008, respondent reported to Doehle-Philman

which in turn referred him to Clinico-Med. Respondent claimed that he was confined for
two days in UST Hospital and that a heart operation was recommended to him. He
nevertheless admitted that he has not yet undergone any surgery. On April 24, 2009,
respondent’s personal doctor, Dr. Luminardo M. Ramos (Dr. Ramos), declared him not
fit to work.
Consequently, on June 19, 2009, respondent filed a Complaint for disability benefits,
reimbursement of medical expenses, moral and exemplary damages, and attorney’s fees
against petitioners. Respondent claimed that since he was declared fit to work before his
deployment, this proved that he sustained his illness while in the performance of his
duties aboard the vessel; that he was unable to work for more than 120 days; and that he
lost his earning capacity to engage in a work he was skilled to do. Thus, he insisted he is
For their part, petitioners alleged that respondent boarded the vessel on June 2, 2008;
that on or about November 21, 2008, respondent was confined at a hospital in Rotterdam;
and that upon repatriation, he was referred to Dr. Leticia Abesamis (Dr. Abesamis), the
company-designated doctor, for treatment.
Petitioners denied that respondent has a hole in his heart. Instead, they pointed out that
on December 27, 2008, Dr. Abesamis diagnosed him of "aortic regurgitation, moderate"
but declared that his condition is not work-related. They averred that despite such
declaration, they still continued with respondent’s treatment. However, on January 19,
2009, Dr. Abesamis declared that respondent had not reported for follow up despite
repeated calls. On April 8, 2009, the company-designated doctor reported that
respondent refused surgery. And on April 15, 2009, she reiterated that respondent’s
condition is not work-related.
Petitioners insisted that the determination of the fitness or unfitness of a medically

repatriated seafarer rests with the company-designated physician; and since Dr.
Abesamis declared that respondent’s illness is not work-related, such determination
must prevail. They also stressed that the company-designated doctor continuously
treated respondent from his repatriation in December 2008, until April 2009, hence, her
finding that his illness is not work-related must be respected.
Page 193 of 1699
Finally, petitioners argued that since respondent’s illness is not an occupational disease,
then he must prove that his work caused his illness; because of his failure to do so, then
he is not entitled to disability benefits.
ISSUE
Whether or not petitioner is entitled to permanent and total disability benefits.
RULING
The Standard Terms and Conditions Governing the Employment of Filipino Seafarers
On-Board Ocean-Going Vessels (POEA-SEC), particularly Section 20(B) thereof,
provides that the employer is liable for disability benefits when the seafarer suffers from
a work-related injury or illness during the term of his contract. To emphasize, to be
compensable, the injury or illness 1) must be work-related and 2) must have arisen during
the term of the employment contract.
In Jebsen Maritime, Inc. v. Ravena, the Court held that those diseases not listed as
occupational diseases may be compensated if it is shown that they have been caused or
aggravated by the seafarer’s working conditions. The Court stressed that while the POEA-
SEC provides for a disputable presumption of work-relatedness as regards those not
listed as occupational diseases, this presumption does not necessarily result in an
automatic grant of disability compensation. The claimant still has the burden to present
substantial evidence or "such relevant evidence as a reasonable mind might accept as
adequate to support a conclusion" that his work conditions caused or at least increased
the risk of contracting the illness.
In this case, considering that respondent did not suffer from any occupational disease
listed under Section 32-A of the POEA-SEC, then to be entitled to disability benefits, the
respondent has the burden to prove that his illness is work-related. Unfortunately, he
failed to discharge such burden.
Records reveal that respondent was diagnosed of aortic regurgitation, a heart "condition
whereby the aortic valve permits blood ejected from the left ventricle to leak back into
the left ventricle." Although this condition manifested while respondent was aboard the
vessel, such circumstance is not sufficient to entitle him to disability benefits as it is of
equal importance to also show that respondent’s illness is work-related.
In Ayungo v. Beamko Shipmanagement Corporation, the Court held that for a disability
to be compensable, the seafarer must prove a reasonable link between his work and his
Page 194 of 1699
illness in order for a rational mind to determine that such work contributed to, or at least
aggravated, his illness. It is not enough that the seafarer’s injury or illness rendered him
disabled; it is equally necessary that he establishes a causal connection between his injury
or illness, and the work for which he is engaged.
Here, respondent argues that he was unable to work as a seaman for more than 120 days,
and that he contracted his illness while under the employ of petitioners. However, he did
not at all describe his work as an oiler, and neither did he specify the connection of his
work and his illness.
In Panganiban v. Tara Trading Shipmanagement, Inc., the Court denied the claim for
disability benefits of a seafarer, who was an oiler like herein respondent. The Court held
that petitioner therein failed to elaborate on the nature of his work or to even specify his
tasks as oiler which rendered it difficult to determine a link between his position and his
illness.
The Court is confronted with a similar situation in this case. Respondent simply relied
on the presumption that his illness is work-related. He did not adduce substantial
evidence that his work conditions caused, or at the least increased the risk of contracting
his illness. Like in Panganiban, herein respondent did not elaborate on the nature of his
work and its connection to his illness. Certainly, he is not entitled to any disability
compensation.
In an attempt to establish work-relatedness, respondent stated in his Memorandum

before the Court that his illness is compensable due to stress. Aside from being belatedly
argued, such claim is unmeritorious as it still failed to prove the required linkage between
respondent’s work and his illness to entitle him to disability benefits.
In this regard, we quote with approval the pronouncement of the NLRC as follows:
x x x [Respondent] admitted that he was told by the attending physician that ‘his
heart has a hole somewhere in the left ventricle’ x x x. Instead of showing how a
hole in the heart may be work[-]related, [respondent] argued on his being ‘unable
to perform his customary work for more than 120 days’ x x x. He stressed in his
Appeal that ‘probability’ is the ultimate test of proof in compensation proceedings,
but he did not cite any probable circumstance which could have made [a] hole in
the heart [w]ork[-]related.
xxxx
x x x [T]o be entitled to compensation and benefits, the seafarer must prove by
substantial evidence that he contracted the illness during the term of his contract
and [that] such infirmity was work-related or at the very least aggravated by the
Page 195 of 1699
conditions of the work for which he was engaged. Failing on this aspect, the
assertion of [respondent] that his illness was work-connected is nothing but an
empty imputation of fact without any probative weight.
Moreover, the company-designated doctor determined that respondent’s condition is

not work-related.
Section 20(B)(3) of the POEA-SEC provides that the company-designated doctor is

tasked to determine the fitness or the degree of disability of a medically repatriated
seafarer. In addition, the company-designated doctor was shown to have closely
examined and treated respondent from his repatriation up to four months thereafter.
Thus, the LA and the NLRC's reliance on the declaration of the company-designated
doctor that respondent's condition is not work-related is justified.
The Court also notes that even respondent's physician of choice made no pronouncement
whether his condition is work-related or not. In his one-page medical report, Dr. Ramos
only stated that respondent is not fit for work. He neither stated that respondent's
condition is· not work-related nor did he expound on his conclusion that respondent is
not fit for work.
Lastly, the Court holds that the fact that respondent passed the PEME is of no moment
in determining whether he acquired his illness during his employment. The PEME is not
exploratory in nature. It is not intended to be a thorough examination of a person's
medical condition, .and is not a conclusive evidence that one is free from any ailment
before deployment. Hence, it does not follow that because respondent was declared fit
to work prior to his deployment, then he necessarily sustained his illness while aboard
the vessel.
Given all these, the Court finds that the CA erred in setting aside the NLRC Resolutions,
which affirmed the dismissal of the Complaint. The findings and conclusions arrived at
by the NLRC were not tainted with grave abuse of discretion as respondent's claim for
disability benefits is unsupported by substantial evidence. Indeed, when the evidence
adduced negates compensability, the claim must necessan1y fail.
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
Page 196 of 1699
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
Page 197 of 1699

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
Page 198 of 1699
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,
Page 199 of 1699
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
Page 200 of 1699
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.
Page 201 of 1699
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.
Page 202 of 1699

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
Page 203 of 1699

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
Page 204 of 1699
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.
Page 205 of 1699
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.
Page 206 of 1699

CAREER PHILIPPINES SHIPMANAGEMENT, INC. and/or SAMPAGUITA MARAVE,

and SOCIETE ANONYME MONEGASQUE ADMINISTRATIO MARITIME FT.
AERIENNEMONACO, Petitioners, v. SALVADOR T. SERNA, Respondent.
G.R. No. 172086 : December 3, 2012
Facts:
On October 20, 1998, Serna entered into a nine-month contract of employment with
petitioners Career Philippines Shipmanagement, Inc. (Career Phils.) and Societe
Anonyme Monegasque Administratio Maritime Ft. Aeriennemonaco (Aeriennemonaco).
He was employed as a bosun for M/V Hyde Park, a chemical tanker, with a basic monthly
salary of US$642.00. Serna was pronounced fit to work after the required pre-
employment medical examination, and boarded the vessel on October 25, 1998.
Serna had worked for Career Phils. and its foreign principals since 1989, and he had
always been hired to board chemical tankers. This was his third consecutive contract
with Aeriennemonaco whose tankers transport chemicals such as methanol, phenol,
ethanol, benzene, and caustic soda.
While on board M/V Hyde Park, Serna experienced weakness and shortness of breath.
He lost much weight. On several occasions, he requested for medical attention, but his
immediate superior, Captain Jyong, denied his requests since the tanker had a busy
schedule.
Serna had no choice but to wait for his contract to finish on July 12, 1999. On July 14, 1999,
upon his repatriation, he reported to the office of Career Phils. to communicate his
physical complaints and to seek medical assistance. He was told that he would be referred
to company-designated physicians.
On July 27, 1999, while waiting for the referral and with his condition worsening, Serna
visited the University of Perpetual Health Medical Center (UPHMC). Dr. Cynthia V.
Page 207 of 1699
Halili-Manabat diagnosed him to be suffering from toxic goiter, and attended to him
from July 27 to August 25, 1999.
On August 3, 1999, Serna received instructions from Career Phils. for him to report to the
Seaman’s Hospital for a pre-employment medical examination on August 5, 1999. The
hospitals company-designated physicians diagnosed him with atrial fibrillation and
declared him unfit to work.
In the meantime, he continued with his medical treatment at the UPHMC. A second
personal physician, Dr. Edilberto C. Torres, concurred with the toxic goiter diagnosis.
Issue:
Does Section 20(B) of the POEA Standard Employment Contract, which is the governing
law between the parties, grant disability benefits to a seafarer who was repatriated due
to finished contract, and with no medical records onboard showing that he was ill at the
time of disembarkation from the vessel nor was there any request from the seafarer
within three (3) working days upon his return for post-employment medical
examination?
Ruling:
Yes.
Work-relatedness of illness is irrelevant to the 1996 POEA-SEC.
We dismiss at the outset the petitioners’ contention on the causal connection between
Sernas illness and the work for which he was contracted. In support, they cite "The World
Book Illustrated Home Medical Encyclopedia," particularly its 1984 Revised Print, in
stating that the causes of toxic goiter or thyrotoxicosis are unknown.
Page 208 of 1699

The causal connection the petitioners cite is a factual question that we cannot touch in
Rule 45. The factual question is also irrelevant to the 1996 POEA-SEC. In Remigio v.
National Labor Relations Commission, we expressly declared that illnesses need not be
shown to be work-related to be compensable under the 1996 POEA-SEC, which covers
all injuries or illnesses occurring in the lifetime of the employment contract. We contrast
this with the 2000 POEA-SEC which lists the compensable occupational diseases. Even
granting that work-relatedness may be considered in this case, we fail to see, too, how
the idiopathic character of toxic goiter and/or thyrotoxicosis excuses the petitioners,
since it does not negate the probability, indeed the possibility, that Serna’s toxic goiter
was caused by the undisputed work conditions in the petitioners’ chemical tankers.
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.
BENJAMIN C. MILLAN, Petitioner, v. WALLEM MARITIME SERVICES, INC.,

REGINALDO A. OBEN AND/OR WALLEM SHIPMANAGEMENT,1Ï‚rÎ½ll LTD.,
Respondents.
G.R. No. 195168 : November 12, 2012
Facts:
Petitioner Benjamin C. Millan has been under the employ of Wallem Maritime Services,
Inc. as a seafarer since May 1981. On October 19, 2002, he was deployed by the latter for
its foreign principal, Wallem Shipmanagement, Ltd., as a messman with a basic salary of
US$405.00 a month on board M/T "Front Vanadis." On February 13, 2003, he slipped
while carrying the ships provisions and injured his left arm. He was examined at St. Pauls
Surgical Clinic in Yosu City, South Korea where he was diagnosed to have suffered
"fracture on left ulnar shaft." Hence, he was medically repatriated on February 26, 2003.
On February 28, 2003, he proceeded to the Manila Doctors Hospital where he consulted
Dr. Ramon S. Estrada, the company-designated physician, and underwent an operation
on March 3, 2003. After his discharge, he went through a series of consultations and
physical therapy sessions from May 6, 2003 until July 2, 2003. On July 5, 2003, Dr. Estrada
Page 209 of 1699
reported that petitioner had completed his physical therapy program but will have to
undergo a physical capacity test on August 28, 2003 to evaluate his fitness to work.
Instead, on August 29, 2003, petitioner filed a complaint against respondents Wallem
Maritime Services, Inc., its President/Manager Reginaldo A. Oben, and Wallem
Shipmanagement, Ltd. for medical reimbursement, sickness allowance, permanent
disability benefits, compensatory damages, exemplary damages and attorney’s fees.
On September 1, 2003, petitioner consulted Dr. Rimando C. Saguin, an orthopedic

surgeon, who diagnosed him as suffering from Philippine Overseas Employment
Administration (POEA) Disability Grade 11 and elbow bursitis which rendered him "unfit
to work at the moment."
On September 10, 2003, petitioner sought the opinion of Dr. Nicanor F. Escutin who
assessed his condition as a partial permanent disability with POEA Disability Grade 10,
20.15%. Dr. Escutin also opined that petitioner was suffering from "loss of grasping power
of small objects in one hand, and inability to turn forearm to pronation or supination.
The period of healing remains undetermined. The patient is now unfit to go back to work
at sea at whatever capacity."
In their defense, respondents denied any liability contending that proper treatment and
management were afforded petitioner but he deliberately ignored his medical program
by failing to appear on his scheduled appointment with the company-designated
physician. Respondents also claim that petitioner was paid his sickness allowance in full,
and his medical examinations, tests and check-ups were shouldered by the company.
Issue:
Whether or not a 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 automatically warrants the grant
of total and permanent disability benefits in his favor.
Page 210 of 1699

Ruling:
No.
In Vergara v. Hammonia Maritime Services, Inc., the Court elucidated on the seeming
conflict between Paragraph 3, Section 20(B) of the POEA-SEC (Department Order No.
004-00) and Article 192 (c)(1) of the Labor Code in relation to Section 2(a), Rule X of the
Amended Rules on Employees Compensation, thus:
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 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. (Italics in the original)
Applying Vergara, the Court in the recent case of C.F. Sharp Crew Management, Inc. v.
Taok enumerated the following instances when a seafarer may be allowed to pursue an
action for total and permanent disability benefits, to wit:
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
hence, justify an extension of the period to 240 days;
Page 211 of 1699

240 days had lapsed without any certification issued by the company-designated
physician;
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;
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;
The company-designated physician recognized that he is totally and permanently

disabled but there is a dispute on the disability grading;
The company-designated physician determined that his medical condition is not

declared him unfit to work;
The company-designated physician declared him totally and permanently disabled but
the employer refuses to pay him the corresponding benefits; and
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.
None of the foregoing circumstances is extant in this case.
Page 212 of 1699

Records show that from the time petitioner was repatriated on February 26, 2003, 129
days had lapsed when he last consulted with the company-designated physician on July
5, 2003 and 181 days had passed on the day he last visited his physiatrist on August 26,
2003.
Concededly, said periods have already exceeded the 120-day period under Section 20(B)
of the POEA-SEC and Article 192 of the Labor Code. However, it cannot be denied that
the company-designated physician had determined as early as March 5, 2003 or even
before his discharge from the hospital that petitioners condition required further medical
treatment in the form of physical therapy sessions, which he had subsequently completed
per Dr. Estrada’s Memo dated July 5, 2003, thus, justifying the extension of the 120-day
period. The company-designated physician therefore had a period of 240 days from the
time that petitioner suffered his injury or until October 24, 2003 within which to make a
finding on his fitness for further sea duties or degree of disability.
Consequently, despite the lapse of the 120-day period, petitioner was still considered to
be under a state of temporary total disability at the time he filed his complaint on August
29, 2003, 184 days from the date of his medical repatriation which is well-within the 240-
day applicable period in this case. Hence, he cannot be said to have acquired a cause of
action for total and permanent disability benefits. To stress, the rule is that a temporary
total disability only becomes permanent when the company-designated physician,
within the 240-day period, declares it to be so, or when after the lapse of the same, he
fails to make such declaration.
Besides, petitioner's own evidence shows that he is suffering only from partial permanent
disability of either Grade 10 or 11. Accordingly, in the absence of proof to the contrary/~
the Court concurs with the CA 's finding that petitioner suffers from a partial permanent
disability grade of 10.
RUBEN D. ANDRADA, Petitioner, v. AGEMAR MANNING AGENCY, INC., and/or

SONNET SHIPPING LTD./MALTA, Respondents.
Page 213 of 1699

G.R. No. 194758 : October 24, 2012
Facts:
On June 23, 2003, petitioner Ruben D. Andrada (Andrada) was employed by respondent
Agemar Manning Agency, Inc. (Agemar Manning), for and in behalf of its foreign
principal, respondent Sonnet Shipping Ltd./Malta (Sonnet Shipping), as chief cook
steward on board M/T Superlady for a contract period of twelve (12) months which was,
upon his request, extended for another five (5) months. Andradas basic monthly salary
was US$650.00 plus US$65.00 tanker allowance on a 48-hour work week, with a fixed
overtime pay of US$195.00 for 105 hours per month and vacation leave with pay of four
days a month. Andrada finished five (5) contracts of employment with the respondents
from December 1994 to April 2003 on board their other vessels. Prior to his last
embarkation, Andrada underwent a pre-employment medical examination (PEME) and
was found fit for sea service. He boarded his vessel on June 24, 2003.
Sometime in April 2004, while the vessel was navigating in high seas, Andrada
experienced severe abdominal pain while carrying heavy food provisions which was part
of his job. Thinking that it would not lead to any serious consequences, he just let it pass.
The abdominal pain, however, recurred during the latter part of his extended contract.
On October 10, 2004, he was referred to the Island Healthy Center in Texas, U.S.A., where
he was diagnosed with umbilical hernia. Andrada was advised to undergo surgery and to
use a girdle whenever he lifted heavy objects. Andrada requested for a medical sign-off
and was repatriated to the Philippines on December 8, 2004 so he could continue his
treatment and medication as per advice of a doctor in Texas, U.S.A.
On the day following his arrival, Andrada immediately reported to the Agemar Manning,
which referred him to YGEIA Medical Clinic for a general check-up. In a letter, dated
December 14, 2004, Dr. Roberto M. De Leon (Dr. De Leon) recommended that Andrada
should undergo surgical operation of his umbilical hernia and multiple gallbladder
stones at the soonest time possible. On January 25, 2005, the medical procedures called
umbilical herniorrhapy and laparoscopic cholecystectomy were performed on him at the
Page 214 of 1699

Philippine General Hospital where he was confined for five (5) days, from January 25 to
29, 2005, under the care of Dr. Jose Macario V. Faylona (Dr. Faylona).
On February 8, 2005, as he could still feel the symptoms of his illness, Andrada consulted
Dr. Efren R. Vicaldo (Dr. Vicaldo) of the Philippine Heart Center. In his medical
certificate, Dr. Vicaldo came out with the following prognosis: Hypertension, essential;
Gall bladder stone; S/P laparascopic cholecystectomy; Umbilical Hernia, S/P repair;
Impediment Grade VIII (33.59%). Dr. Vicaldo opined that Andrada's illness was
considered work aggravated/related. He concluded that Andrada was unfit to resume
work as a seaman in any capacity and could not be expected to land a gainful employment
due to his medical condition.
Record bears out that Dr. Faylona, through a letter, dated March 14, 2005, certified that
Andrada was "fully recovered from the surgery and is now fit to work." On March 21, 2005
or almost two months after his surgery, Andrada submitted himself to a medical check-
up at the YGEIA Medical Clinic. In the progress report, dated March 22, 2005, Dr. Maria
Cristina L. Ramos (Dr. Ramos), the medical director of YGEIA Medical Clinic, declared
Andrada as fit to work effective March 22, 2005. On April 21, 2005, Andrada signed the
Deed of Release, Waiver and Quitclaim wherein he acknowledged receipt of the amount
of $3,501.53 or its peso equivalent of P192,357.41.
The said deed stated that Andrada was thereby releasing and discharging the
respondents from all actions, complaints and demands on account or arising out of his
employment as a seaman on board M/T Superlady.
Notwithstanding, Andrada demanded payment of disability and illness

allowance/benefits from the respondents pursuant to the Philippine Overseas
Employment Administration (POEA) Standard Employment Contract (POEA-SEC) on
the basis of the findings/recommendations of Dr. Vicaldo. His claims were refused.
Issue:
Page 215 of 1699
Whether or not Andrada is entitled to disability benefits on account of his medical

condition.
Ruling:
No.
Jurisprudence is replete with pronouncements 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 latter's employment.
It is his findings and evaluations which should form the basis of the seafarer's disability
claim. His assessment, however, is not automatically final, binding or conclusive on the
claimant, the labor tribunal or the courts, as its inherent merits would still have to be
weighed and duly considered. The seafarer may dispute such assessment by seasonably
exercising his prerogative 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 doctor of choice, the employer and the seaman may agree jointly to refer the
latter to a third doctor whose decision shall be final and binding on them.
The Court notes that the dispute regarding Andrada's medical condition could have been
easily clarified and resolved had the parties observed and stayed true to the procedure
laid down in Section 20 (B), par. 3 of the POEA-SEC. Considering that the parties did not
jointly resort to seek the opinion of a third physician in the determination and
assessment of Andrada's disability or the absence of it, the credibility of the findings of
their respective doctors was properly evaluated by the NLRC on the basis of their
inherent merits.
Andrada based his claim for disability benefits on the medical certificate, dated February
8, 2005, issued by Dr. Vicaldo who assessed his alleged disability as impediment grade
VIII (33.59%). Record, however, shows that said medical certification was not supported
by such diagnostic tests and/or procedures as would adequately refute the normal results
Page 216 of 1699

of those administered to Andrada by the physicians at the YGEIA Medical Clinic and by
Dr. Faylona at the Philippine General Hospital.
CREWLINK, INC. and/or GULF MARINE SERVICES, Petitioners, v. EDITHA

TERINGTERING, for her behalf and in behalf of minor EIMAEREACH ROSE DE
GARCIA TERINGTERING, Respondents
G.R. No. 166803 : October 11, 2012
FACTS:
Respondent Editha Teringtering (Teringtering), spouse of deceased Jacinto Teringtering

(Jacinto), and in behalf of her minor child, filed a complaint against petitioner Crewlink,
Inc. (Crewlink), and its foreign principal Gulf Marine Services for the payment of death
benefits, benefit for minor child, burial assistance, damages and attorney's fees.
Respondent alleged that her husband Jacinto entered into an overseas employment
contract with Crewlink, Inc. for and in behalf of its foreign principal Gulf Marine Services.
Teringtering claimed that before her husband was employed, he was subjected to a pre-
employment medical examination wherein he was pronounced as "fit to work." Thus, her
husband joined his vessel of assignment and performed his duties as Oiler.
On or about April 18, 2001, a death certificate was issued by the Ministry of Health of the
United Arab Emirates wherein it was stated that Jacinto died on April 9, 2001 due to
asphyxia of drowning. Later on, an embalming and sealing certificate was issued after
which the remains of Jacinto was brought back to the Philippines.
Respondent claimed that in order for her husband's death to be compensable it is enough
that he died during the term of his contract and while still on board.
Page 217 of 1699

Respondent asserted that Jacinto was suffering from a psychotic disorder, or Mood
Disorder Bipolar Type, which resulted to his jumping into the sea and his eventual death.
Respondent further asserted that her husbands death was not deliberate and not of his
own will, but was a result of a mental disorder, thus, compensable.
For its part, petitioner Crewlink alleged that sometime on April 9, 2001, around 8:20 p.m.
while at Nasr Oilfield, the late Jacinto Teringtering suddenly jumped into the sea, but the
second engineer was able to recover him. Because of said incident, one personnel was
directed to watch Jacinto.
However, around 10:30 p.m., while the boat dropped anchor south of Nasr Oilfield and
went on standby, Jacinto jumped off the boat again. Around 11:00 p.m., the A/B
watchman reported that Jacinto was recovered but despite efforts to revive him, he was
already dead from drowning.
Petitioner asserted that Teringtering was not entitled to the benefits being claimed,
because Jacinto committed suicide.
ISSUE:
Whether or not Jacinto's death is not compensable, considering that the latter's death
resulted from his willful act.
RULING:
It is not compensable.
Page 218 of 1699

Under No. 6, Section C, Part II of the POEA "Standard Employment Contract Governing
the Employment of All Filipino Seamen On-Board Ocean-Going Vessels" (POEA-SEC), it
is provided that:
xxxx
6. No compensation shall be payable in respect of any injury, incapacity, disability or

death resulting from a willful act on his own life by the seaman, provided, however, that
the employer can prove that such injury, incapacity, disability or death is directly
attributable to him. (Emphasis ours)
Indeed, 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. 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.
In the instant case, petitioner was able to substantially prove that Jacinto's death was
attributable to his deliberate act of killing himself by jumping into the sea. Meanwhile,
respondent, other than her bare allegation that her husband was suffering from a mental
disorder, no evidence, witness, or any medical report was given to support her claim of
Jacinto's insanity.
PACIFIC OCEAN MANNING, INC. and CELTIC PACIFIC SHIP MANAGEMENT CO.,
LTD.,Petitioners, v. BENJAMIN D. PENALES, Respondent
G.R. No. 162809 : September 5, 2012
FACTS:
Petitioner Benjamin Penales (Penales) is a seafarer. He was contracted by private

respondent Pacific Ocean Manning, Inc. (Pacific) for x x x its foreign principal, private
Page 219 of 1699

respondent Celtic Pacific Ship Management (H.K.) Ltd. Penales was assigned to work on
board the vessel, MV "Courage Venture."
Penales underwent the pre-employment medical examination (PEME) as part of the

prescribed employment procedure and was pronounced fit to work by the company
doctors.
Penales joined the vessel of assignment and started working thereon on May 24, 1999.
Penales scheduled repatriation coincided with the vessels docking operations at the port
of Nigeria making his return to Manila difficult. Hence, his supposed disembarkation in
Singapore where he is scheduled to sign off and repatriated to Manila following the
termination of his employment contract was not followed. Instead, he was made to stay
longer than the ten-month contract duration stipulated in the Philippine Overseas
Employment Administration (POEA) approved contract of employment.
On or about August 2000, the vessel "Courage Venture" went to the Port of Chennai,
India. On its way to the designated port and while preparing to moor, the vessel, through
its line (rope) tied on the starboard, was pulled by tugboat MV "Matchless." In
preparation for mooring, the Chief Mate ordered Penales to stand at the forward
masthead and wait for further instruction.
While awaiting further instructions, the rope rifted and directly recoiled in Penales
direction, hitting him severely in the chest, left arm and head. The impact caused him to
miss his balance, become unconscious and sustain a fracture on his left arm.
In Manila, Penales reported to the office of Pacific. He was referred to the Fatima Medical
Clinic and was diagnosed as suffering from "Fracture, closed, committed, M/3, humerus,
S/P Open Reduction, internal fixation, plate and screws, Radial nerve pulsy left, Cerebral
Concussion, Contusion chest left" as per the Medical Certificate issued by the Fatima
Medical Clinic. Penales however failed to go back to the clinic for the management of his
Page 220 of 1699

injuries, as reported by Fatima Medical Clinic on October 10, 2000. Penales was thereafter
referred to the Mary Chiles General Hospital and finally to the Medical Center Manila for
treatment and rehabilitation wherein he continued treatment until January 26, 2001.
On October 2, 2000, while still undergoing treatment, Penales filed a complaint before
the Quezon City Arbitration Branch of the National Labor Relations Commission
(NLRC).
Penales complained that despite medical treatment, he continued to be weak and unable
to perform any work-related activity. He alleged that his accident disabled him from
earning income as a seafarer, thus, he was entitled to disability compensation and
benefits, which the respondents denied him without valid cause.
ISSUE:
Whether or not Penales is entitled to disability benefits despite the fact that he was
neither declared fit to work nor given a disability grade rating within the period allowed
by the law.
RULING:
Yes.
This Court finds petitioners to be mistaken in their notion that in determining the
disability benefits due a seafarer, only the POEA SEC, specifically its schedule of benefits,
must be considered. This Court has ruled that such is governed not only by medical
findings but also by contract and law. The applicability of the Labor Code, particularly
Article 192(c)(1), to seafarers, is already a settled issue. This Court, in Magsaysay Maritime
Corporation v. Lobusta, reiterating our ruling in Remigio v. National Labor Relations
Commission, held:
Page 221 of 1699

The standard employment contract for seafarers was formulated by the POEA pursuant
to its mandate under Executive Order No. 247 to "secure the best terms and conditions
of employment of Filipino contract workers and ensure compliance therewith" and to
"promote and protect the well-being of Filipino workers overseas." Section 29 of the 1996
POEA Standard Employment Contract itself provides that "all rights and obligations of
the parties to the Contract, including the annexes thereof, shall be governed by the laws
of the Republic of the Philippines, international conventions, treaties and covenants
where the Philippines is a signatory." Even without this provision, a contract of labor is
so impressed with public interest that the New Civil Code expressly subjects it to "the
special laws on labor unions, collective bargaining, strikes and lockouts, closed shop,
wages, working conditions, hours of labor and similar subjects."
Thus, the Court has applied the Labor Code concept of permanent total disability to the
case of seafarers. In Philippine Transmarine Carriers v. NLRC, Seaman Carlos Nietes was
found to be suffering from congestive heart failure and cardiomyopathy and was declared
as unfit to work by the company-accredited physician. The Court affirmed the award of
disability benefits to the seaman, citing ECC v. Sanico, GSIS v. CA, and Bejerano v. ECC
that "disability should not be understood more on its medical significance but on the loss
of earning capacity.
Permanent total disability means disablement of an employee to earn wages in the same
kind of work, or work of similar nature that he was trained for or accustomed to perform,
or any kind of work which a person of his mentality and attainment could do. It does not
mean absolute helplessness." It likewise cited Bejerano v. ECC, that in a disability
compensation, it is not the injury which is compensated, but rather it is the incapacity to
work resulting in the impairment of ones earning capacity. (Emphases ours, citations
omitted.)
This Court notes that as of January 26, 2001, Penaless medical treatment had gone beyond
the 120 days provided for in Section 20 B(6) of the POEA SEC, viz:
B. Compensation and Benefits for Injury or Illness
xxxx
Page 222 of 1699
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.
and Article 192(c) of the Labor Code, which reads:
ART. 192. Permanent Total Disability
xxxx
(c) The following disabilities shall be deemed total and permanent:
Temporary total disability lasting continuously for more than one hundred twenty days,
except as otherwise provided for in the Rules.
However, Rule X, Section 2 of the Rules and Regulations Implementing Book IV, which
is the rule referred to in the above Labor Code provision, states:
SEC. 2. Period of entitlement. (a) The income benefit shall be paid beginning on the first
day of such disability. If caused by an injury or sickness it shall not be paid longer than
120 consecutive days except where such injury or sickness still requires medical
attendance beyond 120 days but not to exceed 240 days from onset of disability in which
case benefit for temporary total disability shall be paid. However, the System may declare
the total and permanent status at any time after 120 days of continuous temporary total
disability as may be warranted by the degree of actual loss or impairment of physical or
mental functions as determined by the System.
The above provisions of the POEA SEC, the Labor Code, and its implementing rules and
regulations, are to be read hand in hand when determining the disability benefits due a
seafarer.
Based on the foregoing, it is clear that the initial treatment period of 120 days may be
extended up to a maximum of 240 days under the conditions prescribed by law.
The records show that from the time Penales became injured on August 31, 2000, until
his last treatment on January 26, 2001, only 148 days had lapsed. While this might have
exceeded 120 days, this was well within the 240-day maximum period for the company-
designated physician to either declare Penales fit to work or assign an impediment grade
to his disability at that time. It is worthy to note as well that when Penales filed a
Page 223 of 1699
complaint before the Labor Arbiter on October 2, 2000, not only was he remiss in
regularly attending his scheduled treatment sessions, but only 32 days had passed from
the time of his injury.
We note that under POEA SEC, the seafarer has the duty to faithfully comply with and
observe the terms and conditions of the contract, including the provisions governing the
procedure for claiming disability benefits.
When Penales filed his complaint and refused to undergo further medical treatment, he
prevented the company-designated physician from fully determining his fitness to work
within the time allowed by the POEA SEC and by law. As we said in Vergara:
As we outlined above, a temporary total disability only becomes permanent when so

declared by the company[-designated] 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. x x x.
As we have stated above, since the Labor Arbiter, the NLRC, and the Court of Appeals all
found Penales to be disabled, this fact is now binding on the petitioners and this Court.
The question therefore is the amount of disability benefits to be awarded to Penales. To
settle this, Penaless disability at the time of his last treatment should be determined in
accordance with Section 20(B) of the POEA SEC.
PHILASIA SHIPPING AGENCY CORPORATION, ET AL. V. ANDRES G. TOMACRUZ
G.R. NO. 181180 - AUGUST 15, 2012
FACTS:
Andres G. Tomacruz (Tomacruz) was a seafarer, whose services were engaged by
PHILASIA Shipping Agency Corp., (PHILASIA) on behalf of Intermodal Shipping Inc.
(petitioners) as Oiler #1 on board the vessel M/V Saligna. A twelve-month Philippine
Overseas Employment Administration (POEA) Contract of Employment was duly signed
by the parties on January 9, 2002.
Page 224 of 1699

This was preceded by four similar contracts, which Tomacruz was able to complete for
the petitioners, aboard different vessels. For all five contracts, Tomacruz was required to
undergo a pre-employment medical examination and obtain a "fit to work" rating before
he could be deployed.
Having been issued a clean bill of health, Tomacruz boarded M/V Saligna on January 15,
2002 and performed his duties without any incident. However, sometime in September
2002, during the term of his last contract, Tomacruz noticed blood in his urine.
Tomacruz immediately reported this to the Ship Captain, who referred him to a doctor
in Japan. Tomacruz was subjected to several check-ups and ultrasounds, which revealed
a "stone" in his right kidney. Despite such diagnosis, no medical certificate was issued;
thus, he was allowed to continue working.
Eventually, Tomacruz was repatriated to the Philippines and sent to Micah Medical
Clinic & Diagnostic Laboratory. The November 19, 2002 KUB Ultrasound report of the
clinic revealed that he had stones in both his kidneys.
Referred by Micah Medical Clinic to Dr. Nicomedes Cruz, the company-designated

physician, Tomacruz went through more tests, medications, and treatments. On July 25,
2003, Dr. Cruz declared Tomacruz fit to work despite a showing that there were stones
about 0.4 cm in size found in both his kidneys, and there was the possibility of
hematoma.
Intending to get his sixth contract, Tomacruz, armed with the declaration that he was fit
to work, proceeded to the office of the petitioners to seek employment. However, he was
told by PHILASIA that because of the huge amount that was spent on his treatment, their
insurance company did not like his services anymore.
Nagging in Tomacruz s mind was the veracity of his "fit to work" declaration. Thus, he
sought the medical opinion of another physician, Dr. Efren R. Vicaldo, on September 9,
2003.
Accompanying the Medical Certificate was a "Justification of Impediment Grade VII

(41.8%) for Seaman Andres G. Tomacruz," which provided:
This patient/seaman is a known case of bilateral nephrolithiasis since 1999.
Page 225 of 1699

Sometime in 1999, he underwent right nephrolithotomy at St. Luke s Medical Center.
In September, 2002 he had gross hematuria for which he was seen and evaluated in Japan.
Renal ultrasound revealed small right kidney stone.
Apparently, he had recurrent bilateral renal stones for which he underwent ESWL once
for his right kidney stone and ESWL three times for his left kidney stone.
Latest ultrasound however still revealed bilateral kidney stones; his latest creatinine is
also slightly elevated.
He is now unfit to resume work as seaman in any capacity.
His illness is considered work aggravated.
He has to regularly monitor his renal function status to make sure he does not progress
to renal failure.
Worsening of his symptoms may require repeat ESWL procedures.
Pain is a common accompanying symptom of nephrolithiasis and this patient is expected

to have recurrent colicky pains.
Secondary infection is also common in patients with renal stones. This obviously impairs
his quality of life.
ISSUE:
Whether or not the Entitlement of seafarers to disability benefits is governed only by

medical findings of the company-designated physician, as the one with the sole
accreditation by law to determine the fitness or unfitness of a seafarer under POEA SEC.
RULING:
No.
Page 226 of 1699

Entitlement of seafarers to disability benefits is governed not only by medical findings

but also by contract and by law. By contract, Department Order No. 4, series of 2000, of
the Department of Labor and Employment and the parties’ Collective Bargaining
Agreement bind the seafarer and the employer. By law, the Labor Code provisions on
disability apply with equal force to seafarers. The seafarer, upon sign-off from his vessel,
must report to the company-designated physician within three (3) days from arrival for
diagnosis and treatment. For the duration of the treatment but in no case to exceed 120
days, the seaman is on temporary total disability as he is totally unable to work. He
receives his basic wage during this period until he is declared fit to work or his temporary
disability is acknowledged by the company to be permanent, either partially or totally, as
his condition is defined under the POEA Standard Employment Contract and by
applicable Philippine laws. If the 120 days initial period is exceeded and no such
declaration is made because the seafarer requires further medical attention, then the
temporary total disability period may be extended up to a maximum of 240 days, subject
to the right of the employer to declare within this period that a permanent partial or total
disability already exists. The seaman may of course also be declared fit to work at any
time such declaration is justified by his medical condition.
From the time Tomacruz was repatriated on November 18, 2002, he submitted himself to
the care and treatment of the company-designated physician. When the company-
designated physician made a declaration on July 25, 2003 that Tomacruz was already fit
to work, 249 days had already lapsed from the time he was repatriated. As such, his
temporary total disability should be deemed total and permanent, pursuant to Article 192
(c)(1) of the Labor Code and its implementing rule.
FAIR SHIPPING CORP., and/or KOHYU MARINE CO.,

LTD., Petitioners, v. JOSELITO T. MEDEL, Respondent
G.R. NO. 177907 - August 29, 2012
FACTS:
Page 227 of 1699

On November 23, 1998, Medel was hired by Fair Shipping Corporation, for and in behalf
of its foreign principal Kohyu Marine Co., Ltd. Under the Contract of Employment signed
by Medel, the latter was employed as an Able Seaman of the vessel M/V Optima for a
period of 12 months with a basic monthly salary of US$335.00, plus fixed overtime pay of
US$136.00 and vacation leave with pay of two and a half (2.5) days per month. The
contract expressly stated that the terms and conditions of the revised Employment
Contract governing the employment of all seafarers, as approved per Department Order
No. 33 and Memorandum Circular No. 55, both series of 1996 the 1996 POEA SEC, were
to be strictly and faithfully observed by the parties.
Medel boarded the M/V Optima on November 27, 1998 and commenced the performance
of his duties therein. On March 1, 1999, while the M/V Optima was docked at the Port of
Vungtao in Ho Chi Minh City, Vietnam, Medel figured in an unfortunate accident.
During the conduct of emergency drills aboard the vessel, one of Medel s co-workers lost
control of the manual handle of a lifeboat, causing the same to turn uncontrollably; and
it struck Medel in the forehead. Medel was given first aid treatment and immediately
brought to the Choray Hospital in Ho Chi Minh City on said date.
After undergoing surgical procedure to treat his fractured skull, Medel was discharged
from the hospital on March 13, 1999.
Medel was repatriated to the Philippines on March 13, 1999 and was admitted to the
Metropolitan Hospital on the said date. In a letter dated March 16, 1999, Dr. Robert D.
Lim, the company-designated physician and Medical Coordinator of the Metropolitan
Hospital, informed petitioners that Medel was seen by a neurologist, an ENT specialist,
and an ophthalmologist. Medel subsequently underwent a cranial CT scan and an
ultrasound on his left eye, which was also injured during the accident. On April 22, 1999,
a posterior vitrectomy was performed on Medel s left eye; and on July 14 and July 19, 1999,
Medel s left eye was likewise subjected to two sessions of argon laser retinopexy. Dr. Lim
then reported to petitioners that Medel s condition was re-evaluated on July 22, 1999 and,
after consulting with the neurosurgeon at the Metropolitan Hospital, Medel was advised
to undergo cranioplasty to treat the bony defect in his skull. On October 20, 1999, Medel
was admitted to the hospital and underwent the said surgical procedure.
Page 228 of 1699
In the interregnum, before Medel actually underwent the procedure of cranioplasty, he

claimed from petitioners the payment of permanent total disability benefits. Petitioners,
however, refused to grant the same. Consequently, on September 7, 1999, Medel filed
before the Arbitration Branch of the NLRC a complaint against petitioners for disability
benefits in the amount of US$60,000.00, medical expenses, loss of earning capacity,
damages and attorney s fees.
ISSUE:
What are the applicable law an jurisprudence in ascertaining Medel’s entitlement to

permanent disability benefits?
RULING:
The application of the provisions of the Labor Code to the contracts of seafarers had long
been settled by this Court. In Remigio v. National Labor Relations Commission, we
emphatically declared that:
The standard employment contract for seafarers was formulated by the POEA pursuant
to its mandate under E.O. No. 247 to "secure the best terms and conditions of
employment of Filipino contract workers and ensure compliance therewith" and to
"promote and protect the well-being of Filipino workers overseas." Section 29 of the 1996
POEA SEC itself provides that "all rights and obligations of the parties to the Contract,
including the annexes thereof, shall be governed by the laws of the Republic of the
Philippines, international conventions, treaties and covenants where the Philippines is a
signatory." Even without this provision, a contract of labor is so impressed with public
interest that the New Civil Code expressly subjects it to "the special laws on labor unions,
collective bargaining, strikes and lockouts, closed shop, wages, working conditions,
hours of labor and similar subjects."
Page 229 of 1699

Thus, the Court has applied the Labor Code concept of permanent total disability to the
case of seafarers. x x x.
The Labor Code defines permanent total disability under Article 192(c)(1), which
states:
ART. 192. PERMANENT TOTAL DISABILITY. x x x
xxx
(c) The following disabilities shall be deemed total and permanent:
Temporary total disability lasting continuously for more than one hundred twenty days,
except as otherwise provided in the Rules. (Emphasis ours.)
This concept of permanent total disability is further explained in Section 2(b), Rule VII
of the Implementing Rules of Book IV of the Labor Code (Amended Rules on Employees
Compensation) as follows:
SEC. 2. Disability. x x x
(b) 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 for in Rule X of these Rules. (Emphasis ours.)
The exception in Rule X of the Implementing Rules of Book IV (Amended Rules on

Employees Compensation) as mentioned above, on the other hand, pertains to an
employee s entitlement to temporary total disability benefits under Section 2 of the
aforesaid Rule X, to wit:
Page 230 of 1699

SEC. 2. Period of entitlement. (a) The income benefit shall be paid beginning on the first
day of such disability. If caused by an injury or sickness it shall not be paid longer than
120 consecutive days except where 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. (Emphasis ours.)
In Vergara v. Hammonia Maritime Services, Inc.,39 the Court discussed how the above-
mentioned provisions of the Labor Code and its implementing rules should be read in
conjunction with the first paragraph of Section 20(B)(3) of the 2000 POEA SEC, which
states:
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
Correlating the aforementioned provision of the POEA SEC with the pertinent labor laws
and rules, Vergara teaches that:
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
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
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
disability period may be extended up to a maximum of 240 days, subject to the right of
Page 231 of 1699
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.
xxx
As we outlined above, a temporary total disability only becomes permanent when so

declared by the company physician within the periods he is allowed to do so, or upon the
expiration of the maximum 240-day medical treatment period without a declaration of
either fitness to work or the existence of a permanent disability. x x x. (Emphases ours.)
Incidentally, although the contract involved in Vergara was the 2000 POEA SEC, the
Court applied the ruling therein to the case of Magsaysay Maritime Corporation v.
Lobusta, which involved the 1996 POEA SEC. As noted in Lobusta, the first paragraph of
Section 20(B)(3) of the 2000 POEA SEC was copied verbatim from the first paragraph of
Section 20(B)(3) of the 1996 POEA SEC.
From the foregoing exposition, Medel s entitlement to permanent total disability benefits
becomes clear.
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.
Page 232 of 1699

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:
Page 233 of 1699

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.
Page 234 of 1699

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.
Page 235 of 1699
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
Page 236 of 1699
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.
Page 237 of 1699

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
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.
Page 238 of 1699
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
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.
Page 239 of 1699

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).
Page 240 of 1699

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.
recent case of Philippine Hammonia Ship Agency, Inc. v. Dumadag(Dumadag) that a
CBA militates against his claims. In Dumadag, the Court explained: The POEA-SEC and
is the law between them and as such, its provisions bind both of them. Dumadag,
Page 241 of 1699

determination.
recent case of Philippine Hammonia Ship Agency, Inc. v. Dumadag(Dumadag) that a
CBA militates against his claims. In Dumadag, the Court explained:The POEA-SEC and
is the law between them and as such, its provisions bind both of them." Dumadag,
determination.
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.
Page 242 of 1699

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”.
Page 243 of 1699
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, theMaunlad 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
Page 244 of 1699

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.
RICARDO E. VERGARA, JR. v. COCA-COLA BOTTLERS PHILIPPINES, INC.,

G.R. No. 176985, April 1, 2013
J. Peralta
The principle against diminution of benefits is applicable only if the grant or benefit
is founded on an express policy or has ripened into a practice over a long period of time
which is consistent and deliberate. It presupposes that a company practice, policy and
tradition favorable to the employees has been clearly established; and that the payments
made by the company pursuant to it have ripened into benefits enjoyed by them. Company
Page 245 of 1699
practice, just like any other fact, habits, customs, usage or patterns of conduct, must be
proven by the offering party who must allege and establish specific, repetitive conduct that
might constitute evidence of habit or company practice. Certainly, a practice or custom is,
as a general rule, not a source of a legally demandable or enforceable right.
Facts:
Petitioner was an employee of respondent from May 1968 until he retired on

January 31, 2002 as a District Sales Supervisor (DSS). As stipulated in respondent’s existing
Retirement Plan Rules and Regulations at the time, the Annual Performance Incentive Pay
of RSMs, DSSs, and SSSs shall be considered in the computation of retirement benefits,
as follows: Basic Monthly Salary + Monthly Average Performance Incentive (which is the
total performance incentive earned during the year immediately preceding ÷ 12 months)
× No. of Years in Service.
Claiming his entitlement to an additional P474,600.00 as Sales Management

Incentives (SMI) and to the amount of P496,016.67 which respondent allegedly deducted
illegally, representing the unpaid accounts of two dealers within his jurisdiction,
petitioner filed a complaint before the NLRC for the payment of his Full Retirement
Benefits, Merit Increase, Commission/Incentives, Length of Service, Actual, Moral and
Exemplary Damages, and Attorney’s Fees.
The LA rendered a Decision in favor of petitioner, directing respondent to

reimburse the amount illegally deducted from petitioner’s retirement package and to
integrate therein his SMI privilege. On appeal of respondent, the NLRC modified the
award and deleted the payment of SMI.
Issue:
Whether or not the sales management incentives (SMI) should be included in the
computation of petitioner’s retirement benefits on the ground of consistent company
practice
Ruling:
Upon review of the entire case records, the Supreme Court found no substantial
evidence to prove that the grant of sales management incentives to all retired DSSs,
regardless of whether or not they qualified for the same, had ripened into company
practice.
Despite more than sufficient opportunity given him while his case was pending
Page 246 of 1699
before the NLRC, the Court of Appeals and even this Court, the petitioner utterly failed to
adduce proof to establish his allegation that the incentive has been consistently,
deliberately and voluntarily granted to all retired DSSs without any qualification or
conditions whatsoever.
The only two pieces of evidence that he stubbornly presented throughout the
entirety of this case are the sworn statements of Renato C. Hidalgo and Ramon V.
Velazquez, former DSSs of respondent who retired in 2000 and 1998, respectively. They
claimed that the sales management incentive was included in their retirement package
even if they did not meet the sales and collection qualifiers. However, juxtaposing these
with the evidence presented by respondent would reveal the frailty of their statements.
The respondent’s isolated act of including the sales management incentive in the
retirement package of Velazquez could hardly be classified as a company practice that may
be considered an enforceable obligation.
To repeat, the principle against diminution of benefits is applicable only if the grant
or benefit is founded on an express policy or has ripened into a practice over a long period
of time that is consistent and deliberate. It presupposes that a company practice, policy
and tradition favorable to the employees has been clearly established; and that the
payments made by the company pursuant to it have ripened into benefits enjoyed by
them.
Certainly, a practice or custom is, as a general rule, not a source of a legally

demandable or enforceable right. Company practice, just like any other fact, habits,
customs, usage or patterns of conduct must be proven by the offering party, who must
allege and establish specific, repetitive conduct that might constitute evidence of habit or
company practice.
ROYAL PLANT WORKERS UNION vs. COCA-COLA BOTTLERS PHILIPPINES,

INC.-CEBU PLANT
G.R. No. 198783, April 15, 2013
J. Mendoza
The decision of the management to remove the operators’ chairs from the
production/manufacturing lines of its bottling plants was made in good faith and did not
intend to defeat or circumvent the rights of the workers. The removal of the chairs was
designed to increase work efficiency. Moreover, the operators’ chairs cannot be considered
as one of the employee benefits covered in Article 100 of the Labor Code. In the Court’s view,
the term "benefits" mentioned in the non-diminution rule refers to monetary benefits or
privileges given to the employee with monetary equivalents.
Page 247 of 1699
Facts:
Coca-Cola Bottlers Philippines, Inc. (CCBPI) is a domestic corporation engaged in

the manufacture, sale and distribution of softdrink products. It has several bottling plants
all over the country employing bottling operators for each bottling plant. The bottling
operators, who are all members of Royal Plant Workers Union (ROPWU), were provided
with chairs upon their request; however, the chairs provided for the operators were
removed pursuant to a national directive of CCBPI in line with the "I Operate, I Maintain,
I Clean" program for bottling operators, wherein every bottling operator is given the
responsibility to keep the machinery and equipment assigned to him clean and safe. The
bottling operators took issue with the removal of the chairs. Through the representation
of CCBPI, they initiated the grievance machinery of the Collective Bargaining Agreement
(CBA). Even after exhausting the remedies contained in the grievance machinery, the
parties submitted the same for mediation and, then, for arbitration. Upon submission for
arbitration, CCBPI argued that the removal of the chairs is valid as it is a legitimate exercise
of management prerogative, it does not violate the Labor Code and it does not violate the
CBA it contracted with respondent. On the other hand, respondent espoused the contrary
view. It contended that the bottling operators have been performing their assigned duties
satisfactorily with the presence of the chairs; the removal of the chairs constitutes a
violation of the Occupational Health and Safety Standards, the policy of the State to assure
the right of workers to just and humane conditions of work as stated in Article 3 of the
Labor Code and the Global Workplace Rights Policy.
Issue:
1. Whether or not CCBPI validly exercised its management prerogative in removing the
chairs previously granted
2. Whether or not there is a violation of Article 100 of the Labor Code, covering employees
benefits
Ruling:
A Valid Exercise of 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
Page 248 of 1699
regard to the rights of labor.
In the present controversy, it cannot be denied that CCBPI removed the operators’
chairs pursuant to a national directive and in line with its "I Operate, I Maintain, I Clean"
program, launched to enable the Union to perform their duties and responsibilities more
efficiently. The chairs were not removed indiscriminately. They were carefully studied with
due regard to the welfare of the members of the Union. The removal of the chairs was
compensated by: a) a reduction of the operating hours of the bottling operators from a
two-and-one-half (2 ½)-hour rotation period to a one-and-a-half (1 ½) hour rotation
period; and b) an increase of the break period from 15 to 30 minutes between rotations.
Apparently, the decision to remove the chairs was done with good intentions as
CCBPI wanted to avoid instances of operators sleeping on the job while in the performance
of their duties and responsibilities and because of the fact that the chairs were not
necessary considering that the operators constantly move about while working. In short,
the removal of the chairs was designed to increase work efficiency. Hence, CCBPI’s exercise
of its management prerogative was made in good faith without doing any harm to the
workers’ rights.
No Violation of Article 100 of the Labor Code
The operators’ chairs cannot be considered as one of the employee benefits covered
in Article 100 of the Labor Code. In the Court’s view, the term "benefits" mentioned in the
non-diminution rule refers to monetary benefits or privileges given to the employee with
monetary equivalents. Such benefits or privileges form part of the employees’ wage, salary
or compensation making them enforceable obligations.
Without a doubt, equating the provision of chairs to the bottling operators is

something within the ambit of "benefits'' in the context of Article 100 of the Labor Code
is unduly stretching the coverage of the law. The interpretations of Article 100 of the Labor
Code do not show even with the slightest hint that such provision of chairs for the bottling
operators may be sheltered under its mantle.
MELINDA L. OCAMPO vs. COMMISSION ON AUDIT

G.R. No. 188716, June 10, 2013
J. Perez
The claim of petitioner for two (2) sets of retirement benefits under R.A. 1568 is not,
strictly speaking, a claim for double compensation prohibited under the first paragraph of
Section 8, Article IX-B of the Constitution. Claims for double retirement benefits fall under
the prohibition against the receipt of double compensation when they are based on exactly
Page 249 of 1699
the same services and on the same creditable period.In this case, petitioner is not claiming
two (2) sets of retirement benefits for one and the same creditable period. Rather, petitioner
is claiming a set of retirement benefits for each of her two (2) retirements from the ERB.
However, there is nothing in R.A. 1568 as amended by R.A. 3595 that allows a
qualified retiree to therein recover two (2) sets of retirement benefits as a consequence of
two (2) retirements from the same covered agency. The mere circumstance that members
and chairmen of the ERB may be appointed to serve therein for more than one term does
not mean that they would be entitled a set of retirement benefits under R.A. 1568 for each
of their completed term.
Facts:
On March 1, 1996, petitioner retired from the NEA, after more than 17 years of
service. Petitioner availed of her retirement benefits. Thereafter, petitioner was appointed
as Board Member of the ERB. Upon expiration of her term, petitioner retired under E.O.
172, in relation to R.A. 1568. Petitioner availed of the five year lump sum benefit and the
corresponding monthly pension to be paid out for the remainder of her life. On August
25, 1998, petitioner was again appointed, this time as Chairman of ERB with a term of four
(4) years. On August 15, 2001, the ERB was abolished and replaced by the ERC. For the
second time, petitioner sought retirement under E.O. 172. Chairperson of the ERC
approved the payment thereof to petitioner. However, on post-audit of the transaction,
the State Auditor, issued Notice of Suspension: (1) suspending payment of the petitioner‘s
second retirement gratuity computed on a pro-rata basis equivalent to only two years,
eleven months, and twenty days; and (2) requiring submission by the ERC of ―legal basis
for the payment of retirement gratuity twice under the same law (EO 172).
Petitioner posits that she should be separately paid retirement benefits for her
respective terms as Board Member and Chairperson of the ERB. In other words, petitioner
claims two (2) lump sum payments, and payment thereafter of two (2) monthly pensions.
On the other hand, the COA argues that: (1) the phrase ―for every year of service‖ limits
the payment of the lump sum to the employee‘s length of service and does not
automatically entitle an employee to a lump sum gratuity of five years; (2) Petitioner is not
entitled to two (2) lump sum benefit of five years for each term as it would run counter to
the ―common-sense principle‖ laid down in jurisprudence; (3) payment to petitioner of
two retirement benefits under E.O. 172 for both her retirements, albeit under different
positions and offices, is unconstitutional as it violates the provision against additional or
double compensation; and (4) ultimately, petitioner should have received only a prorated
amount on her retirement gratuity based on her two years and four months as ERB Board
Member, and two years, eleven months and twenty days as ERB Chairperson.
Issue:
Page 250 of 1699
1. Is petitioner entitled to recover two (2) sets of retirement benefits under R.A. 1568
2. How much petitioner is entitled to receive as retirement benefits under the same law
Ruling:
No. At the outset, it must be clarified that the claim of petitioner for two (2) sets of
retirement benefits under R.A. 1568 is not, strictly speaking, a claim for double
compensation prohibited under the first paragraph of Section 8, Article IX-B of the
Constitution. Claims for double retirement benefits fall under the prohibition against the
receipt of double compensation when they are based on exactly the same services and on
the same creditable period. This is not, however, the case herein.
Hence, in order to resolve her claim, what is only required is an interpretation of

R.A.1568, as amended. As can be seen from the discussion above, the success of petitioner‘s
claim actually depends on the existence of a provision in R.A. 1568 that allows her to
recover two (2) set of retirement benefits as a consequence of her two (2) retirements from
the ERB. Petitioner hinges her claim for two (2) sets of retirement benefits solely on the
provisions of R.A. 1568 as amended by R.A. 3595. There is nothing in R.A. 1568 as amended
by R.A. 3595 that allows a qualified retiree to therein recover two (2) sets of retirement
benefits as a consequence of two (2) retirements from the same covered agency. As
worded, R.A. 1568, as amended, only allows payment of only a single gratuity and a single
annuity out of a single compensable retirement from any one of the covered agencies. In
fact, the contingency of multiple retirements from the same covered agency could not have
been contemplated by the law. Hence, R.A. 1568, as it was passed and in its present form,
cannot be said to have sanctioned the payment of more than one set of retirement benefits
to a retiree as a consequence of multiple retirements in one agency. The mere circumstance
that members and chairmen of the ERB may be appointed to serve therein for more than
one term does not mean that they would be entitled a set of retirement benefits under
R.A. 1568 for each of their completed term. Since R.A. 1568, as amended by R.A. 3595
clearly does not justify the payment of more than one gratuity and one annuity to a
qualified retiree, petitioner cannot claim two (2) sets of retirement benefits under the
same law.
Petitioner may recover one gratuity in an amount equivalent to her last annual
salary multiplied by her actual years of service in the ERB but not to exceed five (5) years.
In addition, petitioner is entitled to receive only one annuity equivalent to the amount of
her last monthly salary. While petitioner is entitled to receive only one set of retirement
benefits under R.A. 1568, as amended, despite her two (2) retirements, the Court believe
that her subsequent stint as Chairman of the ERB and her consequent second retirement
necessitated an adjustment of the retirement benefits she is entitled to under the law. This
Page 251 of 1699
is because R.A. 1568, as amended, reckons the amount of gratuity on the retiree‘s last
annual salary and actual years of service not exceeding five (5) years, and it bases the
amount of annuity on the retiree‘s last monthly salary. Hence, for purposes of computing
her gratuity, petitioner‘s last annual salary shall be that which she was receiving at the time
of her second retirement and her actual years of service shall be the sum of her years of
service both as ERB member and chairman, but not to exceed five (5) years. On the other
hand, for purposes of computing her annuity, petitioner‘s last monthly salary shall be that
which she was receiving monthly as of the date of her second retirement.
JEREME G. VILLANUEVA, SR. vs. BALIWAG NAVIGATION, INC., ET AL.

G.R. No. 206505. July 24, 2013
J. Brion
Seafarer was repatriated due to a finished contact, not for medical reasons, is not
entitled to disability benefits.
Facts:
On May 13, 2003, Villanueva entered into a ten-month employment contract with
the respondents as bosun for the vessel M/S Forestal Gaia. After his pre-employment
medical examination (PEME) on July 28, 2003, he was declared fit to work, although the
PEME report indicated that he had a heart disease. Villanueva joined the vessel M/S
Forestal Gaia on August 17, 2003. Villanueva alleged that while in the performance of his
duties on board the vessel one day, he suddenly felt pain in his chest and experienced
difficulty in breathing. He asked for medical assistance but was given only oral medication
to alleviate the pain. He was repatriated on June 24, 2004 upon the expiration of his
contract.
Upon his return, he allegedly reported to the respondent for medical check-up and
it was eventually determined that he had a heart disease and thus was declared unfit to
work. His claim for benefits was denied by respondent and he then filed a complaint for
payment of disability benefits compensation.
The Labor Arbiter dismissed the complaint and declared seafarer’s heart disease to
be not work-related. The NLRC affirmed the decision of the Labor Arbiter. The Court of
Appeals sustained the NLRC rulings.
Issue:
Whether or not petitioner, repatriated due to a finished contract, is entitled to

disability benefits
Page 252 of 1699
Ruling:
We find no reversible legal error in the CA ruling affirming the denial of

Villanueva’s claim for disability benefits. We find it undisputed that he was repatriated for
finished contract, not for medical reasons. More importantly, while the 2000 POEA-
Standard Employment Contract (Section 32-A[ll]) considers a heart disease as
occupational, Villanueva failed to satisfy by substantial evidence the condition laid
down in the Contract that if the heart disease was known to have been present
during employment, there must be proof that an acute exacerbation was clearly
precipitated by the unusual strain brought about by the nature of his work.
Clearly, as the CA emphasized, Villanueva's repatriation for completion of his

contract belies his submission that his claimed heart disease had been aggravated
by his work on board the vessel MIS Forestal Gaia.
COMPENSATION AND BENEFITS
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.
Page 253 of 1699
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 benefitsand 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.)
Page 254 of 1699

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.awlibrary
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
Page 255 of 1699
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.
Page 256 of 1699

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
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
Page 257 of 1699
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
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.
Page 258 of 1699

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. 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.

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.
Page 259 of 1699
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

Page 260 of 1699
contract, the POEA-SEC, as provided under Department Order No. 4, series of 2000 of
contracted.

under Section 32-A of this contract with the conditions set therein satisfied."
hanRoblesvirtualLawlibrar

6. The disease was contracted as a result of the seafarer's exposure to the describe[d] risks;
necessary to contract it; [and]
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
Page 261 of 1699

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

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.
Page 262 of 1699

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
Page 263 of 1699

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
Page 264 of 1699

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.
Page 265 of 1699

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
Page 266 of 1699

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:
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
Page 267 of 1699

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
Page 268 of 1699

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
Page 269 of 1699

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
Page 270 of 1699

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.
Page 271 of 1699

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:chanRoblesvirtualLawlibrary
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
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
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)cralawlawlibrary
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."
Page 272 of 1699

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.
Page 273 of 1699

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
Page 274 of 1699
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;
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
Page 275 of 1699
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.
DOEHLE-PHILMAN MANNING AGENCY INC., DOHLE (IOM) LIMITED AND

CAPT. MANOLO T. GACUTAN vs. HENRY C. HARO
G.R. No. 206522
Facts
On May 30, 2008, Doehle-Philman, in behalf of its foreign principal, Dohle Ltd., hired
respondent as oiler aboard the vessel MV CMA CGM Providenciafor a period of nine
months with basic monthly salary of US$547.00 and other benefits. Before deployment,
respondent underwent pre-employment medical examination (PEME) and was declared
fit for sea duty.
Respondent stated that on June 1, 2008, he boarded the vessel and assumed his duties as
oiler; however, in November 2008, he experienced heartache and loss of energy after
hammering and lifting a 120-kilogram machine; thereafter, he was confined at a hospital
in Rotterdam where he was informed of having a hole in his heart that needed medical
attention.
Page 276 of 1699

After his repatriation on December 6, 2008, respondent reported to Doehle-Philman

which in turn referred him to Clinico-Med. Respondent claimed that he was confined for
two days in UST Hospital and that a heart operation was recommended to him. He
nevertheless admitted that he has not yet undergone any surgery. On April 24, 2009,
respondent’s personal doctor, Dr. Luminardo M. Ramos (Dr. Ramos), declared him not
fit to work.
Consequently, on June 19, 2009, respondent filed a Complaint for disability benefits,
reimbursement of medical expenses, moral and exemplary damages, and attorney’s fees
against petitioners. Respondent claimed that since he was declared fit to work before his
deployment, this proved that he sustained his illness while in the performance of his
duties aboard the vessel; that he was unable to work for more than 120 days; and that he
lost his earning capacity to engage in a work he was skilled to do. Thus, he insisted he is
For their part, petitioners alleged that respondent boarded the vessel on June 2, 2008;
that on or about November 21, 2008, respondent was confined at a hospital in Rotterdam;
and that upon repatriation, he was referred to Dr. Leticia Abesamis (Dr. Abesamis), the
company-designated doctor, for treatment.
Petitioners denied that respondent has a hole in his heart. Instead, they pointed out that
on December 27, 2008, Dr. Abesamis diagnosed him of "aortic regurgitation, moderate"
but declared that his condition is not work-related. They averred that despite such
declaration, they still continued with respondent’s treatment. However, on January 19,
2009, Dr. Abesamis declared that respondent had not reported for follow up despite
repeated calls. On April 8, 2009, the company-designated doctor reported that
respondent refused surgery. And on April 15, 2009, she reiterated that respondent’s
condition is not work-related.
Petitioners insisted that the determination of the fitness or unfitness of a medically

repatriated seafarer rests with the company-designated physician; and since Dr.
Abesamis declared that respondent’s illness is not work-related, such determination
must prevail. They also stressed that the company-designated doctor continuously
treated respondent from his repatriation in December 2008, until April 2009, hence, her
finding that his illness is not work-related must be respected.
Finally, petitioners argued that since respondent’s illness is not an occupational disease,
then he must prove that his work caused his illness; because of his failure to do so, then
he is not entitled to disability benefits.
Issue
Page 277 of 1699
Whether or not petitioner is entitled to permanent and total disability benefits.
Ruling
The Standard Terms and Conditions Governing the Employment of Filipino Seafarers
On-Board Ocean-Going Vessels (POEA-SEC), particularly Section 20(B) thereof,
provides that the employer is liable for disability benefits when the seafarer suffers from
a work-related injury or illness during the term of his contract. To emphasize, to be
compensable, the injury or illness 1) must be work-related and 2) must have arisen during
the term of the employment contract.
In Jebsen Maritime, Inc. v. Ravena, the Court held that those diseases not listed as
occupational diseases may be compensated if it is shown that they have been caused or
aggravated by the seafarer’s working conditions. The Court stressed that while the POEA-
SEC provides for a disputable presumption of work-relatedness as regards those not
listed as occupational diseases, this presumption does not necessarily result in an
automatic grant of disability compensation. The claimant still has the burden to present
substantial evidence or "such relevant evidence as a reasonable mind might accept as
adequate to support a conclusion" that his work conditions caused or at least increased
the risk of contracting the illness.
In this case, considering that respondent did not suffer from any occupational disease
listed under Section 32-A of the POEA-SEC, then to be entitled to disability benefits, the
respondent has the burden to prove that his illness is work-related. Unfortunately, he
failed to discharge such burden.
Records reveal that respondent was diagnosed of aortic regurgitation, a heart "condition
whereby the aortic valve permits blood ejected from the left ventricle to leak back into
the left ventricle." Although this condition manifested while respondent was aboard the
vessel, such circumstance is not sufficient to entitle him to disability benefits as it is of
equal importance to also show that respondent’s illness is work-related.
In Ayungo v. Beamko Shipmanagement Corporation, the Court held that for a disability
to be compensable, the seafarer must prove a reasonable link between his work and his
illness in order for a rational mind to determine that such work contributed to, or at least
aggravated, his illness. It is not enough that the seafarer’s injury or illness rendered him
disabled; it is equally necessary that he establishes a causal connection between his injury
or illness, and the work for which he is engaged.
Page 278 of 1699

Here, respondent argues that he was unable to work as a seaman for more than 120 days,
and that he contracted his illness while under the employ of petitioners. However, he did
not at all describe his work as an oiler, and neither did he specify the connection of his
work and his illness.
In Panganiban v. Tara Trading Shipmanagement, Inc., the Court denied the claim for
disability benefits of a seafarer, who was an oiler like herein respondent. The Court held
that petitioner therein failed to elaborate on the nature of his work or to even specify his
tasks as oiler which rendered it difficult to determine a link between his position and his
illness.
The Court is confronted with a similar situation in this case. Respondent simply relied
on the presumption that his illness is work-related. He did not adduce substantial
evidence that his work conditions caused, or at the least increased the risk of contracting
his illness. Like in Panganiban, herein respondent did not elaborate on the nature of his
work and its connection to his illness. Certainly, he is not entitled to any disability
compensation.
In an attempt to establish work-relatedness, respondent stated in his Memorandum

before the Court that his illness is compensable due to stress. Aside from being belatedly
argued, such claim is unmeritorious as it still failed to prove the required linkage between
respondent’s work and his illness to entitle him to disability benefits.
In this regard, we quote with approval the pronouncement of the NLRC as follows:
x x x [Respondent] admitted that he was told by the attending physician that ‘his
heart has a hole somewhere in the left ventricle’ x x x. Instead of showing how a
hole in the heart may be work[-]related, [respondent] argued on his being ‘unable
to perform his customary work for more than 120 days’ x x x. He stressed in his
Appeal that ‘probability’ is the ultimate test of proof in compensation proceedings,
but he did not cite any probable circumstance which could have made [a] hole in
the heart [w]ork[-]related.
xxxx
x x x [T]o be entitled to compensation and benefits, the seafarer must prove by
substantial evidence that he contracted the illness during the term of his contract
and [that] such infirmity was work-related or at the very least aggravated by the
conditions of the work for which he was engaged. Failing on this aspect, the
assertion of [respondent] that his illness was work-connected is nothing but an
empty imputation of fact without any probative weight.
Page 279 of 1699

Moreover, the company-designated doctor determined that respondent’s condition is

not work-related.
Section 20(B)(3) of the POEA-SEC provides that the company-designated doctor is

tasked to determine the fitness or the degree of disability of a medically repatriated
seafarer. In addition, the company-designated doctor was shown to have closely
examined and treated respondent from his repatriation up to four months thereafter.
Thus, the LA and the NLRC's reliance on the declaration of the company-designated
doctor that respondent's condition is not work-related is justified.
The Court also notes that even respondent's physician of choice made no pronouncement
whether his condition is work-related or not. In his one-page medical report, Dr. Ramos
only stated that respondent is not fit for work. He neither stated that respondent's
condition is· not work-related nor did he expound on his conclusion that respondent is
not fit for work.
Lastly, the Court holds that the fact that respondent passed the PEME is of no moment
in determining whether he acquired his illness during his employment. The PEME is not
exploratory in nature. It is not intended to be a thorough examination of a person's
medical condition, .and is not a conclusive evidence that one is free from any ailment
before deployment. Hence, it does not follow that because respondent was declared fit
to work prior to his deployment, then he necessarily sustained his illness while aboard
the vessel.
Given all these, the Court finds that the CA erred in setting aside the NLRC Resolutions,
which affirmed the dismissal of the Complaint. The findings and conclusions arrived at
by the NLRC were not tainted with grave abuse of discretion as respondent's claim for
disability benefits is unsupported by substantial evidence. Indeed, when the evidence
adduced negates compensability, the claim must necessan1y fail.
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
Page 280 of 1699
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
Page 281 of 1699

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
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
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
Page 282 of 1699

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
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
Page 283 of 1699

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.
Page 284 of 1699

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
Page 285 of 1699

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.
Page 286 of 1699

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
Page 287 of 1699
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.:
chanRoblesvirtualLawlibrary
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.ChanRoblesVirtualawlibrary
Page 288 of 1699

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.sVirtualawlibrary
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.
Page 289 of 1699

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.
Page 290 of 1699

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
Page 291 of 1699
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
Page 292 of 1699
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:
Page 293 of 1699

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
Page 294 of 1699
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.
Page 295 of 1699

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
Page 296 of 1699

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.
STATUTORY BENEFITS
ABDULJUAHID R. PIGCAULAN v SECURITY and CREDIT

INVESTIGATION, INC. and/orRENE AMBY REYES ,
G.R. No. 173648, January 16, 2012
The Facts
Canoy and Pigcaulan were both employed by SCII as security guards and were assigned to SCIIs
different clients. Subsequently, however, Canoy and Pigcaulan filed with the Labor Arbiter
separate complaints for underpayment of salaries and non-payment of overtime, holiday, rest
day, service incentive leave and 13th month pays. These complaints were later on consolidated
as they involved the same causes of action.
Canoy and Pigcaulan, in support of their claim, submitted their respective daily time records
reflecting the number of hours served and their wages for the same. They likewise presented
itemized lists of their claims for the corresponding periods served.
Respondents, however, maintained that Canoy and Pigcaulan were paid their just salaries and
other benefits under the law; that the salaries they received were above the statutory minimum
wage and the rates provided by the Philippine Association of Detective and Protective Agency
Operators (PADPAO) for security guards; that their holiday pay were already included in the
computation of their monthly salaries; that they were paid additional premium of 30% in
addition to their basic salary whenever they were required to work on Sundays and 200% of their
salary for work done on holidays; and, that Canoy and Pigcaulan were paid the corresponding
13th month pay for the years 1998 and 1999. In support thereof, copies of payroll listings and lists
of employees who received their 13th month pay for the periods December 1997 to November
1998 and December 1998 to November 1999 were presented. In addition, respondents
Page 297 of 1699

contended that Canoys and Pigcaulans monetary claims should only be limited to the past three
years of employment pursuant to the rule on prescription of claims.
Issues
a.) Whether there was substantial evidence to support grant of overtime pay.
b.) Whether Pigcaulan is entitled to service incentive leave, holiday pay and 13th month pay.
Ruling
There was no substantial evidence to support the grant of overtime pay.
The Labor Arbiter ordered reimbursement of overtime pay, holiday pay, service incentive leave
pay and 13th month pay for the year 2000 in favor of Canoy and Pigcaulan. The Labor Arbiter
relied heavily on the itemized computations they submitted which he considered as
representative daily time records to substantiate the award of salary differentials. The NLRC then
sustained the award on the ground that there was substantial evidence of underpayment of
salaries and benefits.
We find that both the Labor Arbiter and the NLRC erred in this regard. The handwritten
itemized computations are self-serving, unreliable and unsubstantial evidence to sustain the
grant of salary differentials, particularly overtime pay. Unsigned and unauthenticated as they
are, there is no way of verifying the truth of the handwritten entries stated therein. Written only
in pieces of paper and solely prepared by Canoy and Pigcaulan, these representative daily time
records, as termed by the Labor Arbiter, can hardly be considered as competent evidence to be
used as basis to prove that the two were underpaid of their salaries. We find nothing in the
records which could substantially support Pigcaulans contention that he had rendered service
beyond eight hours to entitle him to overtime pay and during Sundays to entitle him to restday
pay. Hence, in the absence of any concrete proof that additional service beyond the normal
working hours and days had indeed been rendered, we cannot affirm the grant of overtime pay
to Pigcaulan.
Pigcaulan is entitled to holiday pay, service

incentive leave pay and proportionate 13th month
pay for year 2000.
Page 298 of 1699

However, with respect to the award for holiday pay, service incentive leave pay and 13th month
pay, we affirm and rule that Pigcaulan is entitled to these benefits.
Article 94 of the Labor Code provides that:
ART. 94. RIGHT TO HOLIDAY PAY. (a) Every worker shall be paid his regular
daily wage during regular holidays, except in retail and service establishments regularly
employing less than ten (10) workers;
xxxx
While Article 95 of the Labor Code provides:
ART. 95. RIGHT TO SERVICE INCENTIVE LEAVE. (a) Every employee who has
rendered at least one year of service shall be entitled to a yearly service incentive of five
days with pay.
xxxx
Under the Labor Code, Pigcaulan is entitled to his regular rate on holidays even if he does not
work. Likewise, express provision of the law entitles him to service incentive leave benefit for he
rendered service for more than a year already. Furthermore, under Presidential Decree No. 851,
he should be paid his 13th month pay. As employer, SCII has the burden of proving that it has
paid these benefits to its employees.
SCII presented payroll listings and transmittal letters to the bank to show that Canoy and
Pigcaulan received their salaries as well as benefits which it claimed are already integrated in the
employees monthly salaries. However, the documents presented do not prove SCIIs allegation.
SCII failed to show any other concrete proof by means of records, pertinent files or similar
documents reflecting that the specific claims have been paid. With respect to 13th month pay,
SCII presented proof that this benefit was paid but only for the years 1998 and 1999. To repeat,
the burden of proving payment of these monetary claims rests on SCII, being the employer. It is
a rule that one who pleads payment has the burden of proving it. Even when the plaintiff alleges
non-payment, still the general rule is that the burden rests on the defendant to prove payment,
rather than on the plaintiff to prove non-payment. Since SCII failed to provide convincing proof
that it has already settled the claims, Pigcaulan should be paid his holiday pay, service incentive
leave benefits and proportionate 13th month pay for the year 2000.
Page 299 of 1699

The CA erred in dismissing the claims instead of

remanding the case to the Labor Arbiter for a
detailed computation of the judgment award.
Indeed, the Labor Arbiter failed to provide sufficient basis for the monetary awards granted.
Such failure, however, should not result in prejudice to the substantial rights of the party. While
we disallow the grant of overtime pay and restday pay in favor of Pigcaulan, he is nevertheless
entitled, as a matter of right, to his holiday pay, service incentive leave pay and 13th month pay
for year 2000. Hence, the CA is not correct in dismissing Pigcaulans claims in its entirety.
Consistent with the rule that all money claims arising from an employer-employee relationship
shall be filed within three years from the time the cause of action accrued, Pigcaulan can only
demand the amounts due him for the period within three years preceding the filing of the
complaint in 2000. Furthermore, since the records are insufficient to use as bases to properly
compute Pigcaulans claims, the case should be remanded to the Labor Arbiter for a detailed
computation of the monetary benefits due to him.
TIMOTEO H. SARONA v NATIONAL LABOR RELATIONS

COMMISSION, ROYALE SECURITYAGENCY (FORMERLY SCEPTRE
SECURITY AGENCY) andCESAR S. TAN
G.R. No. 185280, January 18, 2012
The Facts
On June 20, 2003, the petitioner, who was hired by Sceptre as a security guard sometime
in April 1976, was asked by Karen Therese Tan (Karen), Sceptre’s Operation Manager, to
submit a resignation letter as the same was supposedly required for applying for a
position at Royale. The petitioner was also asked to fill up Royale’s employment
application form, which was handed to him by Royale’s General Manager, respondent
Cesar Antonio Tan II (Cesar).
After several weeks of being in floating status, Royale’s Security Officer, Martin Gono
(Martin), assigned the petitioner at Highlight Metal Craft, Inc. (Highlight Metal) from
July 29, 2003 to August 8, 2003. Thereafter, the petitioner was transferred and assigned
to Wide Wide World Express, Inc. (WWWE, Inc.). During his assignment at Highlight
Metal, the petitioner used the patches and agency cloths of Sceptre and it was only when
he was posted at WWWE, Inc. that he started using those of Royale.
Page 300 of 1699

On September 17, 2003, the petitioner was informed that his assignment at WWWE, Inc.
had been withdrawn because Royale had allegedly been replaced by another security
agency. The petitioner, however, shortly discovered thereafter that Royale was never
replaced as WWWE, Inc.’s security agency. When he placed a call at WWWE, Inc., he
learned that his fellow security guard was not relieved from his post.
On September 21, 2003, the petitioner was once again assigned at Highlight Metal, albeit
for a short period from September 22, 2003 to September 30, 2003. Subsequently, when
the petitioner reported at Royale’s office on October 1, 2003, Martin informed him that
he would no longer be given any assignment per the instructions of Aida Sabalones-Tan
(Aida), general manager of Sceptre. This prompted him to file a complaint for illegal
dismissal on October 4, 2003.
Issues
a. Whether Royale’s corporate fiction should be pierced for the purpose of

compelling it to recognize the petitioner’s length of service with Sceptre and for
holding it liable for the benefits that have accrued to him arising from his
employment with Sceptre; and
b. Whether the petitioner’s backwages should be limited to his salary for three (3)
months.
Ruling
Royale is a continuation or successor of

Sceptre.
The doctrine of piercing the corporate veil applies 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 this regard, this Court finds cogent reason to reverse the CA’s findings. Evidence
abound showing that Royale is a mere continuation or successor of Sceptre and
fraudulent objectives are behind Royale’s incorporation and the petitioner’s subsequent
employment therein. These are plainly suggested by events that the respondents do not
Page 301 of 1699
dispute and which the CA, the NLRC and LA Gutierrez accept as fully substantiated but
misappreciated as insufficient to warrant the use of the equitable weapon of piercing.
As correctly pointed out by the petitioner, it was Aida who exercised control and
supervision over the affairs of both Sceptre and Royale. Contrary to the submissions of
the respondents that Roso had been the only one in sole control of Sceptre’s finances and
business affairs, Aida took over as early as 1999 when Roso assigned his license to operate
Sceptre on May 3, 1999. As further proof of Aida’s acquisition of the rights as Sceptre’s
sole proprietor, she caused the registration of the business name “Sceptre Security &
Detective Agency” under her name with the DTI a few months after Roso abdicated his
rights to Sceptre in her favor. As far as Royale is concerned, the respondents do not deny
that she has a hand in its management and operation and possesses control and
supervision of its employees, including the petitioner. As the petitioner correctly pointed
out, that Aida was the one who decided to stop giving any assignments to the petitioner
and summarily dismiss him is an eloquent testament of the power she wields insofar as
Royale’s affairs are concerned. The presence of actual common control coupled with the
misuse of the corporate form to perpetrate oppressive or manipulative conduct or evade
performance of legal obligations is patent; Royale cannot hide behind its corporate
fiction.
Aida’s control over Sceptre and Royale does not, by itself, call for a disregard of the
corporate fiction. There must be a showing that a fraudulent intent or illegal purpose is
behind the exercise of such control to warrant the piercing of the corporate veil.
However, the manner by which the petitioner was made to resign from Sceptre and how
he became an employee of Royale suggest the perverted use of the legal fiction of the
separate corporate personality. It is undisputed that the petitioner tendered his
resignation and that he applied at Royale at the instance of Karen and Cesar and on the
impression they created that these were necessary for his continued employment. They
orchestrated the petitioner’s resignation from Sceptre and subsequent employment at
Royale, taking advantage of their ascendancy over the petitioner and the latter’s lack of
knowledge of his rights and the consequences of his actions. Furthermore, that the
petitioner was made to resign from Sceptre and apply with Royale only to be
unceremoniously terminated shortly thereafter leads to the ineluctable conclusion that
there was intent to violate the petitioner’s rights as an employee, particularly his right to
security of tenure. The respondents’ scheme reeks of bad faith and fraud and
compassionate justice dictates that Royale and Sceptre be merged as a single entity,
compelling Royale to credit and recognize the petitioner’s length of service with Sceptre.
The respondents cannot use the legal fiction of a separate corporate personality for ends
subversive of the policy and purpose behind its creationor which could not have been
intended by law to which it owed its being.
Page 302 of 1699

For the piercing doctrine to apply, it is of no consequence if Sceptre is a sole

proprietorship. As ruled in Prince Transport, Inc., et al. v. Garcia, et al., it is the act of
hiding behind the separate and distinct personalities of juridical entities to perpetuate
fraud, commit illegal acts, evade one’s obligations that the equitable piercing doctrine
was formulated to address and prevent:
A settled formulation of the doctrine of piercing the corporate veil is that when
two business enterprises are owned, conducted and controlled by the same
parties, both law and equity will, when necessary to protect the rights of third
parties, disregard the legal fiction that these two entities are distinct and treat
them as identical or as one and the same. In the present case, it may be true that
Lubas is a single proprietorship and not a corporation. However, petitioners’
attempt to isolate themselves from and hide behind the supposed separate and
distinct personality of Lubas so as to evade their liabilities is precisely what the
classical doctrine of piercing the veil of corporate entity seeks to prevent and
remedy.
Also, Sceptre and Royale have the same principal place of business. As early as October
14, 1994, Aida and Wilfredo became the owners of the property used by Sceptre as its
principal place of business by virtue of a Deed of Absolute Sale they executed with Roso.
Royale, shortly after its incorporation, started to hold office in the same property. These,
the respondents failed to dispute.
The respondents do not likewise deny that Royale and Sceptre share the same officers
and employees. Karen assumed the dual role of Sceptre’s Operation Manager and
incorporator of Royale. With respect to the petitioner, even if he has already resigned
from Sceptre and has been employed by Royale, he was still using the patches and agency
cloths of Sceptre during his assignment at Highlight Metal.
Royale also claimed a right to the cash bond which the petitioner posted when he was
still with Sceptre. If Sceptre and Royale are indeed separate entities, Sceptre should have
released the petitioner’s cash bond when he resigned and Royale would have required
the petitioner to post a new cash bond in its favor.
Taking the foregoing in conjunction with Aida’s control over Sceptre’s and Royale’s
business affairs, it is patent that Royale was a mere subterfuge for Aida. Since a sole
proprietorship does not have a separate and distinct personality from that of the owner
of the enterprise, the latter is personally liable. This is what she sought to avoid but
cannot prosper.
Page 303 of 1699

Effectively, the petitioner cannot be deemed to have changed employers as Royale and
Sceptre are one and the same. His separation pay should, thus, be computed from the
date he was hired by Sceptre in April 1976 until the finality of this decision. Based on this
Court’s ruling in Masagana Concrete Products, et al. v. NLRC, et al., the intervening
period between the day an employee was illegally dismissed and the day the decision
finding him illegally dismissed becomes final and executory shall be considered in the
computation of his separation pay as a period of “imputed” or “putative” service:
Separation pay, equivalent to one month's salary for every year of service,
is awarded as an alternative to reinstatement when the latter is no longer an
option. Separation pay is computed from the commencement of employment up
to the time of termination, including the imputed service for which the employee
is entitled to backwages, with the salary rate prevailing at the end of the period of
putative service being the basis for computation.
It is well-settled, even axiomatic, that if

reinstatement is not possible, the period
covered in the computation of backwages
is from the time the employee was
unlawfully terminated until the finality of
the decision finding illegal dismissal.
With respect to the petitioner’s backwages, this Court cannot subscribe to the view that
it should be limited to an amount equivalent to three (3) months of his salary. Backwages
is a remedy affording the employee a way to recover what he has lost by reason of the
unlawful dismissal. In awarding backwages, the primordial consideration is the income
that should have accrued to the employee from the time that he was dismissed up to his
reinstatement and the length of service prior to his dismissal is definitely
inconsequential.
As early as 1996, this Court, in Bustamante, et al. v. NLRC, et al., clarified in no uncertain
terms that if reinstatement is no longer possible, backwages should be computed from
the time the employee was terminated until the finality of the decision, finding the
dismissal unlawful.
Therefore, in accordance with R.A. No. 6715, petitioners are entitled on their full
backwages, inclusive of allowances and other benefits or their monetary
equivalent, from the time their actual compensation was withheld on them up to
the time of their actual reinstatement.
Page 304 of 1699

As to reinstatement of petitioners, this Court has already ruled that reinstatement

is no longer feasible, because the company would be adjustly prejudiced by the
continued employment of petitioners who at present are overage, a separation pay
equal to one-month salary granted to them in the Labor Arbiter's decision was in
order and, therefore, affirmed on the Court's decision of 15 March 1996.
Furthermore, since reinstatement on this case is no longer feasible, the
amount of backwages shall be computed from the time of their illegal
termination on 25 June 1990 up to the time of finality of this
decision.(emphasis supplied)
A further clarification was made in Javellana, Jr. v. Belen:
Article 279 of the Labor Code, as amended by Section 34 of Republic Act

6715 instructs:
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.
Clearly, the law intends the award of backwages and similar benefits to
accumulate past the date of the Labor Arbiter's decision until the dismissed
employee is actually reinstated. But if, as in this case, reinstatement is no longer
possible, this Court has consistently ruled that backwages shall be computed from
the time of illegal dismissal until the date the decision becomes final. (citation
omitted)
In case separation pay is awarded and reinstatement is no longer feasible, backwages

shall be computed from the time of illegal dismissal up to the finality of the decision
should separation pay not be paid in the meantime. It is the employee’s actual receipt of
the full amount of his separation pay that will effectively terminate the employment of
an illegally dismissed employee. Otherwise, the employer-employee relationship subsists
and the illegally dismissed employee is entitled to backwages, taking into account the
increases and other benefits, including the 13th month pay, that were received by his co-
employees who are not dismissed. It is the obligation of the employer to pay an illegally
dismissed employee or worker the whole amount of the salaries or wages, plus all other
Page 305 of 1699

benefits and bonuses and general increases, to which he would have been normally
entitled had he not been dismissed and had not stopped working.
In fine, this Court holds Royale liable to pay the petitioner backwages to be computed
from his dismissal on October 1, 2003 until the finality of this decision. Nonetheless, the
amount received by the petitioner from the respondents in satisfaction of the November
30, 2005 Decision shall be deducted accordingly.
Finally, moral damages and exemplary damages at P25,000.00 each as indemnity for the
petitioner’s dismissal, which was tainted by bad faith and fraud, are in order. Moral
damages may be recovered where the dismissal of the employee was tainted by bad faith
or fraud, or where it constituted an act oppressive to labor, and done in a manner
contrary to morals, good customs or public policy while exemplary damages are
recoverable only if the dismissal was done in a wanton, oppressive, or malevolent
manner.
NON-DIMUNUTION OF BENEFITS
EASTERN TELECOMMUNICATIONS PHILIPPINES, INC., v

EASTERN TELECOMS EMPLOYEES UNION
G.R. No. 185665, February 8, 2012
The Facts
Eastern Telecommunications Phils., Inc. (ETPI) is a corporation engaged in the business

of providing telecommunications facilities, particularly leasing international date lines
or circuits, regular landlines, internet and data services, employing approximately 400
employees.
Eastern Telecoms Employees Union (ETEU) is the certified exclusive bargaining agent of
the company’s rank and file employees with a strong following of 147 regular members.
It has an existing collecti[ve] bargaining agreement with the company to expire in the
year 2004 with a Side Agreement signed on September 3, 2001.
In essence, the labor dispute was a spin-off of the company’s plan to defer payment of
the 2003 14th, 15th and 16th month bonuses sometime in April 2004. The company’s main
ground in postponing the payment of bonuses is due to allege continuing deterioration
Page 306 of 1699
of company’s financial position which started in the year 2000. However, ETPI while
postponing payment of bonuses sometime in April 2004, such payment would also be
subject to availability of funds.
Invoking the Side Agreement of the existing Collective Bargaining Agreement for the
period 2001-2004 between ETPI and ETEU, the union strongly opposed the deferment in
payment of the bonuses by filing a preventive mediation complaint with the NCMB on
July 3, 2003, the purpose of which complaint is to determine the date when the bonus
should be paid.
In the conference held at the NCMB, ETPI reiterated its stand that payment of the
bonuses would only be made in April 2004 to which date of payment, the union agreed.
Thus, considering the agreement forged between the parties, the said agreement was
reduced to a Memorandum of Agreement. The union requested that the President of the
company should be made a signatory to the agreement, however, the latter refused to
sign. In addition to such a refusal, the company made a sudden turnaround in its position
by declaring that they will no longer pay the bonuses until the issue is resolved through
compulsory arbitration.
The company’s change in position was contained in a letter dated April 14, 2004 written
to the union by Mr. Sonny Javier, Vice-President for Human Resources and
Administration, stating that the deferred release of bonuses had been superseded and
voided due to the unions filing of the issue to the NCMB on July 18, 2003. He declared
that until the matter is resolved in a compulsory arbitration, the company cannot and
will not pay any bonuses to any and all union members.
Thus, on April 26, 2004, ETEU filed a Notice of Strike on the ground of unfair labor
practice for failure of ETPI to pay the bonuses in gross violation of the economic
provision of the existing CBA.
On May 19, 2004, the Secretary of Labor and Employment, finding that the company is
engaged in an industry considered vital to the economy and any work disruption thereat
will adversely affect not only its operation but also that of the other business relying on
its services, certified the labor dispute for compulsory arbitration pursuant to Article 263
(q) of the Labor Code as amended.
Issues
Whether or not petitioner ETPI is liable to pay 14th, 15th and 16th month bonuses
for the year 2003 and 14th month bonus for the year 2004 to the members of
respondent union; and
Page 307 of 1699
Ruling
The pivotal question determinative of this controversy is whether the members of ETEU
are entitled to the payment of 14th, 15th and 16th month bonuses for the year 2003 and 14th
month bonus for year 2004.
From a legal point of view, a bonus is a gratuity or act of liberality of the giver which the
recipient has no right to demand as a matter of right. The grant of a bonus is basically a
management prerogative which cannot be forced upon the employer who may not be
obliged to assume the onerous burden of granting bonuses or other benefits aside from
the employee’s basic salaries or wages.
A bonus, however, becomes a demandable or enforceable obligation when it is made part

of the wage or salary or compensation of the employee.
In the case at bench, it is indubitable that ETPI and ETEU agreed on the inclusion of a
provision for the grant of 14th, 15th and 16th month bonuses in the 1998-2001 CBA Side
Agreement, as well as in the 2001-2004 CBA Side Agreement, which was signed on
September 3, 2001. The provision, which was similarly worded, states:
Employment-Related Bonuses
The Company confirms that the 14th, 15th and 16th month bonuses (other than the
13th month pay) are granted.
A reading of the above provision reveals that the same provides for the giving of 14th, 15th
and 16th month bonuseswithout qualification. The wording of the provision does not
allow any other interpretation. There were no conditions specified in the CBA Side
Agreements for the grant of the benefits contrary to the claim of ETPI that the same is
justified only when there are profits earned by the company. Terse and clear, the said
provision does not state that the subject bonuses shall be made to depend on the ETPIs
financial standing or that their payment was contingent upon the realization of profits.
Neither does it state that if the company derives no profits, no bonuses are to be given to
the employees. In fine, the payment of these bonuses was not related to the profitability
of business operations.
The records are also bereft of any showing that the ETPI made it clear before or during
the execution of the Side Agreements that the bonuses shall be subject to any condition.
Indeed, if ETPI and ETEU intended that the subject bonuses would be dependent on the
company earnings, such intention should have been expressly declared in the Side
Agreements or the bonus provision should have been deleted altogether. In the absence
Page 308 of 1699
of any proof that ETPIs consent was vitiated by fraud, mistake or duress, it is presumed
that it entered into the Side Agreements voluntarily, that it had full knowledge of the
contents thereof and that it was aware of its commitment under the contract. Verily, by
virtue of its incorporation in the CBA Side Agreements, the grant of 14th, 15th and 16th
month bonuses has become more than just an act of generosity on the part of ETPI but
a contractual obligation it has undertaken. Moreover, the continuous conferment of
bonuses by ETPI to the union members from 1998 to 2002 by virtue of the Side
Agreements evidently negates its argument that the giving of the subject bonuses is a
management prerogative.
From the foregoing, ETPI cannot insist on business losses as a basis for disregarding its
undertaking. It is manifestly clear that although it incurred business losses of
₱149,068,063.00 in the year 2000, it continued to distribute 14th, 15th and 16th month
bonuses for said year. Notwithstanding such huge losses, ETPI entered into the 2001-
2004 CBA Side Agreement on September 3, 2001 whereby it contracted to grant the
subject bonuses to ETEU in no uncertain terms. ETPI continued to sustain losses for the
succeeding years of 2001 and 2002 in the amounts of ₱348,783,013.00 and ₱315,474,444.00,
respectively. Still and all, this did not deter it from honoring the bonus provision in the
Side Agreement as it continued to give the subject bonuses to each of the union members
in 2001 and 2002 despite its alleged precarious financial condition. Parenthetically, it
must be emphasized that ETPI even agreed to the payment of the 14th, 15th and 16th month
bonuses for 2003 although it opted to defer the actual grant in April 2004. All given,
business losses could not be cited as grounds for ETPI to repudiate its obligation under
the 2001-2004 CBA Side Agreement.
The Court finds no merit in ETPIs contention that the bonus provision confirms the grant
of the subject bonuses only on a single instance because if this is so, the parties should
have included such limitation in the agreement. Nowhere in the Side Agreement does it
say that the subject bonuses shall be conferred once during the year the Side Agreement
was signed.
Granting arguendo that the CBA Side Agreement does not contractually bind petitioner
ETPI to give the subject bonuses, nevertheless, the Court finds that its act of granting the
same has become an established company practice such that it has virtually become part
of the employee’s salary or wage. A bonus may be granted on equitable consideration
when the giving of such bonus has been the company’s long and regular practice. In
Philippine Appliance Corporation v. Court of Appeals, it was pronounced:
To be considered a regular practice, however, the giving of the bonus

should have been done over a long period of time, and must be shown to have
been consistent and deliberate. The test or rationale of this rule on long practice
Page 309 of 1699
requires an indubitable showing that the employer agreed to continue giving the
benefits knowing fully well that said employees are not covered by the law
requiring payment thereof.
The records show that ETPI, aside from complying with the regular 13th month bonus,
has been further giving its employees 14th month bonus every April as well as 15th and 16th
month bonuses every December of the year, without fail, from 1975 to 2002 or for 27 years
whether it earned profits or not. The considerable length of time ETPI has been giving
the special grants to its employees indicates a unilateral and voluntary act on its part to
continue giving said benefits knowing that such act was not required by law. Accordingly,
a company practice in favor of the employees has been established and the payments
made by ETPI pursuant thereto ripened into benefits enjoyed by the employees.
The giving of the subject bonuses cannot be peremptorily withdrawn by ETPI without
violating Article 100 of the Labor Code:
Art. 100. Prohibition against elimination or diminution of benefits. Nothing

in this Book shall be construed to eliminate or in any way diminish supplements,
or other employee benefits being enjoyed at the time of promulgation of this
Code.
The rule is settled that any benefit and supplement being enjoyed by the employees
cannot be reduced, diminished, discontinued or eliminated by the employer. The
principle of non-diminution of benefits is founded on the constitutional mandate to
protect the rights of workers and to promote their welfare and to afford labor full
protection.
Interestingly, ETPI never presented countervailing evidence to refute ETEUs claim that
the company has been continuously paying bonuses since 1975 up to 2002 regardless of
its financial state. Its failure to controvert the allegation, when it had the opportunity
and resources to do so, works in favor of ETEU. Time and again, it has been held that
should doubts exist between the evidence presented by the employer and the employee,
the scales of justice must be tilted in favor of the latter.
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
Page 310 of 1699

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.
Page 311 of 1699
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. CAaffirmed 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 specifiedentries/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
Page 312 of 1699
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
Page 313 of 1699
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
Philippine Geothermal, Inc. Employees Union vs. Unocal Philippines, Inc. (now
known as Chevron Geothermal Philippines Holdings, inc.)
G.R. No. 190187
September 28, 2016
Facts:
This resolves a Petition for Review on Certiorari1 filed by Philippine Geothermal, Inc.
Employees Union (Union) assailing the Decision dated July 23, 2009 and the
Resolution dated November 9, 2009 of the Court of Appeals Eighth Division in Unocal
Philippines, Inc. (now known as Chevron Geothermal Philippines Holdings, inc.) v. The
Philippine Geothermal, Inc. Employees Union. The assailed Decision granted Unocal
Philippines, Inc.'s (Unocal Philippines) appeal and reversed the Secretary of Labor's
award of separation benefits to the Union. The award was granted on the premise that
the merger of Unocal Philippines' parent corporation with another corporation impliedly
terminated the employment of the Union's members. The assailed Resolution denied the
Union's Motion for Reconsideration.
Page 314 of 1699

Issue:
Whether or not the Merger Agreement executed by Unocal Corporation, Blue Merger,
and Chevron resulted in the termination of the employment of petitioner's members.
Ruling:
No.
The effects of a merger are provided under Section 80 of the Corporation Code. Although
this provision does not explicitly state the merger's effect on the employees of the
absorbed corporation, Bank of the Philippine Islands v. BPI Employees Union-Davao
Chapter-Federation of Unions in BPI Unibank has ruled that the surviving corporation
automatically assumes the employment contracts of the absorbed corporation, such that
the absorbed corporation's employees become part of the manpower complement of the
surviving corporation.
The rationale for this ruling is anchored on the nature and effects of a merger as provided
under Section 80 of the Corporation Code, as well as the policies on work and labor
enshrined in the Constitution.
To reiterate, Section 80 of the Corporation Code provides that the surviving corporation
shall possess all the rights, privileges, properties, and receivables due of the absorbed
corporation. Moreover, all interests of, belonging to, or due to the absorbed corporation
"shall be taken and deemed to be transferred to and vested in such surviving or
consolidated corporation without further act or deed." The surviving corporation
likewise acquires all the liabilities and obligations of the absorbed corporation as if it had
itself incurred these liabilities or obligations.
This acquisition of all assets, interests, and liabilities of the absorbed corporation
necessarily includes the rights and obligations of the absorbed corporation under its
employment contracts. Consequently, the surviving corporation becomes bound by the
employment contracts entered into by the absorbed corporation. These employment
contracts are not terminated. They subsist unless their termination is allowed by law.
The merger of Unocal Corporation with Blue Merger and Chevron does not result in an
implied termination of the employment of petitioner's members. Assuming respondent
is a party to the merger, its employment contracts are deemed to subsist and continue
by "the combined operation of the Corporation Code and the Labor Code under the
backdrop of the labor and social justice provisions of the Constitution."
Page 315 of 1699
In this case, there is no dismissal of the employees on account of the merger. Petitioner
does not deny that respondent actually continued its normal course of operations after
the merger, and that its members, as employees, resumed their work with their tenure,
salaries, wages, and other benefits intact. Petitioner was even able to execute with
respondent, after the merger, the Collective Bargaining Agreement from which it anchors
its claims.
Given these circumstances, petitioner is not entitled to separation pay. Although the
policy of the state is to rule in favor of labor in light of the social justice provisions under
the Constitution, this Court cannot unduly trample upon the rights of management,
which are likewise entitled to respect in the interest of fair play.
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
Page 316 of 1699

his 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.
Issu
e:
Whether the basis for the award for dismissal includes benefits and
allowances
Rulin
g:
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
Page 317 of 1699
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
Page 318 of 1699

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.
Issu
e:
Whether the CA was correct in granting Paz financial assistance
Rulin
g:
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.
Page 21 of 1699
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.
PHILIPPINE CARPET MANUFACTURING CORPORATION, PACIFIC CARPET

MANUFACTURING CORPORATION, MR. PATRICIO LIM and MR. DAVID LIM
vs. IGNACIO B. TAGYAMON,PABLITO L. LUNA, FE B. BADA YOS, GRACE B.
MARCOS, ROGELIO C. NEMIS, ROBERTO B. ILAO, ANICIA D. DELA CRUZ and
CYNTHIA L. COMANDAO
G.R. No. 191475, December 11, 2013
J. PERALTA
The respondents were dismissed by the petitioner following a retrenchment and

voluntary retirement program of the latter. Having similar instances with the Philcea Case,
the Court applied Stare Decisis stating that just like the union members in the Philcea case,
respondents Tagyamon, Luna, Badayos, Dela Cruz, and Comandao received similarly worded
memorandum of dismissal effective April 15, 2004 based on the same ground of slump in the
market demand for the company’s products. As such, they are similarly situated in all aspects
as the union members. With respect to respondents Marcos, Nemis and Ilao, although they
applied for voluntary retirement, the same was not accepted by petitioner. Instead, it issued
notice of termination dated March 6, 2004 to these same employees. And while it is true that
petitioner paid them separation pay, the payment was in the nature of separation and not
retirement pay. In other words, payment was made because of the implementation of the
retrenchment program and not because of retirement. As their application for availing of the
company’s voluntary retirement program was based on the wrong premise, the intent to retire
was not clearly established, or rather that the retirement is involuntary. Thus, they shall be
considered discharged from employment. Consequently, they shall be treated as if they are in
the same footing as the other respondents herein and the union members in the Philcea case.
Facts:
Petitioner Philippine Carpet Manufacturing Corporation (PCMC) is a corporation

registered in the Philippines engaged in the business of manufacturing wool and yarn
carpets and rugs. Respondents were its regular and permanent employees, but were
affected by petitioner’s retrenchment and voluntary retirement programs. On March 15,
2004, Tagyamon, Luna, Badayos, Dela Cruz, and Comandao received a uniformly worded
Memorandum of dismissal. As to Marcos, Ilao, and Nemis, they claimed that they were
dismissed effective March 31, 2004, together with fifteen (15) other employees on the
ground of lack of market/slump in demand. PCMC, however, claimed that they availed of
the company’s voluntary retirement program and, in fact, voluntarily executed their
respective Deeds of Release, Waiver, and Quitclaim.
Claiming that they were aggrieved by PCMC’s decision to terminate their employment,
respondents filed separate complaints for illegal dismissal against PCMC. They explained
that PCMC did not, in fact, suffer losses shown by its acts prior to and subsequent to their
termination. They also insisted that their acceptance of separation pay and signing of
quitclaim is not a bar to the pursuit of illegal dismissal case.
PCMC, for its part, defended its decision to terminate the services of respondents being a
necessary management prerogative. It pointed out that as an employer, it had no obligation
to keep in its employ more workers than are necessary for the operation of his business.
Thus, there was an authorized cause for dismissal. Petitioners also stressed that
respondents belatedly filed their complaint as they allowed almost three years to pass
making the principle of laches applicable.
Labor Arbiter (LA) rendered a Decision dismissing the complaint for lack of merit. The LA
found no flaw in respondents’ termination as they voluntarily opted to retire and were
subsequently re-employed on a contractual basis then regularized, terminated from
employment and were paid separation benefits. On appeal, the National Labor Relations
Commission (NLRC) sustained the LA decision. CA reversed the earlier decisions of the LA
and the NLRC, the CA refused to apply the principle of laches, because the case was
instituted prior to the expiration of the prescriptive period set by law which is four years.
Issue:
Whether the case of Philcea is applicable in the case following the doctrine of Stare Decisis
Ruling:
This case and the Philcea case involve the same period which is March to April 2004; the
issuance of Memorandum to employees informing them of the implementation of the cost
reduction program; the implementation of the voluntary retirement program and
retrenchment program, except that this case involves different employees; the execution of
deeds of release, waiver, and quitclaim, and the acceptance of separation pay by the affected
employees.
The illegality of the basis of the implementation of both voluntary retirement and
retrenchment programs of petitioners had been thoroughly ruled upon by the Court in
the Philcea case. It discussed the requisites of both retrenchment and redundancy as
authorized causes of termination and that petitioners failed to substantiate them. In
ascertaining the bases of the termination of employees, it took into consideration
petitioners’ claim of business losses; the purchase of machinery and equipment after the
termination, the declaration of cash dividends to stockholders, the hiring of 100 new
employees after the retrenchment, and the authorization of full blast overtime work for six
hours daily. These, said the Court, are inconsistent with petitioners’ claim that there was a
slump in the demand for its products which compelled them to implement the termination
programs. In arriving at its conclusions, the Court took note of petitioners’ net sales, gross
and net profits, as well as net income. The Court, thus, reached the conclusion that the
retrenchment effected by PCMC is invalid due to a substantive defect.
Just like the union members in the Philcea case, respondents Tagyamon, Luna, Badayos,
Dela Cruz, and Comandao received similarly worded memorandum of dismissal effective
April 15, 2004 based on the same ground of slump in the market demand for the company’s
products. As such, they are similarly situated in all aspects as the union members. With
respect to respondents Marcos, Nemis and Ilao, although they applied for voluntary
retirement, the same was not accepted by petitioner. Instead, it issued notice of
termination dated March 6, 2004 to these same employees. And while it is true that
petitioner paid them separation pay, the payment was in the nature of separation and not
retirement pay. In other words, payment was made because of the implementation of the
retrenchment program and not because of retirement. As their application for availing of
the company’s voluntary retirement program was based on the wrong premise, the intent
to retire was not clearly established, or rather that the retirement is involuntary. Thus, they
shall be considered discharged from employment. Consequently, they shall be treated as if
they are in the same footing as the other respondents herein and the union members in
the Philcea case.
REYNALDO HAYAN MOYA

vs. FIRST SOLID RUBBER INDUSTRIES, INC.
G.R. No. 184011, September 18, 2013
J. PEREZ
In the case of supervisors or personnel occupying positions of responsibility, does loss
of trust justify termination. Loss of confidence as a just cause for termination of employment
is premised on the fact that an employee concerned holds a position of trust and confidence.
This situation holds where a person is entrusted with confidence on delicate matters, such as
the custody, handling, or care and protection of the employer’s property. But, in order to
constitute a just cause for dismissal, the act complained of must be "work-related" such as
would show the employee concerned to be unfit to continue working for the employer.
Facts:
Reynaldo Moya (Moya), was hired by First Solid Rubber Industries (FSRI), a business
engaged in manufacturing of tires and rubbers, as a machine operator. He was later on
promoted as head of the Tire Curing Department of the company however an incident
about an under curing of tires had happened within his department leading to the damage
of five tires. Moya was required to explain about the incident and stated that the damage
was caused by machine failure and the incident was without any fault of the operator.
Despite his explanation, he was terminated by the company through. From the foregoing,
he prayed that payment of backwages, separation pay, moral damages and exemplary
damages be adjudged in his favor due to the illegal dismissal he suffered from the company.
FSRI, in their defense, holds that Moya’s dismissal is valid and maintained that his
severance from the company was due to a valid exercise of management prerogative.
Labor Arbiter (LA) ruled in favor of FSRI, finding sufficient and valid grounds to dismiss
Moya for concealing and lying to the company. However, since the employment was
already strained and Moya was no longer seeking to be reinstated, LA decided that it was
for the best interest of both parties to award instead a separation pay of one (1) month
salary for every year of credited service. NLRC affirmed the decision. CA reversed the
decision LA and NLRC. Hence, the petition.
Issue:
Whether Moya is entitled to separation pay based on his length of service.
Ruling:
Petitioner is not entitled to separation pay. Payment of separation pay cannot be justified
by his length of service.
It must be stressed that Moya was not an ordinary rank-and-file employee. He was holding
a supervisory rank being an Officer-in-Charge of the Tire Curing Department. The position,
naturally one of trust, required of him abiding honesty as compared to ordinary rank-and-
file employees. When he made a false report attributing the damage of five tires to machine
failure, he breached the trust and confidence reposed upon him by the company.
Following the ruling in The Coca-Cola Export Corporation v. Gacayan, the employers have
a right to impose a penalty of dismissal on employees by reason of loss of trust and
confidence. More so, in the case of supervisors or personnel occupying positions of
responsibility, does loss of trust justify termination. Loss of confidence as a just cause for
termination of employment is premised on the fact that an employee concerned holds a
position of trust and confidence. This situation holds where a person is entrusted with
confidence on delicate matters, such as the custody, handling, or care and protection of the
employer’s property. But, in order to constitute a just cause for dismissal, the act
complained of must be "work-related" such as would show the employee concerned to be
unfit to continue working for the employer.
The foregoing as viewpoint, the right of First Solid to handle its own affairs in managing its
business must be respected. The clear consequence is the denial of the grant of separation
pay in favor of Moya.
Moya’s dismissal is based on one of the grounds under Art. 282 of the Labor Code which is
willful breach by the employee of the trust reposed in him by his employer. Also, he is
outside the protective mantle of the principle of social justice as his act of concealing the
truth from the company is clear disloyalty to the company which has long employed him.
INTEGRATED MIRCOELECTRONICS, INC. vs. ADONIS A. PIONILLA
G.R. No. 200222. August 28, 2013
J. Perlas-Bernabe
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 dismissal of the employee would be too harsh of a penalty; and (b) that the
employer was in good faith in terminating the employee.
Facts:
On November 14, 1996, Pionilla was hired by IMI as its production worker. On May
5, 2005, Pionilla received a notice from IMI requiring him to explain the incident which
occurred the day before where he was seen escorting a lady to board the company shuttle
bus at the Alabang Terminal. It was reported by the bus marshall that the lady was wearing
a company identification card (ID) – which serves as a free pass for shuttle bus passengers
– even if she was just a job applicant at IMI. In this regard, Pionilla admitted that he lent
his ID to the lady who turned out to be his relative. He further intimated that he risked
lending her his ID to save on their transportation expenses. Nevertheless, he apologized for
his actions.
IMI found Pionilla guilty of violating Article 6.12 of the Company Rules and Regulations
(CRR) which prohibits the lending of one’s ID since the same is considered a breach of its
security rules and carries the penalty of dismissal. Subsequently, or on August 17, 2005,
Pionilla received a letter dated August 16, 2005 informing him of his dismissal from service.
Three days after, he filed a complaint for illegal dismissal with damages against IMI.
The Labor Arbiter (LA) rendered a Decision finding Pionilla to have been illegally dismissed
by IMI and, as such, ordered the latter to reinstate him to his former position and to pay
him backwages. On appeal, the NLRC reversed the LA’s ruling, finding Pionilla’s dismissal
to be valid. The CA rendered a Decision granting Pionilla’s petition. It found that while
IMI’s regulations on company IDs were reasonable, the penalty of dismissal was too harsh
and not commensurate to the misdeed committed. Hence, this petition.
Issue:
Whether or not the award to Pionilla of reinstatement and full backwages is excessive and
unfair, and contrary to existing principles of law and jurisprudence
Ruling:
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 dismissal of the employee would be too harsh of a penalty; and (b) that the
employer was in good faith in terminating the employee. The aforesaid exception was
recently applied in the case of Pepsi-Cola Products, Phils., Inc. v. Molon, wherein the Court,
citing several precedents, held as follows:
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 Employmentthe 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.
Likewise, in the case of Itogon-Suyoc Mines, Inc. v. National Labor

Relations Commission, the Court pronounced that “the 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.”
The factual similarity of these cases to Remandaban’s situation deems it

appropriate to render the same disposition.
In this case, the Court observes that: (a) the penalty of dismissal was too harsh of a
penalty to be imposed against Pionilla for his infractions; and (b) IMI was in good
faith when it dismissed Pionilla as his dereliction of its policy on ID usage was honestly
perceived to be a threat to the company's security. In this respect, since these
concurring circumstances trigger the application of the exception to the rule on
backwages as enunciated in the above-cited cases, the Court finds it proper to accord
the same disposition and consequently directs the deletion of the award of back wages
in favor of Pionilla, notwithstanding the illegality of his dismissal.
APO CHEMICAL MANUFACTURING CORPORATION and MICHAEL
CHENG, Petitioners, v.RONALDO A. BIDES, Respondent
G.R. No. 186002 : September 19, 2012
FACTS:
In January 1992, petitioner Apo Chemical Manufacturing Corporation (ACMC) hired

respondent Ronaldo A. Bides (Bides). In his eleven (11) years of service, Bides held
various positions in ACMC. Initially, he served as a "laminator," then becoming a stay-
in employee sometime in October 2000, before working as a "packager" in January
2003.
On May 14, 2003, Matthew Cheng (Matthew), the plant manager of ACMC, sent a
written memorandum requiring Bides to explain in writing within forty eight (48)
hours his refusal to sign the disciplinary form in connection with his alleged
infractions of loitering in the comfort room for about five (5) to eight (8) minutes, two
(2) to three (3) times a day, on March 5, 6, 7, 8, 9 and 10, 2003 under pain of revocation
of his housing privileges.
On the same day, instead of submitting a written explanation in compliance with the
memorandum, Bides orally explained to William Uy (William), another plant manager
of ACMC, his justification for his alleged infractions. First, Bides questioned the delay
of more than two (2) months in requiring him to explain the alleged infraction. He
then argued that urinating, as he was "nababalisawsaw" at the time, was not an
infraction. He conveyed his willingness to have his housing privileges forfeited as
stated in the memorandum.
On May 19, 2003, Matthew allegedly confronted Bides and prohibited him from
reporting for work the following day, as he would be terminated from the company.
On May 20, 2003, the day he was supposed to be dismissed from the service, Bides
instituted a complaint for illegal dismissal, with prayer for payment of pro-rata 13th
month pay, backwages and separation pay, and with claim for damages against ACMC.
Bides alleged that ACMC neither formally charged him with any infraction nor served
him any written notice of his termination.
ISSUE:
Whether or not strained relations exist between ACMC and Bides to bar the latter’s
reinstatement and justify the award of separation pay.
RULING:
Yes.
As the records bear out, the LA found that patent animosity existed between ACMC
and Bides considering the confrontation that took place between the latter and
Matthew. This confrontation coupled with Bides refusal to be reinstated led to the LAs
finding of "strained relations" necessitating an award of separation pay in lieu of
reinstatement. The NLRC, on the other hand, deleted the said award for lack of factual
basis. The CA reinstated the LAs finding of "strained relations" and explained that too
much enmity had developed between ACMC and Bides that necessarily barred the
latter’s reinstatement.
On this point, the Court agrees with the LA.
The Court is well aware 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.
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. Moreover, the doctrine of strained relations has been
made applicable to cases where the employee decides not to be reinstated and
demands for separation pay.
In the present case, Bides has consistently maintained, from the proceedings in the LA
up to the CA, his refusal to be reinstated due to his fear of reprisal which he could
experience as a consequence of his return. By doing so, Bides unequivocally foreclosed
reinstatement as a relief.
In Polyfoam-RGC International Corporation v. Concepcion, the Court ruled that "if

reinstatement is no longer feasible x x x, separation pay equivalent to one month salary
for every year of service shall be awarded as an alternative."
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.
UNILEVER PHILIPPINES vs. MARIA RUBY M. RIVERA

G.R. No. 201701, June 03, 2013
J. Mendoza
As a general rule, an employee who has been dismissed for any of the just causes
enumerated under Article 282 of the Labor Code is not entitled to a separation pay. In
exceptional cases, however, the Court has granted separation pay to a legally dismissed
employee as an act of “social justice” or on “equitable grounds.” In both instances, it is
required that the dismissal (1) was not for serious misconduct; and (2) did not reflect on
the moral character of the employee. In this case, the transgressions were serious offenses
that warranted employees’ dismissal from employment.Hence, employee is not entitled to
separation pay.
Facts:
Respondent was employed by petitioner as its Area Activation Executive for Area
9. Petitioner enforces a strict policy that every trade activity must be accompanied by a
Trade Development Program (TDP) and that the allocated budget for a specific activity
must be used for such activity only. Sometime in 2007, petitioner‘s internal auditor
conducted a random audit and found out that there were fictitious billings and fabricated
receipts amounting to P11,200,000.00. It was also discovered that some funds were
diverted from the original intended projects. Upon further verification, the fund
deviations were upon the instruction of respondent. On July 16, 2007, petitioner issued a
show-cause notice to respondent asking her to explain the following charges, to wit: (a)
Conversion and Misappropriation of Resources; (b) Breach of Fiduciary Trust; (c) Policy
Breaches; and (d) Integrity Issues. Responding through an email, dated July 16, 2007,
respondent admitted the fund diversions, but explained that such actions were mere
resourceful utilization of budget because of the difficulty of procuring funds from the
head office. She insisted that the diverted funds were all utilized in the company‘s
promotional ventures in her area of coverage. Through a letter, dated August 23, 2007,
petitioner found respondent guilty of serious breach of the company‘s Code of Business
Principles compelling it to sever their professional relations. In a letter, dated September
20, 2007, respondent asked for reconsideration and requested petitioner to allow her to
receive retirement benefits having served the company for fourteen (14) years already.
Petitioner denied her request, reasoning that the forfeiture of retirement benefits was a
legal consequence of her dismissal from work.
On Oct. 19, 2007, respondent filed a complaint for illegal dismissal and other
monetary claims against petitioner Unilever. The LA dismissed her complaint for lack of
merit and denied her claim for retirement benefits. When the case reached the National
Labor Relations Commission (NLRC), Unilever was ordered to pay respondent P30,000
as nominal damages, retirement benefits and separation pay. Upon a motion for
reconsideration filed by Unilever, the NLRC, in a resolution of March 31, 2009, modified
its ruling by deleting the award of separation pay and reducing the nominal damages
from P30,000 to P20,000 but affirmed the award of retirement benefits. Unilever elevated
the case to the Court of Appeals (CA), The CA deleted the award for retirement benefit
but awarded separation pay as a measure of social justice.
Issue:
1. Whether or not respondent, a validly dismissed employee, is entitled to an award

of separation pay
2. Whether or not respondent is entitled to nominal damages
Ruling:
As a general rule, an employee who has been dismissed for any of the just causes
enumerated under Article 282 of the Labor Code is not entitled to a separation pay. In
exceptional cases, however, the Court has granted separation pay to a legally dismissed
employee as an act of “social justice” or on “equitable grounds.” In both instances, it is
required that the dismissal (1) was not for serious misconduct; and (2) did not reflect on
the moral character of the employee.
In this case, Rivera was dismissed from work because she intentionally
circumvented a strict company policy, manipulated another entity to carry out her
instructions without the company’s knowledge and approval, and directed the diversion
of funds, which she even admitted doing under the guise of shortening the laborious
process of securing funds for promotional activities from the head office. These
transgressions were serious offenses that warranted her dismissal from employment and
proved that her termination from work was for a just cause. Hence, she is not entitled to
separation pay.
More importantly, Rivera did not appeal the March 31, 2009 ruling of the NLRC
disallowing the award of separation pay to her. It was Unilever who elevated the case to
the CA. It is axiomatic that a party who does not appeal, or file a petition for certiorari,
is not entitled to any affirmative relief.
Due process prevents the grant of additional awards to parties who did not appeal.
An appellee who is not an appellant may assign errors in his brief where his purpose is to
maintain the judgment, but he cannot seek modification or reversal of the judgment or
claim affirmative relief unless he has also appealed. It was, therefore, erroneous for the
CA to grant an affirmative relief to Rivera who did not ask for it.
Procedural due process must be observed in terminating an employee which are:

(1) first written notice [of show-cause]; (2) hearing or conference; and (3) second written
notice [of termination]; otherwise an employer is liable for nominal damages to the
employee.
In this case, Unilever was not direct and specific in its first notice to Rivera. The
words it used were couched in general terms and were in no way informative of the
charges against her that may result in her dismissal from employment. Evidently, there
was a violation of her right to statutory due process warranting the payment of indemnity
in the form of nominal damages.
UNIVERSAL ROBINA CORPORATION AND LANCE Y. GOKONGWEI vs.

WILFREDO Z. CASTILLO
G.R. No. 189686, July 10, 2013
J. Perez
An employee who has been dismissed for a just cause under Article 282 of the
Labor Code is not entitled to separation pay. Labor adjudicatory officials and the CA
must demur the award of separation pay based on social justice when an employee’s
dismissal is based on serious misconduct or willful disobedience; gross and habitual neglect
of duty; fraud or willful breach of trust; or commission of a crime against the person of the
employer or his immediate family— grounds under Art. 282 of the Labor Code that sanction
dismissals of employees.
Facts:
Respondent Wilfredo Z. Castillo (Castillo) was hired by petitioner Universal

Robina Corporation (URC) as a truck salesman. He rose from the ranks and became a
Regional Sales Manager, until his dismissal on 12 January 2006. Respondent was
dismissed as regional sales manager of URC for just cause, specifically, for loss of trust
and confidence under Article 282. He was found to have accepted gift checks from a
supplier.
The labor arbiter rendered a decision declaring respondent to have been illegally
dismissed and ordered the payment of backwages and separation pay. On appeal, the
National Labor Relations Commission (NLRC) found the appeal meritorious and
reversed the decision of the labor arbiter. This prompted respondent to file a petition for
certiorari before the Court of Appeals, which upheld his dismissal but awarded him
separation pay “as a form of equitable relief.” Hence, this petition.
Issue:
Whether or not a validly dismissed employee is entitled to separation pay
Ruling:
The award of separation pay is authorized in the situations dealt with in Article
283 and 284 of the Labor Code, but not in terminations of employment based on
instances enumerated in Article 282.
Central Philippines Bandag Retreaders, Inc. cautioned labor tribunals in

indiscriminately awarding separation pay as a measure of social justice, in this wise:
“x xx [L]abor adjudicatory officials and the CA must demur the award of

separation pay based on social justice when an employee’s dismissal is based on serious
misconduct or willful disobedience; gross and habitual neglect of duty; fraud or willful
breach of trust; or commission of a crime against the person of the employer or his
immediate family— grounds under Art. 282 of the Labor Code that sanction dismissals
of employees. They must be most 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. The commitment of the Court
to the cause of labor should not embarrass us from sustaining the employers when they
are right, as here. In fine, we should be more cautious in awarding financial assistance to
the undeserving and those who are unworthy of the liberality of the law.”
Respondent has committed acts constituting willful breach of trust and

confidence reposed on him by URC based on the facts established by the Court of
Appeals.
In Bank of the Philippine Islands vs. NLRC and Arambulo, we ruled that an
employee who has been dismissed for a just cause under Article 282 of the l.abor
Code is not entitled to separation pay. The complainant therein was likewise
dismissed on the ground of loss of trust and confidence. Applying that rule to the
instant case, we here hold that respondent is not entitled to separation pay.
SEPARATION PAY
MA. CORINA C. JIAO, ET AL v NATIONAL LABOR RELATIONS COMMISSION, ET AL.

G.R. No. 182331, April 18, 2012
The Facts
The petitioners were regular employees of the Philippine Banking Corporation

(Philbank), each with at least ten years of service in the company. Pursuant to its
Memorandum dated August 28, 1970, Philbank established a Gratuity Pay Plan (Old Plan)
for its employees. The Old Plan provided:
1. Any employee who has reached the compulsory retirement age of

60 years, or who wishes to retire or resign prior to the attainment of such
age or who is separated from service by reason of death, sickness or other
causes beyond his/her control shall for himself or thru his/her heirs file
with the personnel office an application for the payment of benefits under
the plan[.]
Section 1 laid down the benefits to which the employee would be entitled, to wit:
Section 1
Benefits
1.1 The gratuity pay of an employee shall be an amount equivalent

to one-month salary for every year of credited service, computed on the
basis of last salary received.
1.2 An employee with credited service of 10 years or more, shall be
entitled to and paid the full amount of the gratuity pay, but in no case shall
the gratuity pay exceed the equivalent of 24 months, or two years, salary.
March 8, 1991, Philbank implemented a new Gratuity Pay Plan (New Gratuity Plan). In
particular, the New Gratuity Plan stated thus:
x x x An Employee who is involuntarily separated from the service

by reason of death, sickness or physical disability, or for any authorized
cause under the law such as redundancy, or other causes not due to his
own fault, misconduct or voluntary resignation, shall be entitled to either
one hundred percent (100%) of his accrued gratuity benefit or the actual
benefit due him under the Plan, whichever is greater.
In February 2000, Philbank merged with Global Business Bank, Inc. (Globalbank), with
the former as the surviving corporation and the latter as the absorbed corporation, but
the bank operated under the name Global Business Bank, Inc. As a result of the merger,
complainants’ respective positions became redundant. A Special Separation Program
(SSP) was implemented and the petitioners were granted a separation package equivalent
to one and a half months pay (or 150% of one months salary) for every year of service
based on their current salary. Before the petitioners could avail of this program, they
were required to sign two documents, namely, an Acceptance Letter and a Release,
Waiver, Quitclaim (quitclaim).
As their positions were included in the redundancy declaration, the petitioners availed
of the SSP, signed acceptance letters and executed quitclaims in Globalbank’s favor in
consideration of their receipt of separation pay equivalent to 150% of their monthly
salaries for every year of service.
In August 2002, respondent Metropolitan Bank and Trust Company (Metrobank)

acquired the assets and liabilities of Globalbank through a Deed of Assignment of Assets
and Assumption of Liabilities.
Subsequently, the petitioners filed separate complaints for non-payment of separation

pay with prayer for damages and attorneys fees before the National Labor Relations
Commission (NLRC).
The petitioners asserted that, under the Old Plan, they were entitled to an additional
50% of their gratuity pay on top of 150% of one months salary for every year of service
they had already received. They insisted that 100% of the 150% rightfully belongs to them
as their separation pay. Thus, the remaining 50% was only half of the gratuity pay that
they are entitled to under the Old Plan. They argued that even if the New Gratuity Plan
were to be followed, the computation would be the same, since Section 10.1 of the New
Gratuity Plan provided that:
10.1 Employees who have attained a regular status as of March 8, 1991 who
are covered by the Old Gratuity Plan and are now covered by this Plan shall
be entitled to which is the higher benefit between the two Plans. Double
recovery from both plans is not allowed.
The petitioners further argued that the quitclaims they signed should not bar them from
claiming their full entitlement under the law. They also claimed that they were defrauded
into signing the same without full knowledge of its legal implications.
On the other hand, Globalbank asserted that the SSP should prevail and the petitioners
were no longer entitled to the additional 50% gratuity pay which was already paid, the
same having been included in the computation of their separation pay. It maintained
further that the waivers executed by the petitioners should be held binding, since these
were executed in good faith and with the latter’s full knowledge and understanding.
Meanwhile, Metrobank denied any liability, citing the absence of an employment

relationship with the petitioners. It argued that its acquisition of the assets and liabilities
of Globalbank did not include the latters obligation to its employees. Moreover,
Metrobank pointed out that the petitioners employment with Globalbank had already
been severed before it took over the latters banking operations.
Issues
How much separation pay is the petitioners entitled to?

Whether the acceptance letters and quitclaims that the petitioners executed are valid.
Ruling
The petitioners’ receipt of separation pay

equivalent to their one and a half months
salary for every year of service as provided
in the SSP and the New Gratuity Plan more
than sufficiently complies with the Labor
Code, which only requires the payment of
separation pay at the rate of one month
salary for every year of service.
The petitioners do not question the legality of their separation from the service or the
basis for holding their positions redundant. What they raise is their entitlement to
gratuity pay, as provided in the Old Plan, in addition to what they received under the
SSP. According to the petitioners, they are entitled to separation pay at a rate of one
month salary for every year of service under the Labor Code and gratuity pay at a rate of
one month salary for every year of service whether under the Old Plan or the New
Gratuity Plan. Since what they received as separation pay was equivalent to only 150% or
one and one-half of their monthly salaries for every year of service, the respondents are
still liable to pay them the deficiency equivalent to one-half of their monthly salary for
every year of service.
We disagree.
The New Gratuity Plan hasrepealed the Old Plan.
It is clear from the provisions of Section 8 of the New Gratuity Plan that the Old Plan has
been revoked or superseded. Thus:
SECTION 8
INTEGRATION OF SOCIAL LEGISLATION,
CONTRACTS, ETC.
8.1 This Plan is not intended to duplicate or cause the double

payment of similar or analogous benefits provided for under existing labor
and social security laws. Accordingly, benefits under this Plan shall be
deemed integrated with and in lieu of (i) statutory benefits under the New
Labor Code and Social Security Laws, as now or hereafter amended[;] and
(ii) analogous benefits granted under present or future collective
bargaining agreements, and other employee benefit plans providing
analogous benefits which may be imposed by future legislations. In the
event the benefits due under the Plan are less than those due and
demandable under the provisions of the New Labor Code and/or present
or future Collective Bargaining Agreements and/or future plans of similar
nature imposed by law, the Fund shall respond for the difference.
Globalbanks right to replace the Old Plan and the New Gratuity Plan is within legal
bounds as the terms thereof are in accordance with the provisions of the Labor Code and
complies with the minimum requirements thereof. Contrary to the petitioners claim,
they had no vested right over the benefits under the Old Plan considering that
none of the events contemplated thereunder occurred prior to the repeal thereof
by the adoption of the New Gratuity Plan. Such right accrues only upon their
separation from service for causes contemplated under the Old Plan and the petitioners
can only avail the benefits under the plan that is effective at the time of their dismissal.
In this case, when the merger and the redundancy program were implemented, what was
in effect were the New Gratuity Plan and the SSP; the petitioners cannot, thus, insist on
the provisions of the Old Plan which is no longer existent.
The SSP did not revoke or supersede the

New Gratuity Plan.
On the other hand, the issuance of the SSP did not result to the repeal of the New Gratuity
Plan. As the following provision of the SSP shows, the terms of the New Gratuity Plan
had been expressly incorporated in the SSP and should, thus, be implemented alongside
the SSP:
II. Separation Pay Package
Affected employees are entitled to the following tax free:
a. Gratuity Benefits which they are entitled to under the respective

retirement plans. The bank shall give a premium by rounding up the benefit
to an equivalent of 1.5 months salary per every year of service based on their
salary as of separation date. (emphasis supplied)
The SSP was not intended to supersede the New Gratuity Plan. On the contrary, the SSP
was issued to make the benefits under the New Gratuity Plan available to employees
whose positions had become redundant because of the merger between Philbank and
Globalbank, subject to compliance with certain requirements such as age and length of
service, and to improve such benefits by increasing or rounding it up to an amount
equivalent to the affected employees one and a half monthly salary for every year of
service. In other words, the benefits to which the redundated employees are entitled to,
including the petitioners, are the benefits under the New Gratuity Plan, albeit increased
by the SSP.
Considering that the New Gratuity Plan still stands and has not been revoked by the SSP,
does this mean that the petitioners can claim the benefits thereunder in addition to or
on top of what is required under the Article 283 of the Labor Code?
For as long as the minimum requirements

of the Labor Code are met, it is within the
management prerogatives of employers to
come up with separation packages that
will be given in lieu of what is provided
under the Labor Code.
A direct reference to the New Gratuity Plan reveals the contrary. The above-quoted
Section 8 of the New Gratuity Plan expressly states that the benefits under this Plan shall
be deemed integrated with and in lieu of (i) statutory benefits under the New Labor Code
and Social Security Laws, as now or hereafter amended and that [t]his Plan is not
intended to duplicate or cause the double payment of similar or analogous benefits
provided for under existing labor and security laws.
Article 283 of the Labor Code provides only the required minimum amount of separation
pay, which employees dismissed for any of the authorized causes are entitled to receive.
Employers, therefore, have the right to create plans, providing for separation pay in an
amount over and above what is imposed by Article 283. There is nothing therein that
prohibits employers and employees from contracting on the terms of employment, or
from entering into agreements on employee benefits, so long as they do not violate the
Labor Code or any other law, and are not contrary to morals, good customs, public order,
or public policy. As this Court held in a case:
[E]ntitlement to benefits consequent thereto are not limited to

those provided by said provision of law. Otherwise, the provisions of
collective bargaining agreements, individual employment contracts, and
voluntary retirement plans of companies would be rendered inutile if we
were to limit the award of monetary benefits to an employee only to those
provided by statute. x x x.[32]
Previously, the Court adopted the CAs ruling, upholding the validity of a similar
provision in a companys retirement plan:
[T]here is no further doubt that the payment of separation pay is a

requirement of the law, i.e.[,] the Labor Code, which is a social legislation.
The clear intent of Article XI, section 6 [of the Retirement Plan] is to input
the effects of social legislation in the circulation of Retirement benefits due
to retiring employees x x x. The Retirement Plan itself clearly sets forth
the intention of the parties to entitle employees only to whatever is
greater between the Retirement Benefits then due and that which
the law requires to be given by way of separation pay. To give way to
complainants demands would be to totally ignore the contractual
obligations of the parties in the Retirement Plan, and to distort the clear
intent of the parties as expressed in the terms and conditions contained in
such plan. x x x. (emphasis supplied)
Consequently, if the petitioners were allowed to receive separation pay from both the
Labor Code, on the one hand, and the New Gratuity Plan and the SSP, on the other, they
would receive double compensation for the same cause (i.e., separation from the service
due to redundancy) even if such is contrary to the provisions of the New Gratuity Plan.
The petitioners’ claim of being shortchanged is certainly unfounded. They have
recognized the validity of the SSP and the New Gratuity Plan as evidenced by the
acceptance letters and quitclaims they executed; and the benefits they received under
the SSP and the New Gratuity Plan are more than what is required by the Labor Code.
In the absence of proof that any of the vices
of consent are present, the petitioners’
acceptance letters and quitclaims are
valid; thus, barring them from claiming
additional separation pay.
The Court now comes to the issue on the validity of the acceptance letters and quitclaims
that the petitioners executed, which they claim do not preclude them from asking for the
benefits rightfully due them under the law.
It is true that quitclaims executed by employees are often frowned upon as contrary to
public policy. Hence, deeds of release or quitclaims cannot bar employees from
demanding benefits to which they are legally entitled or from contesting the legality of
their dismissal. The acceptance of those benefits would not amount to estoppel.
However, the Court, in other cases, has upheld quitclaims if found to comply with the
following requisites: (1) the employee executes a deed of quitclaim voluntarily; (2) there
is no fraud or deceit on the part of any of the parties; (3) the consideration of the
quitclaim is credible and reasonable; and (4) the contract is not contrary to law, public
order, public policy, morals or good customs or prejudicial to a third person with a right
recognized by law.
In this case, there is no allegation of fraud or deceit employed by the

respondents in making the petitioners sign the acceptance letters and quitclaims. Neither
was there any claim of force or duress exerted upon the petitioners to compel them to
sign the acceptance letters and quitclaims. Likewise, the consideration is credible and
reasonable since the petitioners are getting more than the amount required under the
law. Thus, the acceptance letters and quitclaims executed by the petitioners are valid and
binding.
Considering that the petitioners have already waived their right to file an action for any
of their claims in relation to their employment with Globalbank, the question of whether
Metrobank can be held liable for these claims is now academic. However, in order to put
to rest any doubt in the petitioners minds as to Metrobanks liabilities, we shall proceed
to discuss this issue.
We hold that Metrobank cannot be held liable for the petitioners’ claims.
As a rule, a corporation that purchases the assets of another will not be liable for the
debts of the selling corporation, provided the former acted in good faith and paid
adequate consideration for such assets, except when any of the following circumstances
is present: (1) where the purchaser expressly or impliedly agrees to assume the debts; (2)
where the transaction amounts to a consolidation or merger of the corporations; (3)
where the purchasing corporation is merely a continuation of the selling corporation;
and (4) where the selling corporation fraudulently enters into the transaction to escape
liability for those debts.
Under the Deed of Assignments of Assets and Assumption of

Liabilitiesbetween Globalbank and Metrobank, the latter accepted the formers assets in
exchange for assuming its liabilities. The liabilities that Metrobank assumed, which were
clearly set out in Annex A of the instrument, are: deposit liabilities; interbank loans
payable; bills payable; managers checks and demand drafts outstanding; accrued taxes,
interest and other expenses; and deferred credits and other liabilities.
Based on this enumeration, the liabilities that Metrobank assumed can be characterized
as those pertaining to Globalbanks banking operations. They do not include Globalbanks
liabilities to pay separation pay to its former employees. This must be so because it is
understood that the same liabilities ended when the petitioners were paid the amounts
embodied in their respective acceptance letters and quitclaims. Hence, this obligation
could not have been passed on to Metrobank.
The petitioners insist that Metrobank is liable because it is the parent company of
Globalbank and that majority of the latter’s board of directors are also members of the
formers board of directors.
While the petitioners’ allegations are true, one fact cannot be ignored that Globalbank
has a separate and distinct juridical personality. The petitioners own evidence Global
Business Holdings, Inc.s General Information Sheetfiled with the Securities and
Exchange Commission bears this out.
Even then, the petitioners would want this Court to pierce the veil of corporate identity
in order to hold Metrobank liable for their claims.
What the petitioner’s desire, the Court cannot do. This fiction of corporate entity can
only be disregarded in cases when it is used to defeat public convenience, justify wrong,
protect fraud, or defend crime. Moreover, to justify the disregard of the separate juridical
personality of a corporation, the wrongdoing must be clearly and convincingly
established.
In the instant case, none of these circumstances is present such as to warrant piercing
the veil of corporate fiction and treating Globalbank and Metrobank as one.
Lastly, the petitioners’ prayer for the award of damages must be denied for lack of legal
basis.
In sum, the New Gratuity Plan and SSP are valid and must be given effect, inasmuch as
their provisions are not contrary to law; and, indeed, grant benefits that meet the
minimum amount required by the Labor Code. The petitioners have voluntarily sought
such benefits and upon their receipt thereof, executed quitclaims in Globalbank’s favor.
The petitioners cannot, upon a mere change of mind, seek to invalidate such quitclaims
and renege on their undertaking thereunder, which, to begin with, is supported by a
substantial consideration and which they had knowingly assumed and imposed upon
themselves.
RETIREMENT PAY
RADIO MINDANAO NETWORK, INC. and ERIC S.

CANOY, Petitioners, v. DOMINGO Z. YBAROLA, JR. and ALFONSO E. RIVERA,
JR., Respondents
G.R. No. 198662 - September 12, 2012
FACTS:
Respondents Domingo Z. Ybarola, Jr. and Alfonso E. Rivera, Jr. were hired on June 15,
1977 and June 1, 1983, respectively, by RMN. They eventually became account
managers, soliciting advertisements and servicing various clients of RMN.
On September 15, 2002, the respondents’ services were terminated as a result of RMN s
reorganization/restructuring; they were given their separation pay P 631,250.00 for
Ybarola, and P 481,250.00 for Rivera. Sometime in December 2002, they executed
release/quitclaim affidavits.
Dissatisfied with their separation pay, the respondents filed separate complaints
(which were later consolidated) against RMN and its President, Eric S. Canoy, for
illegal dismissal with several money claims, including attorney s fees. They indicated
that their monthly salary rates were P 60,000.00 for Ybarola and P 40,000.00 for
Rivera.
ISSUE:
Whether or not respondents’ commissions were part of their salaries.
RULING:
Yes.
If these commissions had been really profit-sharing bonuses to the respondents, they
should have received the same amounts, yet, as the NLRC itself noted, Ybarola and
Rivera received P 372,173.11 and P 586,998.50 commissions, respectively, in 2002. The
variance in amounts the respondents received as commissions supports the CA s
finding that the salary structure of the respondents was such that they only received a
minimal amount as guaranteed wage; a greater part of their income was derived from
the commissions they get from soliciting advertisements; these advertisements are the
"products" they sell. As the CA aptly noted, this kind of salary structure does not
detract from the character of the commissions being part of the salary or wage paid to
the employees for services rendered to the company, as the Court held in Philippine
Duplicators, Inc. v. NLRC.
The petitioners reliance on our ruling in Talam v. National Labor Relations

Commission, regarding the "proper appreciation of quitclaims," as they put it, is
misplaced. While Talam, in the cited case, and Ybarola and Rivera, in this case, are not
unlettered employees, their situations differ in all other respects.
In Talam, the employee received a valuable consideration for his less than two years of
service with the company; he was not shortchanged and no essential unfairness took
place. In this case, as the CA noted, the separation pay the respondents each received
was deficient by at least P 400,000.00; thus, they were given only half of the amount
they were legally entitled to. To be sure, a settlement under these terms is not and
cannot be a reasonable one, given especially the respondents length of service 25 years
for Ybarola and 19 years for Rivera. The CA was correct when it opined that the
respondents were in dire straits when they executed the release/quitclaim affidavits.
Without jobs and with families to support, they dallied in executing the quitclaim
instrument, but were eventually forced to sign given their circumstances.
GRACE CHRISTIAN HIGH SCHOOL, represented by its Principal, DR. JAMES

TAN vs. FILIPINAS A. LAVANDERA
G.R. No. 177845, August 20, 2014, J. Perlas-Bernabe
Filipinas was separated from service due to the compulsory retirement as stated in
the GCHS Retirement Plan. Filipinas felt aggrieved, hence she filed a complaint for illegal
dismissal. The Courts below and the Supreme Court upheld the validity of her dismissal.
The only dispute is the proper computation of her retirement pay. For the computation of
retirement benefits, "one-half (1/2) month salary means 22.5 days: 15 days plus 2.5 days
representingone-twelfth (1/12) of the 13th month pay and the remaining 5 days for SIL.
Facts:
Filipinas was employed by petitioner Grace Christian High School (GCHS) as high
school teacher since June1977, with a monthly salary of 18,662.00 as of May 31, 2001.
On May 11, 2001, she was informed that her serviceswere to be terminated effective
May 31, 2001, pursuant to GCHS’ retirement plan which gives the school the option to
retire a teacher who has rendered at least 20 years of service, regardless of age, with a
retirement pay of one-half (½) month for every year of service. Hence, she filed a case for
illegal dismissal.
GCHS denied that they illegally dismissed Filipinas. They asserted that the latter
was considered retired on May 31, 1997 after having rendered 20 years of service pursuant
to GCHS’ retirement plan and that she was duly advised that her retirement benefits in
the amount of 136,210.00 based on her salary at the time of retirement
The Labor Arbiter (LA) dismissed the illegal dismissal complaint for lack of merit.
The NLRC set aside the LA’s award, and ruled that Filipinas’ retirement pay should be
computed based on her monthly salary at the time of her retirement on May 31, 1997. On
appeal, the CA affirmed with modification the NLRC’s Decision. The CA ruled that the
computation of "one-half month salary" by equating it to"22.5 days" which is "arrived at
after adding 15 days plus 2.5 days representing one-twelfth of the 13th month pay, plus 5
days of SIL.
Issue:
Whether or not the CA erred in the computation of the retirement benefits
Ruling:
The computation of the CA is correct.
In the present case, GCHS has a retirement plan for its faculty and non-faculty
members, which gives it the option to retire a teacher who has rendered at least 20 years
of service, regardless of age, with a retirement pay of one-half (1/2) month for every year
ofservice. Considering, however, that GCHS computed Filipinas’ retirement pay without
including one-twelfth (1/12) of her 13th month pay and the cash equivalent of her five (5)
days SIL, both the NLRC and the CA correctly ruled that Filipinas’ retirement benefits
should be computed in accordance withArticle 287 of the Labor Code, as amended by RA
7641, being the more beneficent retirement scheme. They differ, however, in the resulting
benefit differentials due to divergent interpretations of the term "one-half (1/2) month
salary" as used under the law.
The Court, in the case of Elegir v. Philippine Airlines, Inc., has recently affirmed
that "one-half (1/2) month salary means 22.5 days: 15 days plus 2.5 days representingone-
twelfth (1/12) of the 13th month pay and the remaining 5 days for SIL." The Court sees no
reason to depart from this interpretation. GCHS’ argument37 therefore that the 5 days
SIL should be likewise pro-rated to their 1/12 equivalent must fail.
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.
ROBERTO B. REBLORA vs. ARMED FORCES OF THE PHILIPPINES

G.R. No. 195842, June 18, 2013
J. Perez
PD No. 1638 is the law that governs the retirement and separation of military officers
and enlisted personnel. With respect to the retirement of military officers and enlisted
personnel, the law provides for two kinds: compulsory retirement and optional retirement.
Both kinds of retirements contemplate the satisfaction of a certain age or length of service
requirement by, or the fulfillment of some other conditions on the part of, a military officer
or personnel.
Petitioner’s civilian service at the DILG should and ought to be included as part of his
active service in the military for purposes of computing his retirement benefits under PD
No. 1638.
Facts:
The petitioner is a retired Captain of the Philippine Navy. Prior to entering military
service, the petitioner rendered civilian government service as a Barrio Development
Worker at the Department of the Interior and Local Government (DILG) from 6 January
1969 to 20 July 1974.
On 21 May 1973, the petitioner entered military service as a Probationary Ensign in

the Philippine Navy. On 22 May 2003, at the age of 59 and after a total of thirty-four (34)
years of active service, the petitioner was compulsorily retired from the military by virtue
of General Order No. 142. After his retirement, petitioner claimed retirement benefits
under Section 17 of PD No. 1638.
The AFP granted petitioner’s claim of retirement benefits. In computing for

petitioner’s retirement benefit, however, the AFP did not include petitioner’s civilian
government service at the DILG. The AFP only considered petitioner’s actual military
service.
The petitioner disagreed with computation of the AFP. He insisted that the
computation of his retirement benefit should include the period of his civilian
government service at the DILG immediately before he entered military service.
After an unsuccessful bid to obtain a favorable legal opinion from the AFP Judge
Advocate General, the petitioner requested assistance from the COA for the collection of
his claimed additional retirement benefit.
The COA rendered a Decision denying petitioner’s claim. The COA agreed with the
petitioner that his civilian service at the DILG should and ought to be included as part of
his active service in the military for purposes of computing his retirement benefits under
PD No. 1638. However, since his civilian service should be included as part of his active
service in the military, the COA opined that petitioner should also have been considered
as compulsorily retired on 22 May 2000 and not on 22 May 2003. The COA found that,
applying the provisions of PD No. 1638 as amended, petitioner was not actually underpaid
but was rather overpaid his retirement benefit.
Aggrieved, petitioner questioned the Decision and Resolution of the COA via the
present Rule 45 petition before this Court.
Issue:
Whether or not the petitioner is entitled for additional retirement benefit
Ruling:
Petitioner availed of wrong remedy.
This Court can very well dismiss the instant petition on account of it being the wrong
remedy. Decisions and resolutions of the COA are reviewable by this Court, not via an
appeal by certiorari under Rule 45, as is the present petition, but thru a special civil action
of certiorari under Rule in relation to Rule 65 of the Rules of Court.
Nevertheless, even if this Court should take a liberal appreciation of the present
petition as one that is filed under Rule 65, such petition would still fail. We have taken
an extra step and scoured the established facts vis-à-vis the allegations of the instant
petition in search of any vestiges of grave abuse of discretion on the part of the COA, but
we found none. What we did find, on the other hand, is that the assailed COA Decision
and Resolution was rendered in accord with law.
PD No. 1638, as amended, is the law that governs the retirement and separation of
military officers and enlisted personnel. With respect to the retirement of military
officers and enlisted personnel, the law provides for two kinds: compulsory retirement
and optional retirement. Both kinds of retirements contemplate the satisfaction of a
certain age or length of service requirement by, or the fulfillment of some other
conditions on the part of, a military officer or personnel. Retirement, however, is deemed
compulsory if, upon the satisfaction of the conditions prescribed by law, retirement of
the concerned officer takes place by operation of law; while retirement is deemed
optional if, despite the satisfaction of such conditions, retirement would only take place
when elected by the officer himself.
Section 5(a) of PD No. 1638 explicitly provides that a military officer or enlisted
personnel who has reached the age of fifty-six (56) or who has rendered thirty (30) years
of active service, whichever comes later, shall be compulsorily retired.
Applying the foregoing provisions of PD No. 1638 to the circumstances surrounding

petitioner’s military service, this Court discerns that the COA was correct in holding that
petitioner should be considered as compulsorily retired on 22 May 2000 for purposes of
computing his retirement benefits under the same law.
The clear import of the assailed COA Decision and Resolution is that petitioner’s
civilian service at the DILG should be included in his active military service for the
purpose of computing his retirement benefits under PD No. 1638 only that the services
he rendered after 22 May 2000, for reasons explained above, should also be excluded from
the same computation.
TERMINATION OF EMPLOYMENT
EMPLOYER-EMPLOYEE RELATIONSHIP
Allan Bazar vs. Carlos A. Ruizol

G.R. No. 198782
October 19, 2016
Facts:
Respondent Carlos A. Ruizol (also identified as Carlos Ruisol in the Complaint, Labor
Arbiter's Decision and in other pleadings) was a mechanic at Norkis Distributors and
assigned at the Surigao City branch. He was terminated effective 27 March 2002. At the
time of his termination, respondent was receiving a monthly salary of P2,050.00 and was
working from 8:00 a.m. to 5:00 p.m. with a one-hour meal break for six (6) days in a week.
Respondent claimed that petitioner Allan Bazar came from Tandag branch before he was
assigned as a new manager in the Surigao City branch. Respondent added that he was
dismissed by petitioner because the latter wanted to appoint his protege as a mechanic.
Because of his predicament, respondent filed a complaint before Regional Arbitration
Branch No. XIII of the National Labor Relations Commission (NLRC) in Butuan City for
illegal dismissal and other monetary claims. An Amended Complaint was filed on 12
August 2002 changing the name of the petitioner therein from Norkis Display Center to
Norkis Distributors, Inc. (NDI).
Petitioner, on the other hand, alleged that NDI is a corporation engaged in the sale,
wholesale and retail of Yamaha motorcycle units. Petitioner countered that respondent
is not an employee but a franchised mechanic of NDI pursuant to a retainership
agreement. Petitioner averred that respondent, being the owner of a motor repair shop,
performed repair warranty service, back repair of Yamaha units, and ordinary repair at
his own shop. Petitioner maintained that NDI terminated the retainership contract with
respondent because they were no longer satisfied with the latter's services.
Issues:
a. Whether or not an employer-employee relationship existed in this case.
b. Whether or not respondent was illegally dismissed.
Ruling:
a. Yes.
The four-fold test used in determining the, existence of 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. method by which the work is to be accomplished.
At the outset, respondent denied the existence of a retainership contract. Indeed, the
contract presented by NDI was executed by the latter and a certain Eusequio Adorable.
The name "Carlos Ruizol" was merely added as a retainer/franchised mechanic and the
same was unsigned. Assuming, however, that such a contract did exist, its provisions
should not bind respondent. We agree with the Labor Arbiter on the following points:
Paragraph 5 and 6 of the unsworned contract of Retainership between [respondent] and

[NDI and petitioner] dated March 1, 1989 states as follows:
"5. That the franchised mechanic, though not an employee of the NDI agrees to observe
and abide by the rules and regulations by the NDI aims to maintain a good quality and
efficient service to customer.
6.) Franchised mechanic hereby acknowledge that he is not an employee of NDI, hence,
not entitled to Labor Standard benefits.
It bears stressing that the contents of the unsworn Contract of Retainership is a clear
circumvention of the security of tenure pursuant to Articles 279 and 280 of the Labor
Code. The agreement embodied in the said contract is contrary to law. thus [respondent]
is not bound to comply with the same.”
NDI admitted to have engaged the services of respondent, although under the guise of a
retainership agreement. The fact of engagement does not exclude the power ofNDI to
hire respondent as its employee.
Assuming that respondent signed the retainership agreement, it is not indicative of his
employment status. It is the law that defines and governs an employment relationship,
whose terms are not restricted by those fixed in the written contract, for other factors,
like the nature of the work the employee has been called upon to perform, are also
considered. The law affords protection to an employee, and does not countenance any
attempt to subvert its spirit and intent. Any stipulation in writing can be ignored when
the employer utilizes the stipulation to deprive the employee of his security of tenure.
The inequality that characterizes employer-employee relations generally tips the scales
in favor of the employer, such that the employee is often scarcely provided real and better
options.
Petitioner claims that respondent was receiving 1!2,050.00 as his monthly retainer's fee
as of his termination in March 2002. This fee is covered by the term "wages" and defined
as remuneration or earnings, however designated, capable of being expressed in terms of
money, whether· fixed or ascertained on a time, task, piece or commission basis, or other
method of calculating the same, which is payable by an employer to an employee under
a written or unwritten contract 'of employment for work done or to be done, or for service
rendered or to be rendered.12 For services rendered to NDI, respondent received
compensation. NDI could have easily disproved that respondent was its employee by
presenting the manner by which such compensation was paid to respondent. NDI did
not do so.
That NDI had the power to dismiss respondent was clearly evidenced by the fact that
respondent's services were terminated.
The control test is the most crucial and determinative indicator of the presence or
absence of an employer-employee relationship. Under the control test, an employer-
employee relationship exists where the person for whom the services are performed
reserves the right to control not only the end achieved, but also the manner and means
to be used in reaching that end.
Petitioner asserts that NDI did not exercise the power of control over respondent because
he is free to use his own means and methods by which his work is to be accomplished.
The records show the contrary. It was shown that respondent had to abide by the
standards sets by NDI in conducting repair work on Yamaha motorbikes done in NDI's
service shop. As a matter of fact, on allegations that respondent failed to live up to the
demands of the work, he was sent several memoranda by NDI. We agree with the Labor
Arbiter that the presence of control is evident.
b. Yes.
Petitioner was dismissed through a letter informing him of termination of contract of

retainership which we construe as a termination notice. For lack of a just or authorized
cause coupled with failure to observe the twin-notice rule in termination cases,
respondent's dismissal is clearly illegal.
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.
Mario N. Felicilda vs. Manchesteve H. Uy

G.R. No. 221241
September 14, 2016
Facts:
Petitioner alleged that on October 29, 2010, respondent Manchesteve H. Uy (respondent)
hired him as a truck driver for the latter's trucking service under the business name "Gold
Pillars Trucking" (GPT). In connection, therewith, petitioner was issued a company
identification card (ID), assigned in one of GPT's branches in Manila, and paid on a
percentage basis. On December 9, 2011, petitioner took a nap at the work station while
waiting for his truck to be loaded with cargoes, all of which were delivered to
respondent's clients on schedule. The next day, or on December 10, 2011, respondent's
helper told petitioner that his employment was already terminated due to his act of
sleeping while on the job. Claiming that he was dismissed without just cause and due
process, and that his act of taking a nap did not prejudice respondent's business,
petitioner filed a complaint for illegal dismissal with money claims against respondent,
before the NLRC, docketed as NLRC NCR Case No. 12-18409-11.
In his defense, respondent denied the existence of an employer-employee relationship

between him and petitioner, considering that petitioner was: (a) paid merely on a per
trip "percentage" basis and was not required to regularly report for work; (b) free to offer
his services to other companies; and (c) not under respondent's control with respect to
the means and methods by which he performed his job as a truck driver. Respondent
added that petitioner's company ID did not indicate that the latter was his employee, but
only served the purpose of informing the GPT's clients that petitioner was one of
respondent's authorized drivers. Finally, respondent averred that it no longer engaged
petitioner's services due to the latter's "serious transgressions and misconduct."
Issue:
Whether or not an employer-employee relationship existed between petitioner and
respondent and, thus, the latter could have illegally dismissed the former
Ruling:
Yes.
To ascertain the existence of an employer-employee relationship, jurisprudence has

invariably adhered to 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 power to
control the employee's conduct, or the so-called "control test." Verily, the power of the
employer to control the work of the employee is considered the most significant
determinant of the existence of an employer-employee relationship. This is the so-called
"control test," and is premised on whether the person for whom the services are
performed reserves the right to control both the end achieved and the manner and means
used to achieve that end. It must, however, be stressed that the "control test" merely calls
for the existence of the right to control, and not necessarily the exercise thereof. To be
clear, the test does not require that the employer actually supervises the performance of
duties by the employee.
Contrary to respondent's submission, which was upheld by the CA, the Court agrees with
the labor tribunals that all the four (4) elements are present in this case:
First. It is undisputed that respondent hired petitioner to work as a truck driver for his
private enterprise, GPT.
Second. Petitioner received compensation from respondent for the services he rendered.
Contrary to the findings of the CA, while the wages paid was determined on a "per trip"
or commission basis, it has been constantly ruled that such does not negate employment
relationship. Article 97 (f) of the Labor Code broadly defines the term "wage" as "the
remuneration or earnings, however designated, capable of being expressed in terms of
money, whether fixed or ascertained on a time, task, piece, or commission basis, or other
method of calculating the same, which is payable by an employer to an employee under
a written or unwritten contract of employment for work done or to be done, or for
services rendered or to be rendered x x x." That petitioner was paid on a "per trip" or
commission basis is insignificant as this is merely a method of computing compensation
and not a basis for determining the existence or absence of an employer-employee
relationship.
Third. Respondent's power to dismiss was inherent in the selection and engagement of
petitioner as truck driver.
Fourth. The presence of the element of control, which is the most important element to
determine the existence or absence of employment relationship, can be safely deduced
from the fact that: (a) respondent owned the trucks that were assigned to petitioner; (b)
the cargoes loaded in the said trucks were exclusively for respondent's clients; and (c)
the schedule and route to be followed by petitioner were exclusively determined by
respondent. The latter's claim that petitioner was permitted to render service to other
companies was not substantiated and there was no showing that he indeed worked as
truck driver for other companies. Given all these considerations, while petitioner was
free to carry out his duties as truck driver, it cannot be pretended that respondent,
nonetheless, exercised control over the means and methods by which the former was to
accomplish his work. To reiterate, the power of control refers merely to the existence of
the power. It is not essential for the employer to actually supervise the performance of
duties of the employee, as it is sufficient that the former has a right to wield the power, as
in this case.
For a dismissal to be valid, the rule is that the employer must comply with both the
substantive and procedural due process requirements. Substantive due process requires
that the dismissal must be pursuant to either a just or an authorized cause under Articles
297, 298, and 299 (formerly Articles 282, 283 or 284)38 of the Labor Code, as
amended.39chanrobleslaw
Procedural due process, on the other hand, mandates that the employer must observe
the twin requirements of notice and hearing before a dismissal can be effected.
In this case, suffice it to say that aside from respondent's averment that petitioner
committed "serious transgressions and misconduct" resulting in the former's loss of trust
and confidence, no other evidence was shown to substantiate the same. Such averment
should be properly deemed as a self serving assertion that deserves no weight in
law. Neither was petitioner accorded procedural due process as he was merely informed
by respondent's helper that he was already terminated from his job. Clearly, respondent
illegally dismissed petitioner, and as such, the latter is entitled to backwages and
separation pay in lieu of reinstatement.
HSY Marketing Ltd., Co. vs. Virgilio O. Villastique

G.R. No. 219569
August 17, 2016
Facts:
On January 3, 2003, petitioner hired respondent as a field driver for Fabulous Jeans
& Shirt & General Merchandise (Fabulous Jeans), tasked to deliver ready-to-wear
items and/or general merchandise for a daily compensation of P370.00. On
January 10, 2011, respondent figured in an accident when the service vehicle (a
2010-model Mitsubishi Strada pick up) he was driving in Iligan City bumped a
pedestrian, Ryan Dorataryo (Dorataryo). Fabulous Jeans shouldered the
hospitalization and medical expenses of Dorataryo in the amount of P64,157.15,
which respondent was asked to reimburse, but to no avail. On February 24,
2011, respondent was allegedly required to sign a resignation letter, which he
refused to do. A couple of days later, he tried to collect his salary for that week but
was told that it was withheld because of his refusal to resign. Convinced that he
was already terminated on February 26, 2011, he lost no time in filing a complaint
for illegal dismissal with money claims against petitioner, Fabulous Jeans, and its
owner, Alexander G. Arqueza (Arqueza; collectively, petitioner, et al.) before the
NLRC, docketed as RAB-X-04-00179-2011.
In their defense, petitioner, et al. contended that respondent had committed

several violations in the course of his employment, and had been found by his
superior and fellow employees to be a negligent and reckless driver, which
resulted in the vehicular mishap involving Dorataryo. After they paid for
Dorataryo's hospitalization and medical expenses, respondent went on absence
without leave, presumably to evade liability for his recklessness. Since respondent
was the one who refused to report for work, he should be considered as having
voluntarily severed his own employment. Thus, his money claims cannot prosper
as he was not terminated.
Issues:
a. Whether or not an employer-employee relationship exists in this case.
b. Whether or not respondent voluntarily resigned from work and petitioner
dismissed him from employment.
c. Whether or not respondent is a regular employee.
Ruling:
a. Yes.
Case law instructs that the issue of whether or not an employer-

employee relationship exists in a given case is essentially a question
of fact. It is settled that the Court is not a trier of facts, and this rule applies
with greater force in labor cases. Generally, it may only look into factual
issues in labor cases when the factual findings of the LA, the NLRC, and
the CA are conflicting. Hence, if there is no cogent reason to hold
otherwise, the Court ought to defer to the findings of the foregoing
tribunals on this question of fact.
In this case, it should be recalled that in the LA's November 28, 2011
Decision, the LA categorically declared petitioner to be the employer of
respondent and accordingly, dismissed the complaint against Fabulous
Jeans and Arqueza. Consequently, in the Memorandum of Appeal before
the NLRC, where Fabulous Jeans joined petitioner as respondent-
appellant, it was argued that the LA should have dismissed the charges
against petitioner instead, considering that respondent was employed as a
field driver for Fabulous Jeans, and that there was no employer-employee
relationship between him and petitioner. The NLRC failed to explicitly
address the said issue in its April 30, 2012 Resolution, referring to
respondents-appellants (petitioner, et al. in this case) collectively as the
employer. However, it particularly debunked petitioner's assertion that
there was ample evidence that respondent voluntarily resigned and that he
refused to return to work anymore; and pinpointed petitioner as the one
that knew where to look for respondent after the latter had allegedly
disappeared. The CA, on the other hand, minced no words when it
declared petitioner as attempting to avoid liability by claiming that it has
a separate and distinct personality from that of Fabulous Jeans without
offering evidence to buttress the same. Hence, considering that the LA, the
NLRC, and the CA consistently found petitioner liable as the employer of
respondent, the Court sees no compelling reason to depart from their
judgment on this score.
To add, the Court had already exposed the practice of setting up

"distributors" or "dealers" which are, in reality, dummy companies that
allow the mother company to avoid employer-employee relations and,
consequently, shield the latter from liability from employee claims in case
of illegal dismissal, closure, unfair labor practices, and the like. Respondent
had categorically alleged the commission of such pernicious practice in his
Affidavit dated July 14, 2011. Despite these statements, petitioner failed to
present evidence to rebut the same. Therefore, it cannot be allowed to
evade liability as the employer of respondent.
b. No.
The Court likewise upholds the unanimous conclusion of the lower

tribunals that respondent had not been dismissed at all. Other than the
latter's unsubstantiated allegation of having been verbally terminated from
his work, no substantial evidence was presented to show that he was
indeed dismissed or was prevented from returning to his work. In the
absence of any showing of an overt or positive act proving that petitioner
had dismissed respondent, the latter's claim of illegal dismissal cannot be
sustained, as such supposition would be self-serving, conjectural, and of no
probative value.
Similarly, petitioner's claims of respondent's voluntary resignation and/or

abandonment deserve scant consideration, considering petitioner's failure
to discharge the burden of proving the deliberate and unjustified refusal of
respondent to resume his employment without any intention of returning.
It was incumbent upon petitioner to ascertain respondent's interest or
non-interest in the continuance of his employment, but to no avail.
Hence, since there is no dismissal or abandonment to speak of, the

appropriate course of action is to reinstate the employee (in this case,
herein respondent) without, however, the payment of backwages.
Notably, the reinstatement ordered here should not be construed as a relief

proceeding from illegal dismissal; instead, it should be considered as a
declaration or affirmation that the employee may return to work because
he was not dismissed in the first place.65 For this reason, the Court agrees
with petitioner that the LA, the NLRC, and the CA erred in awarding
separation pay in spite of the finding that respondent had not been
dismissed. Properly speaking, liability for the payment of separation
pay is but a legal consequence of illegal dismissal where
reinstatement is no longer viable or feasible. As a relief granted in lieu
of reinstatement, it goes without saying that an award of separation pay is
inconsistent with a finding that there was no illegal dismissal. This is
because an employee who had not been dismissed, much less
illegally dismissed, cannot be reinstated. Moreover, as there is no
reinstatement to speak of, respondent cannot invoke the doctrine of
strained relations68 to support his prayer for the award of separation pay.
c. Yes.
While petitioner should not be adjudged liable for separation pay, the
Court nonetheless sustains the award of service incentive leave pay in favor
of respondent, in accordance with the finding of the CA that respondent
was a regular employee of petitioner and is, therefore, entitled to such
benefit.
The Court has already held that company drivers who are under the
control and supervision of management officers — like respondent
herein — are regular employees entitled to benefits including
service incentive leave pay. "Service incentive leave is a right which
accrues to every employee who has served 'within 12 months, whether
continuous or broken, reckoned from the date the employee started
working, including authorized absences and paid regular holidays unless
the working days in the establishment as a matter of practice or policy, or
that provided in the employment contracts, is less than 12 months, in which
case said period shall be considered as one [(1)] year.' It is also commutable
to its money equivalent if not used or exhausted at the end of the year. In
other words, an employee who has served for one (1) year is entitled to it.
He may use it as leave days or he may collect its monetary value."
Petitioner, as the employer of respondent, and having complete control

over the records of the company, could have easily rebutted the said
monetary claim against it by presenting the vouchers or payrolls showing
payment of the same. However, since petitioner opted not to lift a finger in
providing the required documentary evidence, the ineluctable conclusion
that may be derived therefrom is that it never paid said benefit and must,
perforce, be ordered to settle its obligation to respondent
Supra Multi-Services, Inc., et al. vs. Lanie M. Labitigan

G.R. No. 192297
August 3, 2016
Facts:
Petitioner SMSI is a domestic corporation engaged in furnishing its clients with
manpower, such as janitors, drivers, messengers, and maintenance personnel.
Petitioners Tambunting and Dabu are the President and Vice-President for
Administration, respectively, of petitioner SMSI.
Respondent was hired as a rank and file employee of petitioner SMSI on March 13,
1994. When respondent's employment was terminated on December 21, 2005, she
was holding the position of Accounting Supervisor with a monthly salary of
P13,000.00
In support of her complaint, respondent alleged that she was a simple rank and
file employee who was elevated to the position of a supervisor but still performed
only clerical work and did not exercise any discretion on how to run the financial
affairs of the company. Respondent admitted to being responsible for preparing
the payroll of the employees of petitioner SMSI.
During the course of respondent's employment, Wage Order No. NCR-09 took
effect on November 5, 2001 providing an Emergency Cost of Living Allowance
(ECOLA) in the amount of P30.00 per day to private sector workers and employees
in the National Capital Region (NCR) earning minimum wage. Based on Wage
Order No. NCR-09, respondent granted herself ECOLA in the pro-rated amount
of Pl4.67 per day beginning November 2002. When Wage Order No. NCR-10 took
effect on July 10, 2004, granting additional ECOLA of P20.00 per day, respondent
accordingly increased her ECOLA to P24.67 per day. In granting herself pro-rated
ECOLA, respondent reasoned that Wage Order Nos. NCR-09 and NCR-10 granted
ECOLA not only to minimum wage earners, but also to other workers and
employees who would suffer from wage distortion because of the application of
the ECOLA, such as herself. Said Wage Orders prescribed a formula precisely to
resolve wage distortion, which respondent applied to her salary and to the salaries
of others similarly situated.
Respondent averred that her grant to herself of pro-rated ECOLA under Wage
Order Nos. NCR-09 and NCR-10 was with the knowledge and conformity of
petitioners. Petitioner Tambunting himself approved and signed the payroll, and
any unauthorized padding or undeserved compensation in the payroll could not
have escaped him
However, on August 22, 2005, a Notice of Personnel Action2 was issued to

respondent noting an "[ e ]rror in granting proportionate ECOLA W.O. NCR 9"
and cancelling respondent's daily allowance of P24.67. Respondent claimed that
she immediately took exception to the Notice and sought audience with petitioner
Tambunting, who promised to look into the matter. For the next four months or
until December 12, 2005, "[n]o one protested against the status quo, including the
fact that [respondent] continued to receive the miniscule sum of P24.67 per day
as ECOLA[.]"
Respondent pointed out that petitioners' malice became even more evident when
on the very next day, December 13, 2005, she was no longer allowed to enter the
premises of petitioner SMSI. Petitioners hurriedly issued Memo 12-6755 also on
December 13, 2005, which placed her on preventive suspension while under
investigation Insubordination and Dishonesty.
Petitioners followed up with Memo 12-6876 dated December 14, 2005 to

respondent, requiring the latter to appear at the administrative hearing.
Respondent attended the administrative hearing on December 19,
2005, accompanied by her son. During the hearing, petitioner Dabu
repeatedly berated and insulted respondent.
On December 20, 2005, petitioners issued Memo 12-692, a Notice of Termination,

which informed respondent of her termination due to:
1. Willful disobedience of the lawful orders of your employer.

2. Willful breach of the trust reposed in you by the management.
Issue:
Whether or not willful breach of trust is a just cause for termination of
employment.
Ruling:
Yes.
Under Article 282( c) of the Labor Code, as amended, an employer may terminate
an employment for, among other just causes, fraud or willful breach by the
employee of the trust reposed in him/her by his/her employer or duly authorized
representative.
Respondent, as Accounting Supervisor, was occupying a managerial position. The

Court is not persuaded by respondent's assertion that even as Accounting
Supervisor, she was still just a mere rank and file employee performing the same
clerical functions she had since her hiring in 1994. In her own memorandum dated
February 12, 2001 to petitioner Tambunting, respondent accepted the
responsibilities of an Accounting Manager. Respondent underwent training for
three months, received additional compensation, and was assigned an accounting
assistant to help her out with her responsibilities. As Accounting Supervisor,
respondent was entrusted with the custody and management of one of the most
delicate matters of any business, that is, the financial resources of petitioner SMSI.
Respondent also exercised discretion in the preparation of the payroll of the
employees of petitioner SMSI, evident from the fact that it was by her own
judgment call that she granted and paid herself pro-rated ECOLA since November
2002.
It was not disputed that respondent was earning more than minimum wage, so
she was not one of the intended beneficiaries of ECOLA under Wage Order Nos.
NCR-09 and NCR-10. Respondent though insisted that Wage Order Nos. NCR-09
and NCR-10 granted her the right to a pro-rated share of the ECO LA on the
ground of wage distortion.
Other than respondent's bare allegation of wage distortion, there is an absolute

dearth of proof to ~corroborate the same. 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. 30 By its definition, wage
distortion is quantifiable, and it may be established by presentation of the
employee groups, wage structure, and the computation showing how the
application of the ECOLA eliminated or severely contracted the difference in wage
or salary rates among the groups. As Accounting Supervisor who was in charge of
preparation of the payroll of the employees of petitioner SMSI for more than a
decade, respondent had knowledge of and access to all these relevant information
and was capable of illustrating, even just by approximation, how she suffered from
wage distortion because of the application of the ECOLA, which would have
entitled her to pro-rated ECOLA under Section 14 of Wage Order No. NCR-09.
However, respondent, apart from her insistence on the presence of wage
distortion, was remarkably silent on any other detail concerning the purported
wage distortion. It bears to stress further that the formula for computing pro-rated
ECOLA in case of wage distortions was not reproduced in Wage Order No. NCR-
10. Consequently, from the effectivity date of Wage Order No. NCR- 10 on July 10,
2004, respondent's unilateral grant of pro-rated ECOLA to herself became even
more evidently baseless.
Even assuming that respondent acted in good faith in granting herself ECOLA
since November 2002, petitioners already explicitly ordered the cancellation of
respondent's ECOLA through the Notice of Personnel Action dated August 22,
2005. Yet, in defiance of said Notice, respondent still continued to grant and pay
herself ECOLA until December 15, 2005.
Respondent herself referred to the amount of daily ECOLA she was receiving as
"miniscule," but given that she had been receiving the unwarranted ECOLA since
November 2002, it had already accumulated to a substantial amount. And
regardless of the amount involved, it is apparent that respondent took advantage
of her position as Accounting Supervisor in granting herself ECOLA even when
she was not entitled to the same and after already being ordered to stop doing so,
which constituted breach of trust. Willful breach of trust is one of the just causes
under Article 282( c) of the Labor Code, as amended, for the employer to
terminate the services of an employee.
The law is plain and clear: willful breach of trust is a just cause for termination of
employment. Necessarily, a finding of breach of trust on the part of respondent in
the present case already justified her dismissal from service by petitioners. 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 as a measure of protection, more so in the case of supervisors or
personnel occupying positions of responsibility. Together with petitioners'
compliance with procedural due process, there is no other logical conclusion than
that respondent's dismissal was valid.
Unlike the unwarranted ECOLA, however, the Court cannot order respondent to
pay her outstanding cash advances from petitioner SMSI, allegedly amounting to
1164,173.83. In Banez v. Valdevilla, the Court recognized that the jurisdiction of
Labor Arbiters and the NLRC in Article 21735 of the Labor Code, as amended, is
comprehensive enough to include claims for all forms of damages "arising from
the employer-employee relations." Whereas the Court in a number of occasions
had applied the jurisdictional provisions of Article 21 7 to claims for damages filed
by employees, it also held that by the designating clause "arising from the
employer-employee relations," Article 217 should apply with equal force to the
claim of an employer for actual damages against its dismissed employee, where
the basis for the claim arises from or is necessarily connected with the fact of
termination, and should be entered as a counterclaim in the illegal dismissal case.
Petitioners' counterclaim for payment of respondent's outstanding cash advances,

although undoubtedly arising from employer-employee relations between
petitioners and respondent, did not arise from or was not necessarily connected
with the fact of respondent's termination. To recall, petitioners terminated
respondent's employment on the ground that respondent, in granting herself
unwarranted ECO LA, willfully breached the trust reposed in her by petitioners as
Accounting Supervisor. Respondent's failure to make the necessary deductions
from her salary to pay for her cash advances from petitioner SMSI was clearly
another transgression petitioners were charging respondent with. While the
Court may take cognizance herein of the fact that such a charge by petitioners
against respondent exists, it has no jurisdiction to determine the truth or falsity
of such charge. Such charge was not covered by the notices and hearing
petitioners accorded respondent prior to the latter's dismissal and for the Court
to rule upon the same in this case would.be in violation of respondent's right to
due process.
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.
SANOH FULTON PHILS., INC. AND EDDIE JOSE vs. EMMANUEL BERNARDO AND
SAMUEL TAGHOY
G.R. No. 187214. August 14, 2013
J. Perez
In termination cases either by retrenchment or closure, the burden of proving that the
termination of services is for a valid or authorized cause rests upon the employer. 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. And to repeat, in closures, the bona fides of the
employer must be proven.
Facts:
Petitioner Sanoh Fulton Phils., Inc. is a domestic corporation that manufactures automotive
parts and wire condensers for home appliances. In view of job order cancellations relating
to the manufacture of wire condensers by Matsushita, Sanyo and National Panasonic, Sanoh
decided to phase out the Wire Condenser Department. On Dec. 22, 2003, the Human
Resources manager of Sanoh informed the employees of that department of retrenchment
effective January 22, 2004. Respondents Emmanuel Bernardo and Samuel Taghoy filed
complaints for illegal dismissal, claiming there was no valid cause for retrenchment. Sanoh
insists that it is the prerogative of management to effect retrenchment as long as it is done
in good faith. It claims that it had in fact closed down the wire condenser in view of serious
business losses.
The Labor Arbiter rendered a Decision dismissing the complaint for illegal dismissal. On
appeal, the National Labor Relations Commission (NLRC) affirmed in toto the decision of
the Labor Arbiter. The Court of Appeals overturned the findings of the Labor Arbiter and
the NLRC, and ruled that Sanoh failed to prove the existence of substantial losses that would
justify a valid retrenchment.
Issue:
Whether or not there is a valid cause for retrenchment
Ruling:
Retrenchment to prevent losses and closure not due to serious business losses are two
separate authorized causes for terminating the services of an employee. The respective
requirements to sustain their validity are likewise different.
For retrenchment, the three (3) basic requirements are: (a) proof that the retrenchment is
necessary to prevent losses or impending losses; (b) service of written notices to the
employees and to the Department of Labor and Employment at least one (1) month prior to
the intended date of retrenchment; and (c) payment of separation pay equivalent to one (1)
month pay, or at least one-half (1/2) month pay for every year of service, whichever is higher.
In termination cases either by retrenchment or closure, the burden of proving that the
termination of services is for a valid or authorized cause rests upon the employer. 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. And to repeat, in closures, the
bona fides of the employer must be proven.
In this case, there was no valid retrenchment. Nor was there a closure of business.
We are mindful of the principle that losses in the operation of the enterprise, lack of work,
or considerable reduction on the volume of business may justify an employer to reduce the
work force. But a lull caused by lack of orders or shortage of materials must be of such
nature as would severely affect the continued business operations of the employer to the
detriment of all and sundry if not properly addressed. Sanoh asserts that cancelled orders
of wire condensers led to the phasing out of the Wire Condenser Department, which
triggered retrenchment. Sanoh presented the letters of cancellation given by Matsushita
and Sanyo as evidence of cancelled orders. The evidence presented by Sanoh barely
established the connection between the cancelled orders and the projected business losses
that may be incurred by Sanoh.
Sanoh failed to prove that these cancelled orders would severely impact on their production
of wire condensers. The Court held in Lambert Pawnbrokers and Jewelry Corp. v. Binamira,
G.R. No. 170464, July 12, 2010, 624 SCRA 705, that the losses must be supported by sufficient
and convincing evidence and the normal method of discharging this is by the submission
of financial statements duly audited by independent external auditors. Petitioner failed to
present proof of the extent of the reduced order and its contribution to the sustainability of
its business.
SEPARATE CONCURRING OPINION
CARPIO, J.:
Retrenchment to prevent losses is one of the authorized causes for dismissal of employees.
Article 283 of the Labor Code states:
Art. 283. Closure of establishment and reduction of personnel.- The employer may also
terminate the employment of any employee due to the installation of labor-saving devices,
redundancy, retrenchment to prevent losses or the closing or cessation of operation of the
establishment or undertaking unless the closing is for the purpose of circumventing the
provisions of this Title, by serving a written notice on the workers and the Ministry of Labor
and Employment at least one (1) month before the intended date thereof. In case of
termination due to the installation of labor-saving devices or redundancy, the worker
affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month
pay or to at least one (1) month pay for every year of service, whichever is higher. In case of
retrenchment to prevent losses and in cases of closures or cessation of operations of
establishment or undertaking not due to serious business losses or financial reverses, the
separation pay shall be equivalent to one (1) month pay or at least one-half (112) month pay
for every year of service, whichever is higher. A fraction of at least six ( 6) months shall be
considered one (1) whole year. (Emphasis supplied)
There are three requisites for a valid retrenchment. In Genuino Ice Company, Inc. v. Lava,
the Court held that:
x x x There are three (3) basic requisites for a valid retrenchment, namely: (a) proof that the
retrenchment is necessary to prevent losses or impending losses; (b) service of written
notices to the employees and to the Department of Labor and Employment at least one (1)
month prior to the intended date of retrenchment; and (c) payment of separation pay
equivalent to one (1) month pay, or at least one-half (1/2) month pay for every year of service,
whichever is higher. (Emphasis supplied)
Under the first requisite, there are two kinds of losses which can justify retrenchment,
namely, incurred losses and impending losses. Incurred losses refer to losses that have
already occurred. Since they have already occurred, they should be reflected in the financial
statements. On the other hand, impending losses refer to losses that have not yet occurred.
They are also termed as future or expected losses. Since they have not yet occurred, they
are not reflected in the financial statements. Thus, in Waterfront Cebu City Hotel v.
Jimenez, the Court held that retrenchment must be "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." The Court recognizes two kinds
of losses which can justify retrenchment — incurred losses which are substantial, serious,
actual and real, and expected losses which are reasonably imminent.
Whether the losses are incurred or impending, employers always bear the burden of proving
that retrenchment is necessary to abate such losses. In Flight Attendants and Stewards
Association of the Philippines v. Philippine Airlines, Inc., the Court held that, "The burden
clearly falls upon the employer to prove economic or business losses with sufficient
supporting evidence. Its failure to prove these reverses or losses necessarily means that the
employee’s dismissal was not justified."
In the case of incurred losses, financial statements duly audited by independent external
auditors are the best proof. In Anabe v. Asian Construction (ASIAKONSTRUKT), the Court
held that, "The losses must be supported by sufficient and convincing evidence, the normal
method of discharging this is the submission of financial statements duly audited by
independent external auditors." In the case of impending losses, financial statements duly
audited by independent external auditors are not necessarily the best proof. Obviously,
impending, expected or future losses which employers seek to prevent through
retrenchment could not yet be reflected in the financial statements. In fact, if the
retrenchment adequately serves its purpose, then the impending losses would never be
reflected in the financial statements.
DIONISIO F. AUZA, JR., ADESSA F. OTARRA, and ELVIE JEANJAQUET,
Petitioners. v. MOL PHILIPPINES, INC. and CESAR G. TIUTAN, Respondents.
G.R. No. 175481 : November 21, 2012
Facts:
Respondent MOL is a common carrier engaged in transporting cargoes to and from

the different parts of the world. On October 1, 1997, it employed Auza and Jeanjaquet
as Cebus Branch Manager and Administrative Assistant, respectively. It also employed
Otarra as its Accounts Officer on November 1, 1997.
On October 14, 2002, Otarra tendered her resignation letter effective November 15,
2002 while Auza and Jeanjaquet submitted their resignation letters on October 30,
2002 to take effect on November 30, 2002. Petitioners were then given their separation
pay and the monetary value of leave credits, 13th month pay, MOL cooperative shares
and unused dental/optical benefits as shown in documents entitled "Remaining
Entitlement Computation," which documents were signed by each of them
acknowledging receipt of such benefits. Afterwhich, they executed Release and
Quitclaims and then issued Separation Clearances.
In February 2004 or almost 15 months after their severance from employment,

petitioners filed separate Complaints for illegal dismissal before the Arbitration Branch
of the NLRC against respondents and MOLs Manager for Corporate Services, George
Dolorfino. These complaints were later consolidated.
Issue:
Whether or not petitioners voluntarily resigned from employment.
Ruling:
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Yes.
After a careful scrutiny and review of the records of the case, this Court is inclined to
affirm the findings of the CA that petitioners voluntarily resigned from MOL.
"Resignation is the formal pronouncement or relinquishment of an office." The overt

act of relinquishment should be coupled with an intent to relinquish, which intent
could be inferred from the acts of the employee before and after the alleged
resignation.
It appears that petitioners, on their own volition, decided to resign from their
positions after being informed of the management’s decision that the Cebu branch
would eventually be manned by a mere skeletal force. As proven by the email
correspondences presented, petitioners were fully aware and had, in fact,
acknowledged that Cebu branch has been incurring losses and was already
unprofitable to operate. Note that there was evidence produced to prove that indeed
the Cebu branchs productivity had deteriorated as shown in a Profit and Loss
Statement for the years 2001 and 2002. Also, there was a substantial reduction of
workforce as all of the Cebu branch staff and personnel, except one, were not retained.
On the other hand, petitioners’ assertions that the Cebu branch was performing well
are not at all substantiated. What they presented was a document entitled "1999
Performance Standards", which only provides for performance objectives but tells
nothing about the branch’s progress. Likewise, the Cebu Performance Reports
submitted which showed outstanding company performance only pertained to the
year 1999 and the first quarter of year 2000. No other financial documents were
submitted to show that such progress continued until year 2002.
Contrary to their assertions, petitioners were not lured by any misrepresentation by

respondents. Instead, they themselves were convinced that their separation was
inevitable and for this, they voluntarily resigned. As aptly observed by the CA, no
element of force can be deduced from their letters of resignation as the same even
contained expressions of gratitude and thus contradicting their allegations that same
were prepared by their employer. In Globe Telecom v. Crisologo, we held that
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allegations of coercion are belied by words of gratitude coming from an employee who
is just forced to resign.
Petitioners aver that right after receiving their separation pay, they found out that the
Cebu branch was not closed but merely transferred to a bigger office and staffed by
newly hired employees. Notably, however, despite such knowledge, petitioners did not
immediately contest their resignations but waited for more than a year or nearly 15
months before contesting them. This negates their claim that they were victims of
deceit. Moreover, no adequate proof was presented to show that the planned
downsizing of Cebu branch did not take place. Similarly, petitioners’ allegations of bad
faith on the part of respondents are unsupported by records. No proof whatsoever was
advanced to show that there was threat of withholding their separation pay unless
their resignation letters were submitted prior to the actual closure of the Cebu branch
or that they were subjected to ill treatment and unpalatable working conditions
immediately prior to their resignation.
In addition, it is well to note that Auza and Otarra are managerial employees and not
ordinary workers who cannot be easily coerced or intimidated into signing something
against their will. As borne out by the records, Auza was the Local Chairman of
International Shipping Lines Association for five years, president of their Homeowners
Association and an active member of his community. Otarra, on the other hand, was
officer of various church organizations and a college professor at the University of the
Visayas. Their standing in society depicts how highly educated and intelligent persons
they are as to know fully well the consequences of their acts in executing and signing
letters of resignation and quitclaims. Although quitclaims are generally against public
policy, voluntary agreements entered into and represented by a reasonable settlement
are binding on the parties which may not be later disowned simply because of a
change of mind. "It is only where there is clear proof that the waiver was wangled from
an unsuspecting or gullible person, or the terms of the settlement are unconscionable,
that the law will step in to bail out the employee." Hence, we uphold the validity of the
quitclaims signed by petitioners in exchange for the separation benefits they received
from respondents.
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All told, the Court affirms the finding of the CA that petitioners were not illegally
dismissed from employment but instead voluntarily resigned therefrom.
CECILIA T. MANESE, JULIETES E. CRUZ, and EUFEMIO PENANO

II, Petitioners, v. JOLLIBEE FOODS CORPORATION, TONY TAN CAKTIONG,
ELIZABETH DELA CRUZ, DIVINA EVANGELISTA, and SYLVIA M.
MARIANO, Respondents
G.R. No. 170454 : October 11, 2012
FACTS:
Petitioners were employees of respondent Jollibee Foods Corporation (Jollibee). They

were part of the team tasked to open a new Jollibee branch at Festival Mall, Level 4, in
Alabang, Muntinlupa City on December 12, 2000. In preparation for the opening of the
new branch, petitioner Cruz requested the Commissary Warehouse and Distribution
(commissary) for the delivery of wet and frozen goods on December 9, 2000 to comply
with the 30-day thawing process of the wet goods, particularly the Jollibee product
called "Chickenjoy."
However, the opening of the store was postponed thrice. When the opening was
rescheduled to December 24, 2000, petitioner Cruz made another requisition for the
delivery of the food on December 23, 2000, but the opening date was again postponed.
Thereafter, Jollibee's Engineering Team assured the operations manager, respondent
Elizabeth dela Cruz, that the new store could proceed to open on December 28, 2000.
Petitioner Cruz, upon the advice of their Opening Team Manager Jun Reonal, did not
cancel the request for delivery of the products.
On December 23, 2000, 450 packs of Chickenjoy were delivered and petitioners placed
them in the freezer. On December 26, 2000, petitioner Cruz thawed the 450 packs of
Chickenjoy (ten pieces in each pack), or 4,500 pieces of Chickenjoy, in time for the
branch opening on December 28, 2000. The shelf life of the Chickenjoy is 25 days from
the time it is marinated; and, once thawed, it should be served on the third day. Its
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shelf life cannot go beyond three days from thawing. After that, the remaining
Chickenjoy products are no longer served, and they are packed in plastic, ten pieces in
each pack, and placed in a garbage bag to be stored in the freezer. Within the period
provided for in the company policy, valid Chickenjoy rejects are usually returned to
the commissary, while rejects which are unreturnable are wasted and disposed of
properly.
During the first week of March 2001, the team of petitioners had a meeting on what to
do with the stored Chickenjoy rejects. They decided to soak and clean the Chickenjoy
rejects in soda water and segregate the valid rejects from the wastes.
On April 2, 2001, petitioner Cruz was transferred to Jollibee Shell South Luzon Tollway
branch in Alabang, Muntinlupa. She estimated that the total undisposed Chickenjoy
rejects from the 450 packs (4,500 pieces of Chickenjoy) delivered on December 23,
2000 was only about 1,140 pieces as of January 2001. She failed to make the proper
indorsement as the area manager directed her to report immediately to her new
assignment.
On May 3, 2001, the area manager, Divina Evangelista, visited four stores, including the
subject Jollibee branch at Festival Mall, Level 4. When Evangelista arrived at the
subject Jollibee branch, she saw petitioner Peno cleaning the Chickenjoy rejects.
Evangelista told petitioner Manese to dispose of the Chickenjoy rejects, but Manese
replied that they be allowed to find a way to return them to the Commissary.
On May 8, 2001, Evangelista required petitioners Cruz and Manese to submit an

incident report on the Chickenjoy rejects.
On June 11, 2001, the Investigating Committee sent petitioner Cruz a Memorandum on
its administrative findings and decision, and the said memorandum notified her that
she was terminated from employment due to loss of trust and confidence.
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On June 13, 2001, petitioners Manese and Peno each received a similar Memorandum
on the administrative findings and decision of the Investigating Committee, and the
said Memoranda also notified them that they were terminated from employment due
to loss of trust and confidence.
Thereafter, petitioners Manese and Cruz filed a Complaint against respondents for
illegal dismissal.
ISSUE:
Whether or not mere existence of a basis for the loss of trust and confidence justifies
the dismissal of the managerial employee.
RULING:
Yes.
The mere existence of a basis for the loss of trust and confidence justifies the dismissal
of the managerial employee because when an employee accepts a promotion to a
managerial position or to an office requiring full trust and confidence, such employee
gives up some of the rigid guaranties available to ordinary workers. Infractions, which
if committed by others would be overlooked or condoned or penalties mitigated, may
be visited with more severe disciplinary action. Proof beyond reasonable doubt is not
required provided there is a valid reason for the loss of trust and confidence, such as
when the employer has a reasonable ground to believe that the managerial employee
concerned is responsible for the purported misconduct and the nature of his
participation renders him unworthy of the trust and confidence demanded by his
position.
However, the right of the management to dismiss must be balanced against the
managerial employee’s right to security of tenure which is not one of the guaranties he
gives up. This Court has consistently ruled that managerial employees enjoy security of
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tenure and, although the standards for their dismissal are less stringent, the loss of
trust and confidence must be substantial and founded on clearly established facts
sufficient to warrant the managerial employee’s separation from the company.
Substantial evidence is of critical importance and the burden rests on the employer to
prove it.
In this case, the acts and omissions enumerated in the respective memorandum with
notice of termination of petitioners Cruz and Peno were valid bases for their
termination, which was grounded on gross negligence and/or loss of trust and
confidence.
LEGEND HOTEL (MANILA), owned by TITANIUM CORPORATION, and/or,

NELSON NAPUD, in his capacity as the President of Petitioner
Corporation, Petitioner, v. HERNANI S. REALUYO, also known as JOEY
ROA, Respondent.
G.R. NO. 153511 - July 18, 2012
FACTS:
This labor case for illegal dismissal involves a pianist employed to perform in the
restaurant of a hotel. On August 9, 1999, respondent, whose stage name was Joey R.
Roa, filed a complaint for alleged unfair labor practice, constructive illegal dismissal,
and the underpayment/nonpayment of his premium pay for holidays, separation pay,
service incentive leave pay, and 13111 month pay. He prayed for attorney's fees, moral
damages off P100,000.00 and exemplary damages for P100,000.00.
Respondent averred that he had worked as a pianist at the Legend Hotel s Tanglaw
Restaurant from September 1992 with an initial rate of P400.00/night that was given to
him after each night s performance; that his rate had increased to P750.00/night; and
that during his employment, he could not choose the time of performance, which had
been fixed from 7:00 pm to 10:00 pm for three to six times/week. He added that the
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Legend Hotel s restaurant manager had required him to conform with the venue s
motif; that he had been subjected to the rules on employees representation checks and
chits, a privilege granted to other employees; that on July 9, 1999, the management
had notified him that as a cost-cutting measure his services as a pianist would no
longer be required effective July 30, 1999; that he disputed the excuse, insisting that
Legend Hotel had been lucratively operating as of the filing of his complaint; and that
the loss of his employment made him bring his complaint.
In its defense, petitioner denied the existence of an employer-employee relationship

with respondent, insisting that he had been only a talent engaged to provide live music
at Legend Hotel s Madison Coffee Shop for three hours/day on two days each week;
and stated that the economic crisis that had hit the country constrained management
to dispense with his services.
ISSUES:
Whether or not respondent’s petition for certiorari before the CA was improper as a
remedy against the NLRC due to its raising mainly questions of fact and because it did
not demonstrate that the NLRC was guilty of grave abuse of discretion.

respondent.
If respondent was petitioner’s employee, whether or not he was validly terminated.
Ruling:
No. Here, Certiorari was the proper recourse.
There is no longer any doubt that a petition for certiorari brought to assail the decision
of the NLRC may raise factual issues, and the CA may then review the decision of the
NLRC and pass upon such factual issues in the process. The power of the CA to review
factual issues in the exercise of its original jurisdiction to issue writs of certiorari is
based on Section 9 of Batas Pambansa Blg. 129, which pertinently provides that the CA
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"shall have the power to try cases and conduct hearings, receive evidence and perform
any and all acts necessary to resolve factual issues raised in cases falling within its
original and appellate jurisdiction, including the power to grant and conduct new
trials or further proceedings."
Yes.
A review of the circumstances reveals that respondent was, indeed, petitioner s

employee. He was undeniably employed as a pianist in petitioner s Madison Coffee
Shop/Tanglaw Restaurant from September 1992 until his services were terminated on
July 9, 1999.
First of all, petitioner actually wielded the power of selection at the time it entered
into the service contract dated September 1, 1992 with respondent. This is true,
notwithstanding petitioner s insistence that respondent had only offered his services
to provide live music at petitioner s Tanglaw Restaurant, and despite petitioner s
position that what had really transpired was a negotiation of his rate and time of
availability. The power of selection was firmly evidenced by, among others, the express
written recommendation dated January 12, 1998 by Christine Velazco, petitioner s
restaurant manager, for the increase of his remuneration.
Petitioner could not seek refuge behind the service contract entered into with
respondent. It is the law that defines and governs an employment relationship, whose
terms are not restricted to those fixed in the written contract, for other factors, like the
nature of the work the employee has been called upon to perform, are also considered.
The law affords protection to an employee, and does not countenance any attempt to
subvert its spirit and intent. Any stipulation in writing can be ignored when the
employer utilizes the stipulation to deprive the employee of his security of tenure. The
inequality that characterizes employer-employee relations generally tips the scales in
favor of the employer, such that the employee is often scarcely provided real and
better options.
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Secondly, petitioner argues that whatever remuneration was given to respondent were
only his talent fees that were not included in the definition of wage under the Labor
Code; and that such talent fees were but the consideration for the service contract
entered into between them.
The argument is baseless.
Respondent was paid P400.00 per three hours of performance from 7:00 pm to 10:00
pm, three to six nights a week. Such rate of remuneration was later increased to
P750.00 upon restaurant manager Velazco s recommendation. There is no denying
that the remuneration denominated as talent fees was fixed on the basis of his talent
and skill and the quality of the music he played during the hours of performance each
night, taking into account the prevailing rate for similar talents in the entertainment
industry.
Respondent s remuneration, albeit denominated as talent fees, was still considered as

included in the term wage in the sense and context of the Labor Code, regardless of
how petitioner chose to designate the remuneration. Anent this, Article 97(f) of the
Labor Code clearly states:
xxx wage paid to any employee shall mean the remuneration or earnings, however
designated, capable of being expressed in terms of money, whether fixed or
ascertained on a time, task, piece, or commission basis, or other method of calculating
the same, which is payable by an employer to an employee under a written or
unwritten contract of employment for work done or to be done, or for services
rendered or to be rendered, and includes the fair and reasonable value, as determined
by the Secretary of Labor, of board, lodging, or other facilities customarily furnished by
the employer to the employee.
Clearly, respondent received compensation for the services he rendered as a pianist in

petitioner s hotel. Petitioner cannot use the service contract to rid itself of the
consequences of its employment of respondent. There is no denying that whatever
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amounts he received for his performance, howsoever designated by petitioner, were
his wages.
It is notable that under the Rules Implementing the Labor Code and as held in Tan v.
Lagrama, every employer is required to pay his employees by means of a payroll, which
should show in each case, among others, the employee s rate of pay, deductions made
from such pay, and the amounts actually paid to the employee. Yet, petitioner did not
present the payroll of its employees to bolster its insistence of respondent not being its
employee.
That respondent worked for less than eight hours/day was of no consequence and did
not detract from the CA s finding on the existence of the employer-employee
relationship. In providing that the " normal hours of work of any employee shall not
exceed eight (8) hours a day," Article 83 of the Labor Code only set a maximum of
number of hours as "normal hours of work" but did not prohibit work of less than
eight hours.
Thirdly, the power of the employer to control the work of the employee is considered
the most significant determinant of the existence of an employer-employee
relationship. This is the so-called control test, and is premised on whether the person
for whom the services are performed reserves the right to control both the end
achieved and the manner and means used to achieve that end.
Petitioner submits that it did not exercise the power of control over respondent and
cites the following to buttress its submission, namely: (a) respondent could beg off
from his nightly performances in the restaurant for other engagements; (b) he had the
sole prerogative to play and perform any musical arrangements that he wished; (c)
although petitioner, through its manager, required him to play at certain times a
particular music or song, the music, songs, or arrangements, including the beat or
tempo, were under his discretion, control and direction; (d) the requirement for him
to wear barong Tagalog to conform with the Filipiniana motif of the venue whenever
he performed was by no means evidence of control; (e) petitioner could not require
him to do any other work in the restaurant or to play the piano in any other places,
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areas, or establishments, whether or not owned or operated by petitioner, during the
three hour period from 7:00 pm to 10:00 pm, three to six times a week; and (f)
respondent could not be required to sing, dance or play another musical instrument.
A review of the records shows, however, that respondent performed his work as a
pianist under petitioner s supervision and control. Specifically, petitioner s control of
both the end achieved and the manner and means used to achieve that end was
demonstrated by the following, to wit:
He could not choose the time of his performance, which petitioners had fixed from
7:00 pm to 10:00 pm, three to six times a week;
He could not choose the place of his performance;
The restaurant s manager required him at certain times to perform only Tagalog songs
or music, or to wear barong Tagalog to conform to the Filipiniana motif;
He was subjected to the rules on employees representation check and chits, a privilege
granted to other employees.
Relevantly, it is worth remembering that the employer need not actually supervise the
performance of duties by the employee, for it sufficed that the employer has the right
to wield that power.
Lastly, petitioner claims that it had no power to dismiss respondent due to his not
being even subject to its Code of Discipline, and that the power to terminate the
working relationship was mutually vested in the parties, in that either party might
terminate at will, with or without cause.
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The claim is contrary to the records. Indeed, the memorandum informing respondent
of the discontinuance of his service because of the present business or financial
condition of petitioner showed that the latter had the power to dismiss him from
employment.
No.
Retrenchment is one of the authorized causes for the dismissal of employees

recognized by the Labor Code. It is a management prerogative resorted to by
employers to avoid or to minimize business losses. On this matter, Article 283 of the
Labor Code states:
Article 283. Closure of establishment and reduction of personnel. The employer may
also terminate the employment of any employee due to the installation of labor-saving
devices, redundancy, retrenchment to prevent losses or the closing or cessation of
operation of the establishment or undertaking unless the closing is for the purpose of
circumventing the provisions of this Title, by serving a written notice on the workers
and the Ministry of Labor and Employment at least one (1) month before the intended
date thereof. xxx. In case of retrenchment to prevent losses and in cases of closures or
cessation of operations of establishment or undertaking not due to serious business
losses or financial reverses, the separation pay shall be equivalent to one (1) month pay
or at least one-half (1/2) month pay for every year of service, whichever is higher. A
fraction of at least six (6) months shall be considered one (1) whole year.
The Court has laid down the following standards that an employer should meet to
justify retrenchment and to foil abuse, namely:
The expected losses should be substantial and not merely de minimis in extent;
The substantial losses apprehended must be reasonably imminent;
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The retrenchment must be reasonably necessary and likely to effectively prevent the
expected losses; and
The alleged losses, if already incurred, and the expected imminent losses sought to be
forestalled must be proved by sufficient and convincing evidence.
Anent the last standard of sufficient and convincing evidence, it ought to be pointed
out that a less exacting standard of proof would render too easy the abuse of
retrenchment as a ground for termination of services of employees.
In termination cases, the burden of proving that the dismissal was for a valid or
authorized cause rests upon the employer. Here, petitioner did not submit evidence of
the losses to its business operations and the economic havoc it would thereby
imminently sustain. It only claimed that respondent s termination was due to its
"present business/financial condition." This bare statement fell short of the norm to
show a valid retrenchment. Hence, we hold that there was no valid cause for the
retrenchment of respondent.
Indeed, 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. Thus, by its
failure to present sufficient and convincing evidence to prove that retrenchment was
necessary, respondent s termination due to retrenchment is not allowed.
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
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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
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(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,
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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
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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.
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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
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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
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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.
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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
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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.
VICENTE ANG vs. CEREFINO SAN JOAQUIN, JR. AND DIOSDADO

FERNANDEZ
G.R. No. 185549. August 7, 2013
J. Del Castillo
The employer's act of tearing to pieces the employee's time card may be considered
an outright - not only symbolic - termination of the parties' employment relationship.
Facts:
Petitioner Vicente Ang (Ang) is the proprietor of Virose Furniture and Glass
Supply (Virose) in Tayug, Pangasinan, a wholesaler/retailer of glass supplies,
jalousies, aluminum windows, table glass, and assorted furniture. San Joaquin and
Fernandez (respondents) were employed by Vicente Ang (petitioner) in his business as
helper and driver respectively. The respondents testified against the petitioner in a
hearing relative to 41 criminal cases filed by his former employee. After the said hearing
Ang began to treat respondents with hostility and antagonism.
One day, a heated argument between San Joaquin and Ang's wife Rosa took place,
in view of the former's refusal to obey her instruction to transfer the monobloc chairs in
her restaurant. Upon reporting for work two days later, he found out that his DTR was
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torn into pieces by Ang. He learned that the DTR of Fernandez also suffer the same fate
after they testified in Court. Fernandez was suspended for a week for insubordination
but the act of insubordination was not specified by Ang in his memorandum to the latter.
Respondents filed complaints for illegal constructive dismissal.
The LA dismissed the complaint for lack of merit. The NLRC affirmed the decision
of the LA. The CA reversed the decision of the NLRC. The CA held that the Labor Arbiter
and the NLRC misappreciated the facts which thus led to the erroneous conclusion that
there was no constructive dismissal. It considered Ang’s act of tearing the respondents’
DTRs or time cards as a categorical indication of their dismissal from employment.
Issue:
Whether or not tearing of DTRs of the employees by the employer constitutes

constructive dismissal
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 and a diminution in pay.” It is a “dismissal in disguise or an act
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.” “Constructive dismissal exists when
the employee involuntarily resigns due to the harsh, hostile, and unfavorable conditions
set by the employer.” “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.”
The CA is correct in its pronouncement that respondents were constructively

dismissed from work. Moreover, by destroying respondents’ time cards, Ang
discontinued and severed his relationship with respondents. The purpose of a time
record is to show an employee’s attendance in office for work and to be paid accordingly,
taking into account the policy of “no work, no pay”. A daily time record is primarily
intended to prevent damage or loss to the employer, which could result in instances
where it pays an employee for no work done; it is a mandatory requirement for inclusion
in the payroll, and in the absence of an employment agreement, it constitutes evidence
of employment. Thus, when Ang tore the respondents’ time cards to pieces, he virtually
removed them from Virose’s payroll and erased all vestiges of respondents’ employment;
respondents were effectively dismissed from work. The act may be considered an outright
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– not only symbolic – termination of the parties’ employment relationship; the “last straw
that finally broke the camel’s back”, as respondents put it in their Position Paper.
In addition, such tearing of respondents’ time cards confirms petitioner’s

vindictive nature and oppressive conduct, as well as his reckless disregard for
respondents’ rights.
CEBU PEOPLE'S MULTI-PURPOSE COOPERATIVE and MACARIO G.

QUEVEDO,
vs. NICERATO E. CARBONILLA, JR.
G.R. No. 212070, January 27, 2016
The 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.
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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)
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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.
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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
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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.
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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
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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.
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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.
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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
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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
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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
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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.
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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
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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
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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
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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.
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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
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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,
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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:
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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-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
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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:
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
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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
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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.
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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
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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
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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
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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
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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
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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.
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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
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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
Employer's Position
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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
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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.
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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
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.
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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
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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.
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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.chanrobleslaw
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
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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.
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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,
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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
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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:
(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
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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
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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)
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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
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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
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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.
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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.
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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.
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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:
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[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.
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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
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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
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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
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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.
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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
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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
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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
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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
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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.
awred
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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.lesVirtualawlibrary
Hence, the instant petition for review on certiorariwas filed by PAL.
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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.
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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.anRoblesVirtualawlibrary
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:chanRoblesv
\
irtualLawlibrary
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)cralawred
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:chanRoblesvirtualLawlibrary
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(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.cralawred
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.
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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.
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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
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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.
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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
th
of 13 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
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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.
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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:ChanRoblesVirtualawlibrary
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
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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,
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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.
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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
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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.
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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.
Anrob
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.
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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
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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
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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 misconduct and loss of trust and confidence.
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
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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
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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.
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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.aw
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.
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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.
y
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
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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:
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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
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
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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). 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. 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
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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

chanRoblesvirtualLawlibrary(a) Serious misconduct or willful disobedience by the

employee of the lawful orders of his employer or representative in connection with his
work;
xxxx
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
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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
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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,
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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:ChanRoblesVirtualawlibrary
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.
x x x x
So, this case is settled into Amicable settlement and the same hereby considered
closed.blesvirtuallawlibrary
We cannot consider this Conciliation Report as the complete settlement between
the parties. As reasoned by the Court of Appeals, and we agree,
that:ChanRoblesVirtualawlibrary
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
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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.
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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:ChanRoblesVirtualawlibrary
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
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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 cralawlawlibrary
(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.
ROMEO A. GALANG v CITYLAND SHAW TOWER, INC.and VIRGILIO BALDEMOR,

G.R. No. 173291, February 8, 2012
The Facts
On August 9, 2002, petitioner Romeo A. Galang filed a complaint for illegal dismissal
with several money claims, including damages and attorneys fees, against the
respondents Cityland Shaw Tower, Inc. (Cityland) and its Building Manager, Virgilio
Baldemor.
Galang alleged on compulsory arbitration that after the expiration of his employment
contracts with the agencies providing maintenance services to Cityland, he was absorbed
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as a janitor by Cityland with a promise of regular employment after the completion of his
six-month probation. He claimed that even after the lapse of the period, he continued
working for Cityland although he had no idea about his employment status. He did not
know his status for certain until he was shown a document on May 21, 2002 informing
him that his employment would be terminated effective May 20, 2002.
The respondents countered that Cityland absorbed Galang as a casual employee after the
expiration of his contract with Gayren Maintenance Services. They alleged that during his
employment with them, they found him to be remiss in the performance of his job and
he failed, too, to conduct himself as a good employee. At times, he would disobey the
orders of his supervisor, Eva Tupas, Cityland’s janitorial services head.
The respondents further alleged that in the face of Galangs negative work attitude and
job performance, Cityland charged him with gross insubordination, harassment of his
co-employees and conduct unbecoming an employee.
On one occasion, he took pictures of his co-janitors after he allegedly lost P4,000.00 in
his locker; he suspected that the culprit was one of the janitors. This caused agitation
among the janitors, prompting Tupas to investigate the incident. She called the janitors,
including Galang, to a meeting. At the meeting, Galang told Tupas that she was not
qualified to be his supervisor. He also verbally insulted and offended her in the presence
of her subordinates.
Additionally, the janitors, security guards and other employees disclosed that Galang
exhibited an air of superiority towards them and would always shout whenever
misunderstandings occurred. Galangs alleged transgressions were the subject of Tupas
memo to Moralde Arrogante, Citylands President.
The respondents stressed that Citylands Board of Directors terminated Galangs services,
for gross insubordination, effective May 20, 2002, after a comprehensive examination of
the accusation against complainant.
Cityland, through Baldemors reply to the labor arbiters summons, denied liability for
Galangs money claims, maintaining that either the claim had no basis or Galang had
already been granted the benefit.
In a decision dated September 22, 2003, Labor Arbiter Fe Superiaso-Cellan found that
Galang had been illegally dismissed.
On appeal, the National Labor Relations Commission (NLRC) affirmed the labor arbiter’s
findings. The respondents moved for reconsideration, but the NLRC denied the motion
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in its resolution of May 31, 2005. Cityland then elevated the case to the CA through a Rule
65 petition for certiorari.
On March 27, 2006, the CA granted the petition. It annulled the NLRCs February 28, 2005
decision and declared that Galang had been dismissed for a just cause. However, it
ordered Cityland to pay him nominal damages of P30,000.00 for its violation of Galangs
right to procedural due process, in accordance with Agabon v. NLRC.
Issue
Whether Galang was illegally dismissed.
Ruling
The CA committed no reversible error and neither did it commit grave abuse of
discretion in declaring that Galang had been dismissed for cause. Contrary to Galang’s
submission, there is substantial evidence such relevant evidence that a reasonable mind
might accept as adequate to support a conclusion supporting the CA decision.
The pieces of evidence which Galang objected to (the affidavits submitted to the NLRC)
were not the sole basis of the CA ruling. They simply corroborated the respondents
earlier submissions to the labor arbiter. We refer to Tupas memorandum dated May 20,
2002 to Arrogante and Cityland’s reply to the labor arbiters summons where Cityland’s
Board of Directors approved Tupas recommendation, as well as that of the audit team,
for Galang’s dismissal. The grounds for Galang’s dismissal had already been laid down by
Tupas memorandum.
Stated otherwise, the affidavits executed in 2005, simply amplified the evidence Cityland
submitted in 2002, including documents which cited Galang’s serious negligence in
causing the flooding of his assigned condominium floor, which resulted in a costly repair
of the buildings elevator. Additionally, there was Tupas memo to Cityland’s President
which pertains to the case of Romeo Galang xxx for harassment to co-janitors,
insubordination to Supervisor and conduct unbecoming an employee.
As earlier pointed out, Tupas made a report of the incident where Galang took pictures
of his co-janitors whom he considered as suspects in the alleged loss of money
(P4,000.00) kept in his locker. Tupas called a meeting to investigate the matter. She
asked Galang to surrender the pictures, but he refused and harassed the janitors and
insulted Tupas in front of everybody. Tupas also reported that on several occasions,
Galang disobeyed her orders, often finding fault with his co-employees, and was very
hard to deal with. She believed that Galang had been grossly insubordinate and had
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committed acts of harassment against his co-employees. Thus, he was already a liability
to the organization.
In light of the circumstances obtaining in the case, we find credible the respondents
submission that Galang had become unfit to continue in employment. The evidence
supports the view that he continued to exhibit undesirable traits as an employee and as
a person, in relation to both his co-workers and his superiors, particularly Tupas, her
immediate supervisor.
On a different plane, Galang kept on saying that the respondents failed to prove their
case against him, yet he chose to simply ignore, as the CA aptly put it, the respondents
documented accusations against him; he did not even deny them in his comment with
the CA nor in his submissions to this Court.
The procedural due process issue
The finding of a just cause for Galang’s dismissal notwithstanding, we concur with the
CA’s conclusion that Cityland did not afford Galang the required notice before he was
dismissed. As the CA noted, the investigation conference Tupas called to look into the
janitors complaints against Galang, did not constitute the written notice required by law
as he had no clear idea what the charges were. Thus, the CA committed no error in
sustaining his dismissal and awarding him nominal damages as indemnity.
GARDEN OF MEMORIES PARK and LIFE PLAN, INC. and PAULINA T.

REQUIO v NATIONAL LABOR RELATIONS COMMISSION, LABOR
ARBITER FELIPET. GARDUQUE II and HILARIA CRUZ,
G.R. No. 160278, February 8, 2012
The Facts
Petitioner Garden of Memories is engaged in the business of operating a memorial park

situated at Calsadang Bago, Pateros, Metro-Manila and selling memorial Plan and
services.
Respondent Cruz, on the other hand, worked at the Garden of Memories Memorial Park
as a utility worker from August 1991 until her termination in February 1998.
On March 13, 1998, Cruz filed a complaint for illegal dismissal, underpayment of wages,
non-inclusion in the Social Security Services, and non-payment of legal/special holiday,
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premium pay for rest day, 13th month pay and service incentive leave pay against Garden
of Memories before the Department of Labor and Employment (DOLE).
Upon motion of Garden of Memories, Requio was impleaded as respondent on the

alleged ground that she was its service contractor and the employer of Cruz.
In her position paper, Cruz averred that she worked as a utility worker of Garden of
Memories with a salary of P115.00 per day. As a utility worker, she was in charge, among
others, of the cleaning and maintenance of the ground facilities of the memorial park.
Sometime in February 1998, she had a misunderstanding with a co-worker named
Adoracion Requio regarding the use of a garden water hose. When the misunderstanding
came to the knowledge of Requio, the latter instructed them to go home and not to return
anymore. After three (3) days, Cruz reported for work but she was told that she had been
replaced by another worker. She immediately reported the matter of her replacement to
the personnel manager of Garden of Memories and manifested her protest.
Cruz argued that as a regular employee of the Garden of Memories, she could not be
terminated without just or valid cause. Also, her dismissal was violative of due process as
she was not afforded the opportunity to explain her side before her employment was
terminated.
Cruz further claimed that as a result of her illegal dismissal, she suffered sleepless nights,
serious anxiety and mental anguish.
In its Answer, Garden of Memories denied liability for the claims of Cruz and asserted
that she was not its employee but that of Requio, its independent service contractor, who
maintained the park for a contract price.
In her defense, Requio prayed for the dismissal of the complaint stating that it was
Victoriana, her mother, who hired Cruz, and she merely took over the supervision and
management of the workers of the memorial park when her mother got ill. She claimed
that the ownership of the business was never transferred to her.
Requio further stated that Cruz was not dismissed from her employment but that she
abandoned her work.
Issues
Whether Requio was a legitimate contractor.
Whether Cruz was illegally dismissed.
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Ruling
In the present case, the LA, the NLRC, and the CA are one in declaring that petitioner
Requio was not a legitimate contractor. Echoing the decision of the LA and the NLRC,
the CA reasoned out that Requio was not a licensed contractor and had no substantial
capital or investment in the form of tool, equipment and work premises, among others.
In determining the existence of an independent contractor relationship, several factors

may be considered, such as, but not necessarily confined to, whether or not the
contractor is carrying on an independent business; the nature and extent of the work;
the skill required; the term and duration of the relationship; the right to assign the
performance of specified pieces of work; the control and supervision of the work to
another; the employers power with respect to the hiring, firing and payment of the
contractors workers; the control of the premises; the duty to supply premises, tools,
appliances, materials and labor; and the mode, manner and terms of payment.
On the other hand, there is labor-only contracting where: (a) 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 (b) the workers
recruited and placed by such person are performing activities which are directly related
to the principal business of the employer.
The Court finds no compelling reason to deviate from the findings of the tribunals below.
Both the capitalization requirement and the power of control on the part of Requio are
wanting.
Generally, the presumption is that the contractor is a labor-only contracting unless such
contractor overcomes the burden of proving that it has the substantial capital,
investment, tools and the like. In the present case, though Garden of Memories is not the
contractor, it has the burden of proving that Requio has sufficient capital or investment
since it is claiming the supposed status of Requio as independent contractor. Garden of
Memories, however, failed to adduce evidence purporting to show that Requio had
sufficient capitalization. Neither did it show that she invested in the form of tools,
equipment, machineries, work premises and other materials which are necessary in the
completion of the service contract.
Furthermore, Requio was not a licensed contractor. Her explanation that her business
was a mere livelihood program akin to a cottage industry provided by Garden of
Memories as part of its contribution to the upliftment of the underprivileged residing
near the memorial park proves that her capital investment was not substantial.
Substantial capital or investment refers to capital stocks and subscribed capitalization in
the case of corporations, tools, equipment, implements, machineries, and work premises,
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actually and directly used by the contractor or subcontractor in the performance or
completion of the job, work or service contracted out. Obviously, Requio is a labor-only
contractor.
Another determinant factor that classifies petitioner Requio as a labor-only contractor

was her failure to exercise the right to control the performance of the work of Cruz, as
can be gleaned from the Service Contract Agreementbetween Garden of Memories and
Requio.
The requirement of the law in determining the existence of independent contractorship

is that the contractor should undertake the work on his own account, under his own
responsibility, according to his own manner and method, free from the control and
direction of the employer except as to the results thereof. In this case, however, the
Service Contract Agreement clearly indicates that Requio has no discretion to determine
the means and manner by which the work is performed. Rather, the work should be in
strict compliance with, and subject to, all requirements and standards of Garden of
Memories.
Under these circumstances, there is no doubt that Requio is engaged in labor-only

contracting, and is considered merely an agent of Garden of Memories. As such, the
workers she supplies should be considered as employees of Garden of Memories.
Consequently, the latter, as principal employer, is responsible to the employees of the
labor-only contractor as if such employees have been directly employed by it.
Notably, Cruz was hired as a utility worker tasked to clean, sweep and water the lawn of
the memorial park. She performed activities which were necessary or desirable to its
principal trade or business. Thus, she was a regular employee of Garden of Memories and
cannot be dismissed except for just and authorized causes.
Moreover, the Court agrees with the findings of the tribunals below that respondent Cruz
did not abandon her work but was illegally dismissed.
As the employer, Garden of Memories has the burden of proof to show the employee's
deliberate and unjustified refusal to resume his employment without any intention of
returning.For abandonment to exist, two factors must 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 element as the more determinative
factor being manifested by some overt acts. It has been said that abandonment of
position cannot be lightly inferred, much less legally presumed from certain equivocal
acts. Mere absence is not sufficient.
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In this case, no such intention to abandon her work can be discerned from the actuations
of Cruz. Neither were there overt acts which could be considered manifestations of her
desire to truly abandon her work. On the contrary, her reporting to the personnel
manager that she had been replaced and the immediate filing of the complaint before
the DOLE demonstrated a desire on her part to continue her employment with Garden
of Memories. As correctly pointed out by the CA, the filing of the case for illegal dismissal
negated the allegation of abandonment.
BITOY JAVIER(DANILO P. JAVIER) v FLY ACE CORPORATION/FLORDELYN

CASTILLO
G.R. No. 192558, February 15, 2012
The Facts
On May 23, 2008, Javier filed a complaint before the NLRC for underpayment of salaries
and other labor standard benefits. He alleged that he was an employee of Fly Ace since
September 2007, performing various tasks at the respondents warehouse such as cleaning
and arranging the canned items before their delivery to certain locations, except in
instances when he would be ordered to accompany the companys delivery vehicles, as
pahinante; that he reported for work from Monday to Saturday from 7:00 oclock in the
morning to 5:00 oclock in the afternoon; that during his employment, he was not issued
an identification card and payslips by the company; that on May 6, 2008, he reported for
work but he was no longer allowed to enter the company premises by the security guard
upon the instruction of Ruben Ong (Mr. Ong), his superior; that after several minutes of
begging to the guard to allow him to enter, he saw Ong whom he approached and asked
why he was being barred from entering the premises; that Ong replied by saying,
Tanungin mo anak mo; that he then went home and discussed the matter with his family;
that he discovered that Ong had been courting his daughter Annalyn after the two met
at a fiesta celebration in Malabon City; that Annalyn tried to talk to Ong and convince
him to spare her father from trouble but he refused to accede; that thereafter, Javier was
terminated from his employment without notice; and that he was neither given the
opportunity to refute the cause/s of his dismissal from work.
To support his allegations, Javier presented an affidavit of one Bengie Valenzuela who
alleged that Javier was a stevedore or pahinante of Fly Ace from September 2007 to
January 2008. The said affidavit was subscribed before the Labor Arbiter (LA).
For its part, Fly Ace averred that it was engaged in the business of importation and sales
of groceries. Sometime in December 2007, Javier was contracted by its employee, Mr.
Ong, as extra helper on apakyaw basis at an agreed rate of ₱300.00 per trip, which was
later increased to ₱325.00 in January 2008. Mr. Ong contracted Javier roughly 5 to 6 times
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only in a month whenever the vehicle of its contracted hauler, Milmar Hauling Services,
was not available. On April 30, 2008, Fly Ace no longer needed the services of Javier.
Denying that he was their employee, Fly Ace insisted that there was no illegal dismissal.
Fly Ace submitted a copy of its agreement with Milmar Hauling Services and copies of
acknowledgment receipts evidencing payment to Javier for his contracted services
bearing the words, daily manpower (pakyaw/piece rate pay) and the latters
signatures/initials.
On November 28, 2008, the LA dismissed the complaint for lack of merit on the ground
that Javier failed to present proof that he was a regular employee of Fly Ace.
On appeal with the NLRC, Javier was favored. Finding Javier to be a regular employee,
the NLRC ruled that he was entitled to a security of tenure. For failing to present proof
of a valid cause for his termination, Fly Ace was found to be liable for illegal dismissal of
Javier who was likewise entitled to backwages and separation pay in lieu of reinstatement.
On March 18, 2010, the CA annulled the NLRC findings that Javier was indeed a former
employee of Fly Ace and reinstated the dismissal of Javier’s complaint as ordered by the
LA.
Issue
Whether an employer-employee relationship existed between Fly Ace and Javier.
Ruling
In this case, the LA and the CA both concluded that Javier failed to establish his
employment with Fly Ace. By way of evidence on this point, all that Javier presented were
his self-serving statements purportedly showing his activities as an employee of Fly Ace.
Clearly, Javier failed to pass the substantiality requirement to support his claim. Hence,
the Court sees no reason to depart from the findings of the CA.
While Javier remains firm in his position that as an employed stevedore of Fly Ace, he
was made to work in the company premises during weekdays arranging and cleaning
grocery items for delivery to clients, no other proof was submitted to fortify his claim.
The lone affidavit executed by one Bengie Valenzuela was unsuccessful in strengthening
Javiers cause. In said document, all Valenzuela attested to was that he would frequently
see Javier at the workplace where the latter was also hired as stevedore. Certainly, in
gauging the evidence presented by Javier, the Court cannot ignore the inescapable
conclusion that his mere presence at the workplace falls short in proving employment
therein. The supporting affidavit could have, to an extent, bolstered Javiers claim of being
tasked to clean grocery items when there were no scheduled delivery trips, but no
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information was offered in this subject simply because the witness had no personal
knowledge of Javiers employment status in the company. Verily, the Court cannot accept
Javiers statements, hook, line and sinker.
The Court is of the considerable view that on Javier lies the burden to pass the well-
settled tests to determine the existence of an employer-employee relationship, viz: (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 employees conduct. Of these elements, the
most important criterion is whether the employer controls or has reserved the right to
control the employee not only as to the result of the work but also as to the means and
methods by which the result is to be accomplished.
In this case, Javier was not able to persuade the Court that the above elements exist in
his case. He could not submit competent proof that Fly Ace engaged his services as a
regular employee; that Fly Ace paid his wages as an employee, or that Fly Ace could
dictate what his conduct should be while at work. In other words, Javiers allegations did
not establish that his relationship with Fly Ace had the attributes of an employer-
employee relationship on the basis of the above-mentioned four-fold test. Worse, Javier
was not able to refute Fly Aces assertion that it had an agreement with a hauling company
to undertake the delivery of its goods. It was also baffling to realize that Javier did not
dispute Fly Aces denial of his services exclusivity to the company. In short, all that Javier
laid down were bare allegations without corroborative proof.
Fly Ace does not dispute having contracted Javier and paid him on a per trip rate as a
stevedore, albeit on a pakyaw basis. The Court cannot fail to note that Fly Ace presented
documentary proof that Javier was indeed paid on a pakyaw basis per the
acknowledgment receipts admitted as competent evidence by the LA. Unfortunately for
Javier, his mere denial of the signatures affixed therein cannot automatically sway us to
ignore the documents because forgery cannot be presumed and must be proved by clear,
positive and convincing evidence and the burden of proof lies on the party alleging
forgery.
CANADIAN OPPORTUNITIES UNLIMITED, INC. v BART Q. DALANGIN, JR.,

G.R. No. 172223, February 6, 2012
The Facts
On November 20, 2001, respondent Bart Q. Dalangin, Jr. filed a complaint for illegal
dismissal, with prayer for reinstatement and backwages, as well as damages (moral and
exemplary) and attorney’s fees, against petitioner Canadian Opportunities Unlimited,
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Inc. (company). The company, based in Pasong Tamo, Makati City, provides assistance
and related services to applicants for permanent residence in Canada.
Dalangin was hired by the company only in the previous month, or in October 2001, as
Immigration and Legal Manager. He was placed on probation for six months. He was to
report directly to the Chief Operations Officer, Annie Llamanzares Abad. His tasks
involved principally the review of the clients’ applications for immigration to Canada to
ensure that they are in accordance with Canadian and Philippine laws.
Through a memorandum dated October 27, 2001, signed by Abad, the company
terminated Dalangin’s employment, declaring him unfit and unqualified to continue as
Immigration and Legal Manager, based on the following grounds:
a) Obstinacy and utter disregard of company policies. Propensity to

take prolonged and extended lunch breaks, shows no interest in
familiarizing oneself with the policies and objectives.
b) Lack of concern for the companys interest despite having just been
employed in the company. (Declined to attend company sponsored
activities, seminars intended to familiarize company employees
with Management objectives and enhancement of company interest
and objectives.)
c) Showed lack of enthusiasm toward work.
d) Showed lack of interest in fostering relationship with his co-
employees.
Issue:
Whether Dalangin, a probationary employee, was validly dismissed.
Ruling
The essence of a probationary period of employment fundamentally lies in the purpose

or objective of both the employer and the employee during the period. While the
employer observes the fitness, propriety and efficiency of a probationer to ascertain
whether he is qualified for permanent employment, the latter seeks to prove to the
former that he has the qualifications to meet the reasonable standards for permanent
employment.
The trial period or the length of time the probationary employee remains on probation
depends on the parties agreement, but it shall not exceed six (6) months under Article
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281 of the Labor Code, unless it is covered by an apprenticeship agreement stipulating a
longer period. Article 281 provides:
Probationary employment. 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.
As the Court explained in International Catholic Migration Commission, the word

probationary, as used to describe the period of employment, implies the purpose of the
term or period, but not its length. Thus, the fact that Dalangin was separated from the
service after only about four weeks does not necessarily mean that his separation from
the service is without basis.
Contrary to the CA’s conclusions, we find substantial evidence indicating that the
company was justified in terminating Dalangin’s employment, however brief it had been.
Time and again, we have emphasized that substantial evidence is such relevant evidence
as a reasonable mind might accept as adequate to support a conclusion.
Dalangin overlooks the fact, wittingly or unwittingly, that he offered glimpses of his own
behavior and actuations during his four-week stay with the company; he betrayed his
negative attitude and regard for the company, his co-employees and his work.
Dalangin admitted in compulsory arbitration that the proximate cause for his dismissal
was his refusal to attend the company’s Values Formation Seminar scheduled for October
27, 2001, a Saturday. He refused to attend the seminar after he learned that it had no
relation to his duties, as he claimed, and that he had to leave at 2:00 p.m. because he
wanted to be with his family in the province. When Abad insisted that he attend the
seminar to encourage his co-employees to attend, he stood pat on not attending, arguing
that marked differences exist between their positions and duties, and insinuating that he
did not want to join the other employees. He also questioned the scheduled 2:00 p.m.
seminars on Saturdays as they were not supposed to be doing a company activity beyond
2:00 p.m. He considers 2:00 p.m. as the close of working hours on Saturdays; thus,
holding them beyond 2:00 p.m. would be in violation of the law.
The Values Formation Seminar incident is an eye-opener on the kind of person and
employee Dalangin was. His refusal to attend the seminar brings into focus and validates
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what was wrong with him, as Abad narrated in her affidavit and as reflected in the
termination of employment memorandum. It highlights his lack of interest in
familiarizing himself with the company’s objectives and policies. Significantly, the
seminar involved acquainting and updating the employees with the company’s policies
and objectives. Had he attended the seminar, Dalangin could have broadened his
awareness of the company’s policies, in addition to Abad’s briefing him about the
company’s policies on punctuality and attendance, and the procedures to be followed in
handling the clients’ applications. No wonder the company charged him with obstinacy.
The incident also reveals Dalangin’s lack of interest in establishing good working
relationship with his co-employees, especially the rank and file; he did not want to join
them because of his view that the seminar was not relevant to his position and duties. It
also betrays an arrogant and condescending attitude on his part towards his co-
employees, and a lack of support for the company objective that company managers be
examples to the rank and file employees.
Additionally, very early in his employment, Dalangin exhibited negative working habits,
particularly with respect to the one hour lunch break policy of the company and the
observance of the company’s working hours. Thus, Abad stated that Dalangin would take
prolonged lunch breaks or would go out of the office without leave of the company only
to call the personnel manager later to inform the latter that he would be unable to return
as he had to attend to personal matters. Without expressly countering or denying Abad’s
statement, Dalangin dismissed the charge for the company’s failure to produce his daily
time record.
The same thing is true with Dalangin’s handling of Tecson’s application for immigration
to Canada, especially his failure to find ways to appeal the denial of Tecson’s application,
as Abad stated in her affidavit. Again, without expressly denying Abad’s statement or
explaining exactly what he did with Tecson’s application, Dalangin brushes aside Abad’s
insinuation that he was not doing his job well, with the ready argument that the company
did not even bother to present Tecson’s testimony.
In the face of Abad’s direct statements, as well as those of his co-employees, it is puzzling
that Dalangin chose to be silent about the charges, other than saying that the company
could not cite any policy he violated. All along, he had been complaining that he was not
able to explain his side, yet from the labor arbiter’s level, all the way to this Court, he
offered no satisfactory explanation of the charges. In this light, coupled with Dalangin’s
adamant refusal to attend the company’s Values Formation Seminar and a similar
program scheduled earlier, we find credence in the company’s submission that Dalangin
was unfit to continue as its Immigration and Legal Manager. As we stressed earlier, we
are convinced that the company had seen enough from Dalangin’s actuations, behavior
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and deportment during a four-week period to realize that Dalangin would be a liability
rather than an asset to its operations.
We, therefore, disagree with the CA that the company could not have fully determined
Dalangin’s performance barely one month into his employment. As we said in
International Catholic Migration Commission, the probationary term or period denotes
its purpose but not its length. To our mind, four weeks was enough for the company to
assess Dalangin’s fitness for the job and he was found wanting. In separating Dalangin
from the service before the situation got worse, we find the company not liable
for illegal dismissal.
The procedural due process issue
Section 2, Rule I, Book VI of the Labor Codes Implementing Rules and Regulations
provides:
If the termination is brought about by the completion of a contract

or phase thereof, or by failure of an employee to meet the standards of the
employer in the case of probationary employment, it shall be sufficient that
a written notice is served the employee within a reasonable time from the
effective date of termination.
The company contends that it complied with the above rule when it asked Dalangin,
through Abad’s Memorandum dated October 26, 2001, to explain why he could not
attend the seminar scheduled for October 27, 2001. When he failed to submit his
explanation, the company, again through Abad, served him a notice the following day,
October 27, 2001, terminating his employment. Dalangin takes strong exception to the
company’s submission. He insists that the company failed to comply with the rules as he
was not afforded a reasonable time to defend himself before he was dismissed.
The records support Dalangin’s contention. The notice served on him did not give him a
reasonable time, from the effective date of his separation, as required by the rules. He
was dismissed on the very day the notice was given to him, or, on October 27, 2001.
Although we cannot invalidate his dismissal in light of the valid cause for his separation,
the company’s non-compliance with the notice requirement entitles Dalangin to
indemnity, in the form of nominal damages in an amount subject to our discretion.
Under the circumstances, we consider appropriate an award of nominal damages of
P10,000.00 to Dalangin.
JOSAN, JPS, SANTIAGO CARGO MOVERS, and MARY GRACE S. PARUNGAO,
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vEDUARDO RAMOS ADUNA,
G.R. No. 190794, February 22, 2012
The Facts
Petitioners are engaged in the trucking business under the sole proprietorship of
Parungao, their president-manager. Sometime in January 2001, petitioners hired Aduna
as a delivery truck driver. He was tasked to make deliveries of various ingredients used
in the production of poultry feeds. His payment was on a per trip basis, the amount of
which depended on the length of the trip or the distance to the point of destination.
Petitioners narrate that on the morning of 5 December 2005, Parungao told Aduna to
come to work later in the day to make deliveries. When he reported for work a little
before 5 p.m. that afternoon, Parungao noticed that he was drunk. She then advised him
not to make deliveries anymore on account of his inebriated condition. Allegedly,
respondent reacted discourteously by hurling invectives at her. He purportedly uttered,
Hindi lang sa inyo makakapagtrabaho dahil maraming kompanya, after which he threw
out the keys of the vehicles assigned to him and stormed out of the office. On his way
out, he met a co-employee, Raymond dela Cruz (Dela Cruz). The two had a confrontation
within company premises, which eventually led to respondents punching Dela Cruz
several times.
Aduna did not report for work until about 50 days from the date of the incident. On 24
January 2006, when he returned to the office, he allegedly informed a certain Maria Agnes
del Castillo that he no longer wished to continue working with petitioners. He then
purportedly asked for a certificate of employment, which he would use in applying for a
new job. Thus, petitioners posit that they did not terminate him as it was actually
respondent who had refused to work. He no longer worked for petitioners thereafter.
Respondent, on the other hand, denies being drunk when he went to work. According to
him, he only had a bottle of beer early that day. He also rejects the allegation that he
hurled invectives at Parungao, as he had never been instructed to cease carrying out his
delivery assignments in the first place. He also denies punching Dela Cruz, explaining
that they simply had a misunderstanding. Supposedly, Dela Cruz was just displeased with
how the new driver, whom Aduna had recommended, was being treated favorably by
petitioners. Respondent then alludes to the police blotter of Dela Cruz, who only
mentioned being elbowed by Aduna. Respondent then narrates that after the incident of
5 December 2005, he was told to lie low until further notice in order to set an example to
other employees. Despite his objections, he eventually acceded to the instruction.
Thereafter, respondent claims that he was no longer given any delivery assignments and
was even prevented from entering company premises. He argues that petitioner
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voluntarily issued to him a Certificate of Employment without his asking, and that he
was told to look for work for the time being. He thus contends that he did not abandon
his job. Consequently, he filed a Complaint for illegal dismissal and nonpayment of
overtime, holiday, 13th month, and service incentive leave pays.
Issue
The sole issue in this case is whether respondent was illegally dismissed.
Ruling
Abandonment is a matter of intention and cannot lightly be presumed from certain

equivocal acts, especially during times of hardship. Thus, we have ruled in a series of
cases that there are two elements that must concur in order for an act to constitute
abandonment: (1) failure to report for work or absence without valid or justifiable reason;
and (2) a clear intention to sever the employer-employee relationship. The second
element is the more determinative factor, which must be manifested by some overt acts.
Mere absence or failure to report for work does not, ipso facto, amount to abandonment
of work. To prove abandonment, the employer must show that the employee deliberately
and unjustifiably refused to resume his employment without any intention of returning.
The NLRC and the CA found that the true reason why respondent did not report for work
for about 50 days was that he had been told by petitioners to lie low. This is a finding of
fact, which we shall no longer disturb. Thus, when respondent realized that he was no
longer going to receive work assignments, he wasted no time in filing a case for illegal
dismissal against petitioners. Employees who take steps to protest their dismissal cannot
logically be said to have abandoned their work. A charge of abandonment is totally
inconsistent with the immediate filing of a complaint for illegal dismissal. The filing
thereof is proof enough of ones desire to return to work, thus negating any suggestion of
abandonment.
Respondent must therefore be deemed to have been constructively dismissed. There is

constructive dismissal when continued employment is rendered impossible,
unreasonable, or unlikely. In this case, although Aduna agreed to lie low because of the
incident, it became clear that petitioners no longer had the intention to give him future
assignments. In fact, they already deemed the issuance of the Certificate of Employment
as a sign of abandonment of work. The continued failure of petitioners to offer him a new
assignment makes the former liable for constructive dismissal. Clearly, the instruction to
temporarily lie low was meant to be for a permanent cessation from work. With the
absence of any proof of dire exigency that would justify the failure to give further
assignments, the only logical conclusion is that respondent was constructively dismissed.
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In an illegal dismissal case, the onus probandi rests on the employer, who has to prove
that the dismissal of an employee was for a valid cause. Since petitioners based their
defense on abandonment by respondent, it is likewise incumbent upon them, as
employers, to prove that he clearly, voluntarily, and intentionally abandoned his work.
As previously discussed, it is clear from the evidence on record that petitioners failed to
discharge this burden. As we have consistently affirmed, if the evidence presented by the
employer and the employee are in equipoise, the scales of justice must be tilted in favor
of the latter. Accordingly, the finding of illegal dismissal must be upheld.
Article 279 of the Labor Code provides that an employee who is unjustly dismissed from
work shall be entitled to reinstatement without loss of seniority rights and other
privileges; to his full back wages, inclusive of allowances; and to other applicable benefits
or their monetary equivalent computed from the time compensation was withheld up to
the time of actual reinstatement. However, in recognition of the strained relations
between petitioners and respondent, the former are instead liable to give separation pay
as found by the CA.
LYNVIL FISHING ENTERPRISES, INC. and/or ROSENDO S. DE BORJA,

V ANDRES G. ARIOLA, JESSIE D. ALCOVENDAS, JIMMY B. CALINAO AND
LEOPOLDO G. SEBULLEN,
G.R. No. 181974, February 1, 2012
The Facts
Lynvil Fishing Enterprises, Inc. (Lynvil) is a company engaged in deep-sea fishing,

operating along the shores of Palawan and other outlying islands of the Philippines. It is
operated and managed by Rosendo S. de Borja.
On 1 August 1998, Lynvil received a report from Romanito Clarido, one of its employees,
that on 31 July 1998, he witnessed that while on board the company vessel Analyn VIII,
Lynvil employees, namely: Andres G. Ariola (Ariola), the captain; Jessie D. Alcovendas
(Alcovendas), Chief Mate; Jimmy B. Calinao (Calinao), Chief Engineer; Ismael G. Nubla
(Nubla), cook; Elorde Baez (Baez), oiler; and Leopoldo D. Sebullen (Sebullen), bodegero,
conspired with one another and stole eight (8) tubs of pampano and tangigue fish and
delivered them to another vessel, to the prejudice of Lynvil.
The said employees were engaged on a per trip basis or por viaje which terminates at the
end of each trip. Ariola, Alcovendas and Calinao were managerial field personnel while
the rest of the crew were field personnel.
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By reason of the report and after initial investigation, Lynvils General Manager Rosendo
S. De Borja (De Borja) summoned respondents to explain within five (5) days why they
should not be dismissed from service. However, except for Alcovendas and Baez, the
respondents refused to sign the receipt of the notice.
Failing to explain as required, respondents employment was terminated.
Lynvil, through De Borja, filed a criminal complaint against the dismissed employees for
violation of P.D. 532, or the Anti-Piracy and Anti-Highway Robbery Law of 1974 before
the Office of the City Prosecutor of Malabon City.
On 12 November 1998, First Assistant City Prosecutor Rosauro Silverio found probable
cause for the indictment of the dismissed employees for the crime of qualified theftunder
the Revised Penal Code.
On the other hand, the story of the defense is:
The private respondents were crew members of Lynvils vessel named Analyn VIII.
On 31 July 1998, they arrived at the Navotas Fishport on board Analyn VIII loaded with
1,241 baeras of different kinds of fishes. These baeras were delivered to a consignee named
SAS and Royale.
The following day, the private respondents reported back to Lynvil office to inquire about
their new job assignment but were told to wait for further advice. They were not allowed
to board any vessel.
On 5 August 1998, only Alcovendas and Baez received a memorandum from De Borja
ordering them to explain the incident that happened on 31 July 1998. Upon being
informed about this, Ariola, Calinao, Nubla and Sebullen went to the Lynvil office.
However, they were told that their employments were already terminated.
Aggrieved, the employees filed with the Arbitration Branch of the National Labor
Relations Commission-National Capital Region on 25 August 1998 a complaint for illegal
dismissal with claims for backwages, salary differential reinstatement, service incentive
leave, holiday pay and its premium and 13th month pay from 1996 to1998. They also
claimed for moral, exemplary damages and attorneys fees for their dismissal with bad
faith.
They added that the unwarranted accusation of theft stemmed from their oral demand
of increase of salaries three months earlier and their request that they should not be
required to sign a blank payroll and vouchers.
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On 5 June 2002, Labor Arbiter Ramon Valentin C. Reyes found merit in complainants
charge of illegal dismissal
The Labor Arbiter found that there was no evidence showing that the private respondents
received the 41 baeras of pampano as alleged by De Borja in his reply-affidavit; and that
no proof was presented that the 8 baeras of pampano [and tangigue] were missing at the
place of destination.
The Labor Arbiter disregarded the Resolution of Assistant City Prosecutor Rosauro
Silverio on the theft case. He reasoned out that the Labor Office is governed by different
rules for the determination of the validity of the dismissal of employees.
The Labor Arbiter also ruled that the contractual provision that the employment
terminates upon the end of each trip does not make the respondents dismissal legal. He
pointed out that respondents and Lynvil did not negotiate on equal terms because of the
moral dominance of the employer.
The Labor Arbiter found that the procedural due process was not complied with and that
the mere notice given to the private respondents fell short of the requirement of ample
opportunity to present the employees side.
Issues
a.) Whether just cause existed for the termination of respondent’s employment
b.) Whether respondents are regular employees
c.) Whether procedural due process was observed
Ruling
In Nicolas v. National Labor Relations Commission, we held that a criminal conviction is

not necessary to find just cause for employment termination. Otherwise stated, an
employee’s acquittal in a criminal case, especially one that is grounded on the existence
of reasonable doubt, will not preclude a determination in a labor case that he is guilty of
acts inimical to the employer’s interests. In the reverse, the finding of probable cause is
not followed by automatic adoption of such finding by the labor tribunals.
In other words, whichever way the public prosecutor disposes of a complaint, the finding
does not bind the labor tribunal.
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Thus, Lynvil cannot argue that since the Office of the Prosecutor found probable cause
for theft the Labor Arbiter must follow the finding as a valid reason for the termination
of respondent’s employment. The proof required for purposes that differ from one and
the other are likewise different.
Nonetheless, even without reliance on the prosecutors finding, we find that there was
valid cause for respondent’s dismissal.
Breach of trust is present in this case.
We agree with the ruling of the Labor Arbiter and Court of Appeals that the quantity of
tubs expected to be received was the same as that which was loaded. However, what is
material is the kind of fish loaded and then unloaded. Sameness is likewise needed.
We cannot close our eyes to the positive and clear narration of facts of the three witnesses
to the commission of qualified theft. Jonathan Distajo, a crew member of the Analyn VIII,
stated in his letter addressed to De Borja dated 8 August 1998, that while the vessel was
traversing San Nicolas, Cavite, he saw a small boat approach them. When the boat was
next to their vessel, Alcovendas went inside the stockroom while Sebullen pushed an
estimated four tubs of fish away from it. Ariola, on the other hand, served as the lookout
and negotiator of the transaction. Finally, Baez and Calinao helped in putting the tubs in
the small boat. He further added that he received P800.00 as his share for the transaction.
Romanito Clarido, who was also on board the vessel, corroborated the narration of
Distajo on all accounts in his 25 August 1998 affidavit. He added that Alcovendas told
him to keep silent about what happened on that day. Sealing tight the credibility of the
narration of theft is the affidavit executed by Elorde Baez dated 3 May 1999. Baez was one
of the dismissed employees who actively participated in the taking of the tubs. He
clarified in the affidavit that the four tubs taken out of the stockroom in fact contained
fish taken from the eight tubs. He further stated that Ariola told everyone in the vessel
not to say anything and instead file a labor case against the management. Clearly, we
cannot fault Lynvil and De Borja when it dismissed the employees.
Lynvil contends that it cannot be guilty of illegal dismissal because the private
respondents were employed under a fixed-term contract which expired at the end of the
voyage.
Contrarily, the private respondents contend that they became regular employees by
reason of their continuous hiring and performance of tasks necessary and desirable in
the usual trade and business of Lynvil.
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Jurisprudence, laid two conditions for the validity of a fixed-contract agreement between
the employer and employee:
First, 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
Second, 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.
Textually, the provision that: NA ako ay sumasang-ayon na maglingkod at gumawa ng

mga gawain sang-ayon sa patakarang por viaje na magmumula sa pagalis sa Navotas
papunta sa pangisdaan at pagbabalik sa pondohan ng lantsa sa Navotas, Metro Manila is
for a fixed period of employment. In the context, however, of the facts that: (1) the
respondents were doing tasks necessarily to Lynvils fishing business with positions
ranging from captain of the vessel to bodegero; (2) after the end of a trip, they will again
be hired for another trip with new contracts; and (3) this arrangement continued for
more than ten years, the clear intention is to go around the security of tenure of the
respondents as regular employees. And respondents are so by the express provisions of
the second paragraph of Article 280, thus:
xxx 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.
The same set of circumstances indicate clearly enough that it was the need for a
continued source of income that forced the employees acceptance of the por viaje
provision.
Having found that respondents are regular employees who may be, however, dismissed
for cause as we have so found in this case, there is a need to look into the procedural
requirement of due process in Section 2, Rule XXIII, Book V of the Rules Implementing
the Labor Code. It is required that the employer furnish the employee with 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.
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From the records, there was only one written notice which required respondents to
explain within five (5) days why they should not be dismissed from the service.
Alcovendas was the only one who signed the receipt of the notice. The others, as claimed
by Lynvil, refused to sign. The other employees argue that no notice was given to them.
Despite the inconsistencies, what is clear is that no final written notice or notices of
termination were sent to the employees.
The twin requirements of notice and hearing constitute the elements of [due] process in
cases of employee's dismissal. The requirement of notice is intended to inform the
employee concerned of the employer's intent to dismiss and the reason for the proposed
dismissal. Upon the other hand, the requirement of hearing affords the employee an
opportunity to answer his employer's charges against him and accordingly, to defend
himself therefrom before dismissal is effected. Obviously, the second written notice, as
indispensable as the first, is intended to ensure the observance of due process.
NEGROS SLASHERS, INC., RODOLFO C. ALVAREZ AND VICENTE TAN

v ALVIN L. TENG
G.R. No. 187122, February 22, 2012
The Facts
Respondent Alvin Teng is a professional basketball player who started his career as such
in the Philippine Basketball Association and then later on played in the Metropolitan
Basketball Association (MBA).
On February 4, 1999, Teng signed a 3-year contract(which included a side contract and
agreement for additional benefits and bonuses) with the Laguna Lakers. Before the
expiration of his contract with the Laguna Lakers on December 31, 2001, the Lakers traded
and/or transferred Teng to petitioner Negros Slashers, with the latter assuming the
obligations of Laguna Lakers under Tengs unexpired contract, including the monthly
salary of P250,000, P50,000 of which remained to be the obligation of the Laguna Lakers.
On March 28, 2000, the management of the Laguna Lakers formally informed Teng of
his transfer to the Negros Slashers.Teng executed with the Negros Slashers the Players
Contract of Employment.
On Game Number 4 of the MBA Championship Round for the year 2000 season, Teng
had a below-par playing performance. Because of this, the coaching staff decided to pull
him out of the game. Teng then sat on the bench, untied his shoelaces and donned his
practice jersey. On the following game, Game Number 5 of the Championship Round,
Teng called-in sick and did not play.
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On November 21, 2000, Vicente Tan, Finance Head of Negros Slashers, wrote Teng
requiring him to explain in writing why no disciplinary action should be taken against
him for his precipitated absence during the crucial Game 5 of the National Championship
Round. He was further informed that a formal investigation would be conducted on
November 28, 2000. The hearing, however, did not push through because Teng was
absent on the said scheduled investigation. Hearing was rescheduled for December 11,
2000. On said date, the investigation proceeded, attended by Teng’s representatives,
Atty. Arsenio Yulo and Atty. Jose Aspiras. A subsequent meeting was also conducted
attended by the management, coaching staff and players of the Negros Slashers team,
wherein the team members and coaching staff unanimously expressed their sentiments
against Teng and their opposition against the possibility of Teng joining back the team.
On March 16, 2001, the management of Negros Slashers came up with a decision, and
through its General Manager, petitioner Rodolfo Alvarez, wrote Teng informing him of
his termination from the team.
On July 28, 2001, Teng filed a complaint before the Office of the Commissioner of the
MBA pursuant to the provision of the Uniform Players Contract which the parties had
executed. Subsequently, on November 6, 2001, Teng also filed an illegal dismissal case
with the Regional Arbitration Branch No. VI of the NLRC.
On July 16, 2002, the Labor Arbiter issued a decision finding Tengs dismissal illegal and
ordering petitioner Negros Slashers, Inc. to pay Teng P2,530,000 representing his unpaid
salaries, separation pay and attorney’s fees.
The case was then appealed to the NLRC. On September 10, 2004, the NLRC issued a
Decision setting aside the July 16, 2002 Decision of the Labor Arbiter and entering a new
one dismissing the complaint for being premature since the arbitration proceedings
before the Commissioner of the MBA were still pending when Teng filed his complaint
Teng filed a motion for reconsideration, but it was denied for being filed beyond the ten-
day reglementary period provided for in Section 15, Rule VII of the NLRC Rules of
Procedure.
Aggrieved, Teng filed a petition for certiorari with the CA assailing the NLRC Decision
dated September 10, 2004 and the Resolution dated March 21, 2005 denying his motion
for reconsideration.
On September 17, 2008 the CA rendered the assailed Decision setting aside the
September 10, 2004 Decision and March 21, 2005 Resolution of the NLRC and reinstating
with modification the Labor Arbiter’s Decision.
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The CA reinstated the findings of the Labor Arbiter that Teng was illegally dismissed
because the grounds relied upon by petitioners were not enough to merit the supreme
penalty of dismissal. The CA held that there was no serious misconduct or willful
disobedience or insubordination on Teng’s part. On the issue of jurisdiction, the CA ruled
that the Labor Arbiter had jurisdiction over the case notwithstanding the pendency of
arbitration proceedings in the Office of the Commissioner of the MBA.
Petitioners sought reconsideration of the above ruling, but their motion was denied by
the CA in a Resolutiondated February 11, 2009.
Petitioners now come to this Court assailing the Decision dated September 17, 2008 and
Resolution dated February 11, 2009 of the CA.
Issues
(1) whether the CA erred in giving due course to respondent Teng’s petition for certiorari
despite its late filing;
(2) whether Teng violated the rule on forum shopping when he filed a complaint for
illegal dismissal with the Regional Arbitration Branch of the NLRC while a similar
complaint was pending in the Office of the Commissioner of the MBA; and
(3) whether the CA erred in ruling that Teng’s dismissal from the Negros Slashers Team
was unjustified and too harsh considering his misconduct.
Ruling
On the first issue raised by petitioners, we rule that the CA did not commit a reversible
error in giving due course to Teng’s petition for certiorari although said petition was filed
late. Ordinarily, rules of procedure are strictly enforced by courts in order to impart
stability in the legal system. However, in not a few instances, we relaxed the rigid
application of the rules of procedure to afford the parties the opportunity to fully
ventilate their cases on the merits. This is in line with the time honored principle that
cases should be decided only after giving all the parties the chance to argue their causes
and defenses. In that way, the ends of justice would be better served. For indeed, the
general objective of procedure is to facilitate the application of justice to the rival claims
of contending parties, bearing always in mind that procedure is not to hinder but to
promote the administration of justice.
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Indeed the prevailing trend is to accord party litigants the amplest opportunity for the
proper and just determination of their causes, free from the constraints of needless
technicalities.
Here, besides the fact that a denial of the recourse to the CA would serve more to
perpetuate an injustice and violation of Teng’s rights under our labor laws, we find that
as correctly held by the CA, no intent to delay the administration of justice could be
attributed to Teng. The CA therefore did not commit reversible error in excusing Teng’s
one-day delay in filing his motion for reconsideration and in giving due course to his
petition for certiorari.
As regards the second issue, we likewise find no merit in petitioners claim that
respondent’s act of filing a complaint with the Labor Arbiter while the same case was
pending with the Office of the Commissioner of the MBA constituted forum shopping.
For forum shopping to exist, it is necessary that (a) there be identity of parties or at least
such parties that represent the same interests in both actions; (b) there be identity of
rights asserted and relief prayed for, the relief being founded on the same facts; and (c)
the identity of the two preceding particulars is such that any judgment rendered in one
action will, regardless of which party is successful, amount to res judicata in the other
action.
Petitioners are correct as to the first two requisites of forum shopping. First, there is
identity of parties involved: Negros Slashers Inc. and respondent Teng. Second, there is
identity of rights asserted i.e., the right of management to terminate employment and
the right of an employee against illegal termination. However, the third requisite of
forum shopping is missing in this case. Any judgment or ruling of the Office of the
Commissioner of the MBA will not amount to res judicata.
To clarify, res judicata is defined in jurisprudence as to have four basic elements: (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; (3) the
disposition of the case must be a judgment on the merits; and (4) there must be as
between the first and second action, identity of parties, subject matter, and causes of
action.
Here, although contractually authorized to settle disputes, the Office of the

Commissioner of the MBA is not a court of competent jurisdiction as contemplated by
law with respect to the application of the doctrine of res judicata. At best, the Office of
the Commissioner of the MBA is a private mediator or go-between as agreed upon by
team management and a player in the MBA Players Contract of Employment. Any
judgment that the Office of the Commissioner of the MBA may render will not result in
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a bar for seeking redress in other legal venues. Hence, respondent’s action of filing the
same complaint in the Regional Arbitration Branch of the NLRC does not constitute
forum shopping.
On the third issue, we find that the penalty of dismissal handed out against Teng was
indeed too harsh.
We understand petitioners in asserting that a basketball organization is a team-based

enterprise and that a harmonious working relationship among team players is essential
to the success of the organization. We also take into account the petition of the other
team members voicing out their desire to continue with the team without Teng. We note
likewise the sentiments of the players and coaching staff during the meeting of February
4, 2001 stating how they felt when Teng abandoned them during a crucial Game Number
5 in the MBA championship round.
Petitioners rely heavily on the alleged effects of Teng’s actions on the rest of the team.
However, such reaction from team members is expected after losing a game, especially a
championship game. It is also not unlikely that the team members looked for someone to
blame after they lost the championship games and that Teng happened to be the closest
target of the team’s frustration and disappointment. But all these sentiments and emotions
from Negros Slashers players and staff must not blur the eyes of the Court from objectively
assessing Teng’s infraction in order to determine whether the same constitutes just ground
for dismissal. The incident in question should be clear: Teng had a below-par performance
during Game Number 4 for which he was pulled out from the game, and then he untied
his shoelaces and donned his practice jersey. In Game Number 5, he did not play.
As an employee of the Negros Slashers, Teng was expected to report for work regularly.
Missing a team game is indeed a punishable offense. Untying of shoelaces when the game
is not yet finished is also irresponsible and unprofessional. However, we agree with the
Labor Arbiter that such isolated foolishness of an employee does not justify the extreme
penalty of dismissal from service. Petitioners could have opted to impose a fine or
suspension on Teng for his unacceptable conduct. Other forms of disciplinary action
could also have been taken after the incident to impart on the team that such misconduct
will not be tolerated.
In the case at bar, the penalty handed out by the petitioners was the ultimate penalty of
dismissal. There was no warning or admonition for respondent’s violation of team rules,
only outright termination of his services for an act which could have been punished
appropriately with a severe reprimand or suspension.
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ERNESTO G. YMBONG v ABS-CBN BROADCASTING CORPORATION,
VENERANDA SY AND DANTE LUZON
G.R. No. 184885, March7, 2012
The Facts
Petitioner Ernesto G. Ymbong started working for ABS-CBN Broadcasting Corporation

(ABS-CBN) in 1993 at its regional station in Cebu as a television talent, co-anchoring Hoy
Gising and TV Patrol Cebu. His stint in ABS-CBN later extended to radio when ABS-CBN
Cebu launched its AM station DYAB in 1995 where he worked as drama and voice talent,
spinner, scriptwriter and public affairs program anchor.
Like Ymbong, Leandro Patalinghug also worked for ABS-CBN Cebu. Starting 1995, he
worked as talent, director and scriptwriter for various radio programs aired over DYAB.
On January 1, 1996, the ABS-CBN Head Office in Manila issued Policy No. HR-ER-016 or
the Policy on Employees Seeking Public Office. In essence, the policy required that
a.)Any employee who intends to run for any public office position, must file his/her letter
of resignation; and b.) any employee who intends to join a political group/party or even
with no political affiliation but who intends to openly and aggressively campaign for a
candidate or group of candidates (e.g. publicly speaking/endorsing candidate, recruiting
campaign workers, etc.) must file a request for leave of absence subject to managements
approval.
Because of the impending May 1998 elections and based on his immediate recollection
of the policy at that time, Dante Luzon, Assistant Station Manager of DYAB issued a
memorandum informing employees/talents that anyone who wants to run for any
position in the coming election will have to file a leave of absence the moment he/she
files his/her certificate of candidacy.
Luzon, however, admitted that upon double-checking of the exact text of the policy and
subsequent confirmation with the ABS-CBN Head Office, he saw that the policy actually
required suspension for those who intend to campaign for a political party or candidate
and resignation for those who will actually run in the elections.
After the issuance of the March 25, 1998 Memorandum, Ymbong got in touch with Luzon.
Luzon claims that Ymbong approached him and told him that he would leave radio for a
couple of months because he will campaign for the administration ticket. It was only
after the elections that they found out that Ymbong actually ran for public office himself
at the eleventh hour. Ymbong, on the other hand, claims that in accordance with the
March 25, 1998 Memorandum, he informed Luzon through a letter that he would take a
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few months leave of absence from March 8, 1998 to May 18, 1998 since he was running
for councilor of Lapu-Lapu City.
As regards Patalinghug, Patalinghug approached Luzon and advised him that he will run
as councilor for Naga, Cebu. According to Luzon, he clarified to Patalinghug that he will
be considered resigned and not just on leave once he files a certificate of candidacy. Thus,
Patalinghug wrote Luzon informing the latter of the former’s resignation as Drama
Production Chief and Talent due to the company’s policy.
Unfortunately, both Ymbong and Patalinghug lost in the May 1998 elections.
Later, Ymbong and Patalinghug both tried to come back to ABS-CBN Cebu. According
to Luzon, he informed them that they cannot work there anymore because of company
policy. This was stressed even in subsequent meetings and they were told that the
company was not allowing any exceptions. ABS-CBN, however, agreed out of pure
liberality to give them a chance to wind up their participation in the radio drama,
Nagbabagang Langit, since it was rating well and to avoid an abrupt ending. The agreed
winding-up, however, dragged on for so long prompting Luzon to issue to Ymbong a
memorandum reminding him that his services had already been terminated when he
radn for a local government election.
Ymbong in contrast contended that after the expiration of his leave of absence, he
reported back to work as a regular talent and in fact continued to receive his salary. On
September 14, 1998, he received a memorandum stating that his services are being
terminated immediately, much to his surprise. Thus, he filed an illegal dismissal
complaint against ABS-CBN, Luzon and DYAB Station Manager Veneranda Sy. He argued
that the ground cited by ABS-CBN for his dismissal was not among those enumerated in
the Labor Code, as amended. And even granting without admitting the existence of the
company policy supposed to have been violated, Ymbong averred that it was necessary
that the company policy meet certain requirements before willful disobedience of the
policy may constitute a just cause for termination. Ymbong further argued that the
company policy violates his constitutional right to suffrage.
Patalinghug likewise filed an illegal dismissal complaintagainst ABS-CBN.
ABS-CBN prayed for the dismissal of the complaints arguing that there is no employer-
employee relationship between the company and Ymbong and Patalinghug. ABS-CBN
contended that they are not employees but talents as evidenced by their talent contracts.
However, notwithstanding their status, ABS-CBN has a standing policy on persons
connected with the company whenever they will run for public office.
Issue
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(1) whether Policy No. HR-ER-016 is valid;
(2) whether the March 25, 1998 Memorandum issued by Luzon superseded Policy No.
HR-ER-016; and
(3) whether Ymbong, by seeking an elective post, is deemed to have resigned and not
dismissed by ABS-CBN.
Ruling
Policy No. HR-ER-016 is valid.
This is not the first time that this Court has dealt with a policy similar to Policy No. HR-
ER-016. In the case of Manila Broadcasting Company v. NLRC, this Court ruled:
What is involved in this case is an unwritten company policy

considering any employee who files a certificate of candidacy for any
elective or local office as resigned from the company. Although 11(b) of R.A.
No. 6646 does not require mass media commentators and announcers such
as private respondent to resign from their radio or TV stations but only to
go on leave for the duration of the campaign period, we think that the
company may nevertheless validly require them to resign as a matter of
policy. In this case, the policy is justified on the following grounds:
Working for the government and the company at the same
time is clearly disadvantageous and prejudicial to the rights
and interest not only of the company but the public as well.
In the event an employee wins in an election, he cannot fully
serve, as he is expected to do, the interest of his employer.
The employee has to serve two (2) employers, obviously
detrimental to the interest of both the government and the
private employer.
In the event the employee loses in the election, the
impartiality and cold neutrality of an employee as broadcast
personality is suspect, thus readily eroding and adversely
affecting the confidence and trust of the listening public to
employers station.
ABS-CBN, like Manila Broadcasting Company, also had a valid justification for Policy No.
HR-ER-016. Its rationale is embodied in the policy itself, to wit:
Rationale:
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ABS-CBN BROADCASTING CORPORATION strongly believes that it is
to the best interest of the company to continuously remain apolitical.
While it encourages and supports its employees to have greater
political awareness and for them to exercise their right to suffrage,
the company, however, prefers to remain politically independent
and unattached to any political individual or entity.
Therefore, employees who [intend] to run for public office or accept
political appointment should resign from their positions, in order to
protect the company from any public misconceptions. To preserve
its objectivity, neutrality and credibility, the company reiterates the
following policy guidelines for strict implementation.
x x x x [Emphasis supplied.]
We have consistently held that so long as a company’s management prerogatives are

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 or
under valid agreements, this Court will uphold them. In the instant case, ABS-CBN
validly justified the implementation of Policy No. HR-ER-016. It is well within its rights
to ensure that it maintains its objectivity and credibility and freeing itself from any
appearance of impartiality so that the confidence of the viewing and listening public in
it will not be in any way eroded. Even as the law is solicitous of the welfare of the
employees, it must also protect the right of an employer to exercise what are clearly
management prerogatives. The free will of management to conduct its own business
affairs to achieve its purpose cannot be denied.
It is worth noting that such exercise of management prerogative has earned a stamp of
approval from no less than our Congress itself when on February 12, 2001, it enacted
Republic Act No. 9006, otherwise known as the Fair Election Act. Section 6.6 thereof
reads:
6.6. Any mass media columnist, commentator, announcer,

reporter, on-air correspondent or personality who is a candidate for
any elective public office or is a campaign volunteer for or employed
or retained in any capacity by any candidate or political party shall
be deemed resigned, if so required by their employer, or shall take a
leave of absence from his/her work as such during the campaign period:
Provided, That any media practitioner who is an official of a political party
or a member of the campaign staff of a candidate or political party shall not
use his/her time or space to favor any candidate or political party.
[Emphasis and underscoring supplied.]
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Policy No. HR-ER-016 was not
superseded by the March 25, 1998
Memorandum
The CA correctly ruled that though Luzon, as Assistant Station Manager for Radio of
ABS-CBN, has policy-making powers in relation to his principal task of administering the
networks radio station in the Cebu region, the exercise of such power should be in accord
with the general rules and regulations imposed by the ABS-CBN Head Office to its
employees. Clearly, the March 25, 1998 Memorandum issued by Luzon which only
requires employees to go on leave if they intend to run for any elective position is in
absolute contradiction with Policy No. HR-ER-016 issued by the ABS-CBN Head Office
in Manila which requires the resignation, not only the filing of a leave of absence, of any
employee who intends to run for public office. Having been issued beyond the scope of
his authority, the March 25, 1998 Memorandum is therefore void and did not supersede
Policy No. HR-ER-016.
Also worth noting is that Luzon in his Sworn Statement admitted the inaccuracy of his
recollection of the company policy when he issued the March 25, 1998 Memorandum and
stated therein that upon double-checking of the exact text of the policy statement and
subsequent confirmation with the ABS-CBN Head Office in Manila, he learned that the
policy required resignation for those who will actually run in elections because the
company wanted to maintain its independence. Since the officer who himself issued the
subject memorandum acknowledged that it is not in harmony with the Policy issued by
the upper management, there is no reason for it to be a source of right for Ymbong.
Ymbong is deemed resigned when he ran

for councilor.
As Policy No. HR-ER-016 is the subsisting company policy and not Luzons March 25, 1998
Memorandum, Ymbong is deemed resigned when he ran for councilor.
We find no merit in Ymbongs argument that [his] automatic termination x x x was a

blatant [disregard] of [his] right to due process as he was never asked to explain why he
did not tender his resignation before he ran for public office as mandated by [the subject
company policy]. Ymbong’s overt act of running for councilor of Lapu-Lapu City is
tantamount to resignation on his part. He was separated from ABS-CBN not because he
was dismissed but because he resigned. Since there was no termination to speak of, the
requirement of due process in dismissal cases cannot be applied to Ymbong. Thus, ABS-
CBN is not duty-bound to ask him to explain why he did not tender his resignation before
he ran for public office as mandated by the subject company policy.
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In addition, we do not subscribe to Ymbongs claim that he was not in a position to know
which of the two issuances was correct. Ymbong most likely than not, is fully aware that
the subsisting policy is Policy No. HR-ER-016 and not the March 25, 1998 Memorandum
and it was for this reason that, as stated by Luzon in his Sworn Statement, he only told
the latter that he will only campaign for the administration ticket and not actually run
for an elective post. Ymbong claims he had fully apprised Luzon by letter of his plan to
run and even filed a leave of absence but records are bereft of any proof of said claim.
Ymbong claims that the letter stating his intention to go on leave to run in the election
is attached to his Position Paper as Annex A, a perusal of said pleading attached to his
petition before this Court, however, show that Annex A was not his letter to Luzon but
the September 14, 1998 Memorandum informing Ymbong that his services had been
automatically terminated when he ran for a local government position.
Moreover, as pointed out by ABS-CBN, had Ymbong been truthful to his superiors, they
would have been able to clarify to him the prevailing company policy and inform him of
the consequences of his decision in case he decides to run, as Luzon did in Patalinghug’s
case.
PEOPLES BROADCASTING SERVICE (BOMBO RADYO PHILS., INC.), v

THE SECRETARY OF THE DEPARTMENT OF LABOR AND EMPLOYMENT,
THE REGIONAL DIRECTOR, DOLE REGION VII, and JANDELEON JUEZAN
G.R. No. 179652, March 6, 2012
The Facts
Private respondent Jandeleon Juezan filed a complaint against petitioner for illegal
deduction, nonpayment of service incentive leave, 13th month pay, premium pay for
holiday and rest day and illegal diminution of benefits, delayed payment of wages and
noncoverage of SSS, PAG-IBIG and Philhealth. After the conduct of summary
investigations, and after the parties submitted their position papers, the DOLE Regional
Director found that private respondent was an employee of petitioner, and was entitled
to his money claims. Petitioner sought reconsideration of the Directors Order, but failed.
The Acting DOLE Secretary dismissed petitioners appeal on the ground that petitioner
submitted a Deed of Assignment of Bank Deposit instead of posting a cash or surety
bond. When the matter was brought before the CA, where petitioner claimed that it had
been denied due process, it was held that petitioner was accorded due process as it had
been given the opportunity to be heard, and that the DOLE Secretary had jurisdiction
over the matter, as the jurisdictional limitation imposed by Article 129 of the Labor Code
on the power of the DOLE Secretary under Art. 128(b) of the Code had been repealed by
Republic Act No. (RA) 7730.
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In the Decision of this Court, the CA Decision was reversed and set aside, and the
complaint against petitioner was dismissed.
The Court found that there was no employer-employee relationship between petitioner
and private respondent. It was held that while the DOLE may make a determination of
the existence of an employer-employee relationship, this function could not be co-
extensive with the visitorial and enforcement power provided in Art. 128(b) of the Labor
Code, as amended by RA 7730. The National Labor Relations Commission (NLRC) was
held to be the primary agency in determining the existence of an employer-employee
relationship. This was the interpretation of the Court of the clause in cases where the
relationship of employer-employee still exists in Art. 128(b).
From this Decision, the Public Attorney’s Office (PAO) filed a Motion for Clarification of
Decision (with Leave of Court). The PAO sought to clarify as to when the visitorial and
enforcement power of the DOLE be not considered as co-extensive with the power to
determine the existence of an employer-employee relationship. In its Comment, the
DOLE sought clarification as well, as to the extent of its visitorial and enforcement power
under the Labor Code, as amended.
The Court treated the Motion for Clarification as a second motion for reconsideration,
granting said motion and reinstating the petition. It is apparent that there is a need to
delineate the jurisdiction of the DOLE Secretary vis--vis that of the NLRC.
Under Art. 129 of the Labor Code, the power of the DOLE and its duly authorized hearing
officers to hear and decide any matter involving the recovery of wages and other
monetary claims and benefits was qualified by the proviso that the complaint not include
a claim for reinstatement, or that the aggregate money claims not exceed PhP 5,000. RA
7730, or an Act Further Strengthening the Visitorial and Enforcement Powers of the
Secretary of Labor, did away with the PhP 5,000 limitation, allowing the DOLE Secretary
to exercise its visitorial and enforcement power for claims beyond PhP 5,000. The only
qualification to this expanded power of the DOLE was only that there still be an existing
employer-employee relationship.
It is conceded that if there is no employer-employee relationship, whether it has been

terminated or it has not existed from the start, the DOLE has no jurisdiction. Under Art.
128(b) of the Labor Code, as amended by RA 7730, the first sentence reads,
Notwithstanding the provisions of Articles 129 and 217 of this Code to the contrary, and
in cases where the relationship of employer-employee still exists, the Secretary of Labor
and Employment or his duly authorized representatives shall have the power to issue
compliance orders to give effect to the labor standards provisions of this Code and other
labor legislation based on the findings of labor employment and enforcement officers or
industrial safety engineers made in the course of inspection. It is clear and beyond debate
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that an employer-employee relationship must exist for the exercise of the visitorial and
enforcement power of the DOLE.
Issue
The question now arises, may the DOLE make a determination of whether or not an
employer-employee relationship exists, and if so, to what extent?
Ruling
The first portion of the question must be answered in the affirmative.
The prior decision of this Court in the present case accepts such answer, but places a
limitation upon the power of the DOLE, that is, the determination of the existence of an
employer-employee relationship cannot be co-extensive with the visitorial and
enforcement power of the DOLE. But even in conceding the power of the DOLE to
determine the existence of an employer-employee relationship, the Court held that the
determination of the existence of an employer-employee relationship is still primarily
within the power of the NLRC, that any finding by the DOLE is merely preliminary.
This conclusion must be revisited.
No limitation in the law was placed upon the power of the DOLE to determine the
existence of an employer-employee relationship. No procedure was laid down where the
DOLE would only make a preliminary finding, that the power was primarily held by the
NLRC. The law did not say that the DOLE would first seek the NLRCs determination of
the existence of an employer-employee relationship, or that should the existence of the
employer-employee relationship be disputed, the DOLE would refer the matter to the
NLRC. The DOLE must have the power to determine whether or not an employer-
employee relationship exists, and from there to decide whether or not to issue
compliance orders in accordance with Art. 128(b) of the Labor Code, as amended by RA
7730.
The DOLE, in determining the existence of an employer-employee relationship, has a

ready set of guidelines to follow, the same guide the courts themselves use. The elements
to determine the existence of an employment relationship are: (1) the selection and
engagement of the employee; (2) the payment of wages; (3) the power of dismissal; (4)
the employers power to control the employees conduct. The use of this test is not solely
limited to the NLRC. The DOLE Secretary, or his or her representatives, can utilize the
same test, even in the course of inspection, making use of the same evidence that would
have been presented before the NLRC.
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The determination of the existence of an employer-employee relationship by the DOLE
must be respected. The expanded visitorial and enforcement power of the DOLE granted
by RA 7730 would be rendered nugatory if the alleged employer could, by the simple
expedient of disputing the employer-employee relationship, force the referral of the
matter to the NLRC. The Court issued the declaration that at least a prima facie showing
of the absence of an employer-employee relationship be made to oust the DOLE of
jurisdiction. But it is precisely the DOLE that will be faced with that evidence, and it is
the DOLE that will weigh it, to see if the same does successfully refute the existence of
an employer-employee relationship.
If the DOLE makes a finding that there is an existing employer-employee relationship, it

takes cognizance of the matter, to the exclusion of the NLRC. The DOLE would have no
jurisdiction only if the employer-employee relationship has already been terminated, or
it appears, upon review, that no employer-employee relationship existed in the first
place.
The Court, in limiting the power of the DOLE, gave the rationale that such limitation
would eliminate the prospect of competing conclusions between the DOLE and the
NLRC. The prospect of competing conclusions could just as well have been eliminated
by according respect to the DOLE findings, to the exclusion of the NLRC, and this We
believe is the more prudent course of action to take.
This is not to say that the determination by the DOLE is beyond question or review.
Suffice it to say, there are judicial remedies such as a petition for certiorari under Rule 65
that may be availed of, should a party wish to dispute the findings of the DOLE.
It must also be remembered that the power of the DOLE to determine the existence of
an employer-employee relationship need not necessarily result in an affirmative finding.
The DOLE may well make the determination that no employer-employee relationship
exists, thus divesting itself of jurisdiction over the case. It must not be precluded from
being able to reach its own conclusions, not by the parties, and certainly not by this
Court.
Under Art. 128(b) of the Labor Code, as amended by RA 7730, the DOLE is fully
empowered to make a determination as to the existence of an employer-employee
relationship in the exercise of its visitorial and enforcement power, subject to judicial
review, not review by the NLRC.
There is a view that despite Art. 128(b) of the Labor Code, as amended by RA 7730, there
is still a threshold amount set by Arts. 129 and 217 of the Labor Code when money claims
are involved, i.e., that if it is for PhP 5,000 and below, the jurisdiction is with the regional
director of the DOLE, under Art. 129, and if the amount involved exceeds PhP 5,000, the
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jurisdiction is with the labor arbiter, under Art. 217. The view states that despite the
wording of Art. 128(b), this would only apply in the course of regular inspections
undertaken by the DOLE, as differentiated from cases under Arts. 129 and 217, which
originate from complaints. There are several cases, however, where the Court has ruled
that Art. 128(b) has been amended to expand the powers of the DOLE Secretary and his
duly authorized representatives by RA 7730. In these cases, the Court resolved that the
DOLE had the jurisdiction, despite the amount of the money claims involved.
Furthermore, in these cases, the inspection held by the DOLE regional director was
prompted specifically by a complaint. Therefore, the initiation of a case through a
complaint does not divest the DOLE Secretary or his duly authorized representative of
jurisdiction under Art. 128(b).
To recapitulate, if a complaint is brought before the DOLE to give effect to the labor
standards provisions of the Labor Code or other labor legislation, and there is a finding
by the DOLE that there is an existing employer-employee relationship, the DOLE
exercises jurisdiction to the exclusion of the NLRC. If the DOLE finds that there is no
employer-employee relationship, the jurisdiction is properly with the NLRC. If a
complaint is filed with the DOLE, and it is accompanied by a claim for reinstatement,
the jurisdiction is properly with the Labor Arbiter, under Art. 217(3) of the Labor Code,
which provides that the Labor Arbiter has original and exclusive jurisdiction over those
cases involving wages, rates of pay, hours of work, and other terms and conditions of
employment, if accompanied by a claim for reinstatement. If a complaint is filed with the
NLRC, and there is still an existing employer-employee relationship, the jurisdiction is
properly with the DOLE. The findings of the DOLE, however, may still be questioned
through a petition for certiorari under Rule 65 of the Rules of Court.
In the present case, the finding of the DOLE Regional Director that there was an
employer-employee relationship has been subjected to review by this Court, with the
finding being that there was no employer-employee relationship between petitioner and
private respondent, based on the evidence presented. Private respondent presented self-
serving allegations as well as self-defeating evidence. The findings of the Regional
Director were not based on substantial evidence, and private respondent failed to prove
the existence of an employer-employee relationship. The DOLE had no jurisdiction over
the case, as there was no employer-employee relationship present. Thus, the dismissal of
the complaint against petitioner is proper.
NORKIS DISTRIBUTORS, INC. AND ALEX D. BUAT v DELFIN S. DESCALLAR

G.R. No. 185255, March 14, 2012
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The facts
On April 26, 1993, respondent Delfin S. Descallar was assigned at the Iligan City Branch
of petitioner Norkis Distributors, Inc., a distributor of Yamaha motorcycles. He became
a regular employee on February 1, 1994 and was promoted as Branch Manager on June
30, 1997. He acted as branch administrator and had supervision and control of all the
employees. Respondent was also responsible for sales and collection.
In a memorandum dated June 20, 2002, petitioners required respondent to explain in

writing within forty-eight (48) hours why he should not be penalized or terminated for
being absent without official leave (AWOL) or rendering under-time service on certain
dates from April 3, 2002 to June 11, 2002. On June 21, 2002, respondent submitted his
written explanation wherein he stated that he reported to the office on those dates, but he
either went to the bank or followed-up on prospects. As he was still within city limits, he
did not file any official leave or travel record. He added that on June 11, 2002, he was at the
pier pulling out ten units of MC stocks.
On July 5, 2002, Norkis conducted an investigation through Mr. Edmund Y. Pingkian.

Finding that respondent was not able to prove that he was really in the branch or on
official travel, petitioners suspended him for fifteen (15) days without pay beginning July
8, 2002. According to petitioners, respondent admitted during the investigation that he
used company time for his personal affairs, but only for a few hours and not the whole
day.
While respondent was still serving his suspension, the Internal Auditor of the company
made a random operational review and audit of the Iligan City Branch. Several findings
against respondent were noted by the auditor, to wit:
1. Refusal to accept redemption payment from customer Gamboa on their

deposited motorcycle unit and unauthorized use of said deposited motorcycle
unit;
2. Requiring customer Amy Pastor to pay an amount in excess of her account
balance;
3. Disbursement of sales commissions to unauthorized persons;
4. Application of sales commission on the down payments of several walk-in
customers.
On July 20, 2002, petitioners asked respondent to explain the findings against him within
four (4) hours from receipt of notice. Respondent found the time given to be cruel but
nevertheless submitted his written explanation on the same day.
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Later, respondent and Branch Control Officer Rosanna Lanzador received a
memorandum dated July 23, 2002, informing them that during a cash count conducted
on July 12, 2002, a shortage of P800 in the companys TNT fund was discovered. Likewise,
an irregularity was found in the disbursement of sales commissions amounting to P1,700.
These amounts were charged equally to the accounts of respondent and Lanzador.
Thereafter, in another memorandum dated July 25, 2002, respondent was placed under
preventive suspension for fifteen (15) working days without pay.
On August 12, 2002, petitioners issued a Notice to Show Cause to respondent. The notice
reads:
xxxx
It has been reported that during the audit of your branch last July 2002,
serious adverse findings were noted against you as follows:
a) Refusal to accept redemption payment made by customer
Gamboa on their deposited motorcycle unit which was traced later
sold to one Marvin Joseph Gealon allegedly your nephew;
b) Unauthorized use of deposited motorcycle unit owned by Ludy
Gamboa;
c) Requiring customer Amy Pastor to pay excessive amount over her
account balance;
d) Disbursement of sales commissions to unauthorized persons;
e) Doing personal business of selling safety helmets using the facility
of the branch.
Further, it is so disappointing to note that despite management support

and cooperation, your branch performance continuously failed to reach to
an acceptable level as illustrated below:
YEAR SALES ACTUAL ACCEPTABLE ACTUAL

QUOTA AVERAGE COLLEX AVERAGE
SALES COLLEX
2001 13 units 5 only 70% 43% only
(Jan-Dec)
2002 13 units 5 only 70% 39% only
(Jan-Jun)
Please take note that adverse audit findings above coupled with
inefficiency are sufficient grounds for termination. In this light therefore,
you are commanded to explain in writing within 24 hours upon receipt of
this notice to show cause why you will not be terminated from your service
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with the company. Failure on your part to response shall be construed as
waiver of your right to be heard.
xxxx
On August 21, 2002, petitioners terminated respondent’s services for loss of trust and
confidence and gross inefficiency.
Issue
Whether just cause existed for the termination of respondent’s employment
Ruling
Here, there is no question that as petitioner’s Branch Manager in Iligan City, respondent
was holding a position of trust and confidence. He was responsible for the administration
of the branch, and exercised supervision and control over all the employees. He was also
incharge of sales and collection.
Now, petitioners terminated his employment on the ground of loss of trust and
confidence for supposedly committing acts inimical to the company’s interests. However,
in termination cases, the burden of proof rests upon the employer to show that the
dismissal is for a just and valid cause and failure to do so would necessarily mean that
the dismissal was illegal. The employer’s case succeeds or fails on the strength of its
evidence and not on the weakness of the employees defense. If doubt exists between the
evidence presented by the employer and the employee, the scales of justice must be tilted
in favor of the latter. Moreover, the quantum of proof required in determining the legality
of an employees dismissal is only substantial evidence or 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.Thus, it is incumbent upon
petitioners to prove by substantial evidence that valid grounds exist for terminating
respondents employment on the ground of loss of trust and confidence. However, our
review of the records of this case reveals that the CA correctly held that petitioners failed
to discharge this burden.
In terminating respondent’s services, petitioners relied on several grounds. First,

petitioners relied on the affidavit of customer Ludy Gamboa. In her affidavit, Ludy
Gamboa accused respondent of refusing to accept payment of P7,000 to redeem a
motorcycle unit sometime on May 21-23, 2001. However, respondent was able to prove by
submitting the Monthly Inventory Report that the motorcycle unit had already been
repossessed by the company due to Gamboas failure to settle her account. Respondent’s
refusal to receive the partial payment was therefore undeniably justified. And the
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motorcycle already having been repossessed, it could also be sold to any person who
might like to buy it including respondent’s nephew.
Second, petitioners also allege that respondent charged customer Amy Pastor an
excessive amount. In her affidavit, Pastor claimed that sometime on January 2002,
respondent required her to pay the amount of P5,566, while her outstanding balance was
only P378. However, a closer look at the audit report conducted by the internal auditor
of petitioner Norkis, Joelito L. Florenosos, would show that there was no over-collection.
Said exculpatory finding was also made after the internal auditor noted that the official
receipt respondent issued to cover the said collection showed no such over-collection.
Why petitioners chose to believe Pastors affidavit over the findings of its own internal
auditor which was duly supported by documentary evidence is perplexing.
Third, petitioners accuse respondent of giving unauthorized commissions to Mr. Gary

Bellen. Respondent however asserted, and petitioners did not rebut, that Bellen is a
legitimate Personalized Sales Representative of Norkis Distributors, as evidenced by the
contract they signed. Respondent also explained, and petitioners again did not rebut,
that Bellen tutored the staff in computer programming and operation free of charge, on
the condition that he may entertain customers and receive commissions. Clearly,
therefore, the arrangement made with Bellen was even beneficial to the company. Hence,
in giving commissions to Bellen, as sales representative, it cannot be said that respondent
willfully breached petitioners trust and confidence in him.
Fourth, petitioners argue that respondent’s failure to reach his monthly sales quota is a
valid basis for loss of trust and confidence. In his explanation, respondent asserted that
certain factors were to be considered for the low sales performance in their branch such
as the existence of other competitors which offered low down payments, low monthly
installments, and other promotional items. Respondent also emphasized that the
customers’ capacity to pay had been affected by the financial crisis at the time, thus
making it more difficult to collect from them.
To our mind, the failure to reach the monthly sales quota cannot be considered an
intentional and unjustified act of respondent amounting to a willful breach of trust on
his part that would call for his termination based on loss of confidence. This is simply
not the willful breach of trust and confidence contemplated in Article 282(c) of the Labor
Code. Indeed, the low sales performance could be attributed to several factors which are
beyond respondent’s control. To be a valid ground for an employee’s dismissal, loss of
trust and confidence must be based on a willful breach. To repeat, a breach is willful if it
is done intentionally, knowingly and purposely, without justifiable excuse.
INTERNATIONAL MANAGEMENT SERVICES/MARILYN C. PASCUAL
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v ROEL P. LOGARTA
G.R. No. 163657 April 18, 2012
The Facts
Sometime in 1997, the petitioner recruitment agency, International Management

Services (IMS), a single proprietorship owned and operated by Marilyn C. Pascual,
deployed respondent Roel P. Logarta to work for Petrocon Arabia Limited (Petrocon) in
Alkhobar, Kingdom of Saudi Arabia, in connection with general engineering services of
Petrocon for the Saudi Arabian Oil Company (Saudi Aramco). Respondent was employed
for a period of two (2) years, commencing on October 2, 1997, with a monthly salary of
eight hundred US Dollars (US$800.00). In October 1997, respondent started to work for
Petrocon as Piping Designer for works on the projects of Saudi Aramco.
Thereafter, in a letter dated December 21, 1997, Saudi Aramco informed Petrocon that for
the year 1998, the former is allotting to the latter a total work load level of 170,850 man-
hours, of which 100,000 man-hours will be allotted for cross-country pipeline projects.
However, in a letter dated April 29, 1998, Saudi Aramco notified Petrocon that due to
changes in the general engineering services work forecast for 1998, the man-hours that
were formerly allotted to Petrocon is going to be reduced by 40%.
Consequently, due to the considerable decrease in the work requirements of Saudi

Aramco, Petrocon was constrained to reduce its personnel that were employed as piping
designers, instrument engineers, inside plant engineers, etc., which totaled to some 73
personnel, one of whom was respondent.
Thus, on June 1, 1998, Petrocon gave respondent a written notice informing the latter that
due to the lack of project works related to his expertise, he is given a 30-day notice of
termination, and that his last day of work with Petrocon will be on July 1, 1998. Petrocon
also informed respondent that all due benefits in accordance with the terms and
conditions of his employment contract will be paid to respondent, including his ticket
back to the Philippines.
On June 23, 1998, respondent, together with his co-employees, requested Petrocon to
issue them a letter of Intent stating that the latter will issue them a No Objection
Certificate once they find another employer before they leave Saudi Arabia. On June 27,
1998, Petrocon granted the request and issued a letter of intent to respondent.
Before his departure from Saudi Arabia, respondent received his final paycheck from
Petrocon amounting SR7,488.57.
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Upon his return, respondent filed a complaint with the Regional Arbitration Branch VII,
National Labor Relations Commission (NLRC), Cebu City, against petitioner as the
recruitment agency which employed him for employment abroad. In filing the
complaint, respondent sought to recover his unearned salaries covering the unexpired
portion of his employment contract with Petrocon on the ground that he was illegally
dismissed.
Issues
Whether there was valid retrenchment in the instant case.
Ruling
In the case at bar, despite the fact that respondent was employed by Petrocon as an OFW
in Saudi Arabia, still both he and his employer are subject to the provisions of the Labor
Code when applicable. The basic policy in this jurisdiction is that all Filipino workers,
whether employed locally or overseas, enjoy the protective mantle of Philippine labor
and social legislations.
Philippine Law recognizes retrenchment as a valid cause for the dismissal of a migrant
or overseas Filipino worker under Article 283 of the Labor Code.
Thus, retrenchment is a valid exercise of management prerogative subject to the strict

requirements set by jurisprudence, to wit:
(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 month pay for every year of service,
whichever is higher;
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(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, x x x efficiency, seniority, physical fitness, age, and financial
hardship for certain workers.
Applying the above-stated requisites for a valid retrenchment in the case at bar, it is
apparent that the first, fourth and fifth requirements were complied with by respondent’s
employer. However, the second and third requisites were absent when Petrocon
terminated the services of respondent.
As aptly found by the NLRC and justly sustained by the CA, Petrocon exercised its
prerogative to retrench its employees in good faith and the considerable reduction of
work allotments of Petrocon by Saudi Aramco was sufficient basis for Petrocon to reduce
the number of its personnel.
As to complying with the fifth requirement, the CA was correct when it ruled that:
As to the fifth requirement, the NLRC considered the following

criteria fair and reasonable in ascertaining who would be dismissed and
who would be retained among the employees; (i) less preferred status; (ii)
efficiency rating; (iii) seniority; and (iv) proof of claimed financial losses.
The primary reason for respondents termination is lack of work

project specifically related to his expertise as piping designer. Due to the
highly specialized nature of Logartas job, we find that the availability of
work and number of allocated man-hours for pipeline projects are
sufficient and reasonable criteria in determining who would be dismissed
and who would be retained among the employees. Consequently, we find
the criterion of less preferred status and efficiency rating not applicable.
The list of terminated employees submitted by Petrocon, shows that

other employees, with the same designation as Logartas (Piping Designer
II), were also dismissed. Terminated, too, were employees designated as
Piping Designer I and Piping Designer. Hence, employees whose job
designation involves pipeline works were without bias terminated.
254 | P a g
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As to seniority, at the time the notice of termination was given to
him, Logartas employment was eight (8) months, clearly, he has not
accumulated sufficient years to claim seniority.
As to proof of claimed financial losses, the NLRC itself has

recognized the drastic reduction of Petrocons work allocation, thereby
necessitating the retrenchment of some of its employees.
As for the notice requirement, however, contrary to petitioner’s contention, proper

notice to the DOLE within 30 days prior to the intended date of retrenchment is
necessary and must be complied with despite the fact that respondent is an overseas
Filipino worker. In the present case, although respondent was duly notified of his
termination by Petrocon 30 days before its effectivity, no allegation or proof was
advanced by petitioner to establish that Petrocon ever sent a notice to the DOLE 30 days
before the respondent was terminated. Thus, this requirement of the law was not
complied with.
Also, petitioner’s contention that respondent freely consented to his dismissal is

unsupported by substantial evidence. Respondent’s recourse of finding a new employer
during the 30-day period prior to the effectivity of his dismissal and eventual return to
the Philippines is but logical and reasonable under the circumstances. Faced with the
eventuality of his termination from employment, it is understandable for respondent to
seize the opportunity to seek for other employment and continue working in Saudi
Arabia.
Moreover, petitioner’s insistence that the case of Jariol v. IMS should be applied in the
present case is untenable. Being a mere decision of the NLRC, it could not be considered
as a precedent warranting its application in the case at bar. Suffice it to state that
although Article 8 of the Civil Code recognizes judicial decisions, applying or
interpreting statutes as part of the legal system of the country, such level of recognition
is not afforded to administrative decisions.
Anent the proper amount of separation pay to be paid to respondent, petitioner

maintains that respondent was paid the appropriate amount as separation pay. However,
a perusal of his Payroll Check Details, clearly reveals that what he received was his
compensation for the month prior to his departure, and hence, was justly due to him as
his salary. Furthermore, the amounts which he received as his End of Contract Benefit
and Other Earning/Allowances: for July 1998 form part of his wages/salary, as such,
cannot be considered as constituting his separation pay.
Verily, respondent is entitled to the payment of his separation pay. However, this Court
disagrees with the conclusion of the Labor Arbiter, the NLRC and the CA, that
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respondent should be paid his separation pay in accordance with the provision of Section
10 of R.A. No. 8042. A plain reading of the said provision clearly reveals that it applies
only to an illegally dismissed overseas contract worker or a worker dismissed from
overseas employment without just, valid or authorized cause, the pertinent portion of
which provides:
Sec. 10. Money Claims. x x x In case of termination of overseas

employment without just, valid or authorized cause as defined by law or
contract, x x x
In the case at bar, notwithstanding the fact that respondents termination from his
employment was procedurally infirm, having not complied with the notice requirement,
nevertheless the same remains to be for a just, valid and authorized cause, i.e.,
retrenchment as a valid exercise of management prerogative. To stress, despite the
employer’s failure to comply with the one-month notice to the DOLE prior to
respondent’s termination, it is only a procedural infirmity which does not render the
retrenchment illegal. In Agabon v. NLRC, this Court ruled that when the dismissal is for
a just cause, the absence of proper notice should not nullify the dismissal or render it
illegal or ineffectual. Instead, the employer should indemnify the employee for violation
of his statutory rights.
Consequently, it is Article 283 of the Labor Code and not Section 10 of R.A. No. 8042 that
is controlling. Thus, respondent is entitled to payment of separation pay equivalent to
one (1) month pay, or at least one-half (1/2) month pay for every year of service, whichever
is higher. Considering that respondent was employed by Petrocon for a period of eight
(8) months, he is entitled to receive one (1) month pay as separation pay. In addition,
pursuant to current jurisprudence, for failure to fully comply with the statutory due
process of sufficient notice, respondent is entitled to nominal damages in the
amount P50,000.00.
CHARLIE JAO v BCC PRODUCTS SALES INC.,

and TERRANCE TY
G.R. No. 163700, April 18, 2012
The Facts
Petitioner maintained that respondent BCC Product Sales Inc. (BCC) and its President,
respondent Terrance Ty (Ty), employed him as comptroller starting from September 1995
with a monthly salary of P20,000.00 to handle the financial aspect of BCCs business; that
on October 19,1995, the security guards of BCC, acting upon the instruction of Ty, barred
him from entering the premises of BCC where he then worked; that his attempts to report
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to work in November and December 12, 1995 were frustrated because he continued to be
barred from entering the premises of BCC; and that he filed a complaint dated December
28, 1995 for illegal dismissal, reinstatement with full backwages, non-payment of wages,
damages and attorney’s fees.
Respondents countered that petitioner was not their employee but the employee of
Sobien Food Corporation (SFC), the major creditor and supplier of BCC; and that SFC
had posted him as its comptroller in BCC to oversee BCCs finances and business
operations and to look after SFCs interests or investments in BCC.
Issue
The sole issue is whether or not an employer-employee relationship existed between

petitioner and BCC. A finding on the existence of an employer-employee relationship will
automatically warrant a finding of illegal dismissal, considering that respondents did not
state any valid grounds to dismiss petitioner.
Ruling
To prove his employment with BCC, petitioner offered the following: (a) BCC
Identification Card (ID) issued to him stating his name and his position as comptroller,
and bearing his picture, his signature, and the signature of Ty; (b) a payroll of BCC for
the period of October 1-15, 1996 that petitioner approved as comptroller; (c) various bills
and receipts related to expenditures of BCC bearing the signature of petitioner; (d)
various checks carrying the signatures of petitioner and Ty, and, in some checks, the
signature of petitioner alone; (e) a court order showing that the issuing court considered
petitioners ID as proof of his employment with BCC; (f) a letter of petitioner dated March
1, 1997 to the Department of Justice on his filing of a criminal case for estafa against Ty
for non-payment of wages; (g) affidavits of some employees of BCC attesting that
petitioner was their co-employee in BCC; and (h) a notice of raffle dated December 5,
1995 showing that petitioner, being an employee of BCC, received the notice of raffle in
behalf of BCC.
Respondents denied that petitioner was BCCs employee. They affirmed that SFC had
installed petitioner as its comptroller in BCC to oversee and supervise SFCs collections
and the account of BCC to protect SFCs interest; that their issuance of the ID to petitioner
was only for the purpose of facilitating his entry into the BCC premises in relation to his
work of overseeing the financial operations of BCC for SFC; that the ID should not be
considered as evidence of petitioners employment in BCC; that petitioner executed an
affidavit in March 1996, stating, among others, as follows:
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1. I am a CPA (Certified Public Accountant) by profession
but presently associated with, or employed by, Sobien Food
Corporation with the same business address as abovestated;
2. In the course of my association with, or employment by, Sobien

Food Corporation (SFC, for short), I have been entrusted by my
employer to oversee and supervise collections on account of
receivables due SFC from its customers or clients; for instance,
certain checks due and turned over by one of SFCs customers is
BCC Product Sales, Inc., operated or run by one Terrance L.
Ty, (President and General manager), pursuant to, or in
accordance with, arrangements or agreement thereon; such
arrangement or agreement is duly confirmed by said Terrance
Ty, as shown or admitted by him in a public instrument executed
therefor, particularly par. 2 of that certain Counter-Affidavit executed
and subscribed on December 11, 1995, xerox copy of which is hereto
attached, duly marked as Annex A and made integral part hereof.
3. Despite such admission of an arrangement, or

agreement insofar as BCC-checks were delivered to, or turned over
in favor of SFC, Mr. Terrance Ty, in a desire to blemish my reputation
or to cause me dishonor as well as to impute unto myself the
commission of a crime, state in another public instrument executed
therefor in that:
3. That all the said 158 checks were unlawfully appropriated by a

certain Charlie Jao absolutely without any authority from BCC
and the same were reportedly turned over by said Mr. Jao to a
person who is not an agent or is not authorized representative
of BCC.
xerox copy of which document (Affidavit) is hereto attached, duly

marked as Annex B and made integral part hereof. (emphasis supplied)
and that the affidavit constituted petitioner’s admission of the arrangement or agreement
between BCC and SFC for the latter to appoint a comptroller to oversee the formers
operations.
Petitioner counters, however, that the affidavit did not establish the absence of an
employer-employee relationship between him and respondents because it had been
executed in March 1996, or after his employment with respondents had been terminated
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on December 12, 1995; and that the affidavit referred to his subsequent employment by
SFC following the termination of his employment by BCC.
We cannot side with petitioner.
Our perusal of the affidavit of petitioner compels a conclusion similar to that reached by
the CA and the Labor Arbiter to the effect that the affidavit actually supported the
contention that petitioner had really worked in BCC as SFC’s representative. It does seem
more natural and more believable that petitioner’s affidavit was referring to his
employment by SFC even while he was reporting to BCC as a comptroller in behalf of
SFC. As respondents pointed out, it was implausible for SFC to still post him to oversee
and supervise the collections of accounts receivables due from BCC beyond December
1995 if, as he insisted, BCC had already illegally dismissed him and had even prevented
him from entering the premises of BCC. Given the patent animosity and strained
relations between him and respondents in such circumstances, indeed, how could he still
efficiently perform in behalf of SFC the essential responsibility to oversee and supervise
collections at BCC? Surely, respondents would have vigorously objected to any
arrangement with SFC involving him.
We note that petitioner executed the affidavit in March 1996 to refute a statement Ty
himself made in his own affidavit dated December 11, 1995 to the effect that petitioner
had illegally appropriated some checks without authority from BCC. Petitioner thereby
sought to show that he had the authority to receive the checks pursuant to the
arrangements between SFC and BCC. This showing would aid in fending off the criminal
charge respondents filed against him arising from his mishandling of the checks.
Naturally, the circumstances petitioner adverted to in his March 1996 affidavit concerned
those occurring before December 11, 1995, the same period when he actually worked as
comptroller in BCC.
Further, an affidavit dated September 5, 2000 by Alfredo So, the President of SFC, whom
petitioner offered as a rebuttal witness, lent credence to respondents denial of petitioners
employment. So declared in that affidavit, among others, that he had known petitioner
for being earlier his retained accountant having his own office but did not hold office in
SFCs premises; that Ty had approached him (So) looking for an accountant or
comptroller to be employed by him (Ty) in [BCCs] distribution business of SFCs general
merchandise, and had later asked him on his opinion about petitioner; and that he (So)
had subsequently learned that Ty had already employed [petitioner] as his comptroller
as of September 1995.
The statements of So really supported respondents position in that petitioners

association with SFC prior to his supposed employment by BCC went beyond mere
acquaintance with So. That So, who had earlier merely retained petitioner as his
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accountant, thereafter employed petitioner as a retained accountant after his supposed
illegal dismissal by BCC raised a doubt as to his employment by BCC, and rather
confirmed respondents assertion of petitioner being an employee of SFC while he worked
at BCC.
Moreover, in determining the presence or absence of an employer-employee

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 so-called control test,
is the most important element.
Hereunder are some of the circumstances and incidents occurring while petitioner was
supposedly employed by BCC that debunked his claim against respondents.
It can be deduced from the March 1996 affidavit of petitioner that respondents
challenged his authority to deliver some 158 checks to SFC. Considering that he contested
respondents challenge by pointing to the existing arrangements between BCC and SFC,
it should be clear that respondents did not exercise the power of control over him,
because he thereby acted for the benefit and in the interest of SFC more than of BCC.
In addition, petitioner presented no document setting forth the terms of his employment
by BCC. The failure to present such agreement on terms of employment may be
understandable and expected if he was a common or ordinary laborer who would not
jeopardize his employment by demanding such document from the employer, but may
not square well with his actual status as a highly educated professional.
Petitioner’s admission that he did not receive his salary for the three months of his
employment by BCC, as his complaint for illegal dismissal and non-payment of
wages and the criminal case for estafa he later filed against the respondents for non-
payment of wages indicated, further raised grave doubts about his assertion of
employment by BCC. If the assertion was true, we are puzzled how he could have
remained in BCCs employ in that period of time despite not being paid the first salary
of P20,000.00/month. Moreover, his name did not appear in the payroll of BCC despite
him having approved the payroll as comptroller.
Lastly, the confusion about the date of his alleged illegal dismissal provides another
indicium of the insincerity of petitioner’s assertion of employment by BCC. In the
petition for review on certiorari, he averred that he had been barred from entering the
premises of BCC on October 19, 1995, and thus was illegally dismissed. Yet, his complaint
for illegal dismissal stated that he had been illegally dismissed on December 12, 1995
when respondents security guards barred him from entering the premises of
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BCC, causing him to bring his complaint only on December 29, 1995, and after BCC had
already filed the criminal complaint against him. The wide gap between October 19,
1995 and December 12, 1995 cannot be dismissed as a trivial inconsistency considering
that the several incidents affecting the veracity of his assertion of employment by BCC
earlier noted herein transpired in that interval.
With all the grave doubts thus raised against petitioners claim, we need not dwell at
length on the other proofs he presented, like the affidavits of some of the employees of
BCC, the ID, and the signed checks, bills and receipts. Suffice it to be stated that such
other proofs were easily explainable by respondents and by the aforestated circumstances
showing him to be the employee of SFC, not of BCC.
MANILA ELECTRIC COMPANY v JAN CARLO GALA,

G.R. Nos. 191288 & 191304, March 7, 2012
The Facts
On March 2, 2006, respondent Jan Carlo Gala commenced employment with the
petitioner Meralco Electric Company (Meralco) as a probationary lineman. He was
assigned at Meralcos Valenzuela Sector. He initially served as member of the crew of
Meralcos Truck No. 1823 supervised by Foreman Narciso Matis. After one month, he
joined the crew of Truck No. 1837 under the supervision of Foreman Raymundo Zuiga,
Sr.
On July 27, 2006, barely four months on the job, Gala was dismissed for alleged complicity
in pilferages of Meralcos electrical supplies, particularly, for the incident which took
place on May 25, 2006. On that day, Gala and other Meralco workers were instructed to
replace a worn-out electrical pole at the Pacheco Subdivision in Valenzuela City. Gala
and the other linemen were directed to join Truck No. 1891, under the supervision of
Foreman Nemecio Hipolito.
When they arrived at the worksite, Gala and the other workers saw that Truck No. 1837,
supervised by Zuiga, was already there. The linemen of Truck No. 1837 were already at
work. Gala and the other members of the crew of Truck No. 1891 were instructed to help
in the digging of a hole for the pole to be installed.
While the Meralco crew was at work, one Noberto Bing Llanes, a non-Meralco employee,
arrived. He appeared to be known to the Meralco foremen as they were seen conversing
with him. Llanes boarded the trucks, without being stopped, and took out what were
later found as electrical supplies. Aside from Gala, the foremen and the other linemen
who were at the worksite when the pilferage happened were later charged with
misconduct and dishonesty for their involvement in the incident.
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Unknown to Gala and the rest of the crew, a Meralco surveillance task force was
monitoring their activities and recording everything with a Sony video camera. The task
force was composed of Joseph Aguilar, Ariel Dola and Frederick Riano.
Meralco called for an investigation of the incident and asked Gala to explain. Gala denied
involvement in the pilferage, contending that even if his superiors might have committed
a wrongdoing, he had no participation in what they did. He claimed that: (1) he was at
some distance away from the trucks when the pilferage happened; (2) he did not have an
inkling that an illegal activity was taking place since his supervisors were conversing with
Llanes, giving him the impression that they knew him; (3) he did not call the attention
of his superiors because he was not in a position to do so as he was a mere lineman; and
(4) he was just following instructions in connection with his work and had no control in
the disposition of company supplies and materials. He maintained that his mere presence
at the scene of the incident was not sufficient to hold him liable as a conspirator.
Despite Gala’s explanation, Meralco proceeded with the investigation and eventually
terminated his employment on July 27, 2006. Gala responded by filing an illegal dismissal
complaint against Meralco.
Issue
Whether Gala was illegally dismissed
Ruling
Contrary to the conclusions of the CA and the NLRC, there is substantial evidence
supporting Meralcos position that Gala had become unfit to continue his employment
with the company. Gala was found, after an administrative investigation, to have failed
to meet the standards expected of him to become a regular employee and this failure was
mainly due to his undeniable knowledge, if not participation, in the pilferage activities
done by their group, all to the prejudice of the Companys interests.
Gala insists that he cannot be sanctioned for the theft of company property on May 25,
2006. He maintains that he had no direct participation in the incident and that he was
not aware that an illegal activity was going on as he was at some distance from the trucks
when the alleged theft was being committed. He adds that he did not call the attention
of the foremen because he was a mere lineman and he was focused on what he was doing
at the time. He argues that in any event, his mere presence in the area was not enough
to make him a conspirator in the commission of the pilferage.
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Gala misses the point. He forgets that as a probationary employee, his overall job
performance and his behavior were being monitored and measured in accordance with
the standards (i.e., the terms and conditions) laid down in his probationary employment
agreement. Under paragraph 8 of the agreement, he was subject to strict compliance
with, and non-violation of the Company Code on Employee Discipline, Safety Code, rules
and regulations and existing policies.Par. 10 required him to observe at all times the
highest degree of transparency, selflessness and integrity in the performance of his duties
and responsibilities, free from any form of conflict or contradicting with his own personal
interest.
The evidence on record established Galas presence in the worksite where the pilferage of
company property happened. It also established that it was not only on May 25, 2006 that
Llanes, the pilferer, had been seen during a Meralco operation. He had been previously
noticed by Meralco employees, including Gala (based on his admission), in past
operations. If Gala had seen Llanes in earlier projects or operations of the company, it is
incredulous for him to say that he did not know why Llanes was there or what Zuiga and
Llanes were talking about. To our mind, the Meralco crew (the foremen and the linemen)
allowed or could have even asked Llanes to be there during their operations for one and
only purpose to serve as their conduit for pilfered company supplies to be sold to ready
buyers outside Meralco worksites.
The familiarity of the Meralco crew with Llanes, a non-Meralco employee who had been
present in Meralco field operations, does not contradict at all but rather support the
Meralco submission that there had been reported pilferage or rampant theft, by the crew,
of company property even before May 25, 2006. Gala downplays this particular point with
the argument that the labor arbiter made no such finding as she merely assumed it to be
a fact, her only basis being the statement that may natanggap na balita na ang mga crew
na ito ay palagiang hindi nagsasauli ng mga electric facilities na kanilang ginagamit o
pinapalitan bagkus ito ay ibinenta palabas. Gala impugns the statement as hearsay. He
also wonders why Meralcos supposed video footage of the incident on May 25, 2006 was
never presented in evidence.
The established fact that Llanes, a non-Meralco employee, was often seen during
company operations, conversing with the foremen, for reason or reasons connected with
the ongoing company operations, gives rise to the question: what was he doing there?
Apparently, he had been visiting Meralco worksites, at least in the Valenzuela Sector, not
simply to socialize, but to do something else. As testified to by witnesses, he was picking
up unused supplies and materials that were not returned to the company. From these
factual premises, it is not hard to conclude that this activity was for the mutual pecuniary
benefit of himself and the crew who tolerated the practice. For one working at the scene
who had seen or who had shown familiarity with Llanes (a non-Meralco employee), not
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to have known the reason for his presence is to disregard the obvious, or at least the very
suspicious.
We consider, too, and we find credible the company submission that the Meralco crew
who worked at the Pacheco Subdivision in Valenzuela City on May 25, 2006 had not been
returning unused supplies and materials, to the prejudice of the company. From all these,
the allegedly hearsay evidence that is not competent in judicial proceedings (as noted
above), takes on special meaning and relevance.
With respect to the video footage of the May 25, 2006 incident, Gala himself admitted
that he viewed the tape during the administrative investigation, particularly in
connection with the accusation against him that he allowed Llanes (binatilyong may
kapansanan sa bibig) to board the Meralco trucks. The choice of evidence belongs to a
party and the mere fact that the video was shown to Gala indicates that the video was
not an evidence that Meralco was trying to suppress. Gala could have, if he had wanted
to, served a subpoena for the production of the video footage as evidence. The fact that
he did not does not strengthen his case nor weaken the case of Meralco.
On the whole, the totality of the circumstances obtaining in the case convinces us that
Gala could not but have knowledge of the pilferage of company electrical supplies on
May 25, 2006; he was complicit in its commission, if not by direct participation, certainly,
by his inaction while it was being perpetrated and by not reporting the incident to
company authorities. Thus, we find substantial evidence to support the conclusion that
Gala does not deserve to remain in Meralcos employ as a regular employee. He violated
his probationary employment agreement, especially the requirement for him to observe
at all times the highest degree of transparency, selflessness and integrity in the
performance of their duties and responsibilities. He failed to qualify as a regular
employee.
MA. MELISSA A. GALANG v JULIA MALASUGUI

G.R. No. 174173, March 7, 2012
The Facts
Respondent’s version
On 26 June 1993, Julia Malasugui (Malasugui) was hired by Ma. Melissa A. Galang
(Galang) to take care, oversee and man the premises of the Davao Royal Garden
Compound (Pangi Property) the main compound of Galang where the orchids and other
ornamental plants used for the business were nursed and propagated. Aside from taking
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care of the plants, she was required by Galang to be present at the premises at seven
thirty in the morning until five thirty in the afternoon every day, including Saturdays,
Sundays and Holidays without any day-offs.
Galang would visit the premises at least thrice a week and give her instructions on what
to do and what were the things to be prioritized. Among these instructions were tending,
watering and spraying with chemicals various orchid varieties, packing the orchids for
export purposes and cleaning the surroundings of the half-hectare premises.
From 1993-1995, Malasugui was paid by Galang P40.00 as daily wage and after three years,
it was increased to P70.00 per day until February 1999. She was also given one thousand
pesos (P1,000.00) bonus every December by Galang.
Malasugui was later made to stay and live at the premises, particularly in one of the bunk
houses within the Pangi property which was vacated by the family driver of Galang, so
that she could watch and guard the premises even during nighttime. However, she had
to buy her food.
In November 1998, she became sick with severe cough and asked for financial assistance
from Galang for medical check-up. The coughing became incessant which prompted
Galang to bring her to a doctor and made to undergo a series of examinations including
chest radiographic examination. Thereafter, she was terminated from work and barred
from entering the Pangi property on 27 January 1999.
On the other hand is the version of the defense:
Petitioner Galang narrated that she is the owner of Davao Royal Garden, a sole
proprietorship engaged in the retailing of ornamental plants, consisting of receiving of
cut-flowers from farmers or suppliers, packing them for shipment, and shipping them to
the buyers.However, Galang did not hire respondent Malasugui.
Her mother Elsa Galang (Elsa) is an orchid hobbyist who is engaged in the propagation
of orchid plants and occasionally sells them to her friends and acquaintances.
In 1993, her family bought a parcel of land at Matini, Pangi, Davao City (Pangi property)
on which they intended to construct their family home. While construction was yet to
start, Elsa transferred her orchid collection to the Pangi property. There thus was a need
to oversee the property and Elsa decided to allow their laundrywoman Aurora Solis
(Solis) to stay in one of the bunk houses within the property to take care of the orchid
collection. At the same time, Solis would also assist Galang in her business. The other
bunkhouse was then occupied by their family driver.
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Sometime in 1995, Malasugui visited Solis, a relative by affinity, in the Pangi property.
She told Solis of her intention to find a job in the city but she had no place to stay in the
meantime. Malasugui could not be hired by the Galang. There was no need for another
employee since Solis was already taking care of Elsa’s orchid collection and Galang’s
orchid business. However, Malasugui was allowed to stay in the bunkhouse occupied by
Solis.
When the family driver left the other bunkhouse, Malasugui occupied it and brought
along her family as well. The Galang family tolerated this arrangement for around six
years as an act of kindness. During these times, Malasugui did not look for any job as
initially intended. They did not require Malasugui to pay for rentals, electricity, water
and other utilities.
Solis, on the other hand, asked Malasugui to help out in her tasks of weeding, watering,
spraying chemicals on the orchids as well as cleaning the Pangi property. When Galang
inquired why Malasugui was doing such tasks, Solis replied that she asked Malasugui to
assist her since she and her family were occupying the property. The assistance rendered
by Malasugui was in gratitude for the hospitality of the Galang family.
Admittedly, Galang occasionally gave money to Malasugui out of charity. She even
answered for the medical expenses of Malasugui when the latter became sick of excessive
coughing early in 1999. She even made an arrangement with a radiologist for her
diagnostic examination but Malasugui did not show up at the appointed time. When
confronted by Galang about this, Malasugui packed her belongings and left the Pangi
property. She was not asked nor forced to leave the premises by any member of the
Galang family.
Malasugui filed a complaint for illegal dismissal before the National Labor Relations
Commission, Regional Arbitration Branch No. XI of Davao City on 8 February 1999
claiming underpayment of wages, holiday pay, separation pay and 13th month differential.
Issue
First, whether or not Malasugui is an employee of Galang; and second if she is an

employee, whether or not Malasugui was constructively dismissed.
Ruling
All three, Labor Arbiter, the NLRC and the CA ruled that there was an employer-
employee relationship between Galang and Malasugui. We do not see any reason to rule
otherwise. This Court is not a trier of facts and does not routinely undertake the re-
examination of the evidence presented by the contending parties for the factual findings
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of the labor officials who have acquired expertise in their own fields are accorded respect
and even finality if affirmed on appeal to the Court of Appeals.
Such principle cannot, however, apply to the finding of illegal dismissal against Galang.
The Labor Arbiter and the NLRC both ruled that there was no illegal dismissal, but the
Court of Appeals reversed such findings. We find a need to look into the decision of the
CA.
That said and done, we conclude that there was indeed an illegal dismissal of the
respondent by the petitioner.
We proceed from the premises that (1) as found by the labor arbiter, the NLRC and the
CA, there is an employer-employee relationship between petitioner and respondent; and
(2) it is a fact that there was a severance of employment.
The dispute is on the reason for the severance. Petitioner pleads that there was
abandonment. Respondent, as she had charged petitioner at the outset, submits that
there was illegal dismissal.
Jurisprudence provides that the burden of proof to show that the dismissal was for a just
cause is on the employer.
Petitioner alleged that respondent packed her bags and left the property after being
scolded due to her non-appearance at the medical examination arranged by the
petitioner. The submission is that respondent left the premises and abandoned her work.
Abandonment is a form of neglect of duty, one of the just causes for an employer to
terminate an employee. It is a hornbook precept that in illegal dismissal cases, the
employer bears the burden of proof. For a valid termination of employment on the
ground of abandonment, the employer must prove, by substantial evidence, the
concurrence of the employee’s failure to report for work for no valid reason and his
categorical intention to discontinue employment.
There is in this case no substantial evidence that will prove respondents categorical
intention to discontinue employment. On the contrary, the story of abandonment is
simply doubtful. The Court of Appeals was correct in ruling that:
xxxx
It is not in accord with normal human experience and too flimsy a

reason for petitioner so circumstanced, to just pack up her things and
vacate the Pangi property after being queried on why she did not show up
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at the appointed time with the radiologist. The allegation that private
respondent was displeased after incurring expenses for petitioners medical
check-up remained unrebutted. Hence, petitionerstestimony that she was
prevented entry into the Pangi property appeared more credible.
xxxx
Respondent has been in the employ of petitioner for six years when the alleged
abandonment happened. Being scolded, if it were true, is hardly a reason for a gardener
of six years to just pack up and leave the work premises where she was even allowed to
reside, at a time when she was ill and needed medical attention. Indeed, the alleged
scolding is itself incredible. The given reason was that respondent failed to show up at
her arranged appointment with the radiologist. It is hard to believe that a sick gardener,
certainly of minimal means, would refuse the offer of medical services. In fact, the basic
allegation in respondents complaint for illegal dismissal was that petitioners treatment
to her became sour especially when she requested that she be examined by a doctor for
her cough. And, completely belying the petitioners assertion that respondent failed to
show up at the appointed time with the radiologist are two certificates issued by
Radiologist Susan R. Gaspar stating that on 30 January 1999 and on 1 February 1999
respondent had her chest x-ray taken at the Radiology Section of the Polyclinic Davao.
In the case of Garcia v. NLRC correctly relied upon by the Court of Appeals, we
emphasized that there must be a concurrence of the intention to abandon and some overt
acts from which an employee may be deduced as having no more intention to work. Such
intent to discontinue the employment must be shown by clear proof that it was deliberate
and unjustified.
In the instant case, the overt act relied upon by petitioner is not only a doubtful occurrence but is,
if it did transpire, even consistent with the dismissal from employment posited by the respondent.
The factual appraisal of the Court of Appeals is correct. Petitioner was displeased after incurring
expenses for respondents medical check-up and, it is credible that, thereafter, respondent was
prevented entry into the work premises. This is tantamount to constructive dismissal.
Constructive dismissal exists where there is cessation of work because continued

demotion in rank and a diminution in pay. 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 or the transfer of an employee are for valid and
legitimate grounds such as genuine business necessity.
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We agree with the Court of Appeals that the incredibility of petitioners submission about
abandonment of work renders credible the position of respondent that she was
prevented from entering the property. This was even corroborated by the affidavits of
Siarot and Mendoza which were made part of the records of this case.
The dismissal of respondent places upon petitioner the burden of proof of legality of
dismissal.
In this case, petitioner, instead of proving the legality of dismissal, relied entirely on the
defense of abandonment. When such defense fell and failed, illegal dismissal was left
undisputed.
D.M. CONSUNJI, INC. and/or DAVIDM. CONSUNJI v ESTELITO L. JAMIN,

G.R. No. 192514, April 18, 2012
The Facts
On December 17, 1968, petitioner D.M. Consunji, Inc. (DMCI), a construction company,
hired respondent Estelito L. Jamin as a laborer. Sometime in 1975, Jamin became a helper
carpenter. Since his initial hiring, Jamins employment contract had been renewed a
number of times. On March 20, 1999, his work at DMCI was terminated due to the
completion of the SM Manila project. This termination marked the end of his
employment with DMCI as he was not rehired again.
On April 5, 1999, Jamin filed a complaint for illegal dismissal, with several money claims
(including attorneys fees), against DMCI and its President/General Manager, David M.
Consunji. Jamin alleged that DMCI terminated his employment without a just and
authorized cause at a time when he was already 55 years old and had no independent
source of livelihood. He claimed that he rendered service to DMCI continuously for
almost 31 years. In addition to the schedule of projects (where he was assigned) submitted
by DMCI to the labor arbiter, he alleged that he worked for three other DMCI projects:
Twin Towers, Ritz Towers, from July 29, 1980 to June 12, 1982; New Istana Project, B.S.B.
Brunei, from June 23, 1982 to February 16, 1984; and New Istana Project, B.S.B. Brunei,
from January 24, 1986 to May 25, 1986.
DMCI denied liability. It argued that it hired Jamin on a project-to-project basis, from
the start of his engagement in 1968 until the completion of its SM Manila project
on March 20, 1999 where Jamin last worked. With the completion of the project, it
terminated Jamins employment. It alleged that it submitted a report to the Department
of Labor and Employment (DOLE) everytime it terminated Jamin’s services.
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Issues
Was DMCIs appeal filed out of time, as Jamin claims, and should have been dismissed
outright?
Whether Jamin is a regular employee of DMCI.
Ruling
DMCI received its copy of the February 26, 2010 CA decision on March 4, 2010 (a
Thursday), as indicated in its motion for reconsideration of the decision itself, not
on March 5, 2010 (a Friday), as stated in the present petition. The deadline for the filing
of the motion for reconsideration was on March 19, 2010(15 days from receipt of copy of
the decision), but it was filed only on March 22, 2010 or three days late. Clearly, the
motion for reconsideration was filed out of time, thereby rendering the CA
decision final and executory.
Necessarily, DMCIs petition for review on certiorari is also late as it had only fifteen (15)
days from notice of the CA decision to file the petition or the denial of its motion for
reconsideration filed in due time. The reckoning date is March 4, 2010, since DMCIs
motion for reconsideration was not filed in due time. We see no point in exercising
liberality and disregarding the late filing as we did in Orozco v. Fifth Division of the Court
of Appeals, where we ruled that [t]echnicality should not be allowed to stand in the way
of equitably and completely resolving the rights and obligations of the parties. The
petition lacks merit for its failure to show that the CA committed any reversible error
or grave abuse of discretion when it reversed the findings of the labor arbiter and
the NLRC.
As earlier mentioned, Jamin worked for DMCI for almost 31 years, initially as a laborer
and, for the most part, as a carpenter. Through all those years, DMCI treated him as a
project employee, so that he never obtained tenure. On the surface and at first glance,
DMCI appears to be correct. Jamin entered into a contract of employment (actually an
appointment paper to which he signified his conformity) with DMCI either as a field
worker, a temporary worker, a casual employee, or a project employee everytime DMCI
needed his services and a termination of employment paper was served on him upon
completion of every project or phase of the project where he worked. DMCI would then
submit termination of employment reports to the DOLE, containing the names of a
number of employees including Jamin. The NLRC and the CA would later on say,
however, that DMCI failed to submit termination reports to the DOLE.
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The CA pierced the cover of Jamins project employment contract and declared him a
regular employee who had been dismissed without cause and without notice. To
reiterate, the CAs findings were based on: (1) Jamins repeated and successive
engagements in DMCIs construction projects, and (2) Jamins performance of activities
necessary or desirable in DMCIs usual trade or business.
We agree with the CA. In Liganza v. RBL Shipyard Corporation, the Court held that
[a]ssuming, without granting[,] that [the] petitioner was initially hired for
specific projects or undertakings, the repeated re-hiring and continuing need for
his services for over eight (8) years have undeniably made him a regular
employee. We find the Liganza ruling squarely applicable to this case, considering
that for almost 31 years, DMCI had repeatedly, continuously and successively engaged
Jamins services since he was hired on December 17, 1968 or for a total of 38 times 35 as
shown by the schedule of projects submitted by DMCI to the labor arbiterand three more
projects or engagements added by Jamin, which he claimed DMCI intentionally did not
include in its schedule so as to make it appear that there were wide gaps in his
engagements. One of the three projects was local, the Ritz Towers, from July 29, 1980 to
June 12, 1982, while the other two were overseas the New Istana Project in Brunei,
Darussalam, from June 23, 1982 to February 16, 1984; and again, the New Istana Project,
from January 24, 1986 to May 25, 1986.
We reviewed Jamins employment contracts as the CA did and we noted that while the
contracts indeed show that Jamin had been engaged as a project employee, there was an
almost unbroken string of Jamins rehiring from December 17, 1968 up to the termination
of his employment on March 20, 1999. While the history of Jamins employment (schedule
of projects) relied upon by DMCI shows a gap of almost four years in his employment for
the period between July 28, 1980 (the supposed completion date of the Midtown Plaza
project) and June 13, 1984 (the start of the IRRI Dorm IV project), the gap was caused by
the company’s omission of the three projects above mentioned.
For not disclosing that there had been other projects where DMCI engaged his services,
Jamin accuses the company of suppressing vital evidence that supports his contention
that he rendered service in the company’s construction projects continuously and
repeatedly for more than three decades. The non-disclosure might not have constituted
suppression of evidence it could just have been overlooked by the company but the
oversight is unfair to Jamin as the non-inclusion of the three projects gives the impression
that there were substantial gaps not only of several months but years in his employment
with DMCI.
Thus, as Jamin explains, the Ritz Tower Project (July 29, 1980 to June 12, 1982) and the
New Istana Project (June 23, 1982 to February 16, 1984) would explain the gap between
the Midtown Plaza project (September 3, 1979 to July 28, 1980) and the IRRI Dorm IV
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project (June 13, 1984 to March 12, 1985) and the other New Istana Project (January 24,
1986 to May 25, 1986) would explain the gap between P. 516 Hanger (September 13, 1985
to January 23, 1986) and P. 516 Maint (May 26, 1986 to November 18, 1987).
To reiterate, Jamin’s employment history with DMCI stands out for his continuous,
repeated and successive rehiring in the companys construction projects. In all the 38
projects where DMCI engaged Jamin’s services, the tasks he performed as a carpenter
were indisputably necessary and desirable in DMCIs construction business. He might not
have been a member of a work pool as DMCI insisted that it does not maintain a work
pool, but his continuous rehiring and the nature of his work unmistakably made him a
regular employee. 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.
Further, as we stressed in Liganza, [r]espondent capitalizes on our ruling in D.M.

Consunji, Inc. v. NLRC which reiterates the rule that the length of service of a project
employee is not the controlling test of employment tenure but whether or not 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.
Surely, length of time is not the controlling test for project employment. Nevertheless, 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 or trade of the
employer. Here, [private] respondent had been a project employee several times over.
His employment ceased to be coterminous with specific projects when he was repeatedly
re-hired due to the demands of petitioners business. Without doubt, Jamins case fits
squarely into the employment situation just quoted.
KAKAMPI and ITS MEMBERS,VICTOR PANUELOS, et al., represented by DAVID

DAYALO, KAKAMPI VICE PRESIDENT and ATTORNEY-IN-FACTv KINGSPOINT
EXPRESS andLOGISTIC and/or MARY ANN CO,
G.R. No. 194813, April 25, 2012
The Facts
Individual petitioners were the former drivers of Kingspoint Express and Logistic
(Kingspoint Express), a sole proprietorship registered in the name of Mary Ann Co (Co)
and engaged in the business of transport of goods. They were dismissed from service on
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January 20, 2006 on the grounds of serious misconduct, dishonesty, loss of trust and
confidence and commission of acts inimical to the interest of Kingspoint Express.
Prior thereto, Kingspoint Express issued separate notices to explain to the individual
petitioners on January 16, 2006, uniformly stating that:
RE: CHARGES OF DISHONESTY

SERIOUS MISCONDUCT &
LOSS OF CONFIDENCE
Dear Mr. Dacara:

You are hereby formally charged with DISHONESTY, SERIOUS
MISCONDUCT, LOSS OF CONFIDENCE, and acts inimical to the
company, by filing with the National Labor Relations Commission (NLRC)
false, malicious, and fabricated cases against the company. Further, your
refusal to undergo drug testing is unwarranted and against company
policy.
Please submit your answer or explanation to the foregoing charges within

forty-eight (48) hours [from] receipt hereof. Your failure to do so would
mean that you waive your right to submit your answer.
You may likewise opt for a formal investigation with the assistance of
counsel, or proceed with the investigation as you may choose.
In the meantime, you are place[d] under preventive suspension for thirty
(30) days effective on January 16, 2006. You are physically barred from
company premises while the preventive suspension exists[.]
The individual petitioners failed to submit their written explanation within the stated
period. Subsequently, Kingspoint Express issued to them separate yet uniformly worded
notices on January 20, 2006, informing them of their dismissal. Kingspoint Express
expressed its decision in this wise:
On January 16, 2006, you were formally charged with DISHONESTY,

SERIOUS MISCONDUCT and LOSS OF CONFIDENCE and ACTS
INIMICAL TO THE COMPANY based on the following acts:
1. FABRICATION OF BASELESS MONEY CLAIMS against the company;
2. MISLEADING FELLOW CO-WORKERS to sign the MALICIOUS

COMPLAINT FOR MONEY CLAIMS against the company;
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3. REFUSAL TO UNDERGO THE COMPANYS GENERAL DRUG TEST[;]
4. EXTORTING MONEY FROM CO-WORKERS TO FUND ACTIVITIES

THAT THEY WERE NEVER FULLY INFORMED OF;
You were given two (2) days to respond to these charges, but you failed to
do [so].
In addition to the foregoing, Dacara was dismissed for consummating his sexual relations
with one of Cos household helpers inside Cos residence thus impregnating her.
A complaint for illegal dismissal was subsequently filed, alleging that the charges against
them were fabricated and that their dismissal was prompted by Kingspoint Express
aversion to their union activities.
Issue
The lone issue for the disposition of this Court is the validity of the individual petitioners’
dismissal.
Ruling
It is fundamental that in order to validly dismiss an employee, the employer is required

to observe both substantive and procedural due process the termination of employment
must be based on a just or authorized cause and the dismissal must be effected after due
notice and hearing.
As to whether Kingspoint Express complied with the substantive requirements of due

process, this Court agrees with the CA that the concerned employees refusal to submit
themselves to drug test is a just cause for their dismissal.
An employer may terminate an employment on the ground of serious misconduct or

willful disobedience by the employee of the lawful orders of his employer or
representative in connection with his work. Willful disobedience requires the
concurrence of two elements: (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. Both elements are present in this case.
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As to the first element, that at no point did the dismissed employees deny Kingspoint
Express claim that they refused to comply with the directive for them to submit to a drug
test or, at the very least, explain their refusal gives rise to the impression that their non-
compliance is deliberate. The utter lack of reason or justification for their
insubordination indicates that it was prompted by mere obstinacy, hence, willful and
warranting of dismissal.
It involves little difficulty to accuse Kingspoint Express of anti-unionism and allege that
this was what motivated the dismissal of the petitioners, but the duty to prove such an
accusation is altogether different. That the petitioners failed at the level of substantiation
only goes to show that their claim of unfair labor practice is a mere subterfuge for their
willful disobedience.
As to the second element, no belabored and extensive discussion is necessary to

recognize the relevance of the subject order in the performance of their functions as
drivers of Kingspoint Express. As the NLRC correctly pointed out, drivers are
indispensable to Kingspoint Express primary business of rendering door-to-door delivery
services. It is common knowledge that the use of dangerous drugs has adverse effects on
driving abilities that may render the dismissed employees incapable of performing their
duties to Kingspoint Express and acting against its interests, in addition to the threat
they pose to the public.
The existence of a single just cause is enough to order their dismissal and it is now
inconsequential if the other charges against them do not merit their dismissal from
service. It is therefore unnecessary to discuss whether the other acts enumerated in the
notices of termination issued by Kingspoint Express may be considered as any of the just
causes.
Nonetheless, while Kingspoint Express had reason to sever their employment relations,
this Court finds its supposed observance of the requirements of procedural due process
pretentious. While Kingspoint Express required the dismissed employees to explain their
refusal to submit to a drug test, the two (2) days afforded to them to do so cannot qualify
as reasonable opportunity, which the Court construed in King of Kings Transport, Inc. v.
Mamac as a period of at least five (5) calendar days from receipt of the notice.
Thus, even if Kingspoint Express defective attempt to comply with procedural due
process does not negate the existence of a just cause for their dismissal, Kingspoint
Express is still liable to indemnify the dismissed employees, with the exception of
Panuelos, Dizon and Dimabayao, who did not appeal the dismissal of their complaints,
with nominal damages in the amount of P30,000.00.
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BILLY M. REALDA v NEW AGE GRAPHICS, INC. AND JULIAN I. MIRASOL, JR.
G.R. No. 192190, April 25, 2012
The Facts
The petitioner, who was the former machine operator of respondent New Age Graphics
Inc. His employment was terminated because of his unjustified refusal to render overtime
work, unexplained failure to observe prescribed work standards, habitual tardiness and
chronic absenteeism despite warning and non-compliance with the directive for him to
explain his numerous unauthorized absences constitute sufficient grounds for his
termination.
Issue
Whether petitioner was illegally dismissed
Ruling
First, the petitioner’s arbitrary defiance to Graphics, Inc.s order for him to render
overtime work constitutes willful disobedience. Taking this in conjunction with his
inclination to absent himself and to report late for work despite being previously
penalized, the CA correctly ruled that the petitioner is indeed utterly defiant of the lawful
orders and the reasonable work standards prescribed by his employer.
This particular issue is far from being novel as this Court had the opportunity in R.B.
Michael Press v. Galit to categorically state that an employer has the right to require the
performance of overtime service in any of the situations contemplated under Article 89
of the Labor Code and an employees non-compliance is willful disobedience. Thus:
For willful disobedience to be a valid cause for dismissal, these two

elements must concur: (1) the employees 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 the present case, there is no question that petitioners order for

respondent to render overtime service to meet a production deadline
complies with the second requisite.Art. 89 of the Labor Code empowers
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the employer to legally compel his employees to perform overtime work
against their will to prevent serious loss or damage:
Art. 89. EMERGENCY OVERTIME WORK
Any employee may be required by the employer to

perform overtime work in any of the following cases:
xxxx
(c) When there is urgent work to be performed on

machines, installations, or equipment, in order to avoid
serious loss or damage to the employer or some other cause
of similar nature;
xxx
In the present case, petitioners business is a printing press whose

production schedule is sometimes flexible and varying. It is only
reasonable that workers are sometimes asked to render overtime work in
order to meet production deadlines.
xxx
The issue now is, whether respondents refusal or failure to render

overtime work was willful; that is, whether such refusal or failure was
characterized by a wrongful and perverse attitude. In Lakpue Drug Inc. v.
Belga, willfulness was described as "characterized by a wrongful and
perverse mental attitude rendering the employees act inconsistent with
proper subordination." The fact that respondent refused to provide
overtime work despite his knowledge that there is a production deadline
that needs to be met, and that without him, the offset machine operator,
no further printing can be had, shows his wrongful and perverse mental
attitude; thus, there is willfulness.
Respondents excuse that he was not feeling well that day is

unbelievable and obviously an afterthought. He failed to present any
evidence other than his own assertion that he was sick. Also, if it was true
that he was then not feeling well, he would have taken the day off, or had
gone home earlier, on the contrary, he stayed and continued to work all
day, and even tried to go to work the next day, thus belying his excuse,
which is, at most, a self-serving statement.
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After a re-examination of the facts, we rule that respondent
unjustifiably refused to render overtime work despite a valid order to do
so. The totality of his offenses against petitioner R.B. Michael Press shows
that he was a difficult employee. His refusal to render overtime work was
the final straw that broke the camels back, and, with his gross and habitual
tardiness and absences, would merit dismissal from service. (Citations
omitted)
Noticeably, this case and R.B. Michael Press share a parallelism. Similar to the dismissed
employee in the above-quoted case, the petitioner exhibited willful disobedience to a
reasonable order from his employer and this Court does not find any reason why
petitioner should be accorded a different treatment.
Second, the petitioner’s failure to observe Graphics, Inc.s work standards constitutes
inefficiency that is a valid cause for dismissal. 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 alloted reasonable
period, or by producing unsatisfactory results. As the operator of Graphics, Inc.’s printer,
he is mandated to check whether the colors that would be printed are in accordance with
the client’s specifications and for him to do so, he must consult the General Manager and
the color guide used by Graphics, Inc. before making a full run. Unfortunately, he failed
to observe this simple procedure and proceeded to print without making sure that the
colors were at par with the client’s demands. This resulted to delays in the delivery of
output, client dissatisfaction, and additional costs on Graphics, Inc.s part.
Security of tenure is indeed constitutionally guaranteed. However, this should not be

indiscriminately invoked to deprive an employer of its management prerogatives and
right to shield itself from incompetence, inefficiency and disobedience displayed by its
employees. The procedure laid down by Graphics, Inc. which the petitioner was bound
to observe does not appear to be unreasonable or unnecessarily difficult. On the contrary,
it is necessary and relevant to the achievement of Graphics, Inc.s objectives. The
petitioner’s non-compliance is therefore hard to comprehend.
While a penalty in the form of suspension had already been imposed on the petitioner
for his habitual tardiness and repeated absenteeism, the principle of totality of
infractions sanctions the act of Graphics, Inc. of considering such previous infractions in
decreeing dismissal as the proper penalty for his tardiness and unauthorized absences
incurred afterwards, in addition to his refusal to render overtime work and conform to
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the prescribed work standards. In Merin v. National Labor Relations Commission,this
Court expounded on the principle of totality of infractions as follows:
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. (Citations
omitted)
This Court cannot condone the petitioners attempt to belittle his habitual tardiness and
absenteeism as these are manifestation of lack of initiative, diligence and discipline that
are adverse to Graphics, Inc.s interest. In Challenge Socks Corporation v. Court of
Appeals, this Court said that it reflects an indifferent attitude to and lack of motivation
in work. It is inimical to the general productivity and business of the employer. This is
especially true when it occurred frequently and repeatedly within an extensive period of
time and despite several warnings.
This Court cannot likewise agree to the petitioners attempt to brush aside his refusal to
render overtime work as inconsequential when Graphics, Inc.s order for him to do so is
justified by Graphics, Inc.s contractual commitments to its clients. Such an order is legal
under Article 89 of the Labor Code and the petitioners unexplained refusal to obey is
insubordination that merits dismissal from service.
The petitioner harped on the improper motivations of Graphics, Inc. in ordering his
dismissal, primary of which was the complaint he filed before the Department of Labor
and Employment that eventually led to the finding of violations of laws on labor
standards and tax regulations. However, the petitioner fails to convince that he is not the
incorrigible employee portrayed by the evidence presented by the respondents. The
petitioner does not deny that he had been habitually tardy and absent and continued
being so even after he had been warned and thereafter suspended. Neither does he deny
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that he refused to render overtime work and that Graphics, Inc. had a legally acceptable
reason for requiring him to do so. The petitioner can only argue that his refusal is not
tantamount to willful disobedience, which of course, is disagreeable. In fact, the
petitioners refusal despite knowledge that his regular presence at work and extended
hours thereat on some occasions were necessary for Graphics, Inc. to meet its obligations
to its clients does not only suggest willfulness on his part but even bad faith. On the other
hand, the petitioner only proffers a general denial of the claim that Graphics, Inc. earned
the ire of its clients due to the defective output resulting from the petitioners failure to
comply with the prescribed work standards.
Even assuming as true the petitioners claim that such complaint gave rise to ill-feelings
on Graphics, Inc.s part, he cannot reasonably and validly suggest that the respondents
have stripped themselves of the right to dismiss him for his deliberate disobedience and
lack of discipline in regularly and punctually reporting for work.
Undoubtedly, Graphics, Inc. complied with the substantive requirements of due process
in effecting employee dismissal. However, the same cannot be said insofar as the
procedural requirements are concerned.
As correctly observed by the CA, Graphics, Inc. failed to afford the petitioner with a
reasonable opportunity to be heard and defend itself. An administrative hearing set on
the same day that the petitioner received the memorandum and the twenty-four (24)
hour period for him to submit a written explanation are far from being reasonable.
Furthermore, there is no indication that Graphics, Inc. issued a second notice, informing
the petitioner of his dismissal. The respondents admit that Graphics, Inc. decided to
terminate the petitioner’s employment after he ceased reporting for work from the time
he received the memorandum requiring him to explain and subsequent to his failure to
submit a written explanation. However, there is nothing on record showing that
Graphics, Inc. placed its decision to dismiss in writing and that a copy thereof was sent
to the petitioner.
Notably, the respondents do not question the findings of the CA. The respondents chose
not to convince this Court otherwise by not filing an appeal, which reasonably suggests
that Graphics, Inc’s failure to comply with the procedural requirements of due process is
admitted.
APO CEMENT CORPORATION v ZALDY E. BAPTISMA

G.R. No. 176671, June 20, 2012
The Facts
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On June 16, 1998, respondent Zaldy E. Baptisma was employed by petitioner Apo Cement
Corporation, a duly registered corporation maintaining and operating a cement manufacturing
plant in Tinaan, Naga, Cebu.
Sometime in September 2003, petitioner received information from one of its employees,
Armando Moralda (Moralda), that some of its personnel, including respondent who was then
the manager of petitioners Power Plant Department, were receiving commissions or kickbacks
from suppliers. To ascertain the veracity of the information given by Moralda, the top
management of petitioner conducted an investigation during which Jerome Lobitaa (Lobitaa),
one of petitioners accredited suppliers, doing business under the name and style Precision
Process, came forward to corroborate the statement of Moralda.
On October 10, 2003, Moralda and Lobitaa executed separate affidavits to substantiate their
claims.
Having been implicated in the irregularities, respondent, on November 3, 2003, received a Show
Cause Letter with Notice of Preventive Suspension from Plant Director Ariel Mendoza.
On November 5, 2003, respondent submitted his written explanation denying the accusations
hurled against him.
To further afford respondent ample opportunity to defend himself, petitioner conducted a series
of administrative investigation hearings during which respondent was able to face his accusers.
This time, Lobitaa gave a more detailed narration of the events that transpired in August and
September 2002. He said:
xxxx
(a) That [on] two (2) separate occasions, I personally handed over to
Mr. Baptisma some amounts representing the latters ten [percent] (10%)
commission and/or kickbacks. The first instance took place sometime around
the first or second week of August 2002, where I met with Mr. Baptisma at the
Papas Grill, a native restaurant located in V. Rama Avenue, Cebu City. Mr.
Baptismas two (2) subordinates, Mr. Reno Cedeo and Bobby Banzon, were also
present. After our dinner, I personally handed over to Mr. Baptisma the amount
of P37,701.81 (cash), which was 10% of the aggregate contract price of P377,018.19
for three (3) purchase orders I got from Apo, i.e. P.O. ON-00028642 (P159,090.91),
ON-000-28630 (P168,181.82), and ON-00030162 (P49,745.46). Mr. Baptisma
readily received the amount from me.
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(b) That the second instance took place sometime in the second
week of September 2002. I again met with Mr. Baptisma and his two (2)
subordinates, Mr. Reno Cedeo and Bobby Banzon, at the same Papas Grill
Restaurant. After our dinner, I personally handed over to Mr. Baptisma the
amount of P15,909.09, which was 10% of the total contract price of P159,090.91
under P.O. No. ON-00030067 dated 8 June 2002 which I got from Apo.
(c) That I submitted to the Investigating Committee copies of the

Purchase Orders corresponding to the transactions I had with Apo out of which
Mr. Baptisma received commissions and/or kickbacks from me, as follows:
xxxx
(d) That I maintain a notebook where I could enter the details of my

dealings with Apo personnel who have been receiving commissions and/or
kickback[s] from me. During the administrative investigation held on 9
December 2003, I showed to the Investigating Committee the particular portion
of my notebook where I recorded the total amount of P53,610.00 representing the
commission[s] and/or kickbacks that I gave to the Power Plant Boys, in
connection with the transactions I had with Apo covered by aforementioned
Purchase Orders. One of the Power Plant Boys I referred to in my notebook was
Mr. Baptisma.
xxxx
For his part, respondent presented his co-employees Bobby Banzon (Banzon), Reno Cedeo
(Cedeo) and Christopher Navarro. Banzon testified that sometime in December 2002, he, along
with respondent and other Apo employees, went to Papas Grill; that on said occasion, he saw
Lobitaa with some companions at another table; and that Lobitaa did not approach them but
only gave food and bottles of beer through a waiter. Cedeo, on the other hand, denied meeting
Lobitaa at Papas Grill.
On March 22, 2004, respondent received the Notice of Termination dated March 19, 2004
informing him of his dismissal from employment effective immediately on the ground of loss of
trust and confidence. At the time of his termination, respondent was a Power Plant Manager
earning a monthly salary of P71,100.00.
On March 31, 2004, respondent filed with the Regional Arbitration Branch VII of the National
Labor Relations Commission (NLRC) in Cebu City a complaint for illegal dismissal with claims
for non-payments of salaries, 13th month pay, service incentive leave, damages, and attorneys
fees, docketed as RAB Case No. VII-03-0701-04, against petitioner and its Vice-President for
Human Resources, Atty. Maria Virginia Ongkiko-Eala.
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Issue
Whether there was just cause for the dismissal of respondent.
Ruling
To validly dismiss an employee on the ground of loss of trust and confidence under Article 282
(c) of the Labor Code of the Philippines, the following guidelines must be observed: 1) loss of
confidence should not be simulated; 2) it should not be used as subterfuge for causes which are
improper, illegal or unjustified; 3) it may 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. More important, it must be based on a willful breach of trust and
founded on clearly established facts.
In this case, we agree with the NLRC that the termination of respondent on the ground of loss
of trust and confidence was justified. Unlike the Labor Arbiter and the CA, we find the testimony
of Lobitaa credible and truthful.
To begin with, we find no inconsistencies between the first and the second affidavits of Lobitaa.
If at all, the only difference between the two is that the second affidavit is more detailed than the
first one. This, however, is understandable considering that the first affidavit was executed by
Lobitaa during petitioners initial investigation, when it was still verifying the information it
received from Moralda, while the second affidavit, which contains Lobitaas testimony during
respondents administrative hearing, was executed long after the investigation was conducted.
Also, there appears to be no ill-motive on the part of Lobitaa to falsely accuse respondent of
accepting commissions and/or kickbacks. In fact, it was not Lobitaa but Moralda who reported
the irregularities to petitioner. Lobitaa came forward only during petitioners initial investigation
to confirm the testimony of Moralda that some personnel were indeed receiving commissions
and/or kickbacks.
Moreover, as between the positive testimony of Lobitaa that he gave respondent commissions
and/or kickbacks on two separate occasions, and the negative testimony of respondents
witnesses Cedeo and Banzon that no such meeting took place, we are more inclined to give
credence to the former. It bears stressing that a positive testimony prevails over a negative one,
more especially in this case where respondents witnesses did not even execute affidavits to attest
to the truthfulness of their statements. Thus, it was error on the part of the Labor Arbiter and
the CA to disregard the testimony of Lobitaa.
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Likewise erroneous is the reasoning of the Labor Arbiter and the CA that since respondent was
not involved in the procurement process, he could not be guilty of violating Section 2.04 of
petitioners Company Rules and Regulations, which prohibits employees from:
Obtaining or accepting money or anything of value by entering into

unauthorized arrangements(s) with supplier (s), client(s) or other outsiders(s).
This is a non sequitur. As aptly pointed out by the NLRC, although he was not directly involved
in the procurement process, respondent, as the then Power Plant Manager, had some power or
authority vital and indispensable to the procurement process.
All told, we find that the testimony of Lobitaa constitutes substantial evidence to prove that
respondent, as the then Power Plant Manager, accepted commissions and/or kickbacks from
suppliers, which is a clear violation of Section 2.04 of petitioners Company Rules and
Regulations. Jurisprudence consistently holds that 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. As we then see it, respondent’s termination was for a just and valid cause.
COSMOS BOTTLING CORP. v WILSON FERMIN,

G.R. No. 193676
COSMOS BOTTLING CORPORATION and CECILIA BAUTISTA v WILSON B.

FERMIN,
G.R. No. 194303, June 20, 2012
The Facts
Wilson B. Fermin (Fermin) was a forklift operator at Cosmos Bottling Corporation

(COSMOS), where he started his employment on 27 August 1976. On 16 December 2002,
he was accused of stealing the cellphone of his fellow employee, Luis Braga (Braga).
Fermin was then given a Show Cause Memorandum, requiring him to explain why the
cellphone was found inside his locker. In compliance therewith, he submitted an affidavit
the following day, explaining that he only hid the phone as a practical joke and had every
intention of returning it to Braga.
On 21 December 2002, Braga executed a handwritten narration of events stating the

following:
(a) At around 6:00 a.m. on 16 December 2002, he was changing his clothes
inside the locker room, with Fermin as the only other person present.
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(b) Braga went out of the locker room and inadvertently left his cellphone
by the chair. Fermin was left inside the room.
(c) After 10 minutes, Braga went back to the locker room to retrieve his
cellphone, but it was already gone.
(d) Braga asked if Fermin saw the cellphone, but the latter denied noticing
it.
(e) Braga reported the incident to the security guard, who thereafter
conducted an inspection of all the lockers.
(f) The security guard found the cellphone inside Fermins locker.
(g) Later that afternoon, Fermin talked to Braga to ask for forgiveness. The
latter pardoned the former and asked him not to do the same to their
colleagues.
After conducting an investigation, COSMOS found Fermin guilty of stealing Bragas

phone in violation of company rules and regulations. Consequently, on 2 October 2003,
the company terminated Fermin from employment after 27 years of service, effective on
6 October 2003.
Following the dismissal of Fermin from employment, Braga executed an affidavit, which
stated the belief that the former had merely pulled a prank without any intention of
stealing the cellphone, and withdrew from COSMOS his complaint against Fermin.
Meanwhile, Fermin filed a Complaint for Illegal Dismissal, which the Labor Arbiter (LA)
dismissed for lack of merit on the ground that the act of taking a fellow employees
cellphone amounted to gross misconduct. Further, the LA likewise took into
consideration Fermins other infractions, namely: (a) committing acts of disrespect to a
superior officer, and (b) sleeping on duty and abandonment of duty.
Fermin filed an appeal with the National Labor Relations Commission (NLRC), which
affirmed the ruling of the LA and denied Fermins subsequent Motion for
Reconsideration.
Thereafter, Fermin filed a Petition for Certiorari with the Court of Appeals (CA), which
reversed the rulings of the LA and the NLRC and awarded him his full retirement
benefits. Although the CA accorded with finality the factual findings of the lower
tribunals as regards Fermin’s commission of theft, it nevertheless held that the penalty
of dismissal from service was improper on the ground that the said violation did not
amount to serious misconduct or wilful disobedience.
COSMOS and Fermin moved for reconsideration, but the CA likewise denied their
motions. Thus, both parties filed the present Petitions for Review.
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COSMOS argues, among other things, that: (a) Fermin committed a clear act of bad faith
and dishonesty in taking the cellphone of Braga and denying knowledge thereof; (b) the
latters recantation was a mere afterthought; (c) the lack of material damage or prejudice
on the part of COSMOS does not preclude it from imposing the penalty of termination;
and (d) the previous infractions committed by Fermin strengthen the decision of
COSMOS to dismiss him from service.
On the other hand, Fermin contends that since the CA found that the penalty of dismissal
was not proportionate to his offense, it should have ruled in favor of his entitlement to
backwages.
It must be noted that in the case at bar, all the lower tribunals were in agreement
that Fermin’s act of taking Bragas cellphone amounted to theft. Factual findings
made by administrative agencies, if established by substantial evidence as borne out by
the records, are final and binding on this Court, whose jurisdiction is limited to reviewing
questions of law.
Issue
Whether the imposition of the penalty of dismissal was appropriate.
Ruling
Theft committed against a co-employee is considered as a case analogous to serious

misconduct, for which the penalty of dismissal from service may be meted out to the
erring employee, viz:
Article 282 of the Labor Code provides:
Article 282. Termination by Employer. - An employer

may terminate an employment for any of the following
causes:
(a) Serious misconduct or willful disobendience by
the employee of the lawful orders of his employer or his
representatives in connection with his work;
xxx xxx xxx
(e) Other causes analogous to the foregoing.
Misconduct involves the transgression of some established and

definite rule of action, forbidden act, a dereliction of duty, willful in
character, and implies wrongful intent and not mere error in judgment. For
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misconduct to be serious and therefore a valid ground for dismissal, it must
be:
1. of grave and aggravated character and not merely trivial

or unimportant and
2. connected with the work of the employee.
In this case, petitioner dismissed respondent based on the NBI's

finding that the latter stole and used Yusecos credit cards. But since the
theft was not committed against petitioner itself but against one of
its employees, respondent's misconduct was not work-related and
therefore, she could not be dismissed for serious misconduct.
Nonetheless, Article 282(e) of the Labor Code talks of other

analogous causes or those which are susceptible of comparison to another
in general or in specific detail. For an employee to be validly dismissed for
a cause analogous to those enumerated in Article 282, the cause must
involve a voluntary and/or willful act or omission of the employee.
A cause analogous to serious misconduct is a voluntary and/or

willful act or omission attesting to an employees moral depravity. Theft
committed by an employee against a person other than his
employer, if proven by substantial evidence, is a cause analogous to
serious misconduct. (Emphasis supplied.)
In this case, the LA has already made a factual finding, which was affirmed by both the
NLRC and the CA, that Fermin had committed theft when he took Bragas cellphone.
Thus, this act is deemed analogous to serious misconduct, rendering Fermins dismissal
from service just and valid.
Further, the CA was correct in ruling that previous infractions may be cited as
justification for dismissing an employee only if they are related to the subsequent offense.
However, it must be noted that such a discussion was unnecessary since the theft, taken
in isolation from Fermins other violations, was in itself a valid cause for the termination
of his employment.
DUTY FREE PHILIPPINES SERVICES, INC., v MANOLITO Q. TRIA,

G.R. No. 174809, June 27, 2012
The facts
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Petitioner Duty Free Philippines Services, Inc. is a manpower agency that provides
personnel to Duty Free Philippines (DFP).
On March 16, 1989, [respondent] Manolo Tria was employed by Petitioner and was
seconded to DFP as a Warehouse Supervisor.
In an Audit Report, dated January 16, 1998, it was revealed that 1,020 packs of Marlboro
bearing Merchandise Code No. 020101 under WRR No. 36-04032 were not included in the
condemnation proceedings held on December 27, 1996 and that there were glaring
discrepancies in the related documents which indicatea malicious attempt to conceal an
anomalous irregularity. The relevant Request for Condemnation was found to have been
fabricated and all signatories therein, namely, Ed Garcia, Stockkeeper; Catherino A. Bero,
DIU Supervisor; and Constantino L. Cruz, were held accountable for the irregular loss of
the unaccounted Marlboro KS Pack of 5.
After further investigation, it was discovered that the subject merchandise was illegally
brought out of the warehouse and it was made to appear that in all the documents
prepared said goods were legally condemned on December 27, 1996. Ed Garcia, one of
the respondents in the Audit Review, implicated [respondent] and [two] others. Garcia
claimed that he was unaware of the illegality of the transaction as he was only obeying
the orders of his superiors who included [respondent]. Garcia disclosed that it was
[respondent] who ordered him to look for a van for the supposed direct condemnation of
the subject merchandise.
Consequently, the Discipline Committee requested [respondent] to submit a written

reply/explanation regarding the findings in the Audit Report and the allegations of
Garcia.
[Respondent] denied his participation in the illegal transaction. Although he admitted

that he instructed Garcia to look for a van, it was for the purpose of transferring the
damaged merchandise from the main warehouse to the proper warehouse for damaged
goods.
On August 27, 1998, the DFP Discipline Committee [DFPDC] issued a Joint Resolution
holding [respondent] GUILTY OF DISHONESTY for (his) direct participation in the fake
condemnation and pilferage of the missing 1,020 Marlboro Pack of 5s cigarettes and orders
(his) DISMISSAL from the service for cause and for loss of trust and confidence, with
forfeiture of all rights and privileges due them from the company, except earned salaries
and leave credits.
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On September 18, 1998, Petitioner sent [respondent] a memorandum terminating his
employment with Petitioner and his secondment to DFP on the basis of the findings and
recommendation of the (DFPs) Discipline Committee.
Aggrieved, [respondent] filed a Complaint against Petitioner for Illegal Dismissal and for
payment of backwages, attorney’s fees and damages
On May 31, 1999, the Labor Arbiter (LA) rendered a Decisionfinding respondent to
have been illegally dismissed from employment. The dispositive portion of the
decision reads:
On appeal, the NLRC affirmed the LA decision, but deleted the award of attorney’s fees.
Petitioner’s motion for reconsideration was also denied on March 15, 2002.
When petitioner elevated the case to the CA, it denied for the first time the existence of
employer-employee relationship and pointed to DFP as respondent’s real employer. The
appellate court, however, considered said defense barred by estoppel for its failure to
raise the defense before the LA and the NLRC. It nonetheless ruled that although DFPDC
conducted the investigation, petitioners dismissal letter effected respondents
termination from employment. On the validity of respondents dismissal from
employment, the CA respected the LA and NLRC findings and reached the same
conclusion that respondent was indeed illegally dismissed from employment. Petitioners
motion for reconsideration was likewise denied in a Resolution dated September 21, 2006.
Issue
Whether petitioner can deny employer-employee relationship for the first time
on appeal
Whether respondent was illegally dismissed.
Ruling
In this case, petitioner insisted that respondent was dismissed from employment for
cause and after the observance of the proper procedure for termination. Consequently,
petitioner cannot now deny that respondent is its employee. While indeed, jurisdiction
cannot be conferred by acts or omission of the parties, petitioner’s belated denial that it
is the employer of respondent is obviously an afterthought, a devise to defeat the law and
evade its obligations.
It is a fundamental rule of procedure that higher courts are precluded from entertaining
matters neither alleged in the pleadings nor raised during the proceedings below, but
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ventilated for the first time only in a motion for reconsideration or on appeal. Petitioner
is bound by its submissions that respondent is its employee and it should not be
permitted to change its theory. Such change of theory cannot be tolerated on appeal, not
due to the strict application of procedural rules, but as a matter of fairness.
As to the legality of respondent’s dismissal, it is well settled that under Rule 45 of the
Rules of Court, only questions of law may be raised, the reason being that this Court is
not a trier of facts, and it is not for this Court to reexamine and reevaluate the evidence
on record. Findings of fact and conclusions of the Labor Arbiter as well as those of the
NLRC or, for that matter, any other adjudicative body which can be considered as a trier
of facts on specific matters within its field of expertise, should be considered as binding
and conclusive upon the appellate courts.
Petitioner dismissed respondent from employment based on the recommendation of the

DFPDC holding respondent guilty of dishonesty for his direct participation in the fake
condemnation and pilferage of the missing 1,020 Marlboro Pack of 5 cigarettes.
Respondent was implicated in the anomalous transaction by his co-employees who
pointed to the former as the one who ordered the other suspects to look for a vehicle that
would be used to transport the subject cigarettes. This, according to the DFPDC, was odd
and strange. With this act alone and by reason of his position, the DFPDC concluded,
and affirmed by petitioner, that respondent definitely had knowledge of the fake
condemnation. From these circumstances, petitioner sustained the findings of
dishonesty and dismissed respondent from employment.
Again, we agree with the appellate court that DFPDCs conclusions are not supported by
clear and convincing evidence to warrant the dismissal of respondent. In illegal dismissal
cases, the employer is burdened to prove just cause for terminating the employment of
its employee with clear and convincing evidence. This principle is designed to give flesh
and blood to the guaranty of security of tenure granted by the Constitution to employees
under the Labor Code. In this case, petitioner failed to submit clear and convincing
evidence of respondents direct participation in the alleged fake condemnation
proceedings. To be sure, unsubstantiated suspicions, accusations, and conclusions of
employers do not provide for legal justification for dismissing employees. In case of
doubt, such cases should be resolved in favor of labor, pursuant to the social justice policy
of labor laws and the Constitution.
DOLORES T. ESGUERRA v VALLE VERDE COUNTRY CLUB,

INC. and ERNESTO VILLALUNA
G.R. No. 173012, June 13, 2012
The Facts
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On April 1, 1978, Valle Verde hired Esguerra as Head Food Checker. In 1999, she was
promoted to Cost Control Supervisor.
On January 15, 2000, the Couples for Christ held a seminar at the country club. Esguerra
was tasked to oversee the seminar held in the two function rooms the Ballroom and the
TanayRoom. The arrangement was that the food shall be served in the form of pre-paid
buffet, while the drinks shall be paid in a pay as you order basis.
The Valle Verde Management found out the following day that only the proceeds from
the TanayRoom had been remitted to the accounting department. There were also
unauthorized charges of food on the account of Judge Rodolfo Bonifacio, one of the
participants. To resolve the issue, Valle Verde conducted an investigation; the employees
who were assigned in the two function rooms were summoned and made to explain, in
writing, what had transpired.
On March 6, 2000, Valle Verde sent a memorandum to Esguerra requiring her to show
cause as to why no disciplinary action should be taken against her for the non-remittance
of the Ballrooms sales. Esguerra was placed under preventive suspension with pay,
pending investigation.
In her letter-response, Esguerra denied having committed any misappropriation. She

explained that it had been her daughter (who was assigned as a food checker) who lost
the money. To settle the matter, Esguerra paid the unaccounted amount as soon as her
daughter informed her about it. Esguerra also explained the unauthorized charging of
food on Judge Bonifacios account. She alleged that Judge Bonifacio took pity on her and
told her to take home some food and to charge it on his account.
Valle Verde found Esguerras explanation unsatisfactory and, on July 26, 2000, issued a
second memorandum terminating Esguerras employment.
Issue
Whether Esguerra was validly dismissed.
Ruling
Under the Labor Code, the requirements for the lawful dismissal of an employee are two-
fold[:] the substantive and the procedural aspects. Not only must the dismissal be for a
just or authorized cause, the rudimentary requirements of due process notice and
hearing must, likewise, be observed x x x. Without the concurrence of the two, the
termination would x x x be illegal[;] employment is a property right of which one cannot
be deprived of without due process.
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There was valid notice and hearing
We fail to find any irregularities in the service of notice to Esguerra. The memorandum
dated March 6, 2000 informed her of the charges, and clearly directed her to show cause,
in writing, why no disciplinary action should be imposed against her. Esguerras
allegation that the notice was insufficient since it failed to contain any intention to
terminate her is incorrect.
In Perez v. Philippine Telegraph and Telephone Company, the Court underscored the
significance of the two-notice rule in dismissing an employee:
To meet the requirements of due process in the dismissal of an employee,

an employer must furnish the worker with two written notices: (1) a
written notice specifying the grounds for termination and giving to said
employee a reasonable opportunity to explain his side and (2) another
written notice indicating that, upon due consideration of all
circumstances, grounds have been established to justify the employers
decision to dismiss the employee. [emphases and italics ours].
Contrary to Esguerra’s allegation, the law does not require that an intention to terminate
ones employment should be included in the first notice. It is enough that employees are
properly apprised of the charges brought against them so they can properly prepare their
defenses; it is only during the second notice that the intention to terminate ones
employment should be explicitly stated.
There is also no basis to question the absence of a proper hearing. In Perez, the
Court provided the following guiding principles in connection with
the hearing requirement in dismissal cases:
a) "ample opportunity to be heard" means any meaningful opportunity

(verbal or written) given to the employee to answer the charges against
him and submit evidence in support of his defense, whether in
a hearing, conference or some other fair, just and reasonable way.
b) a formal hearing or conference becomes mandatory only when

requested by the employee in writing or substantial evidentiary
disputes exist or a company rule or practice requires it, or when similar
circumstances justify it.
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c) the "ample opportunity to be heard" standard in the Labor Code
prevails over the "hearing or conference" requirement in the
implementing rules and regulations.
In sum, the existence of an actual, formal "trial-type" hearing, although preferred, is not
absolutely necessary to satisfy the employee's right to be heard. Esguerra was able to
present her defenses; and only upon proper consideration of it did Valle Verde send the
second memorandum terminating her employment. Since Valle Verde complied with the
two-notice requirement, no procedural defect exists in Esguerras termination.
Esguerra occupied a position of trust and confidence
We now dwell on the substantive aspect of Esguerras dismissal. We have held that there
are two (2) classes of positions of trust the first class consists of managerial employees,
or those vested with the power to lay down management policies; and the second class
consists of cashiers, auditors, property custodians or those who, in the normal and
routine exercise of their functions, regularly handle significant amounts of money or
property.
Esguerra held the position of Cost Control Supervisor and had the duty to remit to the
accounting department the cash sales proceeds from every transaction she was assigned
to. This is not a routine task that a regular employee may perform; it is related to the
handling of business expenditures or finances. For this reason, Esguerra occupies a
position of trust and confidence a position enumerated in the second class of positions
of trust. Any breach of the trust imposed upon her can be a valid cause for dismissal.
In Jardine Davies, Inc. v. National Labor Relations Commission, we held that

loss of confidence as a just cause for termination of employment can be invoked when
an employee holds a position of responsibility, trust and confidence. In order to
constitute a just cause for dismissal, the act complained of must be related to the
performance of the duties of the dismissed employee and must show that he or she is
unfit to continue working for the employer for violation of the trust reposed in him or
her.
We find no merit in the allegation that it was Esguerras daughter who should be held
liable. She had no custody of the cash sales since it was not part of her duties as a food
checker. It was Esguerras responsibility to account for the cash proceeds; in case of
problems, she should have promptly reported it, regardless of who was at fault. Instead,
she settled the unaccounted amount only after the accounting department informed her
about the discrepancy, almost one month following the incident. Esguerras failure to
make the proper report reflects on her irresponsibility in the custody of cash for which
she was accountable, it was her duty to account for the sales proceeds, and she should
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have known about the missing amount immediately after the event.
We cannot favorably consider Esguerras explanation about the unauthorized charging

on Judge Bonifacios account. It is highly unethical for an employee to bring home food
intended to be sold to customers. At any rate, her explanation is self-serving and cannot
be believed; the numerous written testimonies of the other co-workers never even
mentioned it.
LOLITA S. CONCEPCION v MINEX IMPORT CORPORATION, ET AL.

G.R. No. 153569, January 24, 2012
The Facts
Respondent Minex Import-Export Corporation (Minex) engaged in the retail of semi-

precious stones, selling them in kiosks or stalls installed in various shopping centers
within Metro Manila. It employed the petitioner initially as a salesgirl, rotating her
assignment among nearly all its outlets. It made her a supervisor in July 1997, but did not
grant her any salary increase. On October 23, 1997, respondent Vina Mariano, an
Assistant Manager of Minex, assigned the petitioner to the SM Harrison Plaza kiosk with
the instruction to hold the keys of the kiosk. Working under her supervision there were
salesgirls Cristina Calung and Lida Baquilar.
On November 9, 1997, a Sunday, the petitioner and her salesgirls had sales of crystal
items totaling P39,194.50. At the close of business that day, they conducted a cash-count
of their sales proceeds, including those from the preceding Friday and Saturday, and
determined their total for the three days to be P50,912.00. The petitioner wrapped the
amount in a plastic bag and deposited it in the drawer of the locked wooden cabinet of
the kiosk.
At about 9:30 am of November 10, 1997, the petitioner phoned Vina Mariano to report
that the P50,912.00 was missing, explaining how she and her salesgirls had placed the
wrapped amount at the bottom of the cabinet the night before, and how she had found
upon reporting to work that morning that the contents of the cabinet were in disarray
and the money already missing.
Later, while the petitioner was giving a detailed statement on the theft to the security
investigator of Harrison Plaza, Vina and Sylvia Mariano, her superiors, arrived with a
policeman who immediately placed the petitioner under arrest and brought her to
Precinct 9 of the Malate Police Station. There, the police investigated her. She was
detained for a day, from 11:30 am of November 10, 1997 until 11:30 am of November 11,
1997, being released only because the inquest prosecutor instructed so.
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On November 12, 1997, the petitioner complained against the respondents for illegal
dismissal in the Department of Labor and Employment.
On November 14, 1997, Minex, through Vina, filed a complaint for qualified theft against
the petitioner in the Office of the City Prosecutor in Manila.
To the charge of qualified theft, the petitioner insisted on her innocence, reiterating that
on November 9, 1997 she, together with Calung and Baquilar, had first counted the cash
before placing it in a plastic bag that she deposited inside the drawer of the cabinet with
the knowledge of Calung and Baquilar. She explained that on that night Baquilar had left
for home ahead, leaving her and Calung to close the kiosk at around 8:00 pm; that at
exactly 8:01 pm she proceeded to SM Department Store in Harrison Plaza to wait for her
friends whom she had previously walked with to the LRT station; that she noticed upon
arriving at the kiosk the next morning that the cabinet that they had positioned to block
the entrance of the kiosk had been slightly moved; and that she then discovered upon
opening the cabinet that its contents, including the cash, were already missing.
Calung executed a sinumpaang salaysay, however, averring that she had left the
petitioner alone in the kiosk in the night of November 9, 1997 because the latter had still
to change her clothes; and that that was the first time that the petitioner had ever asked
to be left behind, for they had previously left the kiosk together.
Vina declared that the petitioner did not call the office of Minex for the pick-up of the
P39,194.50 cash sales on Sunday, November 9, 1997, in violation of the standard operating
procedure (SOP) requiring cash proceeds exceeding P10,000.00 to be reported for pick-
up if the amount could not be deposited in the bank.
After the preliminary investigation, the Assistant Prosecutor rendered a resolution dated
February 4, 1998 finding probable cause for qualified theft and recommending the filing
of an information against the petitioner. Thus, she was charged with qualified theft in
the Regional Trial Court (RTC) in Manila, docketed as Criminal Case No. 98-165426.
The petitioner appealed by petition for review to the Department of Justice (DOJ), but
the DOJ Secretary denied her petition for review on July 4, 2001.
Issues
a.) Whether there was just cause for her dismissal.
b.) Whether respondent complied with procedural due process.
Ruling
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Indeed, the employer is not expected to be as strict and rigorous as a judge in a criminal
trial in weighing all the probabilities of guilt before terminating the employee. Unlike a
criminal case, which necessitates a moral certainty of guilt due to the loss of the personal
liberty of the accused being the issue, a case concerning an employee suspected of
wrongdoing leads only to his termination as a consequence. The quantum of proof
required for convicting an accused is thus higher – proof of guilt beyond reasonable
doubt – than the quantum prescribed for dismissing an employee – substantial evidence.
In so stating, we are not diminishing the value of employment, but only noting that the
loss of employment occasions a consequence lesser than the loss of personal liberty, and
may thus call for a lower degree of proof.
It is also unfair to require an employer to first be morally certain of the guilt of the
employee by awaiting a conviction before terminating him when there is already
sufficient showing of the wrongdoing. Requiring that certainty may prove too late for the
employer, whose loss may potentially be beyond repair. Here, no less than the DOJ
Secretary found probable cause for qualified theft against the petitioner. That finding
was enough to justify her termination for loss of confidence. To repeat, her responsibility
as the supervisor tasked to oversee the affairs of the kiosk, including seeing to the secure
handling of the sales proceeds, could not be ignored or downplayed. The employer’s loss
of trust and confidence in her was directly rooted in the manner of how she, as the
supervisor, had negligently handled the large amount of sales by simply leaving the
amount inside the cabinet drawer of the kiosk despite being aware of the great risk of
theft. At the very least, she could have resorted to the SOP of first seeking guidance from
the main office on how to secure the amount if she could not deposit in the bank due to
that day being a Sunday.
Yet, even as we now say that the respondents had a just or valid cause for terminating
the petitioner, it becomes unavoidable to ask whether or not they complied with the
requirements of due process prior to the termination.
The petitioner plainly demonstrated how quickly and summarily her dismissal was
carried out without first requiring her to explain anything in her defense as demanded
under Section 2 (d) of Rule I of the Implementing Rules of Book VI of the Labor Code.
Instead, the respondents forthwith had her arrested and investigated by the police
authorities for qualified theft. This, we think, was a denial of her right to due process of
law, consisting in the opportunity to be heard and to defend herself. In fact, their decision
to dismiss her was already final even before the police authority commenced an
investigation of the theft, the finality being confirmed by no less than Sylvia Mariano
herself telling the petitioner during their phone conversation following the latter’s
release from police custody on November 11, 1997 that she (Sylvia) “no longer wanted to
see” her.
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The fact that the petitioner was the only person suspected of being responsible for the
theft aggravated the denial of due process. When the respondents confronted her in the
morning of November 10, 1997 for the first time after the theft, they brought along a
police officer to arrest and hale her to the police precinct to make her answer for the
theft. They evidently already concluded that she was the culprit despite a thorough
investigation of the theft still to be made. This, despite their obligation under Section 2
(d) of Rule I of the Implementing Rules of Book VI of the Labor Code, firstly, to give her a
“reasonable opportunity within which to explain (her) side;” secondly, to set a “hearing
or conference during which the employee concerned, with the assistance of counsel if
(she) so desires is given opportunity to respond to the charge, present (her) evidence, or
rebut the evidence presented against (her);” and lastly, to serve her a “written notice of
termination xxx indicating that upon due consideration of all the circumstances, grounds
have been established to justify (her) termination.” They wittingly shunted aside the
tenets that mere accusation did not take the place of proof of wrongdoing, and that a
suspicion or belief, no matter how sincere, did not substitute for factual findings carefully
established through an orderly procedure.
The fair and reasonable opportunity required to be given to the employee before
dismissal encompassed not only the giving to the employee of notice of the cause and
the ability of the employee to explain, but also the chance to defend against the
accusation. This was our thrust in Philippine Pizza, Inc. v. Bungabong, where we held that
the employee was not afforded due process despite the dismissal being upon a just cause,
considering that he was not given a fair and reasonable opportunity to confront his
accusers and to defend himself against the charge of theft notwithstanding his having
submitted his explanation denying that he had stolen beer from the company dispenser.
The termination letter was issued a day before the employee could go to the HRD Office
for the investigation, which made it clear to him that the decision to terminate was
already final even before he could submit his side and refute the charges against him.
Nothing that he could say or do at that point would have changed the decision to dismiss
him. Such omission to give the employee the benefit of a hearing and investigation before
his termination constituted an infringement of his constitutional right to due process by
the employer.
The respondents would further excuse their failure to afford due process by averring that
“even before the respondents could issue the petitioner any formal written memorandum
requiring her to explain the loss of the P50,912.00 sales proceeds xxx she went post haste
to the NLRC and filed a case for illegal dismissal” in order to “beat the gun on
respondents.” However, we cannot excuse the non-compliance with the requirement of
due process on that basis, considering that her resort to the NLRC came after she had
been told on November 11, 1997 by Sylvia that she (Sylvia) “no longer wanted to see” her.
The definitive termination closed the door to any explanation she would tender. Being
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afforded no alternative, she understandably resorted to the complaint for illegal
dismissal.
MANILA ELECTRIC COMPANY v MA. LUISA BELTRAN

G.R. No. 173774, January 30, 2012
The Facts
Beltran was employed by MERALCO on December 16, 1987. At the time material to this case,
she was holding the position of Senior Branch Clerk at MERALCOs Pasig branch. While
rendering overtime work on September 28, 1996, a Saturday, Beltran accepted P15,164.48 from
Collection Route Supervisor Berlin Marcos (Marcos), which the latter received from customer
Andy Chang (Chang). The cash payment was being made in lieu of a returned check earlier
issued as payment for Chang’s electric bill. Beltran was at first hesitant as it was not part of her
regular duties to accept payments from customers but was later on persuaded by Marcos
persistence. Hence, Beltran received the payment and issued Auxiliary Receipt No. 879641 which
she dated September 30, 1996, a Monday, instead of September 28, 1996. This was done to show
that it was an accommodation, an accepted practice in the office. She thereafter placed the
money and the original auxiliary receipt and other documents pertinent to the returned check
underneath her other files inside the drawer of her table.
Beltran, however, was only able to remit Changs payment on January 13, 1997. Thus, in a
Memorandum dated January 16, 1997, she was placed under preventive suspension effective
January 20, 1997 pending completion of an investigation. MERALCO considered as
misappropriation or withholding of company funds her failure to immediately remit said
payment in violation of its Code on Employee Discipline. Investigation thereafter ensued.
In her Sinumpaang Salaysay, Beltran admitted receipt of Chang’s payment of P15,164.48 on

September 28, 1996. She also admitted having issued an Auxiliary Receipt dated September 30,
1996 and having remitted the amount only on January 13, 1997, after her immediate supervisor,
Elenita L. Garcia (Garcia), called her attention about the payment and its non-remittance.
Beltran nevertheless explained the circumstances which caused the delay of the turn-over of
Chang’s payment. She recounted that on the day following her receipt of the money, she had a
huge fight with her husband which led to their separation; that on September 30, 1997, she
reported at MERALCO’s Taguig branch where she worked until 8:30 p.m.; and, that subsequent
marital woes coupled with her worries for her ailing child distracted her into forgetting Chang’s
payment. Beltran claimed that after Garcia approached her regarding the unremitted payment
of Chang, she immediately looked for the money in her drawer and right there and then handed
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it over to Garcia together with the other pertinent documents. Beltran denied having personally
used the money.
Garcia, the Administrative Supervisor of MERALCOs Pasig branch, on the other hand, testified
that while doing an accounting of all outstanding returned checks sometime in December 1996,
she noticed that Chang’s returned check was missing. Upon further inquiry, she discovered that
Chang had already redeemed the returned check after paying P15,164.48 to Beltran, who in turn
issued an Auxiliary Receipt dated September 30, 1996. It was also discovered that the payment
has not yet been remitted. This prompted her to inquire from Beltran on January 7, 1997 about
the supposed payment and immediately ordered the remittance of the same. Beltran, however,
failed to do so on that day and even on the next day when she reported for work. Beltran
subsequently went on leave of absence on January 9 and 10, 1997. It was only on January 13, 1997
that the money with the pertinent documents were handed over.
In a memorandumdated February 25, 1997, the investigator found Beltran guilty of

misappropriating and withholding Chang’s payment of P15,164.48 and recommended her
dismissal from service.
By virtue thereof, Beltran was terminated effective March 13, 1997.
Beltran filed a complaint for illegal dismissalagainst MERALCO. She argued that she had no
intention to withhold company funds. Besides, it was not her customary duty to collect and
remit payments from customers. She claimed good faith, believing that her acceptance of
Chang’s payment is considered goodwill in favor of both MERALCO and its customer. If at all,
her only violation was a simple delay in remitting the payment, which caused no considerable
harm to the company. Further, her nine years of unblemished service to the company should be
taken into account such that the penalty of dismissal is not a commensurate penalty for the
unintentional act committed.
MERALCO, on the other hand, maintained that under company policy, Beltran had the duty to
remit payment for electric bills by any customer on the day the same was received. It opined that
if indeed the money was kept intact inside the drawer and was not put to personal use, Beltran
could have easily turned over the same when Garcia instructed her to do so on January 7, 1997.
However, Beltran failed to remit the money on said date and even on the following day, January
8, when she reported for work. Worse, in the two succeeding days, she went on leave. Thus,
there was a clear sign of misappropriation of company funds, considered a serious misconduct
and punishable by dismissal from the service.
Issue
Whether Beltran should be reinstated.
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Ruling
For loss of trust and confidence to be a valid ground for dismissal, it must be based on a willful
breach of trust and founded on clearly established facts. A 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 addition, loss of trust and
confidence must rest on substantial grounds and not on the employer’s arbitrariness, whims,
caprices or suspicion.
In the case at bench, Beltran attributed her delay in turning over Chang’s payment to her difficult
family situation as she and her husband were having marital problems and her child was
suffering from an illness. Admittedly, she was reminded of Chang’s payment by her supervisor
on January 7, 1997 but denied having been ordered to remit the money on that day. She then
reasoned that her continued delay was caused by an inevitable need to take a leave of absence
for her to attend to the needs of her child who was suffering from asthma.
It should be emphasized at this point that the burden of proving the legality of an employee’s
dismissal lies with the employer. Unsubstantiated suspicions, accusations, and conclusions of
employers do not provide legal justification for dismissing employees. [M]ere conjectures cannot
work to deprive employees of their means of livelihood. To begin with, MERALCO cannot claim
or conclude that Beltran misappropriated the money based on mere suspicion. The NLRC thus
erred in concluding that Beltran made use of the money from the mere fact that she took a leave
of absence after having been reminded of the unremitted funds. And even if Beltran delayed
handing over the funds to the company, MERALCO still has the burden of proof to show clearly
that such act of negligence is sufficient to justify termination from employment. Moreover, we
find that Beltrans delay does not clearly and convincingly establish a willful breach on her part,
that is, which is done intentionally, knowingly and purposely, without any justifiable excuse.
True, the reasons Beltran proffered for her delay in remitting the cash payment are mere
allegations without any concrete proof. Nonetheless, we emphasize that as the employer, the
burden still lies on MERALCO to provide clear and convincing facts upon which the alleged loss
of confidence is to be made to rest.
Undoubtedly, Beltran was remiss in her duties for her failure to immediately turn over Chang’s
payment to the company. Such negligence, however, is not sufficient to warrant separation from
employment. To justify removal from service, the negligence should be gross and habitual. Gross
negligence x x x 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, on the
other hand, connotes repeated failure to perform ones duties for a period of time, depending
upon the circumstances. No concrete evidence was presented by MERALCO to show that
Beltran’s delay in remitting the funds was done intentionally. Neither was it shown that same is
willful, unlawful and felonious contrary to MERALCO’s finding as stated in the letter of
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termination it sent to Beltran. Surely, Beltran’s single and isolated act of negligence cannot justify
her dismissal from service.
Moreover, Beltran’s simple negligence did not result in any loss. From the time she received the
payment on September 28, 1996 until January 7, 1997 when she was apprised by her supervisor
about Chang’s payment, no harm or damage to the company or to its customers attributable to
Beltran’s negligence was alleged by MERALCO. Also, from the time she was apprised of the non-
remittance by her superior on January 7, 1997, until the turn-over of the amount on January 13,
1997, no such harm or damage was ever claimed by MERALCO.
Under the circumstances, MERALCOs sanction of dismissal will not be commensurate to

Beltran’s inadvertence not only because there was no clear showing of bad faith and malice but
also in consideration of her untainted record of long and dedicated service to MERALCO.
Where a penalty less punitive would suffice, whatever missteps may be committed by an
employee ought not to be visited with a consequence so severe such as dismissal from
employment. Hence, we find no reversible error or any grave abuse of discretion on the part of
the CA in ordering Beltran’s reinstatement without backwages. The forfeiture of her salary is an
equitable punishment for the simple negligence committed.
MANSION PRINTING CENTER and CLEMENT CHENG v DIOSDADO BITARA, JR.

G.R. No. 168120, January 25, 2012
The Facts
Petitioner Mansion Printing Center is a single proprietorship registered under the name
of its president and co-petitioner Clement Cheng. It is engaged in the printing of quality
self-adhesive labels, brochures, posters, stickers, packaging and the like.
Sometime in August 1998, petitioners engaged the services of respondent as a helper

(kargador). Respondent was later promoted as the company’s sole driver tasked to pick-
up raw materials for the printing business, collect account receivables and deliver the
products to the clients within the delivery schedules.
Petitioners aver that the timely delivery of the products to the clients is one of the
foremost considerations material to the operation of the business. It being so, they
closely monitored the attendance of respondent. They noted his habitual tardiness and
absenteeism.
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Thus, as early as 23 June 1999, petitioners issued a Memorandum requiring respondent
to submit a written explanation why no administrative sanction should be imposed on
him for his habitual tardiness.
Several months after, respondent’s attention on the matter was again.
Despite respondent’s undertaking to report on time, however, he continued to disregard

attendance policies. His weekly time record for the first quarter of the year 2000 revealed
that he came late nineteen (19) times out of the forty-seven (47) times he reported for
work. He also incurred nineteen (19) absences out of the sixty-six (66) working days
during the quarter. His absences without prior notice and approval from March 11-16,
2000 were considered to be the most serious infraction of all because of its adverse effect
on business operations.
Consequently, Davis Cheng, General Manager of the company and son of petitioner
Cheng, issued on 17 March 2000 another Memorandum (Notice to Explain) requiring
respondent to explain why his services should not be terminated. He personally handed
the Notice to Explain to respondent but the latter, after reading the directive, refused to
acknowledge receipt thereof. He did not submit any explanation and, thereafter, never
reported for work.
On 21 March 2000, Davis Cheng personally served another Memorandum (Notice of

Termination) upon him informing him that the company found him grossly negligent of
his duties, for which reason, his services were terminated effective 1 April 2000.
Issue
(a) Whether respondent was illegally dismissed
Ruling
In the present case, however, petitioners have repeatedly called the attention of
respondent concerning his habitual tardiness. The Memorandum dated 23 June 1999 of
petitioner Cheng required him to explain his tardiness. Also in connection with a similar
infraction, respondent even wrote petitioner Cheng a letter dated 29 November 1999
where he admitted that his tardiness has affected the delivery schedules of the company,
offered an apology, and undertook to henceforth report for duty on time. Despite this
undertaking, he continued to either absent himself from work or report late during the
first quarter of 2000.
We, therefore, agree with the Labor Arbiter’s findings, to wit:
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The imputed absence and tardiness of the complainant are
documented. He faltered on his attendance 38 times of the 66 working
days. His last absences on 11, 13, 14, 15 and 16 March 2000 were undertaken
without even notice/permission from management. These attendance
delinquencies may be characterized as habitual and are sufficient
justifications to terminate the complainant’s employment.
On this score, Valiao v. Court of Appealsis instructive:
xxx It bears stressing that petitioner’s absences and tardinesswere

not isolated incidents but manifested a pattern of habituality. xxx 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 him should
not be taken singly and separately but in their totality. Fitness for continued
employment cannot be compartmentalized into tight little cubicles of
aspects of character, conduct, and ability separate and independent of each
other.
There is likewise no merit in the observation of the Court of Appeals that the petitioners
themselves are not certain of the official time of their employees after pointing out the
seeming inconsistencies between the statement of the petitioners that “there is no need
for written rules since even the [respondent] is aware that his job starts from 8 am to 5
pm”and its Memorandum of 23 June 1999, where it was mentioned that respondent’s
official time was from 8:30 a.m. to 5:30 p.m. On the contrary, it was clearly stated in the
Memorandum that the Management adjusted his official time from 8:00 a.m. to 5:00 p.m.
to 8:30 a.m. to 5:30 p.m.to hopefully solve the problem on his tardiness.
Neither is there basis to hold that the company tolerates the offsetting of undertime with
overtime services. The Weekly Time Record relied upon by respondent does not
conclusively confirm the alleged practice.
In Valiao, we defined gross negligence as “want of care in the performance of one’s

duties” and habitual neglect as “repeated failure to perform one’s duties for a period of
time, depending upon the circumstances.” Clearly, even in the absence of a written
company rule defining gross and habitual neglect of duties, respondent’s omissions
qualify as such warranting his dismissal from the service.
JONATHAN V. MORALES v HARBOUR CENTRE PORT TERMINAL, INC.

G.R. No. 174208, January 25, 2012
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The Facts
On 16 May 2000, petitioner Jonathan V. Morales (Morales) was hired by respondent

Harbour Centre Port Terminal, Inc. (HCPTI) as an Accountant and Acting Finance
Officer, with a monthly salary of P18,000.00. Regularized on 17 November 2000, Morales
was promoted to Division Manager of the Accounting Department, for which he was
compensated a monthly salary of P33,700.00, plus allowances starting 1 July 2002.
Subsequent to HCPTI’s transfer to its new offices at Vitas, Tondo, Manila on 2 January
2003, Morales received an inter-office memorandum dated 27 March 2003, reassigning
him to Operations Cost Accounting, tasked with the duty of “monitoring and evaluating
all consumables requests, gears and equipment” related to the corporation’s operations
and of interacting with its sub-contractor, Bulk Fleet Marine Corporation. The
memorandum was issued by Danilo V. Singson (Singson), HCPTI’s new Administration
Manager, duly noted by Johnny U. Filart (Filart), its new Vice President for
Administration and Finance, and approved by its President and Chief Executive Officer,
Vicente T. Suazo, Jr.
On 31 March 2003, Morales wrote Singson, protesting that his reassignment was a clear
demotion since the position to which he was transferred was not even included in
HCPTI’s plantilla. In response to Morales’ grievance that he had been effectively placed
on floating status, Singson issued a 4 April 2003 inter-office memorandum to the effect
that “transfer of employees is a management prerogative” and that HCPTI had “the right
and responsibility to find the perfect balance between the skills and abilities of employees
to the needs of the business.” For the whole of the ensuing month Morales was absent
from work and/or tardy. Singson issued to Morales a 29 April 2003 inter-office
memorandum denominated as a First Warning. The memorandum reminded Morales
that, as an employee of HCPTI, he was subject to its rules and regulations and could be
disciplinarily dealt with pursuant to its Code of Conduct. In view of the absences Morales
continued to incur, HCPTI issued a Second Warning dated 6 May 200 and a Notice to
Report for Work and Final Warning dated 22 May 2003.
In the meantime, Morales filed a complaint dated 25 April 2003 against HCPTI, Filart and
Singson, for constructive dismissal, moral and exemplary damages as well as attorney’s
fees.
Issue
Whether petitioner was constructively dismissed.
Ruling
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Constructive dismissal exists where there is cessation of work because "continued
demotion in rank or a diminution in pay" and other benefits. Aptly called a dismissal in
disguise or an act 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.
Our perusal of the record shows that HCPTI miserably failed to discharge the foregoing
onus. While there was a lack of showing that the transfer or reassignment entailed a
diminution of salary and benefits, one fact that must not be lost sight of was that Morales
was already occupying the position of Division Manager at HCPTI’s Accounting
Department as a consequence of his promotion to said position on 22 October 2002.
Concurrently appointed as member of HCPTI’s Management Committee (MANCOM) on
2 December 2002, Morales was subsequently reassigned by HCPTI “from managerial
accounting to Operations Cost Accounting” on 27 March 2003, without any mention of
the position to which he was actually being transferred. That the reassignment was a
demotion is, however, evident from Morales’ new duties which, far from being
managerial in nature, were very simply and vaguely described as inclusive of “monitoring
and evaluating all consumables requests, gears and equipments related to [HCPTI’s]
operations” as well as “close interaction with [its] sub-contractor Bulk Fleet Marine
Corporation.”
We have carefully pored over the records of the case but found no evidentiary basis for
the CA’s finding that Morales was designated as head of HCPTI’s Operations Department
which, as indicated in the corporation’s plantilla, had the Vice-President for Operations
at its helm. On the contrary, Morales’ demotion is evident from the fact that his
reassignment entailed a transfer from a managerial position to one which was not even
included in the corporation’s plantilla. For an employee newly charged with functions
which even the CA recognized as pertaining to the Operations Department, it also struck
a discordant chord that Morales was, just the same, directed by HCPTI to report to Filart,
its Vice- President for Finance with whom he already had a problematic working
relationship. This matter was pointed out in Morales’ 31 March 2003 protest but was
notably brushed aside by HCPTI by simply invoking management prerogative in its inter-
office memorandum dated 4 April 2003.
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Admittedly, the right of employees to security of tenure does not give them vested rights
to their positions to the extent of depriving management of its prerogative to change
their assignments or to transfer them. By management prerogative is meant the right of
an employer to regulate all aspects of employment, such as the freedom to prescribe work
assignments, working methods, processes to be followed, regulation regarding transfer
of employees, supervision of their work, lay-off and discipline, and dismissal and recall
of workers. Although jurisprudence recognizes said management prerogative, it has been
ruled that the exercise thereof, while ordinarily not interfered with, is not absolute and
is subject to limitations imposed by law, collective bargaining agreement, and general
principles of fair play and justice. Thus, an employer may 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. Indeed, having the right should not be confused with the
manner in which that right is exercised.
NORMAN YABUT v MANILA ELECTRIC COMPANY

and MANUEL M. LOPEZ
G.R. No. 190436, January 16, 2012
The Facts
The petitioner had worked with Meralco from February 1989 until his dismissal from
employment on February 5, 2004. At the time of said dismissal, he was assigned at the
Meralco Malabon Branch Office as a Branch Field Representative tasked, among other
things, to conduct surveys on service applications, test electric meters, investigate
consumer-applicants' records of Violations of Contract (VOC) and perform such other
duties and functions as may be required by his superior.
On October 4, 2003, Meralco's Inspection Office issued a memorandum addressed to

Meralco's Investigation-Legal Office, informing it of an illegal service connection at the
petitioner's residence in Bulacan. The Inspection Office claimed discovering shunting
wires installed on the meter base registered under petitioner Yabut's name. These wires
allegedly allowed power transmission to the petitioner's residence despite the fact that
Meralco had earlier disconnected his electrical service due to his failure to pay his electric
bills.
Given this report, Meralco's Head of Investigation-Litigation Office issued to the

petitioner a notice asking him to explain.
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In the course of the company's investigations, the petitioner presented his sworn
statement. Yabut admitted being the registered customer of Meralco at the subject
residence. The petitioner claimed that his electrical service was disconnected sometime
in July 2003 for unpaid electric bills. On October 3, 2003, between 10:00 o'clock and 10:30
o'clock in the morning, he was informed by his wife that Meralco discovered shunting
wires on their meter base during an inspection. The petitioner nonetheless claimed that
at about 8:00 o'clock in the morning of the same day, prior to his wife's notice upon him
of the inspection, he had already given to an officemate the amount of P8,432.35 and
requested that the same be paid to Meralco to cover his outstanding electric bills. The
amount of P8,432.35 plus P1,540 as service deposit was then paid for the petitioner's
account on October 3, 2003 at about 9:30 o'clock in the morning.
Yabut denied knowing the person who installed the discovered shunting wires. While he
did not always go home to their house in Bulacan as there were times when he stayed in
his sister's residence in Malabon, the petitioner confirmed that he was regularly in his
Bulacan house. His residence had electricity even prior to the full settlement of his
outstanding bills through a connection made to the line of his neighbor Jojo Clemente.
Photographs taken during Meralco's inspection of Yabut's residence were also presented
to and identified by Yabut. He confirmed that the inspected meter base was installed
within his lot's premises. Claiming that he had been obtaining electricity from a
neighbor, he argued that shunting wires in his meter base could have caused an electrical
malfunction.
Meralco’s Litigation – Investigation Office summarized the results of Meralco's findings

in a memorandum dated December 30, 2003. It indicated that Yabut’s electric service was
disconnected on April 3, 2003 for account delinquency. Notwithstanding the
disconnection and the fact that Meralco’s service had not been reconnected, Yabut's
meter registered electric consumption.
In view of these findings, respondent Meralco, issued on February 4, 2004 a notice of

dismissal addressed to the petitioner. The notice cites violation of Section 7, paragraph 3
of Meralco's Company Code on Employee Discipline and Article 282 (a), (c), (d) and (e)
of the Labor Code of the Philippines as bases for the dismissal.
Aggrieved by the decision of the management, Yabut filed a complaint for illegal
dismissal and money claims against Meralco and Lopez.
Issue
Whether or not petitioner was illegally dismissed by the respondents.
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Ruling
The requirement for a just cause was satisfied in this case. We note that the petitioner's
employment was terminated by the herein respondents for violation of Section 7, par. 3
of Meralco's Company Code on Employee Discipline, and for the existence of just cause
under Article 282 (a), (c), (d) and (e) of the Labor Code.
The petitioner's violation of the company rules was evident. While he denies any
involvement in the installation of the shunting wires which Meralco discovered, it is
significant that said SIN 708668501 is registered under his name, and its meter base is
situated within the premises of his property. Said meter registered electric consumption
during the time his electric service was officially disconnected by Meralco. It was the
petitioner and his family who could have benefited from the illegal connection, being the
residents of the area covered by the service. His claim that he failed to know or even
notice the shunted wires fails to persuade as we consider the meter located in the front
of his house, the nature of his work as branch field representative, his long-time
employment with Meralco and his familiarity with illegal connections of this kind.
The logical conclusion that may be deduced from these attending circumstances is that
the petitioner was a party, or at the very least, one who agreed to the installation of the
shunted wires, and who also benefited from the illegal connection at the expense of his
employer-company. In sustaining the CA's findings, we consider the rule that in
administrative and quasi-judicial proceedings, as in proceedings before the NLRC which
had original jurisdiction over the complaint for illegal dismissal, the quantum of proof
necessary is substantial evidence or such relevant evidence as a reasonable mind may
accept as adequate to support a conclusion.
Significantly, “(t)ampering with electric meters or metering installations of the Company

or the installation of any device, with the purpose of defrauding the Company” is
classified as an act of dishonesty from Meralco employees, expressly prohibited under
company rules. It is reasonable that its commission is classified as a severe act of
dishonesty, punishable by dismissal even on its first commission, given the nature and
gravity of the offense and the fact that it is a grave wrong directed against their employer.
To reiterate, Article 282 (a) provides that an employer may terminate an employment
because of an employee's serious misconduct, a cause that was present in this case in
view of the petitioner's violation of his employer's code of conduct. Misconduct is defined
as 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.” For serious misconduct to justify dismissal, the following requisites must
be present: (a) it must be serious; (b) it must relate to the performance of the employee's
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duties; and (c) it must show that the employee has become unfit to continue working for
the employer.
In reviewing the CA’s Decision, we again consider the petitioner's duties and powers as
a Meralco employee. And we conclude that he committed a serious misconduct.
Installation of shunting wires is without doubt a serious wrong as it demonstrates an act
that is willful or deliberate, pursued solely to wrongfully obtain electric power through
unlawful means. The act clearly relates to the petitioner's performance of his duties given
his position as branch field representative who is equipped with knowledge on meter
operations, and who has the duty to test electric meters and handle customers' violations
of contract. Instead of protecting the company’s interest, the petitioner himself used his
knowledge to illegally obtain electric power from Meralco. His involvement in this
incident deems him no longer fit to continue performing his functions for respondent-
company.
While the installation of the shunted wires benefited the herein petitioner as a customer
of Meralco, his act cannot be fully severed from his status as the respondent's employee.
As correctly observed by the CA, “(i)t is an offense against the Company Code of
Employee Discipline. As a field representative, he is knowledgeable on the mechanics of
meter and metering installation.”
The dismissal is also justified as the act imputed upon the petitioner qualifies as “fraud
or willful breach by the employee of the trust reposed in him by his employer or duly
authorized representative” under Article 282 (c) of the Labor Code. While the petitioner
contests this ground by denying that his position is one of trust and confidence, it is
undisputed that at the time of his dismissal, he was holding a supervisory position after
he rose from the ranks since commencement of his employment with Meralco. As a
supervisor with duty and power that included testing of service meters and investigation
of violations of contract of customers, his position can be treated as one of trust and
confidence, requiring a high degree of honesty as compared with ordinary rank-and-file
employees.
In this case, the acts complained of were clearly work-related because they related to
matters the petitioner handled as branch field representative. Taking into account the
results of its investigations, Meralco cannot be expected to trust Yabut to properly
perform his functions and to meet the demands of his job. His dishonesty, involvement
in theft and tampering of electric meters clearly prejudice respondent Meralco, since he
failed to perform the duties which he was expected to perform.
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EVER ELECTRICAL MANUFACTURING, INC., (EEMI) and VICENTE GO v
SAMAHANG MANGGAGAWA NG EVER ELECTRICAL/ NAMAWU LOCAL 224
represented by FELIMON PANGANIBAN,
G.R. No. 194795, June 13, 2012
The Facts
Petitioner Ever Electrical Manufacturing, Inc. (EEMI)is a corporation engaged in the

business of manufacturing electrical parts and supplies. On the other hand, the
respondents are members of Samahang Manggagawa ng Ever Electrical/NAMAWU Local
224 (respondents) headed by Felimon Panganiban.
The controversy started when EEMI closed its business operations on October 11, 2006
resulting in the termination of the services of its employees. Aggrieved, respondents filed
a complaint for illegal dismissal with prayer for payment of 13th month pay, separation
pay, damages, and attorneys fees. Respondents alleged that the closure was made without
any warning, notice or memorandum and in full disregard of the requirements of the
Labor Code.
In its defense, EEMI explained that it had closed the business due to various factors. In
1995, it invested in Orient Commercial Banking Corporation (Orient Bank) the sum of
P500,000,000.00 and during the Asian Currency crises, various economies in the South
East Asian Region were hurt badly. EEMI was one of those who suffered huge losses. In
November 1996, it obtained a loan in the amount of P121,400,000.00 from United
Coconut Planters Bank (UCPB). As security for the loan, EEMIs land and its
improvements, including the factory, were mortgaged to UCPB.
EEMIs business suffered further losses due to the continued entry of cheaper goods from
China and other Asian countries. Adding to EEMIs financial woes was the closure of
Orient Bank where most of its resources were invested. As a result, EEMI was not able to
meet its loan obligations with UCPB.
In an attempt to save the company, EEMI entered into a dacion en pago arrangement
with UCPB which, in effect, transferred ownership of the companys property to UCPB as
reflected in TCT No. 429159. Originally, EEMI wanted to lease the premises to continue
its business operation but under UCPBs policy, a previous debtor who failed to settle its
loan obligation was not eligible to lease its acquired assets. Thus, UCPB agreed to lease
it to an affiliate corporation, EGO Electrical Supply Co, Inc. (EGO), for and in behalf of
EEMI. On February 2, 2002, a lease agreement was entered into between UCPB and EGO.
The said lease came to a halt when UCPB instituted an unlawful detainer suit against
EGO before the Metropolitan Trial Court, Branch 5, Makati City (MeTC) docketed as Civil
Case No. 88602. On August 11, 2006, the MeTC ruled in favor of UCPB and ordered EGO
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to vacate the leased premises and pay rentals to UCPB in the amount of P21,473,843.65.
On September 19, 2006, a writ of execution was issued. Consequently, on October 11,
2006, the Sheriff implemented the writ by closing the premises and, as a result, EEMIs
employees were prevented from entering the factory.
On April 25, 2007, the Labor Arbiter (LA) ruled that respondents were not illegally
dismissed. It, however, ordered EEMI and its President, Vicente Go (Go), to pay their
employees separation pay and 13th month pay respectively.
On September 15, 2008, the NLRC reversed and set aside the decision of the LA. The
NLRC dismissed the complaint for lack of merit and ruled that since EEMIs cessation of
business operation was due to serious business losses, the employees were not entitled
to separation pay.
Respondents moved for reconsideration of the NLRC decision, but the NLRC denied the
motion in its March 23, 2009 Resolution.
Unperturbed, respondents elevated the case before the CA via a petition for certiorari
under Rule 65.
On August 31, 2010, the CA granted the petition. It nullified the decision of the NLRC and
reinstated the LA decision.
The CA held that respondents were entitled to separation pay and 13th month pay because
the closure of EEMIs business operation was effected by the enforcement of a writ of
execution and not by reason of business losses. The CA, citing Restaurante Las Conchas
v. Lydia Llego, upheld the solidary liability of EEMI and Go, declaring that when the
employer corporation is no longer existing and unable to satisfy the judgment in favor of
the employees, the officers should be held liable for acting on behalf of the corporation.
Issues
1. Whether the CA erred in finding that the closure of EEMIs operation was not due to
business losses; and
2. Whether the CA erred in finding Vicente Go solidarily liable with EEMI.
Ruling
Article 283 of the Labor Code provides:
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Art. 283. Closure of establishment and reduction of personnel. The
employer may also terminate the employment of any employee due to the
installation of labor saving devices, redundancy, retrenchment to prevent
losses or the closing or cessation of operation of the establishment or
undertaking unless the closing is for the purpose of circumventing the
provisions of this Title, by serving a written notice on the workers and the
Ministry of Labor and Employment at least one (1) month before the
intended date thereof. In case of termination due to the installation of
labor saving devices or redundancy, the worker affected thereby shall be
entitled to a separation pay equivalent to at least his one (1) month pay or
to at least one (1) month pay for every year of service, whichever is higher.
In case of retrenchment to prevent losses and in cases of closures or
cessation of operations of establishment or under taking not due to serious
business losses or financial reverses, the separation pay shall be equivalent
to one (1) month pay or at least one-half (1/2) month pay for every year of
service, whichever is higher. A fraction of at least six (6) months shall be
considered one (1) whole year.
Article 283 of the Labor Code identifies closure or cessation of operation of the
establishment as an authorized cause for terminating an employee. Similarly, the said
provision mandates that employees who are laid off from work due to closures that are
not due to business insolvency should be paid separation pay equivalent to one-month
pay or to at least one-half month pay for every year of service, whichever is higher. A
fraction of at least six months shall be considered one whole year.
Although business reverses or losses are recognized by law as an authorized cause, it is

still essential that the alleged losses in the business operations be proven convincingly;
otherwise, this ground for termination of employment would be susceptible to abuse by
conniving employers, who might be merely feigning business losses or reverses in their
business ventures in order to ease out employees.
In this case, EEMI failed to establish that the main reason for its closure was business
reverses. As aptly observed by the CA, the cessation of EEMIs business was not directly
brought about by serious business losses or financial reverses, but by reason of the
enforcement of a judgment against it. Thus, EEMI should be required to pay separation
pay to its affected employees.
MANILA ELECTRIC COMPANY (MERALCO) v HERMINIGILDO H. DEJAN,

G.R. No. 194106, June 18, 2012
The Facts
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Respondent Herminigildo Dejan commenced employment with the Manila Electric
Company (Meralco) on July 7, 1992. He was then Meralcos branch representative in its
San Pedro, Laguna branch, with a monthly salary of P30,500.00. His work consisted of
accepting payments of the required fees from applicants for electric service installation
and issuing the corresponding meter sockets/bases after payment of a deposit, preceded
by an inspection of the premises to be energized by a Meralco field personnel.
In the mid-afternoon of March 18, 2005, the security guard on duty at the branch, Warlito
Silverio, noticed a certain Estanislao Gozarin a.k.a. Mang Islao, a private electrician, take
out from the branch premises 20 pieces of meter sockets which were then loaded into a
parked Meralco contracted jeep belonging to one Cesar Reyes. Reyes brought the meter
sockets to his house. The meter sockets were thereafter allegedly picked up by Gil
Duenas, a Meralco field representative. Dejan was asked to explain the incident.
In his letter-explanation, dated March 23, 2005, to a certain Emilia SJ Reaso, Dejan
admitted that he released the meter sockets in question because the deposit fees had
already been paid. The payor, a certain Antonio A. Depante a.k.a. Bruce, also an
electrician, asked for the release of the items. Allegedly, he had several contracts for
service installation with the branch. Dejan indicated the list of contracts covering the
released meter sockets. Sometime in September, October and November 2005, Meralco
asked Gozarin, Dejan, and Reyes to give their sworn statements on the incident.
On February 10, 2006, Dejan received a letter from Marcelino Rosario, head of Meralcos
Investigation-Paralegal Services, charging him with the unauthorized taking of 20 meter
sockets, in violation of Section 7, paragraphs 4 and 11 of the Company Code of Employee
Discipline, in relation to Article 282 of the Labor Code. On February 17, 2006, Meralco
conducted a formal investigation where Dejan admitted issuing the meter sockets
without the authorization of the applicants for electric connection. He alleged that he
released the items even without authorization as it had been the accepted practice in the
office, provided the deposit fee had been paid. He claimed that he talked with Depante,
through the cell phone of Duenas, about it, after Duenas himself requested him (Dejan)
to release the meter sockets to Gozarin. When Dejan released the meter sockets, Duenas
instructed Gozarin to take them out of the Meralco premises and load them in Reyes
jeep.
Also testifying at the investigation, Depante corroborated Dejans account of the incident.
He alleged that he made the request for the release of the meter sockets due to his
inability to pick up the items himself as he was busy with another project at the time. He
and Duenas retrieved the meter sockets from Reyes house the next day.
Unconvinced with Dejans explanation, Meralco served Dejan a letter on April 6, 2006,
terminating his employment effective the following day, with forfeiture of all rights and
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privileges. On April 20, 2006, Dejan filed his complaint with the National Labor Relations
Commission (NLRC).
Issue
Whether Dejan was illegally dismissed.
Ruling
Dejan is liable as charged. More specifically, he is liable for violation of Section 7,

paragraphs 4 and 11 of the Company Code of Employee Discipline, constituting serious
misconduct, fraud and willful breach of trust of the employer, just causes for termination
of employment under the law. The facts and the evidence on record clearly bear this out
and we wonder how the CA could have missed the seriousness or gravity of Dejans
transgressions.
There is no dispute about the release of the meter sockets. Also, the persons involved
were clearly identified Dejan; Gozarin or Mang Islao, a private electrician who received
the meter sockets; Reyes, the owner of the jeep where the meter sockets were loaded by
Gozarin; Duenas, a Meralco field representative; and Depante, another private electrician
who purportedly owned the meter sockets.
There is also no question that Dejan released the meter sockets to Gozarin without the
written authority or SPA from the customer or customers who applied for electric
connection (as a matter of company policy). Dejan released the meter sockets to Gozarin
on the mere say-so of Depante, as he claimed, through a call to Duenas cell phone, and
justified his act to be in accord with accepted company practice.
Dejan tried to minimize the gravity of his offense by denying that the meter sockets were
lost and that he issued them without authority since they were all contracted, as shown
by the SINs he submitted in evidence.
Dejans tale fails to convince us. While the meter sockets might not have been lost, their
issuance or release was highly irregular, perpetrated to defraud the company. As we see
it, the release of the meter sockets served as a key element in a private contracting activity
for electric service connection of Dejan and Duenas.
On the day of the release of the meter sockets, March 18, 2005, a Friday, Duenas was in
the branch office, interceding for private electrician Depante. Gozarin, Depantes
emissary, was there also, waiting for the release. Dejan had then already put the 20 meter
sockets in boxes when he received a call from Depante on Duenas cell phone requesting
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for the release of the meter sockets to Gozarin, saying that he could not pick them up as
he was attending to another project.
After Depantes call, Dejan released the meter sockets to Gozarin who had them loaded
in Reyes jeep; Reyes, in turn, brought them to his house. On the Sunday of that week,
March 20, 2005, the meter sockets were picked up. Reyes testified that Duenas picked
them up; Duenas, on the other hand, stated that it was Depante who retrieved the meter
sockets.
While there was no unanimity as to who picked up the meter sockets, it appears that it
was Duenas who was the most active or the most interested in having the meter sockets
released. Gozarin, who had known Duenas for quite some time, testified that it was
Duenas who told him to get the meter sockets from Dejan and load them in Reyes jeep.
Questioned as to whether Dejan asked him for a written authorization, Gozarin answered
no. Reyes, like Gozarin, had also known Duenas for some time; in fact, since 1993. Also,
it was Duenas who asked him to load the meter sockets in his jeep.
Given Duenas involvement in the release of the meter sockets on March 18, 2005, there
is reason to believe that it was more through his intervention than Depantes
representation that the meter sockets were released. There is reason to believe, too, that
it was Duenas who picked the meter sockets from Reyes house and that Depante made a
call to Dejan to accommodate the latter and Duenas, whom he likewise knew very well,
in taking the meter sockets out of the branch premises for reason or reasons only known
to them. Depante is a private contractor for electric services and it would work to his
favor if he cooperated with the two Meralco employees.
It was bad enough that Dejan failed to ask for a written authorization for the release of
the meter sockets as required by company policy. His apparent motive behind the move
to mislead the company, in concert with Duenas, as to the real recipient of the meter
sockets made it worse. It could only result in a loss to Meralco as it was not the customer,
who applied for electric service, or his authorized representative who received the meter
sockets. As the circumstances strongly indicate, it was Duenas who retrieved the meter
sockets. It was obviously an act intended to defraud the company. It lends credence to
Meralcos submission that Duenas was engaged in private contracting for electric
connection, together with Dejan.
The above impression is bolstered by Dejans false claim that the meter sockets were all
accounted for because they were issued for Depantes service applications. As the
company discovered, however, the SINs Dejan submitted in evidence covered
applications which had already been inspected, approved and provided (installed) with
meters even before March 18, 2005, the date when the 20 meter sockets were released.
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Meralco argued before the NLRC that if Depantes service applications had already been
installed with meters, it could only be that the meter sockets Dejan issued were intended
for purposes which the company had not approved or authorized. It added that there was
clear indication of Dejans intent to gain from and to defraud the company. Meralco
reiterated the same argument before the CA.
The CA brushed aside the argument, relying on Dejans explanation that Depantes
practice of leaving the deposit with him whenever customers abounded often resulted in
the accumulation of contracts for the meter base.
We disagree with this finding. Dejan stated in his Sinumpaang Salaysay given on
October 21, 2005:
T: Bakit ikaw ang kinausap ni Bruce na mag-issue ng 20 meter sockets?

S: Kasi po ako po ang gumawa ng mga kontrata niya.
T: Kung gayon ay kaya mo ito ibinigay ay bayad na lahat ng mga

deposito nito?
S: Opo.
Further, in the Malayang Salaysay given by Dejan and Depante on February 17, 2006,
Dejan said:
T: Anong masasabi mo Ginoong Dejan hinggil sa paratang sa iyo?

S: Hindi po totoo na sinasabi nila na nawala po ang meter base at hindi
rin po totoo na ito ay aking inisyu ng walang pahintulot dahil ang
lahat nito ay kontrata. Akin po[ng] isinusumite ang ilan sa mga
kontratang ukol sa mga SIN na siyang dahilan kaya ko ini-issue ang
mga ito.
Based on the above depositions, we cannot accept the CAs insinuation that Dejan mixed
up the SINs he submitted in evidence (to cover for the released 20 meter sockets) with
the SINs pertaining to other service applications which Depante contracted. There could
not have been room for confusion as far as Dejan is concerned. He was the one preparing
Depantes contracts, as he himself admitted. He knew or should have known the contracts
status (whether they had already been acted upon or not). It would be gross negligence
on his part if it were otherwise.
Under the circumstances, we believe that Dejan submitted the SINs in question to make
it appear that the released meter sockets pertained to outstanding service applications
contracted by Depante; in other words, to give a semblance of regularity in the
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transaction and to avoid liability for their unauthorized release. He released the meter
sockets with intent to defraud the company.
We cannot blame Meralco for losing its trust and confidence in Dejan. He is no ordinary
employee. As branch representative, he was principally charged with the function and
responsibility to accept payment of fees required for the installation of electric service
and facilitate issuance of meter sockets. The duties of his position require him to always
act with the highest degree of honesty, integrity and sincerity, as the company puts it. In
light of his fraudulent act, Meralco, an enterprise imbued with public interest, cannot be
compelled to continue Dejans employment, as it would be inimical to its interest.
Needless to say, [t]he law, in protecting the rights of the laborer, authorizes neither
oppression nor self-destruction of the employer. For sure, Dejan was validly
dismissed for serious misconduct, and loss of trust and confidence.
ROMEO E. PAULINO v NATIONAL LABOR RELATIONS COMMISSION and

PHILIPPINE LONG DISTANCE TELEPHONE COMPANY, INCORPORATED.
G.R. No. 176184, June 13, 2012
The Facts
On 16 January 1995, petitioner, who was then employed by private respondent Philippine
Long Distance Telephone Company, Inc. (PLDT) as Cable Splicer III, surrendered his
service vehicle to PLDTs motor pool for body repairs. For this reason, he unloaded the
company-issued plant materials contained in the vehicle and stored them at his residence
for safekeeping.
For 1 month and 11 days, PLDTs properties were in the custody of petitioner. Thus, on 27
February 1995, members of the Philippine National Police (PNP), armed with a search
warrant, searched his house where the following items were taken: a.) 95 pcs soldering
wire; b.) 4 pcs electrical tape; c) 1 roll aluminum tape; d) 1 box drive ring & C-nob; e) roll
C-R tape; f) 19 pcs. 12x20 lead sheets, etc.
At that time, based on the investigation by the PNP, petitioner did not present any
documents or requisition slips that would justify his possession of the materials.
Consequently, PLDT caused the filing of an Information for qualified theft against him.
The next day, PLDT issued an invitation to V. Pesayco, the manager of petitioner,
requesting him to make petitioner available to clarify certain matters. Petitioner
attended this meeting along with his lawyer, but PLDTs investigators merely talked with
the counsel. PLDT then received a security report stating that petitioner had engaged in
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the illicit disposal of its plant materials, which were recovered during the search
conducted at his residence.
On 3 April 1995, PLDT issued an Inter-Office Memo requiring petitioner to explain why
he should not be terminated from employment for serious misconduct (theft of company
property). The Memo also gave him the option to ask for a formal hearing of his case. In
reply, he requested that the proceedings be held in abeyance until the criminalcase
against him had been concluded.
Then, on 26 May 1995, Pesayco informed petitioner in writing that since his reply did not
provide any clarification whatsoever that would have warranted an evaluation of his case,
the company was terminating his services effective on the said date.
Three years later, after the criminal case for qualified theft had been terminated for
failure of the prosecution to prove his guilt beyond reasonable doubt, petitioner filed a
Complaint for Illegal Dismissal which the Labor Arbiter (LA) dismissed for utter lack of
merit. The LA found petitioner’s possession of valuable and material company properties
to be highly suspect. In addition, it was fully irregular that a highly efficient Company,
such as herein respondent, would allow any of its employees to place expensive and
necessary properties for personal safe-keeping.
Issue
Whether petitioner was validly dismissed.
Ruling
The Labor Code recognizes that an employer, for just cause, may validly terminate the
services of an employee for serious misconduct or willful disobedience of the lawful
orders of the employer or representative in connection with the employees work. Fraud
or willful breach by the employee of the trust reposed by the employer in the former, or
simply loss of confidence, also justifies an employee’s dismissal from employment.
The LA, the NLRC and the CA all acknowledged that, notwithstanding petitioner’s
acquittal in the criminal case for qualified theft, respondent PLDT had adequately
established the basis for the companys loss of confidence as a just cause to terminate
petitioner. This Court finds that approach to be correct, since proof beyond reasonable
doubt of an employee’s misconduct is not required in dismissing an employee. Rather, as
opposed to the proof beyond reasonable doubt standard of evidence required in criminal
cases, labor suits require only substantial evidence to prove the validity of the dismissal.
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Willful breach of trust or loss of confidence requires that the employee (1) occupied a
position of trust or (2) was routinely charged with the care of the employer’s property.
As correctly appreciated by the CA, petitioner was charged with the care and custody of
PLDTs property.
To warrant dismissal based on loss of confidence, there must be some basis for the loss
of trust or the employer must have reasonable grounds to believe that the employee is
responsible for misconduct that renders the latter unworthy of the trust and confidence
demanded by his or her position. Here, petitioner disputes the sufficiency of PLDTs basis
for loss of trust and confidence. He alleges that he did not steal the plant materials,
considering that he had lawful possession.
However, assuming that he lawfully possessed the materials, PLDT still had ample
reason or basis to already distrust petitioner. For more than a month, he did not even
inform PLDT of the whereabouts of the plant materials. Instead, he stocked these
materials at his residence even if they were needed in the daily operations of the
company. In keeping with the honesty and integrity demanded by his position, he should
have turned over these materials to the plants warehouse.
The fact that petitioner did not present any documents or requisition slips at the time
that the PNP took the plant materials logically excites suspicion. In addition, PLDT
received a security report stating that petitioner had engaged in the illicit disposal of its
plant materials, which were recovered during the search conducted at his residence
Thus, PLDT reasonably suspected petitioner of stealing the company’s property. At that
juncture, the employer may already dismiss the employee since it had reasonable
grounds to believe or to entertain the moral conviction that the latter was responsible
for the misconduct, and the nature of his participation therein rendered him absolutely
unworthy of the trust and confidence demanded by his position.
In a final effort to impugn his dismissal, petitioner claims that he could only be faulted
for breaching PLDTs rules and regulations which prohibited the employees from
bringing home company materials.
In this regard, petitioner exacerbates his position. By admitting that he breached

company rules, he buttressed his employers claim that he committed serious
misconduct.
Employees cannot take company rules for granted, especially in this case where
petitioners breach involved various plant materials that may cause major disruption in
the companys operations. Indeed, an employer may discharge an employee for refusal to
obey a reasonable company rule. As a rule, although this Court leans over backwards to
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help workers and employees continue with their employment, acts of dishonesty in the
handling of company property are a different matter.
Given these circumstances, it would have been unfair for PLDT to keep petitioner in its
employ. Petitioner displayed actions that made him untrustworthy. Thus, as a measure
of self-protection, PLDT validly terminated his services for serious misconduct and loss
of confidence.
Having established the validity of petitioner’s dismissal, we sustain the rulings of the
tribunals a quo. To emphasize, our empathy with the cause of labor should not blind us
to the rights of management. This Court should stamp out, rather than tolerate, the
commission of irregular acts wherever these are noted. Malpractices should not be
allowed to continue but should be rebuked.
VICENTE VILLANUEVA, JR. v THE NATIONAL LABORRELATIONS COMMISSION

THIRD DIVISION, MANILAELECTRIC COMPANY, MANUEL LOPEZ, Chairman
and CEO, and FRANCISCO COLLANTES, Manager,
G.R. No. 176893, June 13, 2012
The Facts
Since 1990, Villanueva had been employed with Meralco as bill collector, teller and
branch representative. Sometime in June 2002, Francisco Collantes, Manager of Meralco
Branch Office, Novaliches, Quezon City, referred to the company’s Investigation Office
a report dated June 10, 2002 regarding unusual contract modifications in the transactions
handled by Villanueva. The report claimed that there were customers who were issued
Contracts for Electric Service by Villanueva which indicated their payment of ₱930.00
(service deposit of ₱520.00 and meter deposit of ₱410.00) as deposit payment when they
actually gave him a total amount of ₱1,240.00. The discrepancy amounting to ₱310.00 was
not covered by any receipt. Pursuant to the complaints, a field investigation was
conducted by the company-designated investigator who was able to obtain sworn
statements from nine (9) out of twenty four (24) complaining customers.2[4] The said
complainants identified Villanueva as the person they have transacted with, from a line-
up of pictures of several individuals. Further, the complaints were corroborated by the
sworn statements of Ben-Hur C. Nepomuceno (Nepomunceno) and Merle S. Santos
(Santos), office team leader and assistant office team leader of the Novaliches branch,
respectively.
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Nepomuceno stated that in the course of the routine checking of his men for March 2002,
he found the unusual additional deposit payments accepted by Villanueva. When he
made further verification on the collection reports of the latter, he also discovered
additional deposits he received from other customers. Upon confirming Villanuevas act
of contract modification with a customer named Sherwin Borja, Nepomuceno requested
the Customer Process Management to suspend Villanuevas CMS-User ID. Corporate
Audit was also asked to investigate his irregular transactions. In his statement,
Nepomuceno described the additional payments as irregular because customers
normally paid for deposit payments on a one-time basis. With Villanuevas transactions,
however, customers who paid ₱1,240.00 complained of getting receipts reflecting only
₱930.00 as the amount paid, constraining Villanueva to issue another receipt for an
additional deposit of ₱310.00. Nepomuceno clarified that additional deposits were meant
to increase the contracted capacity of customers after a considerable period of time from
their initial electric service application.
For her part, Santos, whose duties included the preparation of summary reports in
overages of tellers and branch representatives, stated that the existing practice was for
the personnel concerned to report excess collections on the same day they were collected.
Santos claimed that Villanueva had never reported a case of overage in his collections
since 2001.
In a letter dated August 1, 2002, Villanueva was informed of the investigation to be

conducted by the company. On the date of the scheduled hearing indicated in the letter,
Villanueva appeared with counsel who requested for time within which to submit a
responsive paper. In his counter-affidavit, he denied demanding payment in excess of the
minimum deposit charged from applicants for electric service connection. He admitted
that there were times that Modification of Contract was done because of the
recommendations of a Meralco fieldman who, upon inspection, approved a higher load
of electricity than that applied for. Villanueva explained that if ever there was error or
discrepancy in the preparation of the contract, this would have to be balanced at the end
of the day. He claimed that there were instances when initial entries of applied loads
were erroneous prompting him to modify the contract in order that the customers
deposit payment could be entered. In cases when the customer was no longer in the office
premises, he would just record them as pre-payment so as to reflect the same in their
billing upon installation of the electric meter.
In a letter dated August 28, 2002, Meralco denied the request of Villanueva’s counsel to
cross-examine the witnesses (complaining customers) who were not Meralco employees.
Management maintained that it was not the proper place to grill a witness on cross-
examination which should be done in an appropriate proceeding. Villanueva was then
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advised that the case would be considered submitted for decision as the issues had
already been joined with the submission of his counter-affidavit.
On January 9, 2003, Villanueva received the Notice of Termination.
On January 21, 2003, Villanueva filed a complaint for illegal dismissal before the Regional
Arbitration Branch.
Issue
Whether Villanueva’s dismissal is valid.
Ruling
In this case, the above requisites have been met. Meralco’s loss of trust and confidence
arising out of Villanueva’s act of misappropriation of company funds in the course of
processing customer applications has been proven by substantial evidence, thus,
justified. Verily, the issuance of additional receipts for excessive payments exacted from
customers is a willful breach of the trust reposed in him by the company.
One. Villanueva worked for Meralco as a Branch Representative whose tasks included the
issuance of Contracts for Electric Service after receipt of the amount due for service
connection from customers. Obviously, he was entrusted not only with the responsibility
of handling company funds but also to cater to customers who intended to avail of
Meralco’s services. This is nothing but an indication that trust and confidence were
reposed in him by the company, although his position was not strictly managerial by
nature. Loss of confidence generally applies only to: (1) cases involving employees
occupying positions of trust and confidence; or (2) situations where the employee is
routinely charged with the care and custody of the employer’s money or property. To the
first class belong managerial employees, that is, those vested with the powers and
prerogatives to lay down management polices and/or to hire, transfer, suspend, lay-off,
recall, discharge, assign or discipline employees, or effectively recommend such
managerial actions. To the second class belong cashiers, auditors, property custodians,
or those who, in the normal and routine exercise of their functions, regularly handle
significant amounts of money or property. Villanueva falls in the latter category.
Two. Villanueva’s acts of issuing contracts indicating therein an amount less than the
actual payment made by the customers and, thereafter, issuing a receipt in an attempt to
document the discrepancy are certainly work-related. This is, in fact, the core of his
position as a Branch Representative.
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Three. Meralco’s charge against Villanueva was adequately proven by substantial
evidence. The records provide an extensive showing of evidence against Villanueva. The
affidavits of co-employees and, more especially those of the customers themselves, bear
weight in establishing the specific acts constituting the charge against him. In fact, no
inconsistencies among these statements were found. Villanueva likewise failed to pose a
plausible defense
Four. The breach of the company’s trust in Villanueva was shown to have been committed
knowingly and willfully. Although the amount of discrepancy or money misappropriated
may be considered minimal and even inconsequential to an established company such as
Meralco, it is the anomalous practice of requiring applicants for electric service
connection to pay amounts higher than required that is the crux of Villanueva’s offense.
The conscious design of issuing another receipt to make it appear that there was a mistake
in the initial transaction with the customers exhibits a culpable act bordering on
dishonesty and deceit. If not for personal gain, why did Villanueva exact from customers
amounts in excess of what was required by the company? What would have Villanueva
done had the customers failed to discover the discrepancy between the amount they paid
and that appearing in the receipts issued to them? Why were there no overages reported
to his branch supervisor with respect to excess payments which were no longer questioned
by the customers? These questions arise out of the practice which unfortunately corrupted
an employee like Villanueva. These doubts sway the Court away from Villanueva’s claim
that his errors were promptly corrected upon discovery.
Villanueva’s insistence, that the act which triggered his dismissal did not justify his
separation from the service because the Company Code of Employee Discipline failed to
make mention of his case in a specific manner, fails to persuade the Court. The
established facts do not constitute a mere case of simple negligence. The acts performed
were without the slightest connotation of inadvertence which Villanueva could have
demonstrated during the proceedings a quo.
Besides, the Court is not unmindful of the prerogatives available to Meralco as an

employer. The company 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. Management has
the prerogative to discipline its employees and to impose appropriate penalties on erring
workers pursuant to company rules and regulations. So long as they are 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 or under valid
agreements, the employer’s exercise of its management prerogative must be upheld. The
law imposes many obligations on the employer such as providing just compensation to
workers and observance of the procedural requirements of notice and hearing in the
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termination of employment. On the other hand, the law also recognizes the right of the
employer to expect from its workers not only good performance, adequate work and
diligence, but also good conduct and loyalty. The employer may not be compelled to
continue to employ such persons whose continuance in the service will patently be
inimical to its interests.
WATERFRONT CEBU CITY HOTEL v MA. MELANIE P. JIMENEZ, JACQUELINE

C. BAGUIO, LOVELLA V. CARILLO, and MAILA G. ROBLE,
G.R. No. 174214, June 13, 2012
The Facts
Respondents Ma. Melanie P. Jimenez, Jacqueline C. Baguio, Lovella V. Carillo, and Maila
G. Roble were hired for Club Waterfront (the Club), a division under petitioner
Waterfront Cebu City Hotel (the Hotel) which catered to foreign high stakes gamblers,
for different positions (guest services assistant, treasury supervisor, guest services
assistant, pit supervisor) and dates (September 4, 1996, June 1, 1996, May 26, 1998 and
September 1, 1999).
On 12 May 2003, respondents received identical letters of termination from petitioners

Director of Human Resources informing them of the temporary suspension of business
of the Club. A total of 45 employees were notified of the imminent closure.
On the following day, petitioner served the notice of suspension of business with the
Department of Labor and Employment (DOLE).
The dismissed employees were offered separation pay equivalent to half-month pay for
every year of service. The Clubs closure took effect on 15 June 2003.
On 26 June 2003, respondents filed a complaint before the Labor Arbiter for illegal
dismissal, illegal suspension, and non-payment of salaries and other monetary benefits.
They likewise prayed for damages and attorney’s fees.
Respondents refused to believe that the Club was suffering from losses because they
knew exactly the number of arrivals as well as junket clients of the Club. They presented
documents to show the arrival of foreign guests at the Club.
Respondents maintained that upon the other hand, they are employees of petitioner
assigned to the Club, hence they should have been allowed to work in other departments
of the hotel.
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Oppositely, petitioner averred that since April 2002, the Club has been incurring losses
that it had to temporarily cease its operations effective 15 June 2003. To support the
allegations of losses, petitioner presented financial statements of Waterfront Promotion,
Ltd. Petitioner argued that pursuant to Article 286 of the Labor Code, the temporary
suspension of business operations does not terminate employment. Thus, respondents
have no cause of action against them.
Issue
Whether respondents were illegally dismissed.
Ruling
Initially, the respondents were laid off as a result of the suspension of the Clubs
operation. Under Art. 286 of the Labor Code, a bona fide suspension of business
operations for not more than six (6) months does not terminate employment. After six
(6) months, the employee may be recalled to work or be permanently laid off. In this
case, more than six (6) months have elapsed from the time the Club ceased to operate.
Hence, respondents’ termination became permanent.
Petitioner anchors its arguments mainly on the thesis that retrenchment to prevent
losses was undertaken to justify the dismissal of respondents. Petitioner likened the
closure of the Club, which it deemed as a division/department, to retrenchment. Acting
on the same premise that the Club is a division of petitioner, respondents demanded that
they should be transferred to another department of petitioner, instead of being
dismissed from employment. Respondents also claim that petitioner failed to prove
losses to support retrenchment.
At the outset, it should be stated that the respondents cannot be accommodated in other
departments of the Hotel. The duties and functions they perform are peculiar to the
positions they hold in the Club. It is likewise undisputed that the Club remained closed
and there is no other department in the Hotel similar to the Club and which catered to
foreign high stakes gamblers. Verily, reinstatement cannot be and could not have been
an option for petitioner Hotel.
For the purpose of proving financial losses, petitioner presented the financial statements
of Waterfront Promotion, Ltd. which petitioner describes as the company which
promotes, markets and finances the Club.
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A review of the corporate structure of the Club as contained in the financial statements
submitted by petitioner reveals that it is actually a wholly-owned subsidiary of
Waterfront Promotion, Ltd.
Their corporate relationship is described as follows:
Waterfront Promotion Ltd (WPL) and its wholly-owned subsidiary, Club

Waterfront International Limited (CWIL), were incorporated in the
Cayman Islands on March 6, 1995 and June 11, 1996, respectively. WPL is a
wholly-owned subsidiary of Waterfront Philippines, Incorporated (WPI), a
company registered with the Philippine Securities and Exchange
Commission (SEC).
WPL and CWIL invite and organize groups of foreign casino players to play
in Philippine casinos pursuant to certain agreements entered into with the
Philippine Amusement and Gaming Corporation (PAGCOR) under the
latters Foreign Highroller Marketing Program (the Program).
To support the Program, WPL and CWIL entered into several agreements
with certain parties also known as junket operators to market and promote
the Philippine casinos to foreign casino players. In consideration for
marketing and promoting the Philippine casinos, these operators receive
certain incentives such as free hotel accommodations, free airfares, and
rolling commissions from WPL and CWIL.
The financial statements have been prepared on a going concern basis,

which assumes that WPL and CWIL will continue in existence. The validity
of this assumption is dependent upon WPL and CWIL to meet their
financing requirements on a continuing basis and the success of their
future operations. Management continues to look for other business
opportunities and intends to run WPL and CWIL as going concerns.
At present, both WPL and CWIL have temporarily stopped their

operations. The Management decided to temporarily cease the operations
of WPL and CWIL on June 2003 and November 2001 respectively, due to
unfavorable economic conditions. However, the Management of
Waterfront Philippines, Incorporated (WPI), the Ultimate Parent
Company, has given an undertaking to provide necessary support in order
for the Company to continue as a going concern.
WPLs principal office is located in George Town, Grand Cayman, Cayman

Islands, British West Indies.
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In turn, Waterfront Promotion, Ltd. is a wholly-owned subsidiary of Waterfront
Philippines. Petitioner Hotel, as shown in the official records, is also another subsidiary
of Waterfront Philippines. Strictly speaking, the Club is not related to petitioner except
to say that they are two different subsidiaries of one parent corporation, i.e., Waterfront
Philippines. Petitioner, then, could have right at the beginning avoided the conflict with
respondents by setting itself apart from them. Petitioner could have invoked the
separateness from the Hotel of the Club which employed respondents. Petitioner did not
do so. Instead, and at the outset, it formally presented itself as the respondents employer
when, through its Director of Human Resources, it informed respondents about the
temporary suspension of the business of the Club and forthwith served the notices of
suspension of business on DOLE.
We find the consolidated financial statements that were prepared in the name of
Waterfront Promotion refer to the casino operations of the Club. A consolidated financial
statement is usually prepared for a parent company and its subsidiaries, the purpose of
which is to provide an overview of the financial condition of the group of companies as
a single entity. The Club, being a wholly-owned subsidiary of Waterfront Promotion, Ltd.
operates under the management, supervision and control of Waterfront Promotion, Ltd.
The relationship between these two companies is so intertwined that the Club is
practically considered a department or division of Waterfront Promotion, Ltd.
A review of the consolidated financial statement shows that for the fiscal years 2002 and
2003, the parent company and the consolidated companies reflect the same amounts of
losses: United States (U.S.) $2,791,104.00 for 2002 and U.S. $765,222.00 for 2003. This
proves petitioners assertion that the losses there reflected refer to the losses of the Club.
The consolidated financial statement and the corporate relationships it indicates, cannot,
however, be relied upon by petitioner to avoid this particular labor dispute because, as
already stated, petitioner itself has been claiming from the very beginning that the Club
is only a division/department of the hotel.
Verily, retrenchment and not closure was effected to warrant the valid dismissal of
respondents. Petitioner has not totally ceased its operations. It merely closed down a
department.
Retrenchment is the termination of employment initiated by the employer through no

fault of and without prejudice to the employees. It is resorted to 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. It is an act of the employer of dismissing employees because of losses in
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the operation of a business, lack of work, and considerable reduction on the volume of
his business.
In case of retrenchment, proof of financial losses becomes the determining factor in

proving its legitimacy. In establishing a unilateral claim of actual or potential losses,
financial statements audited by independent external auditors constitute the normal
method of proof of profit and loss performance of a company. The condition of business
losses justifying retrenchment is normally shown by audited financial documents like
yearly balance sheets and profit and loss statements as well as annual income tax returns.
Retrenchment is subject to faithful compliance with the substantative and procedural

requirements laid down by law and jurisprudence. For a valid retrenchment, the
following elements must be present:
(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 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, efficiency, seniority, physical fitness, age,
and financial hardship for certain workers.
All these elements were successfully proven by petitioner. First, the huge losses suffered
by the Club for the past two years had forced petitioner to close it down to avert further
losses which would eventually affect the operations of petitioner. Second, all 45
employees working under the Club were served with notice of termination. The
corresponding notice was likewise served to the DOLE one month prior to retrenchment.
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Third, the employees were offered separation pay, most of whom have accepted and
opted not to join in this complaint. Fourth, cessation of or withdrawal from business
operations was bona fide in character and not impelled by a motive to defeat or
circumvent the tenurial rights of employees. As a matter of fact, as of this writing, the
Club has not resumed operations. Neither is there a showing that petitioner carried out
the closure of the business in bad faith. No labor dispute existed between management
and the employees when the latter were terminated.
BANK OF LUBAO, INC. v ROMMEL J. MANABAT and the

NATIONAL LABOR RELATIONSCOMMISSION
G.R. No. 188722, February 1, 2012
The Facts
In 2001, Rommel J. Manabat (respondent) was hired by petitioner Bank of Lubao, a rural
bank, as a Market Collector. Subsequently, the respondent was assigned as an encoder at
the Bank of Lubao’s Sta. Cruz Extension Office, which he manned together with two
other employees, teller Susan P. Lingad (Lingad) and May O. Manasan. As an encoder,
the respondent’s primary duty is to encode the clients deposits on the banks computer
after the same are received by Lingad.
In November 2004, an initial audit on the Bank of Lubaos Sta. Cruz Extension Office
conducted by the petitioner revealed that there was a misappropriation of funds in the
amount of P3,000,000.00, more or less. Apparently, there were transactions entered and
posted in the passbooks of the clients but were not entered in the banks book of accounts.
Further audit showed that there were various deposits which were entered in the banks
computer but were subsequently reversed and marked as error in posting.
On November 17, 2004, the respondent, through a memorandum sent by the petitioner,
was asked to explain in writing the discrepancies that were discovered during the audit.
On November 19, 2004, the respondent submitted to the petitioner his letter-explanation
which, in essence, asserted that there were times when Lingad used the banks computer
while he was out on errands.
On December 11, 2004, an administrative hearing was conducted by the banks

investigating committee where the respondent was further made to explain his side.
Subsequently, the investigating committee concluded that the respondent conspired
with Lingad in making fraudulent entries disguised as error corrections in the banks
computer.
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On August 9, 2005, the petitioner filed several criminal complaints for qualified theft
against Lingad and the respondent with the Municipal Trial Court (MTC) of Lubao,
Pampanga. Thereafter, citing serious misconduct tantamount to willful breach of trust
as ground, it terminated the respondents employment effective September 1, 2005.
On September 26, 2005, the respondent filed a Complaint for illegal dismissal with the
Regional Arbitration Branch of the National Labor Relations Commission (NLRC) in San
Fernando City, Pampanga. In the said complaint, the respondent, to bolster his claim
that there was no valid ground for his dismissal, averred that the charge against him for
qualified theft was dismissed for lack of sufficient basis to conclude that he conspired
with Lingad. The respondent sought an award for separation pay, full backwages, 13th
month pay for 2004 and moral and exemplary damages.
For its part, the petitioner insists that the dismissal of the respondent is justified,
asserting the February 14, 2006 Audit Report which confirmed the participation of the
respondent in the alleged misappropriations. Likewise, the petitioner asserted that the
dismissal of the qualified theft charge against the respondent is immaterial to the validity
of the ground for the latter’s dismissal.
Issues
(1) Whether respondent is entitled to separation pay in lieu of reinstatement; and
(2) whether the respondent is entitled to payment of backwages.
Ruling
First Issue: Separation Pay in Lieu of Reinstatement
At the outset, it should be stressed that a determination of the applicability of the

doctrine of strained relations is essentially a factual question and, thus, not a proper
subject in the instant petition.
The well-entrenched rule in our jurisdiction is that only questions of law may be
entertained by this Court in a petition for review on certiorari. This rule, however, is not
ironclad and admits certain exceptions, such as when, inter alia, the findings of fact are
conflicting.
Here, in view of the conflicting findings of the NLRC and the CA, this Court is constrained
to pass upon the propriety of the application of the doctrine of strained relations to justify
the award of separation pay to the respondent in lieu of reinstatement.
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The law on reinstatement is provided for under Article 279 of the Labor Code of the
Philippines:
Article 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. (emphasis supplied)
Under the law and prevailing jurisprudence, an illegally dismissed employee is entitled
to reinstatement as a matter of right. However, 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, particularly where the illegally dismissed employee held a managerial or key
position in the company, it would be more prudent to order payment of separation pay
instead of reinstatement.
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.
In such cases, it should be proved that the employee concerned occupies a position where
he enjoys the trust and confidence of his employer; and that it is likely that if reinstated,
an atmosphere of antipathy and antagonism may be generated as to adversely affect the
efficiency and productivity of the employee concerned.
Here, we agree with the CA that the relations between the parties had been already
strained thereby justifying the grant of separation pay in lieu of reinstatement in favor of
the respondent.
First, it cannot be gainsaid that the petitioner’s reinstatement to his former position
would only serve to intensify the atmosphere of antipathy and antagonism between the
parties. Undoubtedly, the petitioners filing of various criminal complaints against the
respondent for qualified theft and the subsequent filing by the latter of the complaint for
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illegal dismissal against the latter, taken together with the pendency of the instant case
for more than six years, had caused strained relations between the parties.
Second, considering that the respondent’s former position as bank encoder involves the
handling of accounts of the depositors of the Bank of Lubao, it would not be equitable
on the part of the petitioner to be ordered to maintain the former in its employ since it
may only inspire vindictiveness on the part of the respondent.
Third, the refusal of the respondent to be re-admitted to work is in itself indicative of the
existence of strained relations between him and the petitioner. In the case of Lagniton,
Sr. v. National Labor Relations Commission, the Court held that the refusal of the
dismissed employee to be re-admitted is constitutive of strained relations:
It appears that relations between the petitioner and the

complainants have been so strained that the complainants are no longer
willing to be reinstated. As such reinstatement would only exacerbate the
animosities that have developed between the parties, the public
respondents were correct in ordering instead the grant of separation pay
to the dismissed employees in the interest of industrial peace.
Time and again, this Court has recognized that strained relations between the employer
and employee is an exception to the rule requiring actual reinstatement for illegally
dismissed employees for the practical reason that the already existing antagonism will
only fester and deteriorate, and will only worsen with possible adverse effects on the
parties, if we shall compel reinstatement; thus, the use of a viable substitute that protects
the interests of both parties while ensuring that the law is respected.
Second Issue: Backwages
Anent the second issue, the petitioner claimed that the respondent is not entitled to the
payment of backwages considering that there was no bad faith on its part when it
terminated the latter’s employment. The petitioner insists that it is within its prerogative
to dismiss the respondent on the basis of loss of trust and confidence.
The arguments raised by the petitioner with regard to the issue of backwages, essentially,
attacks the factual findings of the CA, the NLRC and the LA. As stated earlier, subject to
well-defined exceptions, factual questions may not be raised in a petition for review on
certiorari under Rule 45 as this Court is not a trier of facts. The petitioner failed to assert
any circumstance which would impel this Court to disregard the findings of fact of the
lower tribunals on the propriety of the award of backwages in favor of the respondent.
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However, the backwages that should be awarded to the respondent should be modified.
Employees who are illegally dismissed are entitled to full backwages, inclusive of
allowances and other benefits or their monetary equivalent, computed from the time
their actual compensation was withheld from them up to the time of their actual
reinstatement. But if reinstatement is no longer possible, the backwages shall be
computed from the time of their illegal termination up to the finality of the decision.
Thus, when there is an order of reinstatement, the computation of backwages shall be

reckoned from the time of illegal dismissal up to the time that the employee is actually
reinstated to his former position.
Pursuant to the order of reinstatement rendered by the LA, the petitioner sent the
respondent a letter requiring him to report back to work on May 4, 2007.
Notwithstanding the said letter, the respondent opted not to report for work. Thus, it is
but fair that the backwages that should be awarded to the respondent be computed from
the time that the respondent was illegally dismissed until the time when he was required
to report for work, i.e. from September 1, 2005 until May 4, 2007. It is only during the said
period that the respondent is deemed to be entitled to the payment of backwages.
The fact that the CA, in its April 4, 2009 decision, ordered the payment of separation pay
in lieu of the respondent’s reinstatement would not entitle the latter to backwages. It
bears stressing that decisions of the CA, unlike that of the LA, are not immediately
executory. Accordingly, the petitioner should only pay the respondent backwages from
September 1, 2005, the date when the respondent was illegally dismissed, until May 4,
2007, the date when the petitioner required the former to report to work.
1. PNCC SKYWAY CORPORATION (PSC), Petitioner, v.THE SECRETARY OF

LABOR & EMPLOYMENT, PNCC SKYWAY TRAFFIC MANAGEMENT, AND
SECURITY DIVISION WORKERS ORGANIZATION, Respondent.
G.R. No. 196110, February 06, 2017
Facts:
Sometime in March 1977, the Philippine National Construction Corporation
(PNCC) was awarded by the Toll Regulatory Board (TRB) with the franchise of
constructing, operating and maintaining the north and south expressways,
including the South Metro Manila Skyway (Skyway). On December 15, 1998, it
created petitioner PNCC Skyway Corporation (PSC) for the purpose of taking
charge of its traffic safety, maintaining its facilities and collecting toll.
Eight years later, or on July 18, 2007, the Citra Metro Manila Tollway Corporation
(Citra), a private investor under a build-and-transfer scheme, entered into an
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agreement with the TRB and the PNCC to transfer the operation of the Skyway
from petitioner PSC to the Skyway O & M Corporation (SOMCO). The said
transfer provided for a five-month transition period from July 2007 until the full
torn-over of the Skyway at 10:00 p.m. of December 31, 2007 upon which
petitioner PSC will close its operation.
On December 28, 2007, or three (3) days before the flail transfer of the operation
of the Skyway to SOMCO, petitioner PSC served termination letters to its
employees, many of whom were members of private respondent PNCC Skyway
Traffic Management and Security Division Worker's Organization (Union).
According to the letter, PSC has no choice but to close its operations resulting in
the termination of its employees effective January 31, 2008. However, the
employees are entitled to receive separation pay amounting to 250% of the basic
monthly pay for every year of service, among others things. Petitioner PSC,
likewise, served a notice of termination to the Department of Labor and
Employment (DOLE).
On that same day of December 28, 2007, private respondent Union, immediately
upon receipt of the termination letters, filed a Notice of Strike before the DOLE
alleging that the closure of the operation of PSC is tantamount to union-busting
because it is a means of terminating employees who are members thereof.
Furthermore, the notices of termination were served on its employees three (3)
days before petitioner PSC ceases its operations, thereby violating the
employees' right to due process. As a matter of fact, the employees were no
longer allowed to work as of January 1, 2008. Private respondent Union, thus,
prayed that petitioner PSC be held guilty of unfair labor practice and illegal
dismissal. It, likewise, prayed for the reinstatement of all dismissed employees,
along with the award of backwages, moral and exemplary damages, and
attorney's fees.
For its defense, PSC denied that the closure of its operation was intended to
remove employees who are members of private respondent Union. Instead, it
claimed that it was done in good faith and in the exercise of management
prerogative, considering that it was anchored on an agreement between the TRB,
the PNCC and the private investor Citra. PSC likewise denied that it had violated
the right to due process of its employees, considering that the notices of
termination were served on December 28, 2007 while the termination was
effective only on January 31, 2008, PSC alleged that the Union was guilty of an
illegal strike when it started a strike on the same day it filed a notice of strike on
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December 28, 2007.
On August 29, 2008, public respondent Secretary of Labor and Employment

(SOLE), in its assailed Decision,4 found that there was an authorized cause for
the closure of the operation of PSC albeit it failed to comply with the procedural
requirements set forth under Article 283 of the Labor Code.
Issue:
Whether or not PSC failed to comply with the procedural requirements set forth
under Article 283 of the Labor Code, that is, by serving notices of termination
upon the employees and the DOLE at least one (1) month before the intended
date thereof.
Ruling:
Yes.
The provision of Article 283 of the Labor Code is instructive on the notice
requirement, to wit:
Art. 283. Closure of establishment and reduction of personnel. The employer may
also terminate the employment of any employee due to the installation of labor
saving devices, redundancy, retrenchment to prevent losses or the closing or
cessation of operation of the establishment or undertaking unless the closing is
for the purpose of circumventing the provisions of this Title, by serving a written
notice on the workers and the Ministry of Labor and Employment at least one (1)
month before the intended date thereof. In case of termination due to the
installation of labor saving devices or redundancy, the worker affected thereby
shall be entitled to a separation pay equivalent to at least his one (1) month pay
or to at least one (1) month pay for every year of service, whichever is higher. In
case of retrenchment to prevent losses and in cases of closures or cessation of
operations of establishment or under taking not due to serious business losses or
financial reverses, the separation pay shall be equivalent to one (1) month pay or
at least one-half (1/2) month pay for every year of service, whichever is higher. A
In sum, under Article 283 of the Labor Code, three requirements are necessary
for a valid cessation of business operations: (a) service of a written notice to the
employees and to the DOLE at least one month before the intended date
thereof; (b) the cessation of business must be bona fide in character; and (c)
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payment to the employees of termination pay amounting to one month pay or at
least one-half month pay for every year of service, whichever is higher.
In the instant case, while both the SOLE and the appellate court found the
closure of PSC's business operation to be bona fide, the required notices were,
however, served on the employees and the DOLE only three (3) days before the
closure of the company. PSC contends that it had substantially complied with
the one (1) month notice requirement since the termination of its employees was
made effective only on January 31, 2008, or more than one (1) month after it had
given the notice of termination on December 28, 2007. It insists that they have
in fact paid the affected employees for the said period covered by the supposed
one-month notice. We disagree.
The required written notice under Article 283 of the Labor Code is to inform the
employees of the specific date of termination or closure of business operations,
and must be served upon them at least one (1) month before the date of
effectivity to give them sufficient time to make the necessary arrangements.11
The purpose of this requirement is to give employees time to prepare for the
eventual loss of their jobs, as well as to give DOLE the opportunity to ascertain
the veracity of the alleged cause of termination.12 Thus, considering that the
notices of termination were given merely three (3) days before the cessation of
the PSC's operation, it defeats the very purpose of the required notice and the
mandate of Article 283 of the Labor Code. Neither the payment of employees'
salaries for the said one-month period13 nor the employees' alleged actual
knowledge of the ASTOA is sufficient to replace the formal and written notice
required by the law.
Moreover, as early as July 2007, PSC already had knowledge of the eventual take-
over by SOMCO of the Skyway by December 31, 2007. Thus, considering that
PSC had ample time of more than five (5) months to serve the notice of
termination to its employees, its failure to comply with the notice requirement
under Article 283 of the Labor Code is inexcusable.
KINDS OF EMPLOYMENT
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KINDS OF EMPLOYMENT
WILFREDO ARO, ET AL. V NATIONAL LABOR RELATIONS COMMISSION, ET AL.

G.R. No. 174792, March 7, 2012
The Facts
Several employees of private respondent Benthel Development Corporation, including

the petitioners, filed a Complaint for illegal dismissal with various money claims and
prayer for damages against the latter, in the NLRC Arbitration Branch No. VII in Cebu
City and docketed as RAB Case No. 07-09-1222-97/12-1609-97. Thereafter, Labor Arbiter
Ernesto F. Carreon rendered a decision finding private respondent guilty of illegal
dismissal and ordering it to pay its thirty-six (36) employees P446,940.00 as separation
pay.
The employees, including the petitioners herein, appealed from the said decision. The
NLRC, in NLRC Case No. V-000399-98, affirmed the decision of Labor Arbiter Carreon
in its Decision dated January 12, 1999, with the modification that private respondent pay
backwages computed from the respective dates of dismissal until finality of the decision.
Private respondent, unsatisfied with the modification made by the NLRC, filed a motion
for reconsideration with the contention that, since it has been found by the Labor Arbiter
and affirmed in the assailed decision that the employees were project employees, the
computation of backwages should be limited to the date of the completion of the project
and not to the finality of the decision.
Issue
Whether petitioners were project employees or regular employees.
Ruling
Article 280 of the Labor Code distinguishes a "project employee" from a "regular
employee," thus:
Article 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
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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.
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 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.
In Hanjin Heavy Industries and Construction Co. Ltd. v. Ibaez, this Court extensively
discussed the above distinction, thus:
x x x [T]he principal test for determining whether particular employees are

properly characterized as "project employees" as distinguished from
"regular 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.
In a number of cases, the Court has held that the length of service or the
re-hiring of construction workers on a project-to-project basis does not
confer upon them regular employment status, since their re-hiring is only
a natural consequence of the fact that experienced construction workers
are preferred. Employees who are hired for carrying out a separate job,
distinct from the other undertakings of the company, the scope and
duration of which has been determined and made known to the employees
at the time of the employment , are properly treated as project employees
and their services may be lawfully terminated upon the completion of a
project. Should the terms of their employment fail to comply with this
standard, they cannot be considered project employees.
In Abesco Construction and Development Corporation v. Ramirez, which

also involved a construction company and its workers, this Court
considered it crucial that the employees were informed of their status as
project employees:
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The principal test for determining whether employees
are "project employees" or "regular employees" is whether
they are assigned to carry out a specific project or
undertaking, the duration and scope of which are specified
at the time they are engaged for that project. Such duration,
as well as the particular work/service to be performed, is
defined in an employment agreement and is made clear to
the employees at the time of hiring.
In this case, petitioners did not have that kind of

agreement with respondents. Neither did they inform
respondents of the nature of the latters work at the time of
hiring. Hence, for failure of petitioners to substantiate their
claim that respondents were project employees, we are
constrained to declare them as regular employees.
In Caramol v. National Labor Relations Commission, and later

reiterated in Salinas, Jr. v. National Labor Relations Commission, the Court
markedly stressed the importance of the employees' knowing consent to
being engaged as project employees when it clarified that "there is no
question that stipulation on employment contract providing for a fixed
period of employment such as project-to-project contract is valid provided
the period 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 x x
x."
Applying the above disquisition, this Court agrees with the findings of the CA that
petitioners were project employees. It is not disputed that petitioners were hired for the
construction of the Cordova Reef Village Resort in Cordova, Cebu. By the nature of the
contract alone, it is clear that petitioners' employment was to carry out a specific project.
Hence, the CA did not commit grave abuse of discretion when it affirmed the findings of
the Labor Arbiter.
Therefore, being project employees, petitioners are only entitled to full backwages,
computed from the date of the termination of their employment until the actual
completion of the work. Illegally dismissed workers are entitled to the payment of their
salaries corresponding to the unexpired portion of their employment where the
employment is for a definite period. In this case, as found by the CA, the Cordova Reef
Village Resort project had been completed in October 1996 and private respondent
herein had signified its willingness, by way of concession to petitioners, to set the date
of completion of the project as March 18, 1997; hence, the latter date should be
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considered as the date of completion of the project for purposes of computing the full
backwages of petitioners.
STRIKE
C. ALCANTARA & SONS, INC. v COURT OF APPEALS, ET AL

G.R. No. 155135
NAGKAHIUSANG MAMUMUO SA ALSONS-SPFL (NAMAAL-SPFL), ET AL v. C.

ALCANTARA & SONS, INC, ET AL.
G.R. No. 155135
NAGKAHIUSANG MAMUMUO SA ALSONS-SPFL (NAMAAL-SPFL), AND ITS

MEMBERS whose names are listed below,
v C. ALCANTARA & SONS, INC.
G.R. No. 179220, March 14, 2012
The Facts
The negotiation between CASI and the Union on the economic provisions of the
Collective Bargaining Agreement (CBA) ended in a deadlock prompting the Union to
stage a strike, but the strike was later declared by the Labor Arbiter (LA) to be illegal
having been staged in violation of the CBAs no strike-no lockout provision.
Consequently, the Union officers were deemed to have forfeited their employment with
the company and made them liable for actual damages plus interest and attorneys fees,
while the Union members were ordered to be reinstated without backwages there being
no proof that they actually committed illegal acts during the strike.
Notwithstanding the provision of the Labor Code mandating that the reinstatement
aspect of the decision be immediately executory, the LA refused to reinstate the
dismissed Union members. On November 8, 1999, the NLRC affirmed the LA decision
insofar as it declared the strike illegal and ordered the Union officers dismissed from
employment and liable for damages but modified the same by considering the Union
members to have been validly dismissed from employment for committing prohibited
and illegal acts.
On petition for certiorari, the Court of Appeals (CA) annulled the NLRC decision and
reinstated that of the LA. Aggrieved, CASI, the Union and the Union officers and
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members elevated the matter to this Court. The cases were docketed as G.R. Nos. 155109
and 155135.
During the pendency of the cases, the affected Union members (who were ordered
reinstated) filed with the LA a motion for reinstatement pending appeal and the
computation of their backwages. Instead of reinstating the Union members, the LA
awarded separation pay and other benefits. On appeal, the NLRC denied the Union
members claim for separation pay, accrued wages and other benefits. When elevated to
the CA, the appellate court held that reinstatement pending appeal applies only to illegal
dismissal cases under Article 223 of the Labor Code and not to cases under Article 263.
Hence, the petition by the Union and its officers and members in G.R. No. 179220.
G.R. Nos. 155109, 155135, and 179220 were consolidated.
The Court agreed with the CA on the illegality of the strike as well as the termination of
the Union officers, but disagreed with the CA insofar as it affirmed the reinstatement of
the Union members. The Court, instead, sustained the dismissal not only of the Union
officers but also the Union members who, during the illegal strike, committed prohibited
acts by threatening, coercing, and intimidating non-striking employees, officers,
suppliers and customers; obstructing the free ingress to and egress from the company
premises; and resisting and defying the implementation of the writ of preliminary
injunction issued against the strikers.
The Court further held that the terminated Union members, who were ordered
reinstated by the LA, should have been immediately reinstated due to the immediate
executory nature of the reinstatement aspect of the LA decision. In view, however, of
CASI’s failure to reinstate the dismissed employees, the Court ordered CASI to pay the
terminated Union members their accrued backwages from the date of the LA decision
until the eventual reversal by the NLRC of the order of reinstatement. In addition to the
accrued backwages, the Court awarded separation pay as a form of financial assistance
to the Union members equivalent to one-half month salary for every year of service to
the company up to the date of their termination.
Not satisfied, CASI filed a Motion for Partial Reconsideration.
Issue
Whether the union members are entitled to award of backwages and separation pay
Ruling
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After a careful review of the records of the case, we find it necessary to reconsider the
Courts September 29, 2010 decision, but only as to the award of separation pay.
The LA, the NLRC, the CA and the Court are one in saying that the strike staged by the
Union, participated in by the Union officers and members, is illegal being in violation of
the no strike-no lockout provision of the CBA which enjoined both the Union and the
company from resorting to the use of economic weapons available to them under the law
and to instead take recourse to voluntary arbitration in settling their disputes. We,
therefore, find no reason to depart from such conclusion.
Article 264 (a) of the Labor Code lays down the liabilities of the Union officers and
members participating in illegal strikes and/or committing illegal acts, to wit:
ART. 264. PROHIBITED ACTIVITIES
(a) xxx
Any worker whose employment has been terminated as a

consequence of an unlawful lockout shall be entitled to reinstatement with
full backwages. Any Union officer who knowingly participates in an illegal
strike and any worker or Union officer who knowingly participates in the
commission of illegal acts during a strike may be declared to have lost his
employment status: Provided, That mere participation of a worker in a
lawful strike shall not constitute sufficient ground for termination of his
employment, even if a replacement had been hired by the employer during
such lawful strike.
Thus, the above-quoted provision sanctions the dismissal of a Union officer who
knowingly participates in an illegal strike or who knowingly participates in the
commission of illegal acts during a lawful strike. In this case, the Union officers were in
clear breach of the above provision of law when they knowingly participated in the illegal
strike.
As to the Union members, the same provision of law provides that a member is liable
when he knowingly participates in the commission of illegal acts during a strike. We find
no reason to reverse the conclusion of the Court that CASI presented substantial
evidence to show that the striking Union members committed the following prohibited
acts:
a. They threatened, coerced, and intimidated non-striking

employees, officers, suppliers and customers;
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b. They obstructed the free ingress to and egress from the company
premises; and
c. They resisted and defied the implementation of the writ of
preliminary injunction issued against the strikers.
The commission of the above prohibited acts by the striking Union members warrants
their dismissal from employment.
As clearly narrated earlier, the LA found the strike illegal and sustained the dismissal of
the Union officers, but ordered the reinstatement of the striking Union members for lack
of evidence showing that they committed illegal acts during the illegal strike. This
decision, however, was later reversed by the NLRC. Pursuant to Article 223 of the Labor
Code and well-established jurisprudence, the decision of the LA 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 the employee, merely reinstated in the payroll. 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. If the employer
fails to exercise the option of re-admitting the employee to work or to reinstate him in
the payroll, the employer must pay the employees salaries during the period between the
LAs order of reinstatement pending appeal and the resolution of the higher court
overturning that of the LA. In this case, CASI is liable to pay the striking Union members
their accrued wages for four months and nine days, which is the period from the notice
of the LAs order of reinstatement until the reversal thereof by the NLRC.
Citing Escario v. National Labor Relations Commission (Third Division),CASI claims that
the award of the four-month accrued salaries to the Union members is not sanctioned by
jurisprudence. In Escario, the Court categorically stated that the strikers were not
entitled to their wages during the period of the strike (even if the strike might be legal),
because they performed no work during the strike. The Court further held that it was
neither fair nor just that the dismissed employees should litigate against their employer
on the latters time. In this case, however, the four-month accrued salaries awarded to the
Union members are not the backwages referred to in Escario. To be sure, the awards were
not given as their salaries during the period of the strike. Rather, they constitute the
employers liability to the employees for its failure to exercise the option of actual
reinstatement or payroll reinstatement following the LAs decision to reinstate the Union
members as mandated by Article 223 of the Labor Code adequately discussed earlier. In
other words, such monetary award refers to the Union members accrued salaries by
reason of the reinstatement order of the LA which is self-executory pursuant to Article
223. We, therefore, sustain the award of the four-month accrued salaries.
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Finally, as regards the separation pay as a form of financial assistance awarded by the
Court, we find it necessary to reconsider the same and delete the award pursuant to
prevailing jurisprudence.
Separation pay may be given as a form of financial assistance when a worker is dismissed
in cases such as the installation of labor-saving devices, redundancy, retrenchment to
prevent losses, closing or cessation of operation of the establishment, or in case the
employee was found to have been suffering from a disease such that his continued
employment is prohibited by law. It is a statutory right defined as the amount that an
employee receives at the time of his severance from the service and is designed to provide
the employee with the wherewithal during the period that he is looking for another
employment. It is oriented towards the immediate future, the transitional period the
dismissed employee must undergo before locating a replacement job. As a general rule,
when just causes for terminating the services of an employee exist, the employee is not
entitled to separation pay because lawbreakers should not benefit from their illegal acts.
The rule, however, is subject to exceptions. The Court, in Philippine Long Distance
Telephone Co. v. NLRC,laid down the guidelines when separation pay in the form of
financial assistance may be allowed, to wit:
We hold that henceforth 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. Where the reason for the valid dismissal
is, for example, habitual intoxication or an offense involving moral
turpitude, like theft or illicit sexual relations with a fellow worker, the
employer may not be required to give the dismissed employee separation
pay, or financial assistance, or whatever other name it is called, on the
ground of social justice.
A contrary rule would, as the petitioner correctly argues, have the

effect, of rewarding rather than punishing the erring employee for his
offense. And we do not agree that the punishment is his dismissal only and
that the separation pay has nothing to do with the wrong he has committed
x x x.
We had the occasion to resolve the same issue in Toyota Motor Phils. Corp. Workers
Association (TMPCWA) v. National Labor Relations Commission. Following the
declaration that the strike staged by the Union members is illegal, the Union officers and
members were considered validly dismissed from employment for committing illegal acts
during the illegal strike. The Court affirmed the CAs conclusion that the commission of
illegal acts during the illegal strike constituted serious misconduct. Hence, the award of
separation pay to the Union officials and members was not sustained.
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Indeed, we applied social justice and equity considerations in several cases to justify the
award of financial assistance. In Piero v. National Labor Relations Commission, the Court
declared the strike to be illegal for failure to comply with the procedural requirements.
We, likewise, sustained the dismissal of the Union president for participating in said
illegal strike. Considering, however, that his infraction is not so reprehensible and
unscrupulous as to warrant complete disregard of his long years of service, and
considering further that he has no previous derogatory records, we granted financial
assistance to support him in the twilight of his life after long years of service. The same
compassion was also applied in Aparente, Sr. v. NLRC where the employee was declared
to have been validly terminated from service after having been found guilty of driving
without a valid drivers license, which is a clear violation of the companys rules and
regulations. We, likewise, awarded financial assistance in Salavarria v. Letran College to
the legally dismissed teacher for violation of school policy because such infraction
neither amounted to serious misconduct nor reflected that of a morally depraved person.
However, in a number of cases cited in Toyota Motor Phils. Corp. Workers Association
(TMPCWA) v. National Labor Relations Commission, we refrained from awarding
separation pay or financial assistance to Union officers and members who were separated
from service due to their participation in or commission of illegal acts during the strike.
In Pilipino Telephone Corporation v. Pilipino Telephone Employees Association (PILTEA),
the strike was found to be illegal because of procedural infirmities and for defiance of the
Secretary of Labors assumption order. Hence, we upheld the Union officers dismissal
without granting financial assistance. In Sukhotai Cuisine and Restaurant v. Court of
Appeals, and Manila Diamond Hotel and Resort, Inc. (Manila Diamond Hotel) v. Manila
Diamond Hotel Employees Union, the Union officers and members who participated in
and committed illegal acts during the illegal strike were deemed to have lost their
employment status and were not awarded financial assistance.
In Telefunken Semiconductors Employees Union v. Court of Appeals, the Court held that
the strikers open and willful defiance of the assumption order of the Secretary of Labor
constitute serious misconduct and reflective of their moral character, hence, granting of
financial assistance to them cannot be justified. In Chua v. National Labor Relations
Commission, we disallowed the award of financial assistance to the dismissed employees
for their participation in the unlawful and violent strike which resulted in multiple deaths
and extensive property damage because it constitutes serious misconduct on their part.
Here, not only did the Court declare the strike illegal, rather, it also found the Union
officers to have knowingly participated in the illegal strike. Worse, the Union members
committed prohibited acts during the strike. Thus, as we concluded in Toyota,
Telefunken, Chua and the other cases cited above, we delete the award of separation pay
as a form of financial assistance.
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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
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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.
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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.
UNIVAC DEVELOPMENT, INC., vs. WILLIAM M. SORIANO
G.R. No. 182072, June 19, 2013
J. Peralta
The power of the employer to terminate a probationary employee is subject to three

limitations, namely: (1) it must be exercised in accordance with the specific requirements
of the contract; (2) the dissatisfaction on the part of the employer must be real and in
good faith, not feigned so as to circumvent the contract or the law; and (3) there must be
no unlawful discrimination in the dismissal. In this case, not only did petitioner fail to
show that respondent was apprised of the standards for regularization but it was likewise
not shown how these standards had been applied in his case. Pursuant to well-settled
doctrine, petitioner‘s failure to specify the reasonable standards by which respondent‘s
alleged poor performance was evaluated as well as to prove that such standards were
made known to him at the start of his employment, makes respondent a regular
employee. In other words, because of this omission on the part of petitioner, respondent is
deemed to have been hired from day one as a regular employee.
Facts:
William Soriano was hired by petitioner, UNIVAC Development, Inc. on

probationary basis as legal assistant of the company. Soriano claimed that eight (8) days
prior to the completion of his six months probationary period, he was informed that he
was being terminated from employment due to the company’s cost-cutting measures.
Univac, on the other hand, denied the allegations of Soriano and claimed instead that
prior to his employment, the latter was informed of the standards required for
regularization. Univac also supposedly informed him of his duties and obligations.
Univac recalled that a company meeting was held where respondent allegedly
expressed his intention to leave the company because he wanted to review for the bar
examinations. It was also in that meeting where he was informed of his unsatisfactory
performance in the company. Thus, when respondent did not report for work, Univac
assumed that he pushed through with his plan to leave the company, abandoning his
job by his failure to report for work.
Labor Arbiter (LA) rendered a decision dismissing Soriano’s complaint for lack
of merit and held that respondent was informed of his unsatisfactory performance. On
appeal, the NLRC affirmed the LA decision in its entirety. Claiming that said decision
never reached him because his manifestation of change of address was belatedly
integrated with the record of the case, Soriano thus filed his motion for reconsideration
but was likewise denied in a resolution which became final and executory. Soriano
elevated the matter to the CA via special civil action for certiorari under Rule 65 of the
Rules of Court and was able to obtain a favorable decision when the CA granted his
petition.
Issues:
1. Whether or not CA erred in granting the petition of Soriano when the resolution
of the NLRC is already final and executor
2. Whether or not Soriano was illegally dismissed by Univac
Ruling:
Power of CA in reviewing NLRC Decisions
Under Article 223 of the Labor Code, the decision of the NLRC becomes final
and executory after the lapse of ten calendar days from receipt thereof by the parties.
However, the adverse party is not precluded from assailing the decision via petition for
certiorari under Rule 65 of the Rules of Court before the CA and then to this Court via a
petition for review under Rule 45. Thus, contrary to the contention of petitioner, there
is no violation of the doctrine of immutability of judgment when respondent elevated
the matter to the CA which the latter consequently granted.
The power of the CA to review NLRC decisions has already been thoroughly
explained and clarified by the Court in several cases, to wit:
The power of the Court of Appeals to review NLRC decisions via Rule 65 or
Petition for Certiorari has been settled as early as in our decision in St. Martin Funeral
Home v. National Labor Relations Commission. This Court held that the proper vehicle
for such review was a Special Civil Action for Certiorari under Rule 65 of the Rules of
Court, and that this action should be filed in the Court of Appeals in strict observance
of the doctrine of the hierarchy of courts. Moreover, it is already settled that under
Section 9 of Batas Pambansa Blg. 129, as amended by Republic Act No. 7902 (An Act
Expanding the Jurisdiction of the Court of Appeals, amending for the purpose of
Section Nine of Batas Pambansa Blg. 129 as amended, known as the Judiciary
Reorganization Act of 1980), the Court of Appeals — pursuant to the exercise of its
original jurisdiction over Petitions for Certiorari — is specifically given the power to
pass upon the evidence, if and when necessary, to resolve factual issues.
The CA can grant a petition when the factual findings complained of are not
supported by the evidence on record; when it is necessary to prevent a substantial
wrong or to do substantial justice; when the findings of the NLRC contradict those of
the LA; and when necessary to arrive at a just decision of the case. Thus, contrary to the
contention of petitioner, the CA can review the finding of facts of the NLRC and the
evidence of the parties to determine whether the NLRC gravely abused its discretion in
finding that there was no illegal dismissal against respondent.
Soriano was illegally dismissed from employment by Univac
Univac’s failure to specify the reasonable standards by which Soriano’s alleged

poor performance was evaluated as well as to prove that such standards were made
known to him at the start of his employment, makes the latter a regular employee. In
other words, because of this omission on the part of Univac, Soriano is deemed to have
been hired from day one as a regular employee; and to justify 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. The SC finds no reason to
depart from the CA conclusion that Soriano’s termination from employment is without
just and valid ground. Neither was due process observed, making his termination illegal.
He is, therefore, entitled to the twin relief of reinstatement and backwages granted under
the Labor Code. However, as aptly held by the CA, considering the strained relations
between petitioner and respondent, separation pay should be awarded in lieu of
reinstatement. This Court has consistently ruled that if reinstatement is no longer
feasible, backwages shall be computed from the time of illegal dismissal until the date
the decision becomes final. Separation pay, on the other hand, is equivalent to at least
one month pay, or one month pay for every year of service, whichever is higher (with a
fraction of at least six months being considered as one whole year), computed from the
time of employment or engagement up to the finality of the decision.
REGULAR
Marvin G. Felipe and Reynante L. Velasco vs. Danilo Divina Tamayo Konstract,
Inc. (DDTKI) and its president/owner, Danilo Divina Tamayo
G.R. No. 218009
September 21, 2016
Facts:
DDTKI hired Felipe as Formworks Aide on December 19, 2005, and Velasco as
Warehouse Aide on March 14, 2007. Felipe and Velasco claimed regular
employment status for having continuously worked for DDTKI until September
2010 when they were no longer given working assignments. They wrote a letter,
dated September 28, 2010, to the respondents inquiring about their employment
status and why they were not transferred to the Glorietta Project which
supposedly started on September 17, 2010, based on a document denominated as
a Manpower Requisition Form (MRF). The respondents, however, did not reply to
their letter.
On October 12, 2010, Felipe and Velasco filed their complaint for illegal dismissal
and non-payment of service incentive leave and 13th month pay against the
respondents before the arbitration branch of the NLRC.
The respondents, on the other hand, claimed that the petitioners were former
project employees of DDTKI who were hired for a particular project. They
presented various project employment contracts duly signed by Felipe and
Velasco to support their claim that these employees were hired for specific
construction projects for a specific period, and that they were informed of the
nature and duration of their employment from the beginning of their
engagement.
The respondents further averred that as of September 2010, Felipe and Velasco
were not rehired as the company "did not need any more workers after the
completion of their respective projects." After the completion of their last project,
the US Embassy New Office Annex 1 Project (MNOX-1), Felipe and Velasco were
not rehired and their termination was reported to the Department of Labor and
Employment (DOLE) as "completion of phase of work." DDTKI stressed that they
were never employed for the Glorietta Project and the illegally obtained MRF, a
confidential document of DDTKI, did not serve as its employment contract with
Felipe and Velasco.
Issue:
Whether or not petitioners were regular (work pool) employees of respondents.
Ruling:
No.
Petitioners were project employees of DDTKI.
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 if particular employees are properly characterized as "project
employees," as distinguished from "regular employees," is whether or not the
employees are assigned to carry out a "specific project or undertaking," the
duration (and scope) of which are specified at the time they are engaged for that
project. The project can 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 LA, the NLRC and the CA were one in finding that petitioners
were project employees hired by DDTKI for a specific task within a particular
period already determined at the time of their hiring as evidenced by their
employment contracts.
As correctly noted by the CA, petitioners' employment was terminated due to the
expiration of the period for which they were contracted. Considering that their
employment contract for the US Embassy New Office Annex 1 Project (MNOX-1)
had been terminated on September 18, 2010, the CA correctly ruled that their
termination from work was not illegal but that the project for which they were
hired merely expired.
On their contention that they were regular employees due to their uninterrupted
service for DDTKI for four (4) years and the continuous employment contract
renewal every month, petitioners are mistaken. In Aro v. NLRC, the Court
explained:
[T]he length of service or the re-hiring of construction workers on a

project-to-project basis does not confer upon them regular employment
status, since their, re-hiring is only a natural consequence of the fact that
experienced construction workers are preferred. Employees who are hired for
carrying out a separate job, distinct from the other undertakings of the company,
the scope and duration of which has been determined and made known to the
employees at the time of the employment, are properly treated as project
employees and their services may be lawfully terminated upon the completion of
a project. xxx.19 [Emphasis supplied]
Therefore, being project employees who have been validly terminated by reason
of the completion of the specific project, MNOX-1, for which they were hired,
petitioners Felipe and Velasco are not entitled to reinstatement and back wages.
On the issue of non-payment of service incentive leave, the Court rules that
petitioners are not entitled to this benefit either. Based on records and as correctly
noted by respondents, they have not rendered at least one year of continuous
service.
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.
Fact
s:
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.
Issu
e:
Whether respondents were regular employees and therefore illegally

dismissed by Vicmar
Rulin
g:
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
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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:
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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.
GMA NETWORK, INC.,

vs. CARLOS P. PABRIGA, GEOFFREY F. ARIAS, et al.
G.R. No. 176419, November 27, 2013
J. LEONARDO-DE CASTRO
The respondents’ jobs and undertakings are clearly within the regular or usual
business of the employer company and are not identifiably distinct or separate from the
other undertakings of the company. There is no denying that the manning of the operations
center to air commercials, acting as transmitter/VTR men, maintaining the equipment,
and acting as cameramen are not undertakings separate or distinct from the business of a
broadcasting company. As regular employees, they are entitled to security of tenure and
therefore their services may be terminated only for just or authorized causes. Since
petitioner failed to prove any just or authorized cause for their termination, we are
constrained to affirm the findings of the NLRC and the Court of Appeals that they were
illegally dismissed.
Facts:
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On July 1999, due to the miserable working conditions private respondents were forced
to file a complaint against petitioner before the National Labor Relations Commission
Regional Arbitration Cebu City. Thereafter, the private respondents were summoned to
the office of petitioner’s Area Manager, Mrs. Susan Aliño, and they were made to explain
why they filed the complaint. The next day, private respondents were barred from
entering and reporting for work without any notice stating the reasons therefor. Private
respondents, through their counsel, wrote a letter to Mrs. Susan Aliño requesting that
they be recalled back to work. On a reply letter from Mr. Bienvenido Bustria, petitioner’s
head of Personnel and Labor Relations Division, admitted the non-payment of benefits
but did not mention the request of private respondents to be allowed to return to work.
Private respondents, then, sent another letter to Mr. Bustria reiterating their request to
work but the same was totally ignored. Private respondents filed an amended complaint
raising the following additional issues: 1) Unfair Labor Practice; 2) Illegal dismissal; and
3) Damages and Attorney’s fees.
Labor Arbiter dismissed the complaint of respondents for illegal dismissal and unfair
labor practice, but held petitioner liable for 13th month pay. The NLRC reversed the
Decision of the Labor Arbiter. Petitioner elevated the case to the Court of Appeals via a
Petition for Certiorari, the appellate court rendered its Decision denying the petition for
lack of merit.
Issue:
Whether CA erred in finding respondents are regular employees
Ruling:
In order to safeguard the rights of workers against the arbitrary use of the word "project"
to prevent employees from attaining the status of regular employees, 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. As discussed above, 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. As it was with regard to the distinction between a regular and casual
employee, the purpose of this requirement is to delineate whether or not the employer
is in constant need of the services of the specified employee. If the particular job or
undertaking is within the regular or usual business of the employer company and it is
not identifiably distinct or separate from the other undertakings of the company, there
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is clearly a constant necessity for the performance of the task in question, and therefore
said job or undertaking should not be considered a project.
The respondents’ jobs and undertakings are clearly within the regular or usual business
of the employer company and are not identifiably distinct or separate from the other
undertakings of the company. There is no denying that the manning of the operations
center to air commercials, acting as transmitter/VTR men, maintaining the equipment,
and acting as cameramen are not undertakings separate or distinct from the business of
a broadcasting company.
Petitioner’s allegation that respondents were merely substitutes or what they call pinch-
hitters (which means that they were employed to take the place of regular employees of
petitioner who were absent or on leave) does not change the fact that their jobs cannot
be considered projects within the purview of the law. Every industry, even public offices,
has to deal with securing substitutes for employees who are absent or on leave. Such
tasks, whether performed by the usual employee or by a substitute, cannot be considered
separate and distinct from the other undertakings of the company. While it is
management’s prerogative to device a method to deal with this issue, such prerogative is
not absolute and is limited to systems wherein employees are not ingeniously and
methodically deprived of their constitutionally protected right to security of tenure. We
are not convinced that a big corporation such as petitioner cannot device a system
wherein a sufficient number of technicians can be hired with a regular status who can
take over when their colleagues are absent or on leave, especially when it appears from
the records that petitioner hires so-called pinch-hitters regularly every month.
In affirming the Decision of the NLRC, the Court of Appeals furthermore noted that if
respondents were indeed project employees, petitioner should have reported the
completion of its projects and the dismissal of respondents in its finished projects:
There is another reason why we should rule in favor of private respondents. Nowhere in
the records is there any showing that petitioner reported the completion of its projects
and the dismissal of private respondents in its finished projects to the nearest Public
Employment Office as per Policy Instruction No. 20 of the Department of Labor and
Employment [DOLE]. Jurisprudence abounds with the consistent rule that the failure of
an employer to report to the nearest Public Employment Office the termination of its
workers’ services everytime a project or a phase thereof is completed indicates that said
workers are not project employees.
In sum, we affirm the findings of the NLRC and the Court of Appeals that respondents
are regular employees of petitioner. As regular employees, they are entitled to security of
tenure and therefore their services may be terminated only for just or authorized causes.
Since petitioner failed to prove any just or authorized cause for their termination, we are
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constrained to affirm the findings of the NLRC and the Court of Appeals that they were
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
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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]
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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
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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
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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
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.
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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
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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
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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
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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.
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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
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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

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:
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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
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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.
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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:
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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
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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.

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:
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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
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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.
Issu
e:
Whether petitioners are project-based employees
Rulin
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g:
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.
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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:
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
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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.
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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
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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
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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
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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?
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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 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. 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
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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:
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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
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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. 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.
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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:
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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
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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
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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,
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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.
JAIME N. GAPAYAO vs. ROSARIO FULO, SOCIAL SECURITY SYSTEM AND

SOCIAL SECURITY COMMISSION
G.R. No. 193493. June 13, 2013
CJ. Sereno
Farm workers generally fall under the definition of seasonal employees. The Court
has consistently held that seasonal employees may be considered as regular employees.
This rule, however, is not absolute. Seasonal workers who have worked for one season only
may not be considered regular employees. Also when seasonal employees are free to
contract their services with other farm owners, then the former are not regular employees.
For regular employees to be considered as such, the primary standard used is the
reasonable connection between the particular activity they perform and the usual trade or
business of the employer.
Facts:
Jaime Fulo died of "acute renal failure secondary to 1st degree burn 70% secondary
electrocution" while doing repairs at the residence and business establishment of
petitioner Gapayao.
Allegedly moved by his Christian faith, Gapayao extended some financial

assistance to private respondent Rosario, wife of Jaime Fulo. Rosario then executed an
Affidavit of Desistance stating that she was not holding them liable for the death of her
late husband, and was waiving her right and desisting from filing any criminal or civil
action against petitioner. Both parties then executed a Compromise Agreement.
Thereafter, Rosario filed a claim for social security benefits with the SSS. However,
upon verification and evaluation, it was discovered that the deceased was not a registered
member of the SSS. Upon the insistence of Rosario that her late husband had been
employed by petitioner, the SSS conducted a field investigation to clarify his status of
employment. In its field investigation report, it found that Jaime Fulo is an employee of
Mr. & Mrs. Jaime Gapayao. Consequently, the SSS demanded that petitioner remit the
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social security contributions of the deceased. Gapayao denied that the deceased was his
employee.
In asserting the existence of an employer-employee relationship, Rosario alleges

that her late husband had been in the employ of petitioner for 14 years, from 1983 to
1997. During that period, he was made to work as a laborer in the agricultural
landholdings, a harvester in the abaca plantation, and a repairman/utility worker in
several business establishments owned by petitioner. This view is bolstered by the
admission of petitioner himself in the Compromise Agreement that he was the deceased's
employer.
Petitioner, on the other hand, insists that the deceased was not his employee.
Petitioner alleges that the deceased is a freelance worker. Since he was engaged on
a pakyaw basis and worked for a short period of time, in the nature of a farm worker every
season, he was not precluded from working with other persons and in fact worked for
them.
Issue:
Whether or not there exists an employer-employee relationship between Jaime

Fulo and petitioner that would merit an award of benefits in favor of private respondent
under social security laws
Ruling:
Farm workers may be considered regular seasonal employees.
Farm workers generally fall under the definition of seasonal employees. The Court
has consistently held that seasonal employees may be considered as regular
employees. Regular seasonal employees are those called to work from time to time. 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 services
may be needed. They are in regular employment because of the nature of their job, and
not because of the length of time they have worked.
This rule, however, is not absolute. Seasonal workers who have worked for one
season only may not be considered regular employees. Also when seasonal employees are
free to contract their services with other farm owners, then the former are not regular
employees.
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For regular employees to be considered as such, the primary standard used is the
reasonable connection between the particular activity they perform and the usual trade
or business of the employer.
The records reveal that the deceased was indeed a farm worker who was in the
regular employ of petitioner. From year to year, the deceased had been working on
petitioner's land by harvesting abaca and coconut, processing copra, and clearing weeds.
His employment was continuous in the sense that it was done for more than one
harvesting season. Moreover, no amount of reasoning could detract from the fact that
these tasks were necessary or desirable in the usual business of petitioner. The other tasks
allegedly done by the deceased outside his usual farm work only bolster the existence of
an employer-employee relationship. The deceased was a construction worker in the
building and a helper in the bakery, grocery, hardware, and piggery — all owned by
petitioner. This fact only proves that even during the off season, the deceased was still in
the employ of petitioner.
The most telling indicia of this relationship is the Compromise Agreement

executed by petitioner and private respondent. Petitioner entered into the agreement
with full knowledge that he was described as the employer of the deceased. This
knowledge cannot simply be denied by a statement that petitioner was merely forced or
threatened into such an agreement.
Pakyaw workers are considered employees, provided they are subject to the control
of petitioner.
In Legend Hotel Manila v. Realuyo, the Court held that "the power of the employer
to control the work of the employee is considered the most significant determinant of
the existence of an employer-employee relationship. This is the so-called control test and
is premised on whether the person for whom the services are performed reserves the
right to control both the end achieved and the manner and means used to achieve that
end." It should be remembered that the control test merely calls for the existence of the
right to control, and not necessarily the exercise thereof. It is not essential that the
employer actually supervises the performance of duties by the employee. It is enough
that the former has a right to wield the power.
In this case, we agree with the CA that petitioner wielded control over the
deceased in the discharge of his functions. Being the owner of the farm on which the
latter worked, petitioner — on his own or through his overseer — necessarily had the
right to review the quality of work produced by his laborers. It matters not whether the
deceased conducted his work inside petitioner's farm or not because petitioner retained
the right to control him in his work, and in fact exercised it through his farm manager
Amado Gacelo. The latter himself testified that petitioner had hired the deceased as one
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of the pakyaw workers whose salaries were derived from the gross proceeds of the
harvest.
The right of an employee to be covered by the Social Security Act is premised on

the existence of an employer-employee relationship. That having been established, the
Court hereby rules in favor of private respondent.
JOB CONTRACTING
Edward de Castro and Ma. Girlie Platon vs. Court of Appeals, et al.
G.R.No. 204261, October 05, 2016
Facts:
Nuvoland, a corporation formed primarily "to own, use, improve, develop, subdivide, sell,
exchange, lease and hold for investment or otherwise, real estate of all kinds, including
buildings, houses, apartments and other structures," was registered with the Securities
and Exchange Commission (SEC) on August 9, 2006. Respondent Ramon
Bienvenida (Bienvenida) was the principal stockholder and member of the Board of
Directors while Raul Martinez (Martinez) was its President.
Silvericon, on the other hand, was registered with the SEC on December 19, 2006. Its
Articles: of Incorporation described it as a "corporation organized 'to own, use, improve,
develop, subdivide, sell, exchange, lease and hold for investment or otherwise, real estate
of all kinds, including buildings, houses, apartments and other structures.'"
Sometime in 2007, Martinez recruited petitioner Edward de Castro (De Castro), a sales
and marketing professional in the field of real estate, to handle its sales and marketing
operations, including the hiring and supervision of the sales and marketing personnel.
To formalize this undertaking, De Castro was made to sign a Memorandum of
Agreement (MOA), denominated as Shareholders Agreement, wherein Martinez
proposed to create a new corporation, through which the latter's compensation, benefits
and commissions, including those of other sales personnel, would be coursed. It was
stipulated in the said MOA that the new corporation would have an authorized capital
stock of P4,000,000.00, of which P1,000,000.00 was subscribed and paid equally by the
Martinez Group and the De Castro Group.
As it turned out, the supposedly new corporation contemplated was Silvericon. De Castro
was appointed the President and majority stockholder of Silvericon while Bienvenida and
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Martinez were named as stockholders and incorporators thereof, each owning one (1)
share of subscribed capital stock.
In the same MOA, Martinez was designated as Chairman of the new corporation to whom
De Castro, as President and Chief Operating Officer, would directly report. De Castro
was tasked to manage the day to day operations of the new corporation based on policies,
procedures and strategies set by Martinez. For their respective roles, Martinez was to
receive a monthly allowance of P125,000.00, while De Castro's monthly salary was
P400,000.00, with car plan and project income bonus, among other perks. Both Martinez
and De Castro were stipulated to receive override commissions at 1% each, based on the
net contract price of each condominium unit sold.
During De Castro's tenure as Chief Operating Officer of the newly created Silvericon, he
recruited forty (40) sales and marketing personnel. One of them was petitioner Ma. Girlie
F. Platon (Platon) who occupied the position of Executive Property Consultant. De
Castro and his team of sales personnel were responsible for the sale of 100% of the
projects owned and developed by Nuvoland.
Thereafter, the Sales and Marketing Agreement(SMA), dated February 26, 2008, was
purportedly executed by Nuvoland and Silvericon, stipulating that all payments made for
the condominium projects of Nuvoland were to be given directly to it. Clients secured by
the sales and marketing personnel would issue checks payable to Nuvoland while the cash
payments, as the case may be, were deposited to Nuvoland's account. Meanwhile, the
corresponding sales commission of the sales personnel were issued to them by Nuvoland,
with Martinez signing on behalf of the said company.
In a Letter, dated December 12, 2008 and signed by Bienvenida, Nuvoland terminated the
SMA on the ground that Silvericon personnel committed an unauthorized walkout and
abandonment of the Nuvo City Showroom for two (2) days. In the same letter, Nuvoland
demanded that Silvericon make a full accounting of all its uses of the marketing advances
from Nuvoland. It, however, assured that all sales commissions earned by Silvericon
personnel would be released as per existing policy.
After the issuance of the said termination letter, De Castro and all the sales and
marketing personnel of Silvericon were barred from entering the office premises.
Nuvoland, eventually, was able to secure the settlement of all sales and marketing
personnel's commissions and wages with the exception of those of De Castro and Platon.
The claims of one of Silvericon's senior manager were settled during the pendency of a
complaint with the LA.
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Issues:
a. Whether or not Silvericon was a mere labor-only contractor and, therefore, a mere agent
of Nuvoland.
b. Whether or not De Castro and Platon were illegally dismissed.
Ruling:
Yes.
At the outset it should be rioted that a real estate company like Nuvoland may opt to
advertise and; sell its real estate assets on its own, or allow an independent contractor to
market these developments in a manner that does not violate aforesaid regulations.
Basically, a legitimate job contractor complies with the requirements on sufficient
capitalization and equipment to undertake the needs of its client. Although this is not
the sole determining factor of legitimate contracting, independent contractors are
likewise required to register with the DOLE. This is required by D.O. 18-02.
In the present case, the Court is hounded by nagging doubts in its review of the assailed
decision. Several factors showing that Silvericon was not an independent contractor
were, conveniently brushed aside resulting in an unjust outcome. For clarity, the Court
lists down these factors, most of which were left unexplained by the respondents.
First. As earlier pointed out, D.O. 18-02 expressly provides for a registration requirement.
Remarkably, the respondents do not deny the apparent non-compliance with the rules
governing independent contractors.
This failure on the part of Silvericon reinforces the Court's view that it was engaged in
labor-only contracting. Nuvoland did not even bother to make Silvericon comply with
this vital requirement had it really entered into a legitimate contracting arrangement
with a truly independent outfit. The efforts which the two corporations have put into the
drafting of the SMA belie mere inadvertence and heedlessness on this matter.
Second. D.O. No. 18-A, series of 2011, defines substantial capital as the paid-up capital
stocks/shares of at least P3,000,000.00 in the case of corporations, partnerships and
cooperatives. This amount was set with speciflty to avoid the subterfuge resorted to by
entities with the intention to circumvent the law. As things now stand, even the
subscribed capital of Silvericon was a far cry from the amount set by the rules. It is
important to note that at the time Nuvoland engaged the services of Silvericon, the
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latter's authorized stock capital was P4,000,000.00, out of which only P1,000,000.00 was
subscribed.
In Vinoya v. National Labor Relations Commission,24 the Court tackled the insufficiency
of paid-in capitalization taking into account the "current economic atmosphere in the
country."25In other words, the determination of sufficient capital stock for independent
contractors must be assessed in a broad and extensive manner with consideration of the
industry involved.
In this case, the sufficiency of a subscribed capital of P1,000,000.00 for independent

contracting must be assessed taking into consideration the extent of the undertaking
relative to the nature of the industry in which Nuvoland was engaged.
Nuvoland was one of the prominent corporations in the real estate industry. It is safe to
assume then that the marketing of its condominium projects would entail a substantially
high amount in what was typically a capital intensive industry. The undertaking covered
not just one but two considerably huge condominium projects located in prime spots in
the metropolis.
For the sale and marketing of two condominium buildings, it would require massive
funds for promotions, advertisements, shows, salaries, and operating expenses of its
more or less 40 personnel. In light of this vast business undertaking, it is obvious that the
P1 million subscribed capital of Silvericon would hardly suffice to satisfy this huge
engagement. Nuvoland was apparently aware of this that it had to fund the marketing
expenses of the project in an amount not exceeding P30 million per building. This
was even provided in paragraph 6 of the SMA.
This being the case, the paid-in capitalization of Silvericon amounting to P1 million was
woefully inadequate to be considered as substantial capital. Thus, Silvericon could not
qualify as an independent contractor.
Third. Silvericon had no substantial equipment in the form of tools, equipment,

machinery, and work premises. Records reveal that Nuvoland itself designed and
constructed the model units used in the sales and marketing of its condominium units.
This indisputably proves that at the time of its engagement, Silvericon had no such
investment necessary for the conduct of its business.
Fourth. Although it is true that the respondents had explicitly assailed the authenticity
of the MO A attached with the petition, their faint denial fails to explain the exclusivity
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which had characterized the relationship between Nuvoland and Silvericon. If Silvericon
was an independent contractor, it is only but logical that it should have also offered its
services to the public.
The respondents claim that they had presented a contract tending to show that Silvericon
had catered its services to one LNC (SPV-AMC) Corporation in 2007. In their own words,
the respondents assert that the relationship of Nuvoland with Silvericon, particularly as
to its contractual rights and obligations, was exactly the same as the transaction of
Silvericon with LNC (SPV-AMC) Corporation. Unfortunately for the respondents, this
allegation alone could not override the other tell-tale indicators of labor-only contracting
present in this case.
Fifth. The respondents do not deny that Nuvoland and Silvericon shared the same
officers and employees: respondents Bienvenida and Martinez were stockholders and
incorporators thereof while De Castro was the President and majority stockholder of
Silvericon. At the same time, Bienvenida was a principal stockholder and member of the
Board of Directors of Nuvoland while Martinez was Nuvoland's President. Admittedly,
this fact alone does not give rise to an inference that Nuvoland and Silvericon are one
and the same. It effectively sows doubt, however, when taken together with the other
indicators of labor-only contracting, as previously discussed.
If Nuvoland and Silvericon were indeed separate entities, out of all other Nuvoland
officers, why did Bienvenida, as an incorporator of both corporations, choose to
authorize the purported termination of the SMA without at least calling for an
investigation of the incident? As a stockholder of Silvericon, he possessed an interest in
the said corporation. Curiously though, Nuvoland's decision to part with Silvericon as
expressed in Bienvenida's letter was reached without consultation or, at the least, a
preliminary notice. Had there really been a breach of contract, Nuvoland would have
demanded an explanation from Silvericon before barring the personnel's entry in their
work premises to think that the latter was engaged in an important aspect of its business.
Further, with Nuvoland having advanced a huge amount of money for Silvericon, it could
have at least exercised caution before terminating the SMA with a meager request for an
accounting of funds. A closer scrutiny of the events that transpired would show that the
termination of the SMA was one and the same with the termination of all Silvericon
personnel. This conclusion proceeded from the irrefutable fact that Silvericon was
actually a creation of Nuvoland. As a labor-only contractor, for all intents and purposes,
Silvericon was a mere mock-up.
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In truth, the termination of the SMA was actually a ruse to make it appear that Silvericon
was an independent entity. It was simply a way to terminate the employment of several
employees altogether and escape liability as an employer. True enough, Nuvoland
insisted that the petitioners direct their claims to Silvericon.
The conclusion that Silvericon was a mere labor-only contractor and a business conduit
of Nuvoland warrants the piercing of its corporate veil.
In the interest of justice and equity, that veil of corporate fiction must be pierced, and
Nuvoland and Silvericon be regarded as one and the same entity to prevent a denial of
what the petitioners are entitled to. In a situation like this, an employer-employee
relationship between the principal and the dismissed employees arises by operation of
law. Silvericon being merely an agent, its employees were in fact those of Nuvoland.
Stated differently, Nuvoland was the principal employer of the petitioners.
Sixth. As additional basis of this outcome, the Court highlights the presence of the
elements of an employer-employee relationship between the parties. In determining the
presence or absence of an employer-employee 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 so-called control test, is the most important
element.29 Jurisprudentially speaking, there is no hard and fast rule designed to establish
the aforesaid elements. It depends on the peculiar facts of each case.
Not to be excluded from this pronouncement is the observation that the subject
termination letter itself mentioned the release of all the commissions earned by
Silvericon personnel after the impetuous decision of Nuvoland to physically bar the
personnel from entry to their workplace. If these are not indicators of the power of
engagement, payment of wages and power of dismissal, the Court is at a loss as to what
to call this authority. Astonishingly, Nuvoland did not refute its conformity to the
payment of commissions, as if it was oblivious to an admission that all commissions were
taken directly from Nuvoland, and not from Silvericon. Verily, this reflects Nuvoland's
exercise of the power to compensate Silvericon personnel. The power to terminate
employees had also been exercised by Nuvoland when it clearly dispensed with the
cancellation clause in the SMA providing a 30-day period for grievance resolution.
Instead, Nuvoland utilized the alleged abandonment of the showroom as a ground for
unilateral termination of the simulated agreement.
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As regards the power of control, the only argument raised by the respondents was the
inclusion of a provision in the SMA which stated that Silvericon, as its agent, "shall be
responsible for all advertisements, promotions, public relations, special events,
marketing collaterals, road shows, open houses, etc. as part of its marketing efforts."32 For
Nuvoland, this provision in the SMA showed that Silvericon exercised full and exclusive
control over all levels of work, especially as to the means thereof.33 Regrettably, the
existence of the subject provision would not cause an automatic proposition that
Silvericon exercised control over the work of its personnel. A clear showing of Silvericon's
control over its day-to-day operations and ultimate work performance would have
dispelled any doubt, but Nuvoland fell short on this score. Worse, it again opted for
silence when the petitioners alleged that Nuvoland provided the work premises of the
sales and marketing; personnel of Silvericon; that Nuvoland dictated the end result of
the undertaking, that is, to sell at least eighty percent of the condominium project within
a period of twenty-four months; that Nuvoland decided on the models, designs and
prices of the units; that Nuvoland was the ultimate recipient of all amounts collected by
the sales and marketing team; and lastly, Nuvoland determined the maximum amount
of marketing expenses for the accomplishment of the goal.
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
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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.
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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) TheDOLE 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.
Notwithstanding the contract stipulation leaving Golden Rock the

(2)
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
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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:
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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.
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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
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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
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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
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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.
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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:
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[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.
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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
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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.
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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
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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.
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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
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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
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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
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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
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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
the engagement of the employee or where the work or services to be performed is

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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
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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
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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
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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
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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.
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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.
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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.
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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
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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
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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.
First Philippine Industrial Corporation vs. Raquel M. Calimbas and Luisa P.

Mahilom
G.R. No. 179256. July 10, 2013
J. Peralta
The test to determine the existence of independent contractorship is whether

one claiming to be an independent contractor has contracted to do the work according to
his own methods and without being subjected to the control of the employer, except only
to the results of the work.. Petitioner cannot rightly claim that DGMS was an independent
job contractor inasmuch as respondents were subjected to the control and supervision of
petitioner while they were performing their job.
Facts:
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Private respondent First Philippine Industrial Corporation (FPIC) is a
domestic corporation primarily engaged in the transportation of petroleum products
by pipeline. Upon the other hand, petitioners Raquel Calimbas and Luisa Mahilom
were engaged by De Guzman Manpower Services ("DGMS") to perform secretarial
and clerical jobs for FPIC. DGMS is engaged in the business of supplying manpower to
render general clerical, building and grounds maintenance, and janitorial and utility
services.
ON March 29, 1993, petitioner First Philippine Industrial Corp. (FPIC) entered
into a Contract of Special Services with De Guzman Manpower Services (DGMS), where
the latter agreed to undertake some aspects of building and grounds maintenance at
FPIC’s premises, offices and facilities, as well as to provide clerical and other utility
services as may be required from time to time by FPIC. Pursuant to that contract,
respondents Raquel Calimbas and Luisa Mahilom were engaged by the DGMS to render
services to FPIC. On June 21, 2001, petitioner FPIC informed the respondents that their
services would no longer be needed on July 31, 2001 as a result of the “Pace-Setting” Study.
Accordingly, DGMS formally notified both respondents that their respective work
assignments in FPIC were no longer available to them effective July 31, 2001. On Aug. 3,
2001, respondents Calimbas and Mahilom signed quitclaims, releasing and discharging
DGMS from whatever claims they might have against them by virtue of their past
employment upon receipt of the sums of P17,343.10 and P23,459.14, respectively. Despite
having executed the said quitclaims, respondents filed a complaint against FPIC for
illegal dismissal, and for money claims, damages and attorney’s fees alleging that they
were regular employees of petitioner FPIC after serving almost five years, and that they
were dismissed without cause.
The Labor Arbiter rendered a Decision holding that respondents were regular
employees of petitioner, and that they were illegally dismissed when their employment
was terminated without just or authorized cause. The NLRC dismissed petitioner’s appeal
and upheld the Labor Arbiter’s decision. The CA reversed and set aside the NLRC’s
resolutions.
Issue:
1. Whether or not respondents are employees of petitioner

2. Whether or not respondents were lawfully dismissed from their employment
Ruling:
We sustain the findings of the CA that respondents are petitioner’s employees and
that DGMS is engaged in labor-only contracting.
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First, in Vinoya v. National Labor Relations Commission, this Court categorically
stated that the actual paid-in capital of P75,000.00 could not be considered as substantial
capital. Thus, DGMS’s actual paid-in capital in the amount of P75,000.00 does not
constitute substantial capital essential to carry out its business as an independent job
contractor. In spite of its bare assertion that the Vinoya case does not apply in the present
case, DGMS has not shown any serious and cogent reason to disregard the ruling in the
aforementioned case. Records likewise reveal that DGMS has no substantial equipment
in the form of tools, equipment and machinery. As a matter of fact, respondents were
using office equipment and materials owned by petitioner while they were rendering
their services at its offices.
Second, petitioner exercised the power of control and supervision over the
respondents. As aptly observed by the CA, “the daily time records of respondents even
had to be countersigned by the officials of petitioner to check whether they had worked
during the hours declared therein. Furthermore, the fact that DGMS did not assign
representatives to supervise over respondents’ work in petitioner’s company tends to
disprove the independence of DGMS. It is axiomatic that the test to determine the
existence of independent contractorship is whether one claiming to be an independent
contractor has contracted to do the work according to his own methods and without
being subjected to the control of the employer, except only to the results of the work.
Obviously, on this score alone, petitioner cannot rightly claim that DGMS was an
independent job contractor inasmuch as respondents were subjected to the control and
supervision of petitioner while they were performing their jobs.”
Third, also worth stressing are the points highlighted by respondents: (1)
Respondents worked only at petitioner’s offices for an uninterrupted period of five years,
occupying the same position at the same department under the supervision of company
officials; (2) Three weeks ahead of the termination letters issued by DGMS, petitioner’s
HR Manager Lorna Young notified respondents, in a closed-door meeting, that their
services to the company would be terminated by July 31, 2001; (3) In the termination
letters prepared by DGMS, it was even stressed that the said termination letters will
formalize the verbal notice given by petitioner’s HR Administration personnel; (4) The
direct superiors of respondents were managerial employees of petitioner, and had direct
control over all the work-related activities of the latter. This control included the
supervision of respondents’ performance of their work and their compliance with
petitioner’s company policies and procedures. DGMS, on the other hand, never
maintained any representative at the petitioner’s office to oversee the work of
respondents.
All told, an employer-employee relationship exists between petitioner and

respondents. And having served for almost five years at petitioner’s company,
respondents had already attained the status of regular employees.
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As to the second issue, whether respondents were lawfully dismissed from their
employment, this Court rules in the negative.
In the present case, petitioners failed to show any valid or just cause under the
Labor Code on which it may justify the termination of services of respondents. Also, apart
from notifying that their services had already been terminated, petitioner failed to
comply with the rudimentary requirement of notifying respondents regarding the acts or
omissions which led to the termination of their services as well as giving them an ample
opportunity to contest the legality of their dismissal. Having failed to establish
compliance with the requirements of termination of employment under the Labor Code,
respondents’ dismissal is tainted with illegality.
Resultantly, the CA correctly held that respondents are entitled to reinstatement

without loss of seniority rights, and other privileges and to their full backwages, inclusive
of allowances and other benefits or their monetary equivalent, computed from the time
their compensation was withheld up to the time of their actual reinstatement.
Considering that reinstatement is no longer feasible, respondents are entitled instead to
separation pay equivalent to one month salary for every year of service.
JOB CONTRACTING AND LABOR-ONLY CONTRACTING
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
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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
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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.
449 | P a g
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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.
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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.
451 | P a g
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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.
452 | P a g
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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.
453 | P a g
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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.1âwphi1The 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
454 | P a g
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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.
455 | P a g
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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
456 | P a g
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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.
457 | P a g
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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.
RoblesvirtualLawlibrary
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.chanRoblesvirtualLawlibrary
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
458 | P a g
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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:ChanRoblesVirtualawlibrary
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:ChanRoblesVirtualawlibrary
459 | P a g
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"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:ChanRoblesVirtualawlibrary
"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.virtuallawlibrary
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
460 | P a g
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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:ChanRoblesVirtualawlibrary
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:ChanRoblesVirtualawlibrary
"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."
461 | P a g
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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:chanRoblesvirtualLawlibrary
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. uallawlibrary
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
462 | P a g
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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:ChanRoblesVirtualawlibrary
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.
463 | P a g
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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,
464 | P a g
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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:Cha
"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
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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
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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:ChanR
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
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
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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.

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
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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
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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:ChanRoblesVirtualawlibrary
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
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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:ChanRoblesVirtualawlibrary
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.blesvirtuallawlibrary
Finally, the Court determined the existence of an employer-employee relationship

between the parties therein considering that the contract of service between Coca-Cola
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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
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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
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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
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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:ChanRoblesVirtualawlibrary
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]
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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
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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.
1. NESTLE PHILIPPINES, INC., Petitioner, v.BENNY A. PUEDAN, JR., JAYFER

D. LIMBO, BRODNEY N. AVILA, ARTHUR C. AQUINO, RYAN A. MIRANDA,
RONALD R. ALAVE, JOHNNY A. DIMAYA, MARLON B. DELOS REYES,
ANGELITO R. CORDOVA, EDGAR S. BARRUGA, CAMILO B. CORDOVA,
JR., JEFFRY B. LANGUISAN, EDISON U. VILLAPANDO, JHEIRNEY S.
REMOLIN, MARY LUZ A. MACATALAD,* JENALYN M. GAMUROT, DENNIS
G. BAWAG, RAQUEL A. ABELLERA, AND RICANDRO G. GUATNO, JR.,
Respondent.
G.R. No. 220617, January 30, 2017
Facts:
The instant case arose from an amendedcomplaint dated July 6, 2012 for illegal
dismissal, damages, and attorney's fees filed by respondents against, inter alia,
ODSI and NPI. Respondents alleged that on various dates, ODSI and NPI hired
them to sell various NPI products in the assigned covered area. After some time,
respondents demanded that they be considered regular employees of NPI, but
they were directed to sign contracts of employment with ODSI instead. When
respondents refused to comply with such directives, NPI and ODSI terminated
them from their position. Thus, they were constrained to file the complaint,
claiming that: (a) ODSI is a labor-only contractor and, thus, they should be
deemed regular employees of NPI; and (b) there was no just or authorized cause
for their dismissal.
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Issue:
Whether or not ODSI is a labor-only contractor of NPI, and consequently, NPI is
respondents' true employer and, thus, deemed jointly and severally liable with
ODSI for respondents' monetary claims.
Ruling:
No.
A closer examination of the Distributorship Agreement reveals that the

relationship of NPI and ODSI is not that of a principal and a contractor
(regardless of whether labor-only or independent), but that of a seller and a
buyer/re-seller. As stipulated in the Distributorship Agreement, NPI agreed to
sell its products to ODSI at discounted prices, which in turn will be re-sold to
identified customers, ensuring in the process the integrity and quality of the said
products based on the standards agreed upon by the parties. As aptly explained
by NPI, the goods it manufactures are distributed to the market through various
distributors, e.g., ODSI, that in turn, re-sell the same to designated outlets
through its own employees such as the respondents. Therefore, the reselling
activities allegedly performed by the respondents properly pertain to ODSI,
whose principal business consists of the "buying, selling, distributing, and
marketing goods and commodities of every kind" and "[entering] into all kinds
of contracts for the acquisition of such goods [and commodities]."
Thus, contrary to the CA's findings, the aforementioned stipulations in the

Distributorship Agreement hardly demonstrate control on the part of NPI over
the means and methods by which ODSI performs its business, nor were they
intended to dictate how ODSI shall conduct its business as a distributor.
Otherwise stated, the stipulations in the Distributorship Agreement do not
operate to control or fix the methodology on how ODSI should do its business as
a distributor of NPI products, but merely provide rules of conduct or guidelines
towards the achievement of a mutually desired result - which in this case is the
sale of NPI products to the end consumer. In Steelcase, Inc. v. Design
International Selections, Inc., the Court held that the imposition of minimum
standards concerning sales, marketing, finance and operations are nothing more
than an exercise of sound business practice to increase sales and maximize
profits, to wit:
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Finally, both the CA and DISI rely heavily on the Dealer Performance
Expectation required by Steelcase of its distributors to prove that DISI
was not functioning independently from Steelcase because the same
imposed certain conditions pertaining to business planning,
organizational structure, operational effectiveness and efficiency, and
financial stability. It is actually logical to expect that Steelcase, being one
of the major manufacturers of office systems furniture, would require its
dealers to meet several conditions for the grant and continuation of a
distributorship agreement. The imposition of minimum standards
concerning sales, marketing, finance and operations is nothing
more than an exercise of sound business practice to increase sales
and maximize profits for the benefit of both Steelcase and its
distributors. For as long as these requirements do not impinge on a
distributor's independence, then there is nothing wrong with
placing reasonable expectations on them.57 (Emphasis and
Verily, it was only reasonable for NPI - it being a local arm of one of the largest
manufacturers of foods and grocery products worldwide - to require its
distributors, such as ODSI, to meet various conditions for the grant and
continuation of a distributorship agreement for as long as these conditions do
not control the means and methods on how ODSI does its distributorship
business, as shown in this case. This is to ensure the integrity and quality of the
products which will ultimately fall into the hands of the end consumer.
Thus, the foregoing circumstances show that ODSI was not a labor only
contractor of NPI; hence, the latter cannot be deemed the true employer of
respondents. As a consequence, NPI cannot be held jointly and severally liable to
ODSI's monetary obligations towards respondents.
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,
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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
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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
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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
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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
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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.
VIGILLA, ET. AL. vs. PHILIPPINE COLLEGE OF CRIMINOLOGY, INC.

G.R. No. 200094, June 10, 2013
J. Mendoza
In legitimate job contracting, the principal employer becomes jointly and severally
liable with the job contractor only for the payment of the employees' wages whenever the
contractor fails to pay the same. On the other hand, in labor-only contracting, the principal
employer becomes solidarily liable with the labor-only contractor for all the rightful claims
of the employees. In this case, the releases, waivers and quitclaims executed by employees
in favor of the labor-only contractor redounded to the benefit of the principal.
Facts:
PCCr is a non-stock educational institution, while the petitioners were janitors,

janitresses and supervisor under the supervision and control of the PCCr‘s Senior Vice
President for Administration. The petitioners, however, were made to understand, upon
application with respondent school, that they were under MBMSI, a corporation engaged
in providing janitorial services to clients. PCCr‘s Senior Vice President for Administration
is also the President and General Manager of MBMSI.
Sometime in 2008, PCCr discovered that the Certificate of Incorporation of

MBMSI had been revoked as of July 2, 2003. On March 16, 2009, PCCr, through its
President, citing the revocation, terminated the school‘s relationship with MBMSI,
resulting in the dismissal of the employees or maintenance personnel under MBMSI. In
September, 2009, the dismissed employees filed their respective complaints for illegal
dismissal and monetary benefits against MBMSI and PCCr. In their complaints, they
alleged that it was the school, not MBMSI, which was their real employer because (1)
MBMSI‘s certification had been revoked; (2) PCCr had direct control over MBMSI‘s
operations and (3)the selection and hiring of employees were undertaken by PCCr. On
the other hand, PCCr contended that PCCr could not have illegally dismissed the
complainants because it was not their direct employer. On September 11, 2009, PCCr
submitted several documents before the LA, including releases, waivers and quitclaims
in favor of MBMSI executed by the petitioners to prove that they were employees of
MBMSI and not PCCr.
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Issue:
1. Whether or not MBMSI is solidarily liable with PCCr

2. Will the releases, waivers and quitclaims in favor of MBMSI redound to the benefit
of PCCr
Ruling:
The releases, waivers and quitclaims executed by petitioners in favor of MBMSI

redounded to the benefit of PCCr pursuant to Article 1217 of the New Civil Code. The
reason is that MBMSI is solidarily liable with the respondents for the valid claims of
petitioners pursuant to Article 109 of the Labor Code. As correctly pointed out by the
respondents, the basis of the solidary liability of the principal with those engaged in
labor-only contracting is the last paragraph of Article 106 of the Labor Code, which in
part provides: “In such cases [labor-only contracting], the person or intermediary shall be
considered merely as an agent of the employer who shall be responsible to the worker in the
same manner and extent as if the latter were directly employed by him.”
Section 19 of D.O. No. 18-02 issued by the DOLE, which was still in effect at the
time of the promulgation of the subject decision and resolution, interprets Article 106 of
the Labor Code in this wise:
“Section 19. Solidary liability. The principal shall be deemed as the direct employer
of the contractual employees and therefore, solidarily liable with the contractor or
subcontractor for whatever monetary claims the contractual employees may have against
the former in the case of violations as provided for in Sections 5 (Labor- Only contracting),
6 (Prohibitions), 8 (Rights of Contractual Employees) and 16 (Delisting) of these Rules. In
addition, the principal shall also be solidarily liable in case the contract between the
principal and contractor or subcontractor is preterminated for reasons not attributable to
the fault of the contractor or subcontractor.
Considering that MBMSI, as the labor-only contractor, is solidarily liable with the
respondents, as the principal employer, then the respondents‘ solidary liability was
already expunged by virtue of the releases, waivers and quitclaims executed by each of
the petitioners in favor of MBMSI pursuant to Article 1217 of the Civil Code which
provides that “payment made by one of the solidary debtors extinguishes the obligation.
In light of these conclusions, the Court holds that the releases, waivers and
quitclaims executed by petitioners in favor of MBMSI redounded to the respondents'
benefit. The liabilities of the respondents to petitioners are now deemed extinguished.
The Court cannot allow petitioners to reap the benefits given to them by MBMSI in
exchange for the releases, waivers and quitclaims and, again, claim the same benefits
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from PCCr. While it is the duty of the courts to prevent the exploitation of employees, it
also behooves the courts to protect the sanctity of contracts that do not contravene the
law. The law in protecting the rights of the laborer authorizes neither oppression nor
self-destruction of the employer. While the Constitution is committed to the policy of
social justice and the protection of the working class, it should not be supposed that every
labor dispute will be automatically decided in favor of labor. Management also has its
own rights, which, as such, are entitled to respect and enforcement in the interest of
simple fair play. Out of its concern for those with less privileges in life, the Court has
inclined more often than not toward the worker and upheld his cause in his conflicts
with the employer. Such favoritism, however, has not blinded the Court 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.
DISMISSAL FROM EMPLOYMENT

Marina's Creation Enterprises and Jerry B. Alfonso vs. Romeo V. Ancheta
G.R. No. 218333
December 07, 2016
Facts:
In January 2010, Marina hired respondent Romeo V. Ancheta (Ancheta) as a sole attacher
in Marina. In March 2011, Ancheta suffered an intra-cranial hemorrhage (stroke) and was
placed under home care. On 12 May 2011, Ancheta suffered a second stroke and was
confined at St. Victoria Hospital in Marikina City for four days. On 26 May 2011, Ancheta
filed a Sickness Notification with the Social Security System (SSS) and was paid sickness
benefits in the amount of Eight Thousand One Hundred Pesos (P8,100). The physician
who physically examined Ancheta stated that Ancheta would be fit to resume work after
ninety (90) days or on 12 August 2011.4
On 13 August 2011, Ancheta reported for work. Marina, however, wanted Ancheta to
submit a new medical certificate before he could resume his work in Marina. Ancheta
did not comply and was not able to resume his work in Marina. On 8 November 2011,
Ancheta filed a complaint with the Labor Arbiter against Marina and its registered owner
Jerry B. Alfonso for illegal dismissal and non-payment of separation pay.
Issue:
Whether or not Ancheta was illegally dismissed.
Ruling:
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Yes.
Article 280 of the Labor Code provides for the two types of regular employees, to wit: (1)
employees who have been engaged to perform activities which are usually necessary or
desirable in the usual business or trade of the employer, and (2) employees who have
rendered at least one year of service, whether such service is continuous or broken, with
respect to the activity in which they are employed. In De Leon v. National Labor Relations
Commission, this Court held that the test of determining the regular status of an
employee is whether the employee performs work which 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. Also, 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 the activity to the business.
Applying Article 280 of the Labor Code, Ancheta was a regular employee of Marina.
Ancheta, who was working in Marina as a sole attacher, was performing work that was
usually necessary or desirable in the usual business or trade of Marina which was engaged
in the business of making shoes and bags. Moreover, Ancheta had been performing work
as a sole attacher in Marina since January 2010 up to March 2011 when he suffered his first
stroke. Thus, Ancheta had acquired regular employment status by performing work in
Marina for at least one year.
In its petition, Marina argues that the company's action of requiring Ancheta to undergo
a medica1 examination and to submit a medical certificate was a valid exercise of
management prerogative. Marina's contention is not correct. Article 279 of the Labor
Code provides: "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. x x x."
Since Ancheta was a regular employee of Marina, Ancheta's employment can only be
terminated by Marina based on just or authorized causes provided in the Labor Code. In
its position paper, Marina admitted that the company had refused to give Ancheta work
assignments until Ancheta submitted a new medical certificate. It is Marina's position
that Ancheta's employment would not continue if Ancheta would not submit a new
medical certificate. Marina's action in refusing to accept Ancheta notwithstanding the
medical certificate attached to Ancheta's SSS Sickness Notification stating that Ancheta
was physically fit to resume his work in Marina on 12 August 2011 amounts to an illegal
dismissal of Ancheta.
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The Implementing Rules of the Labor Code impose upon the employer the duty not to
terminate an employee until there is a certification by a competent public health
authority that the employee's disease is of such nature or at such a stage that it cannot
be cured within a period of six months even with proper medical treatment. In this case,
Marina terminated Ancheta from employment without seeking a prior certification from
a competent public health authority that Ancheta's disease is of such nature or at such a
stage that it cannot be cured within a period of six months even with proper medical
treatment. Hence, Ancheta was illegally dismissed by Marina.
Oasis Park Hotel vs. Leslee G. Navaluna

G.R. No. 197191
November 21, 2016
Facts:
Respondents, believing that they were not being accorded the labor standard benefits for
regular employees, filed on August 28, 2008 a complaint for violation of labor standard
laws against petitioner and/or the spouses Jean and William Victor (also called Bill)
Percy, President and Vice President, respectively, of petitioner, before the Department
of Labor and Employment (DOLE), docketed as NCROO-MFO-0809-IS-004.
Respondents, though, continued reporting for work, confident that they were merely
exercising their constitutional rights.
On September 17, 2008, petitioner issued a similarly worded Notice to Explain and
Preventive Suspension to each respondent. The Notice required respondents to submit
within five days from notice their written explanation on why they should not be subject
to disciplinary action or their services terminated for the following alleged offenses:
a. Serious Misconduct and Willful Breach of the trust reposed upon you by management,
specifically when you, together with [names of the other co-respondents], conspired
among yourselves to sabotage the operations of the hotel by committing the following
acts:
1. By being moody and miserable in dealing with the hotel's customers;

2. By intentional "slowdown" in the performance of your duties;
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b. Serious Misconduct, specifically by breeding contempt and fostering discontent among
your co-workers through rumor mongering, discourtesy and crude attitude towards
management.
Respondents individually submitted their written explanations to refute the charges

against them, but did not attend the administrative hearing. On October 16, 2008,
petitioner issued to each respondent a written Notice of Termination.
Issue:
Whether or not respondents were illegally dismissed
Ruling:
Yes.
The dismissal of respondents may be sustained only if shown to have been made for a
just and authorized cause and with due process; and that the burden of proving that the
termination was for a valid or authorized cause rests upon the employer.
Time and again, the Court has ruled that in illegal dismissal cases, the onus of proving
that the employee was not dismissed or if dismissed, 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. The petitioner must not only rely on the weakness
of the respondents' evidence, but must stand on the merits of its own defense. A party
alleging a critical fact must support his allegation with substantial evidence, for any
decision based on unsubstantiated allegation and unreliable documentary evidence
cannot stand, as it will offend due process.
Petitioner was unable to submit substantial evidence that respondents actually

committed serious misconduct and wilful breach of trust to justify the respondents'
dismissal from employment. Initially, there were only the self-serving and
unsubstantiated allegations of petitioner and the spouses Percy. Subsequently, petitioner
and the spouses Percy attached to the Sur-Rejoinder they submitted to the Labor Arbiter
on August 18, 2009 "newly discovered evidence," i.e., the affidavits of other hotel
employees to establish respondents' guilt. The Court agrees with the observation of
the NLRC that such affidavits, belatedly executed by the hotel employees almost a year
after respondents' dismissal on October 16, 2008, deserve little weight and credence for
these were non-existent at the time petitioner conducted its alleged investigation of the
charges against respondents and could not have been the basis for respondents'
dismissal. Moreover, the Court cannot tum a blind eye to the very short period between
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respondents' filing of their complaint before the DOLE on August 28, 2008 and the
issuance by petitioner to respondents of the Notices to Explain and Preventive
Suspension on September 17, 2008 and Notices of Termination on October 16, 2008,
giving rise to the reasonable belief that petitioner administratively charged and dismissed
respondents as retaliation for respondents' filing of their complaint before the DOLE.
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
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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.
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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.
Coca-Cola Bottlers Philippines, Inc., et al. vs. IBM Local I, et al.
G.R. No. 169967
November 23, 2016
Facts:
Sangalang and Nacpil were hired by CCBPI on July 1, 1983 and July 16, 1972, respectively,
as assistant syrupmen. They were assigned at the syrup room production department of
CCBPI's San Fernando City, Pampanga plant.
As a nationwide company practice, the duty of dumping caps/crowns belonged to the

assistant syrupmen. In CCBPI's San Fernando City plant, however, this activity was
passed on to the utility men sometime in 1982. After the positions of utility men were
abolished, CCBPI engaged the services of independent contractors to perform the said
activity and other allied services.
On July 13, 2000, Quality Control Superintendent Angel T. Labao and Process Supervisor
Jose P. Diaz held a meeting with the assistant syrupmen to advise the concerned
employees of the management's decision to revert the duty of dumping caps/crowns to
the assistant syrupmen which was supposed to be among the duties and responsibilities
incumbent in said position in all of CCBPI's plants. The employees concerned, however,
suggested that CCBPI instead regularize the contractual employees who were performing
the dumping task because they feared that they might be held responsible for damages
that CCBPI may suffer in carrying out two important tasks of production, namely, the
preparation of syrup and dumping caps/crown at the cap bin.
On August 16, 2000, another meeting was held to notify the assistant syrupmen that the
proposed dumping activity was within their job description. The assistant syrupmen were
likewise informed that a dry run will be held on August 17, 2000 and its full
implementation shall commence on August 21, 2000. The following day after the dry run,
CCBPI issued a Memorandum containing the dumping activity schedule which was sent
to and received by the concerned employees, including the complainants.
On August 22, 2000, Line 1 Production Supervisor Jovir Tomanan sent a Memorandum to
the management to report that the complainants refused to comply with CCBPI's order
pertaining to the dumping of caps/crown on the ground that the same was not part of
their responsibilities.
On the same day, CCBPI immediately sent a Notice to Explain to the complainants,
requiring them to explain in writing why no disciplinary action should be imposed
against them for violating CCBPI's Code of Disciplinary Rules and Regulation (Code of
Discipline).
On August 23, 2000, the complainants did not again perform the dumping activity by
refusing to accept the key to the dumping area when the Line 1 Production Supervisor on
duty, Edgar M. Reyes, handed it to them.
On the same day, CCBPI issued a Notice of Investigation to the complainants for
violation of Section 22, Rule 003-85 of CCBPI's Code of Discipline on August 21, 2000.
Meanwhile, on August 24, 2000, the complainants were served a second Notice to
Explain for violation of the same Code of Discipline's provision for their failure to
perform the dumping activity on August 23, 2000.
After review and deliberations, CCBPI issued on September 22, 2000 an Inter-Office
Memorandum, where it found the complainants guilty of the offenses charged and meted
a penalty of dismissal effective on September 25, 2000. Consequently, the complainants
filed a Complaint for illegal dismissal where they asked, among others, to be reinstated
to their former positions.
Issues:
a. Whether or not complainants' refusal to perform the additional duties of dumping
caps/crowns is a single continuous act which constitutes only a single offense of
insubordination.
b. Whether or not complaints’ dismissal for insubordination is illegal.
Ruling:
a. Yes.
The CA correctly ruled that the failure of the complainants to perform their additional
assigned task on three (3) separate instances constitutes merely a single offense. The
Court quotes:
We take notice of the company's efforts to comply with the two-notice requirement that
would otherwise validate a dismissal from employment by its act of serving upon [the
complainants] three (3) notices requiring them to explain the commission of three (3)
alleged acts of insubordination committed on three (3) separate dates. But bearing in
mind the constitutionally enshrined mandate to afford protection to labor, this Court
finds that the refusal of [the complainants] to abide by the schedule of dumping
caps/crowns on separate dates constitutes only a single continued defiance of the
company's lawful order. The circumstances in this case show that although [the
complainants) refused to carry out the task on three separate dates, it must be noted that
what they were, in fact, rejecting was the new activity which they truly believed was not
part of their job description. (Emphasis ours)
Moreover, the records of the case clearly show that what the complainants opposed was
the implementation of the additional task of dumping caps/crowns given to the assistant
syrupmen and not the schedule of the dumping activity. As it is, their continuous refusal
to perform such additional task merely translates to one single offense, i.e. the
performance of the dumping activity. This is even supported by the fact that the
complainants did not even attempt to perform the dumping activity since the start of its
implementation.
b. Yes.
In Bascon v. CA, this Court outlines the elements of gross insubordination as follows:
As regards the appellate court's finding that petitioners were justly terminated for gross
insubordination or willful disobedience, Article 282 of the Labor Code provides in part:
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.
However, willful disobedience of the employer's lawful orders, as a just cause for
dismissal of an employee, envisages 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. (Emphasis ours)
On the first requisite, an examination of the position description for the assistant
syrupmen clearly indicates that the additional tasks and duties allowed to be given to the
employees are limited to the performance of activities related to the responsibilities of
assistant syrupmen. In the present case, the other duties and responsibilities of the
assistant syrupmen, which CCBPI did not controvert, refer to syrup preparation, tanks
sanitation, hatching of syrup, slow pouring of concentrates, maintenance of the plain and
flavored syrup room, withdrawal of concentrates, and any work/job inside the plain and
flavored syrup room. Clearly, these additional responsibilities mainly refer to works
related to the syrup preparation and not to dumping caps/crowns.
The second requisite is also lacking in the present case. The refusal of the complainants
was not without basis. According to them, their apprehensions to perform the additional
task were based on their legitimate fear of handling two equally critical and sensitive
positions. Apparently, their behavior did not constitute the wrongful and perverse
attitude that would sanction their dismissal. The surrounding circumstances indicate
that the complainants were motivated by their honest belief that the Memorandum was
indeed unlawful and unreasonable.
In sum, the Court agrees that the complainants were indeed bound to obey the lawful
orders of CCBPI, but only as long as these pertain to the duties as indicated in their
position description. The order to perform the additional task of dumping caps/crowns,
however, while being lawful, is not part of their duties as assistant syrupmen.
Gerino Yukit, et al. vs. Tritran, Inc., et al.

G.R. No. 184841
November 21, 2016
Facts:
Petitioners Danilo Reyes, Rodrigo S. Sumilang, Leodegario O. Rosales, Mario R. Melarpis,
Marcelo R. Ocon, Dennis V. Bathan, Bernardo S. Magnaye, Lorenzo U. Martinez, Antonio
M. Laderes, Sofio de los Reyes Baon, Mario R. Miguel, Edgrado N. Macalla, Jr., Alejandro
Cueto, Virgilio Ringor and Jason R. Barte were formerly employed as drivers and
conductors of Tritran.
On 26 May 2004, Tritran sent a Notice of Closure/Cessation of Business to the Regional

Director, Regional Office No. IV of the Department of Labor and Employment (DOLE
Regional Office), citing irreversible business losses to justify the permanent closure of
the establishment. Despite its financial condition, however, Tritran undertook to pay
separation benefits to its employees.
A few months earlier, Tritran had informed the DOLE Regional Office of its decision to
temporarily close the establishment and cease operations effective 15 January 2004. The
decision was made after the company had laid off a total of 114 employees in
2003 pursuant to a retrenchment program implemented to cut down costs. It cited
financial reverses as the reason for both the temporary closure and the retrenchment.
Issue:
Whether or not petitioners were validly dismissed for an authorized cause.
Ruling:
Yes.
It is settled that employers can lawfully close their establishments at any time and for
any reason. The law considers the decision to close and cease business operations as a
management prerogative that courts cannot interfere with. Our review of this case is
therefore limited to a determination of whether the closure was made in good faith to
advance the employer's interest, and not for the purpose of circumventing the rights of
the employees.
In this case, the Court agrees with the conclusion of the CA and the NLRC that the closure
of Tritran was legitimate, having been brought about by serious business losses as shown
in the company's AFS.
We have consistently ruled that a company's economic status may be established

through the submission of financial statements. If prepared by independent external
auditors, these statements are particularly entitled to weight and credence.
Proceeding from the conclusion that the closure of Tritran was carried out for legitimate
reasons, this Court affirms the validity of the dismissal of petitioners from employment.
Article 283 of the Labor Code expressly sanctions termination of employment due to
closure of establishment, subject to certain notice requirements. If the closure is not due
to serious business losses or financial reverses, the company is likewise required to grant
separation benefits to dismissed employees.
Here, Tritran's compliance with the notice requirement under the Labor Code has been
sufficiently proven. The company sent a written notice to its workers at least one month
prior to the effective date of its closure. It also informed the DOLE Regional Office of the
intended cessation of operations within the deadline.
Since the closure of Tritran was due to serious business losses, petitioners would
ordinarily not be entitled to separation benefits under Article 283. However, the Court
notes that the company voluntarily obligated itself to pay severance benefits to the
employees, notwithstanding its financial condition. In its letter to the DOLE Regional
Office and the written notices it sent to its workers, Tritran expressly promised to pay
separation benefits to the employees, less their actual accountabilities with the company.
In fact, it repeatedly alleged that it had paid its other employees these benefits and
offered the same remuneration to petitioners, as shown by photocopies of the check
vouchers prepared in the latter's name.
We likewise note that the undertaking to pay severance benefits was made to all affected
workers and relayed to the DOLE Regional Office even prior to the filing of this case.
Consequently, this promise must be considered a binding commitment, and not a mere
settlement offer.
Having voluntarily assumed the obligation to pay separation benefits to its terminated
employees, Tritran must now fulfill its obligation.
Interadent Zahntechnik Philippines, Inc., Bernardino G. Bantegui, Jr. and Sonia

J. Grandea vs. Rebecca F. Simbillo
G.R. No. 207315
November 23, 2016
Facts:
On July 23, 2010, Interadent sought a company-wide implementation of the following
security measures: body frisking and bag/personal items inspection of all employees
upon ingress and egress of office, disconnection of all USB ports and prohibition of
cellular phone usage. The immediate implementation of these security procedures was
brought about by an alleged leakage of security information uncovered by Interadent's
external auditors.
On July 28, 2010, upon the directive of Bantegui, all network and internet connections in
Interadent's Accounting Department were removed and disabled. Simbillo's electronic
mail (email) account was likewise suspended.
On July 29, 2010, petitioners served Simbillo a Memorandum (Notice to Explain)

requiring her to submit a written explanation and to attend an administrative hearing on
August 2, 2010, regarding a message she posted on her Facebook account "referring to
company concerns with the Bureau of Internal Revenue (BIR) and insulting statements
against a co-worker." In the Notice to Explain, Simbillo was reminded that as Treasurer,
as well as Finance and Accounting Manager, he should observe the highest degree of
confidentiality in handling sensitive information. She was preventively suspended for
seven days effective July 29, 2010 to August 6, 2010.
On the following day, Simbillo, through counsel, wrote a reply-letter arguing that she
was already constructively dismissed even prior to her receipt of the Notice to Explain
considering the discriminatory acts committed by petitioners starting July 23, 2010 when
certain security procedures were directed exclusively and solely against her. Simbillo
claimed that the Notice to Explain was defective and was only used to disguise the intent
to dismiss her; hence there was no need for her to submit an answer or attend the
hearing. Simbillo further asserted that she committed no violation of any rule or law
relative to the message she posted on her personal and private Facebook account that
would justify any disciplinary action.
In a letter dated August 6, 2010, petitioners extended Simbillo's suspension up to August

25, 2010 in view of her failure to submit a written explanation and to attend the scheduled
hearing. In a reply-letter dated August 9, 2010, Simbillo reiterated her claim of
constructive dismissal and that there was no need for her to answer and attend the
hearing.
On August 9, 2010, Simbillo filed with the Labor Arbiter a Complaint for constructive
illegal dismissal, non-payment of service incentive leave pay, 13th month pay, illegal
suspension, claims for moral and exemplary damages and attorney's fees against
petitioners.
On August 24, 2010, petitioners issued a Second Notice informing Simbillo of her
termination from service effective August 25, 2010 on the ground of loss of trust and
confidence. Petitioners found Simbillo to have disclosed sensitive and confidential
information when she posted on her Facebook account on July 15, 2010
Issue:
Whether or not Simbillo was validly dismissed.
Ruling:
No.
As a managerial employee, the existence of a basis for believing that Simbillo has
breached the trust of petitioners justifies her dismissal. However, to be a valid ground,
loss of trust and confidence must be based on willful breach of trust, that is, done
intentionally, knowingly and purposely, without justifiable excuse, as distinguished from
an act done carelessly, thoughtlessly, heedlessly, or inadvertently.
In this case, the act alleged to have caused the loss of trust and confidence of petitioners
in Simbillo was her Facebook post which supposedly suggests that Interadent was being
"feasted on" by the BIR and also contains insulting statements against a co-worker and
hence has compromised the reputation of the company. According to petitioners, there
was disclosure of confidential information that gives the impression that Interadent is
under investigation by the BIR for irregular transactions. However, we agree with the
CA's observation that the Facebook entry did not contain any corporate record or any
confidential information. Otherwise stated, there was really no actual leakage of
information. No company information or corporate record was divulged by Simbillo.
Simbillo's failure to substantiate her claim that the Facebook entry was posted for a friend
who consulted her on a predicament she has with her company and that the term "b_i_r_"
represents ''bwitre" will not weaken her case against petitioners. It must be emphasized
at this point that in illegal dismissal cases, the burden of proof is upon the employer to
show that the employee's dismissal was for a valid cause. ''The employer's case succeeds
or fails on the strength of its evidence and not on the weakness of that adduced by the
employee, in keeping with the principle that the scales of justice should be tilted in favor
of the latter in case of doubt in the evidence presented by them." The Facebook entry did
not mention any specific name of employer/company/ government agency or person.
Contrary to petitioners' insistence, the intended subject matter was not clearly
identifiable. As acknowledged by petitioners themselves, Simbillo's Facebook account
contained a list of her former and present employers. If anything, the entry would merely
merit some suspicion on the part of Interadent being the present employer, but it would
be far-fetched to conclude that Interadent may be involved in anomalous transactions
with the BIR. Clearly, petitioners' theory was based on mere speculations.
If at all, Simbillo can only be said to have acted "carelessly, thoughtlessly, heedlessly or
inadvertently'' in making such a comment on Facebook; however, such would not
amount to loss of trust and confidence as to justify the termination of her employment.
When the breach of trust or loss of confidence conjectured upon is not borne by clearly
established facts, as in this case, such dismissal on the ground of loss of trust and
confidence cannot be upheld.
Elmer A. Apines vs. Elburg Shipmanagement Philippines, Inc. and/or Danilo F.

Venida
G.R. No. 202114
November 09, 2016
Facts:
Elburg Shipmanagement Philippines, Inc. (ESPI) is a local manning agency, with Danilo
F. Venida as representative (collectively, the respondents). Emirates Trading Agency LLC
(ETAL) is among ESPI's foreign principals.
On September 11, 2007, Apines boarded ETAL's ship, M/V Bandar TBN Trans Gulf, for an
eight-month engagement as bosun.
Apines claimed that sometime in the third week of September, a British surveyor was on
board the ship to inspect the cargo hold. Captain Glicerio Castañares (Capt. Castañares)
and Chief Mate Edgardo Llevares instructed Apines to put an apparatus on the top tank
of the cargo hold to check for possible leaks. Apines promptly complied with the order.
On his way up from the cargo hold, he accidentally stepped on scattered iron ore pellets
causing his left knee to strongly hit the steel railings of the ladder, and for him to slip
and fall.
According to Apines, despite a sprain and swollen ankle, he was able to stand up and
walk. When the pain eventually became intolerable, Apines informed Capt. Castañares
about his condition. Apines was given analgesics. However, his request to be brought to
the nearest port for medical attention remained unheeded since the ship was still on
voyage. Further, whenever the ship reached a port, Apines was assigned as a crane driver.
On November 10, 2007, Apines consulted with an orthopedic surgeon named Dr.
Abraham George (Dr. George) when the ship reached the Port of Bahrain.
In February of 2008, Apines once again complained of pain in his left knee and requested
for a medical check-up when the ship reached Jubail, Saudi Arabia.
Apines claimed that since the pain in his left knee even worsened, he requested for
immediate repatriation.
In Capt. Castañares' e-mail message sent to ESPI and Capt. Nicolo Terrei on February 5,
2008, it was stated that for a week already, Apines had been unable to work due to severe
pain on his left knee. Per request, Apines had a medical check up in Jubail, Saudi Arabia.
The doctor diagnosed Apines to be suffering from arthritis. Apines insisted that it was
not merely arthritis, but the doctor was not able to determine any other ailment.
Consequently, the doctor assessed Apines to be fit for sea duty. However, due to the
worsening pain and inability to work, Apines requested to be promptly sent home to be
able to consult with a doctor on his own account. Thus, Capt. Castañares sought Apines'
repatriation to be arranged even if there was still no reliever to take the latter's place.
ESPI, however, denied that Apines had an accidental injury while on board the ship. In
the Affidavit dated May 4, 2008 and e-mail message sent to ESPI on November 4, 2008,
Capt. Castañares stated that in the duration of Apines' stay in the ship from September
15, 2007 to February 6, 2008, there was no report that the latter had figured in an accident
or had sustained an injury.
Apines disembarked from the ship on February 7, 2008. The next day, Apines reported
to ESPI's office.
Issues:
a. Whether or not the Apines’ failure to comply with the 72-hour reporting requirement is
fatal and shall automatically result in the forfeiture of his disability benefits.
b. Whether or not Apines is entitled to total and permanent disability benefits.
Ruling:
a. No.
In Interorient Maritime Enterprises, Inc., et al. v. Remo, the Court emphatically ruled that
"the absence of a post-employment medical examination cannot be used to defeat
respondent's claim since the failure to subject the seafarer to this requirement was not due
to the seafarer's fault but to the inadvertence or deliberate refusal of petitioners."
Considering the above, the Court finds that Apines' failure to comply with the 72-hour
reportorial requirement for the conduct of a post-employment medical examination
under the 2ndparagraph of Section 20(B)(3) of the 2000 POEA-SEC cannot result in the
automatic forfeiture of his disability benefits.
Island Overseas Transport Corporation/Pine Crest Shipping Corporation/Capt. Emmanuel

L. Regio v. Armando M. Beja, on the other hand, is instructive anent when a seafarer may
be exempt from compliance with the procedure laid down in the 3rd paragraph of Section
20(B)(3) on the requirement of consultation with a third doctor, viz.:
A seafarer's compliance with such procedure presupposes that the company-designated

physician came up with an assessment as to his fitness or unfitness to work before the
expiration of the 120-day or 240-day periods. Alternatively put, absent a certification
from the company-designated physician, the seafarer had nothing to contest and
the law steps in to conclusively characterize his disability as total and
permanent. (Emphasis ours)
In the case at bar, ESPI's records relative to the occurrence of the injury and the events
leading to and following Apines' repatriation are conspicuously scarce. Apines claims that
he was outrightly denied medical assistance on the pretext that the doctors abroad had
found him fit to work. There was unfortunately no document to establish that denial.
Similarly, no convincing paper trail exists to prove that there was in fact a referral to a
company-designated doctor either for assessment or treatment. Sans referral to a
company-designated doctor, no post-employment medical examination can be
performed on Apines by ESPI. No written fit to work or disability grading certificate was
also issued. Without the assessment of the company-designated doctor, there was
nothing for Apines' own physicians to contest rendering consultation with a third doctor
agreed upon by the parties as superfluous.
Perforce, compliance with the requirements of the 3rd paragraph of Section 20(B)(3) on
obtaining the assessment of a third doctor in case of divergent opinions of the company-
designated doctor, on one hand, and the seafarer's own physician, on the other, cannot
be imposed upon Apines.
b. Yes.
Having sustained an accidental injury on board the vessel, Apines is entitled to disability
benefits. To what extent, the Court shall discuss below.
At the outset, it bears noting that Apines filed his Complaint before the NLRC on June 6,
2008, 121 days from his repatriation. Before that date, no disability rating of any kind had
been issued by the respondents.
In Beja, the Court clarified that:
[I]f the maritime compensation complaint was filed prior to October 6, 2008, the rule
on the 120-day period, during which the disability assessment should have been made
in accordance with Crystal Shipping, Inc. v. Natividad, that is, the doctrine then prevailing
before the promulgation of Vergara on October 6, 2008, stands; if, on the other hand, the
com.fslaint was filed from October 6, 2008 onwards, the 240-day rule applies. (Citation
omitted and emphasis ours)
In the instant case, Apines filed his Complaint on June 6, 2008. Hence, the 120-day period
rule stands. Due to ESPI's failure to issue a disability rating within the 120-day period, the
presumption of Apines' entitlement to total and permanent disability benefits arose.
In disability compensation claims, "what is important is that [the seafarer] was unable to
perform his customary workfor more than 120 days which constitutes permanent total
disability," since "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."
Apines underwent meniscectomy on July 1, 2008. Upon his discharge from the PGH on
July 4, 2008, Dr. Dizon prescribed home medications and recommended his continued
rehabilitation. Clearly, more than 120 days from repatriation, Apines' medical condition
remained unresolved, and he cannot yet perform, without serious discomfort and
inconvenience, the customary duties of a crane operator
Isidro Quebral, et al. vs. Angbus Construction, Inc. and Angelo Bustamante, Jr.
G.R. No. 221897, November 07, 2016
Facts:
Petitioners alleged that Angbus employed them as construction workers on various dates
from 2008 to 2011. They claimed to be regular employees since they were engaged to
perform tasks which are necessary and desirable to the usual business of Angbus, and
that they have rendered services to the latter's construction business for several years
already. They were, however, summarily dismissed from work on June 28, 2012 and July
14, 2012 without any just or authorized cause and due process. Thus, they filed
consolidated cases for illegal dismissal with prayer for reinstatement and payment of full
backwages, salary differential, ECOLA, 13th month pay, service incentive leave pay,
overtime and holiday pay, including moral and exemplary damages as well as attorney's
fees.
For their part, respondents maintained that petitioners were first employed by Angelfe
Management and Consultancy (Angelfe) for a one time project only. Two or three years
after the completion of the Angelfe project, they were then hired by Angbus, which is a
separate and distinct business entity from the former. Thus, petitioners were hired only
for two project employment contracts - one each with Angelfe and Angbus. Respondents
further stated that a long period of time between the first project employment and the
other intervened, which meant that petitioners were not re-hired repeatedly and
continuously.
However, respondents failed to present petitioners' employment contracts, payrolls, and

job application documents either at Angelfe or Angbus. They averred that these
documents were completely damaged by the flood caused by the "habagat" on August 6
to 12, 2012, as evinced by a Certification issued by the Chairman of Barangay Rosario,
Pasig City, (Brgy. Rosario Certification) where Angelfe and later, Angbus purportedly
held offices.
Issue:
Whether or not petitioners were validly dismissed considering that they were mere
project employees of Angbus.
Ruling:
No. Petitioners were not validly dismissed. They were, in fact, regular employees of
Angbus.
On the substantive aspect, Article 295 of the Labor Code, as amended, distinguishes a
project employee from a regular employee, to wit:
Art. 295 [280]. Regular and casual employment. - The provisions of written agreement to
the contrary notwithstanding and regardless of the oral agreement of the parties, an
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.
x x x x (Emphasis and underscoring supplied)
A project-based 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-based employees may be lawfully terminated at the completion of the project.
To safeguard the rights of workers against the arbitrary use of the word "project" to
preclude them from attaining regular status, jurisprudence provides that employers
claiming that their workers are project-based employees have the burden to prove that
these two requisites concur: (a) the employees were 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, Angbus failed to discharge this burden. Notably, Angbus did not state the
specific project or undertaking assigned to petitioners. As to the second requisite, not
only was Angbus unable to produce petitioners' employment contracts, it also failed to
present other evidence to show that it informed petitioners of the duration and scope of
their work.
The Court further observes that the CA placed unwarranted emphasis on the DOLE
Reports or termination reports submitted by Angbus as basis to rule that petitioners were
project employees.
Based on Section 2.2 of Department Order No. 19, Series of 1993, it is clear that the
submission of the termination report to the DOLE "may be considered" only as an
indicator of project employment. By the provision's tenor, the submission of this report,
by and of itself, is therefore not conclusive to confirm the status of the terminated
employees as project employees, especially in this case where there is a glaring absence
of evidence to prove that petitioners were assigned to carry out a specific project or
undertaking, and that they were informed of the duration and scope of their supposed
project engagement, which are, in fact, attendant to the first two (2) indicators of project
employment in the same DOLE issuance above-cited.
All told, since Angbus failed to discharge its burden to prove that petitioners were project
employees, the NLRC correctly ruled that they should be considered as regular
employees. Thus, the termination of petitioners' employment should have been for a just
or authorized cause, the lack of which, as in this case, amounts to illegal dismissal.
Jinky S. Sta. Isabel vs. Perla Compañia de Seguros, Inc.

G.R. No. 219430
November 07, 2016
Facts:
On February 27, 2006, Perla, a corporation engaged in the insurance business hired Sta.
Isabel as a Claims Adjuster with the task of handling and settling claims of Perla's Quezon
City Branch (QC Branch). Later on, Perla discovered that Sta. Isabel owned a separate
insurance agency known as JRS Insurance Agency (JRS). To avoid conflict of interests,
Perla instructed its QC Branch manager to: (a) allow the licensing of JRS as a licensed
agent of the QC Branch at the soonest time possible; and (b) forward all claims coded
under JRS to Perla's Claims Department at the Head Office for processing, evaluation,
and approval.
Pending the resolution of the JRS issue, Sta. Isabel received a Notice to Explain dated
October 19, 2012 why no disciplinary action should be taken against her for her poor
services towards the clients of PAIS Insurance Agency (PAIS), to which she submitted
her written explanation. On October 29, 2012, Sta. Isabel attended a meeting with Perla's
officers concerning the JRS and PAIS incidents. On even date, Perla issued a Report on
Status of the Hearing for Jinky Sta. Isabel wherein it resolved the foregoing incidents by
agreeing that: (a) claims under JRS shall be approved by the Head Office; and (b) claims
under PAIS will be transferred to the Head Office for processing.
On November 9, 2012, Sta. Isabel received another Notice to Explain why no disciplinary
action should be taken against her for her poor services towards the clients of Ricsons
Consultants and Insurance Brokers, Inc. (Ricsons). In view of Sta. Isabel's failure to
submit a written explanation and to appear before the Head Office to explain herself,
Perla issued a Final Written Warning dated November 22, 2012 to be more circumspect
with her claims servicing, with a stem admonition that "any repetition of the same
offense or any acts analogous to the foregoing shall be dealt with more severely and shall
warrant drastic disciplinary action including the penalty of Termination in order to
protect the interest of the company." On even date, Perla likewise issued a Final Directive
to Report to Head Office instructing Sta. Isabel to report to the Head Office and explain
her alleged refusal to receive the afore-cited Final Written Warning.
On November 26, 2012, Perla issued the following to Sta. Isabel: (a) a Notice to
Explain why no disciplinary action should be taken against her for failing to report to the
Head Office despite due notice; and (b) a Notice of Termination17 dismissing Sta. Isabel
from employment on the ground of insubordination.
Issue:
Whether or not Sta. Isabel was validly dismissed on the ground of insubordination.
Ruling:
No.
Since Sta. Isabel was actually dismissed on the ground of insubordination, there is a need
to determine whether or not there is sufficient basis to hold her guilty on such ground.
Insubordination or willful disobedience, is a just cause for termination of employment

listed under Article 297 (formerly Article 282) of the Labor Code.
Willful disobedience or insubordination, as a just cause for the dismissal of an employee,

necessitates the concurrence of at least two (2) requisites, namely: (a) the employee's
assailed conduct must have been willful, that is, characterized by a wrongful and perverse
attitude; and (b) 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, a plain reading of the Notice to Explain and Notice of Termination both
dated November 26, 2012 reveals that the charge of insubordination against Sta. Isabel
was grounded on her refusal to report to the Head Office despite due notice. While
Perla's directives for Sta. Isabel to report to the Head Office indeed appear to be
reasonable, lawful, and made known to the latter, it cannot be said that such directives
pertain to her duties as a Claims Adjuster, i.e., handling and settling claims of Perla's
Quezon City Branch, regardless of whether her refusal to heed them was actually willful
or not. The aforesaid directives, whether contained in the Notice to Explain dated
November 9, 2012 or the Final Directive to Report to Head Office dated November 22,
2012, all pertain to Perla's investigation regarding the Ricsons incident and, thus, were
issued in compliance with the requisites of procedural due process in administrative
cases. Otherwise stated, such directives to appear before the Head Office were for the
purpose of affording Sta. Isabel an opportunity to be heard regarding the Notice to
Explain dated November 9, 2012. As correctly pointed out by the labor tribunals, Sta.
Isabel's failure or refusal to comply with the foregoing directives should only be deemed
as a waiver of her right to procedural due process in connection with the Ricsons
incident, and is not tantamount to willful disobedience or insubordination
Universal Canning Inc., Ma. Lourdes Losaria and Engr. Rogelio A. Desosa vs.
Court of Appeals, et al.
G.R. No. 215047
November 23, 2016
Facts:
Petitioner Universal Canning Inc. is a domestic corporation duly authorized to engage in
business by Philippine laws. Petitioners Ma. Lourdes A. Losaria and Engr. Rogelio Desosa
are respectively employed by the company as its Personnel Officer and Plant Manager.
Respondents Dante M. Sarosal, Francisco Dumagal. Jr., Nelson E. Francisco, Elmer C.

Saromines and Samuel D. Coronel were employed by petitioner Universal Canning on
various capacities with wages ranging from P240.00 to P280.00 a day.
On 21 January 2009, respondents were caught by petitioner company's Purchasing

Officer, Falconieri Almazan, playing cards at the company's premises during working
hours. The incident was immediately reported by Almazan to the Personnel Officer, Ma.
Lourdes Losaria, who immediately conducted an investigation to determine the names
and of those who were involved in the gambling activities. On the same day, respondents
were placed under preventive investigation pending further investigation by a panel
indicated in a memorandum addressed to and duly received by the individuals
concerned. Under the same memorandum, respondents were required by the petitioner
to file their written explanation of the incident. Respondents complied with the directive.
In their letter-explanation dated 23 January 2009, respondents denied that they were
involved in gambling activities within the company's premises during work hours. It was
argued by the respondents that while indeed they were playing cards inside the company
premises, it cannot be considered gambling as there was no money involved and that it
took place during noon break.
On 9 February 2009, the investigation was conducted where respondents were

questioned regarding their participation in the 21 January 2009 activities inside the
company's premises. After the inquiry, the Investigating Officer found that respondents
were playing cards during working hours which is considered an infraction of the
company's rules and regulations.
On the basis of the Investigation Report, respondents were dismissed from employment
through a notice thereof dated 19 February 2016 which enumerated the grounds: (1)
taking part in a betting, gambling or any unauthorized game of chance inside the
company premises while on duty; and (2) for loss of trust and confidence. The
termination of respondents was reported by the petitioner to the Department of Labor
of Employment (DOLE) on 24 February 2009.
Issue:
Whether or not there was just cause for dismissing respondents from employment.
Ruling:
Yes.
It must be stressed at the onset that respondents were dismissed by petitioners for two
reasons: (1) for violation of company rules and regulations under Paragraph IV, Number
4 under Offenses Against Public Morals; and (2) for loss of trust and confidence. While
it is true that loss of trust and confidence alone could not stand as a ground for dismissal
in this case since respondents are rank and file employees who are not occupying
positions of trust and confidence, such is not the only ground, relied by the company in
terminating respondents' employment. Petitioner company also cited the infraction of
company rules and regulations, in addition to loss and trust of confidence. Infraction of
the company rules and regulation which is akin to serious misconduct is a just cause for
termination of employment recognized under Article 282 (a) of the Labor Code.
Misconduct is defined as an improper or wrong conduct. It is a transgression of some

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.
Here, there is no question that respondents were caught in the act of engaging in
gambling activities inside the workplace during work hours, a fact duly established
during the investigation conducted by the petitioner company and adopted by the labor
tribunals below. As a matter of fact, respondents never controverted their participation
in the gambling activities, but instead raised the defense that it took place during noon
break and that no stakes were involved; these claims even if were proven true, will
however not save the day for the respondents. The use of the company's time and
premises for gambling activities is a grave offense which warrants the penalty of dismissal
for it amounts to theft of the company's time and it is explicitly prohibited by the
company rules on the ground that it is against public morals.
Suffice it to state that an employee may be validly dismissed for violation of a reasonable
company rule or regulation adopted for the conduct of the company's business. It is the
recognized prerogative of the employer to transfer and reassign employees according to
the requirements of its business. For indeed, regulation of manpower by the company
clearly falls within the ambit of management prerogative. A valid exercise of management
prerogative is one which, among others, covers: work assignment, working methods,
time, supervision of workers, transfer of employees, work supervision, and the discipline,
dismissal and recall of workers. Except as provided for, or limited by special laws, an
employer is free to regulate, according to his own discretion and judgment, all aspects of
employment. As a general proposition, an employer has free reign over every aspect of
its business, including the dismissal of his employees as long as the exercise of its
management prerogative is done reasonably, in good faith, and in a manner not
otherwise intended to defeat or circumvent the rights of workers.
Mary Ann G. Venzon vs. ZAMECO II Electric Cooperative, Inc. and Engr. Fidel
Correa
G.R. No. 213934
November 09, 2016
Facts:
Petitioner Jose M. Gutierrez, Jr. was the Manager of Administrative and Personnel
Department of ZAMECO II and was hired on June 1, 2003. Petitioner Mary Ann Venzon
was the Manager of Member Service Department and had been with ZAMECO II since
January 21, 1996. Petitioner Eddie Gutierrez was a member of the Operation and
Disconnection Team and was hired on April 29, 2002. Petitioner Monaliza L. Cabal was
an accounting staff and started working at ZAMECO II on August 1, 2001.
In a Memorandum dated September 2, 2009, OIC-General Manager Engr. Alvin Farrales

designated petitioner Gutierrez, Jr. as Officer-in-Charge of the cooperative during his
official travel to Manila on September 3, 2009.35chanrobleslaw
On September, 3, 2009, the CDA authorities arrived in ZAMECO II to assume

management of the cooperative. This was opposed by the existing management of
ZAMECO II. The following day, September 4, 2009, Petitioner Gutierrez, Jr. issued a
Memorandum for and in behalf of Farrales directing the employees to proceed to the
main office in compliance with the directive of the CDA appointed officers. Thus, a
meeting was held on the same date at ZAMECO II's office in San Antonio led by CDA
representatives. Petitioners Gutierrez, Jr., Venzon and Gutierrez participated in the said
meeting. Also, several meetings were held which were attended by employees and
officers of ZAMECO II who allegedly defected to the side of CDA appointed officers.
Likewise, on September 4, 2009, petitioners Venzon, Gutierrez and Gutierrez, Jr. were
given separate memoranda by Engr. Farrales directing them to explain why no
disciplinary action should be taken against them for failure to report for work on the said
date and for violating the Company Code of Ethics and Discipline and the Employees
Code of Conduct. The charges against them were: (a) attending unauthorized meetings,
gatherings or assembly of employees; (b) abandonment of work or of assigned duties; (c)
misrepresentation or usurpation of functions; (d) giving unlawful orders that create
confusion and disorder; (e) rumor mongering or gossiping with intent to destroy the
reputation of the company or its officers and employees; and/or (f) any act conduct or
behavior not included in the above but which is prejudicial or detrimental to the
company or its employees and/or contrary to good order or discipline.
Incidentally, petitioner Gutierrez, Jr. had undergone medical treatment from September
8 to September 28, 2009. He submitted medical certificates but did not file any
application for sick leave. He, together with petitioner Gutierrez, did not submit any
explanation with regard to the above charges.
On September 11, 2009, petitioner Venzon answered the above charges. She explained
that effective September 3, 2009 when CDA had assumed jurisdiction over ZAMECO II,
after a serious discernment, she recognized only the officers appointed by the CDA, who
were the ones dismissed by the NEA, and Fidel Correa as the General Manager.
Petitioner Cabal stopped reporting for work starting September 13, 2009.
On September 18, 2009, Farrales issued a Memorandum to the security personnel to deny
entry to petitioners Gutierrez, Jr, Gutierrez and Venzon and four other persons including
Engr. Correa, and to not allow them to report for work.
On October 27, 2009, upon the recommendation of the IAC in a meeting on October 22,
2009, petitioners were dismissed from employment. The order of dismissal was served to
them on November 20, 2009 but they refused to receive the same.
Issue:
Whether or not petitioners were illegally dismissed from employment.
Ruling:
No.
Serious misconduct by the employee justifies the employer in terminating his or her
employment.
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 employees 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 the case at bar, General Manager Farrales, himself, designated petitioner Gutierrez, Jr.
as Officer-in-Charge of the cooperative during his official travel to Manila on September
3, 2009. But when the CDA authorities arrived in ZAMECO II to assume management of
the cooperative which was opposed by the existing management of ZAMECO II,
petitioner Gutierrez, Jr. issued a Memorandum, allegedly signed on behalf of Farrales,
directing the employees to proceed to the main office in compliance with the directive
of the CDA appointed officers. Hence, a meeting was held on the same date at the
cooperative's office in San Antonio led by CDA representatives. Petitioners Gutierrez, Jr.,
Venzon and Gutierrez participated in the said meeting.
Petitioners obviously aligned themselves with the former Board of Directors led by
Dominguez in trying to wrest control of the management of ZAMECO II. In deciding to
get involved in the power play, petitioners relinquished their duties as employees. They
defied the instructions and directives of the Interim Board of Directors as well as that of
the General Manager. Instead, they followed the instructions of the Board of Directors
and officers designated by the CDA. They even filed a civil action against Farrales and
the Interim Board of Directors.
Petitioners did not participate in the proceedings before the IAC because they did not
recognize its authority. It was the officers designated by the CDA whom they recognize.
Their acts definitely undermined the existence of the cooperative.
Under these factual premises, We cannot help but consider the petitioners' misconduct
to be of grave and aggravated character so that the cooperative was justified in imposing
the highest penalty available — dismissal. In ruling as We do now, We considered the
balancing between petitioners' tenurial rights and ZAMECO II's interests. Unfortunately
for the petitioners, in this balancing under the circumstances of the case, we have to rule
against their tenurial rights in favor of the employer's management rights.
Furthermore, Article 296(c) states that loss of trust and confidence in the employee is a
just cause for dismissal. But it will validate an employee's dismissal only upon compliance
with certain requirements, namely: (1) the employee concerned 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.
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.
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 employees
participation therein rendered him unworthy of trust and confidence demanded by his
position.
There are two classes o f positions of trust. First, 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 to other officers or members
of the managerial staff. The second class consists of the 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.
It is undisputed that at the time of their dismissal, the petitioners Gutierrez, Jr. and
Venson were holding managerial positions and greater fidelity and trust were expected
of them.Farrales even designated petitioner Gutierrez, Jr. as Officer-in-Charge of
ZAMECO II during his official travel to Manila. Their positions were unmistakably
imbued with trust and confidence as they were charged with the delicate task of
overseeing the operations of their divisions. As managers, a high degree of honesty and
responsibility, as compared with ordinary rank-and-file employees, were required and
expected of them.
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. Petitioners
Gutierrez, Jr. and Venson are not just charged with a misdeed, but with loss of trust and
confidence, a cause premised on the fact that petitioners Gutierrez, Jr. and Venzon hold
positions whose functions may only be performed by someone who enjoys the trust and
confidence of the 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.
As to the standards of procedural due process, the same were likewise observed in
effecting the petitioner's dismissal. Petitioners were given written memorandum to
inform them of the charges against them as well as notices of termination in accordance
with Section 2, Rule XIV, Book V of the Omnibus Rules Implementing the Labor Code.
Angelito R. Publico vs. Hospital Managers, Inc., et al.

G.R. No. 209086
October 17, 2016
Facts:
Publico was employed to work at CSMC in 1989, and was the hospital's Chief of Blood
Bank Section, Laboratory Department when he was dismissed from employment by HMI
in 2008.4The dismissal was founded on Publico's gross and/or habitual negligence, as
penalized under the following provisions of the HMTs Code of Discipline for employees,
and indicated in an inter-office memo dated March 19, 2008 that directed Publico to
answer the charges.
Prior to Publico's dismissal, HMI discovered incidents of unauthorized sale of blood and
apheresis units by laboratory personnel, who also issued fake receipts and failed to remit
payments to the hospital. When asked to explain his side on the issue, Publico denied
any participation in the anomalous transactions. He claimed to have known of the
incidents of unauthorized sale only when he was asked to participate in the investigation.
He further evaded any responsibility by claiming that while five employees were
investigated for the scheme, only one of them was under his supervision in the blood
bank section. He was also tasked to supervise only personnel assigned in the morning
shift, while the supposed unauthorized transactions happened during the night shift.
Further investigations conducted by HMTs Management Investigation Committee
eventually led to Publico's dismissal on May 9, 2008, through a Notice of Termination
served upon him.7 Feeling aggrieved, Publico charged the respondents with illegal
dismissal before the Labor Arbiter (LA).
Issue:
Whether or not Publico was illegally dismissed from employment.
Ruling:
No.
Under Article 282(b) of the Labor Code, an employer may terminate an employment on
the ground of "[g]ross and habitual neglect by the employee of his duties." In the instant
case, Publico was entrusted by HMI to take on the role of Chief, Blood Bank Section of
the Laboratory Department, and with this carried the reasonable expectation that he
would assiduously perform the demands of his position.
The anomalous transactions in the Blood Bank Section were found to have persisted for
almost two years.22 Had Publico been not negligent in the performance of his duties, the
wrongful dealings could have been prevented, or immediately discovered and rectified.
The excuses advanced by Publico to evade any liability for the acts of his personnel only
reinforce HMI's finding that he was negligent in the performance of his responsibilities
as Section Chief. Among these defenses, he insisted that: first, some of the wrongdoers
were not under his watch; second, the transactions happened during the night shift when
he supervised only those in the morning shift; and third, the questioned transactions
were not recorded in the log book.
Clearly from these defenses, Publico was careless in the performance of his
responsibilities. He remained unmindful of the extent of his obligations as Section Chief
Personnel supervision was only one of his several functions, all intended to ensure proper
and orderly operations within his department. These responsibilities included all matters
affecting the laboratory, such as workflow supervision, record management, equipment
and inventory control. He was duty-bound to monitor and supervise all equipment,
supplies, work, and personnel operating in his department, regardless of whether these
people were under his direct supervision and the shift when they reported for work.
In addition to the foregoing, Publico could not have simply relied on the laboratory log
book to monitor activities within his department, especially since the erring employees
would not have recorded their illegal activities, to be able to perpetuate the commission
thereof.
The foregoing circumstances show that Publico's neglect was gross and habitual. "Gross
negligence connotes want of care in the performance of one's duties. Habitual neglect
implies repeated failure to perform one's duties for a period of time, depending upon the
circumstances."
Additionally, it should be emphasized that the offense and liability of Publico were for
neglect of duties, which allowed the repeated commission of anomalous transactions in
his department. Contrary to the LA's and NLRC's reasons in finding insufficient ground
to support dismissal from employment, the liability of Publico did not depend on his
knowledge or direct participation in the wrongful sale of blood and apheresis units. Even
as the Court considers the inter-office memo sent by HMI to inform Publico of the
charges, references were on negligence and non-observance of operating policies and
procedures. The accusations pertained to his failure to perform his duties as a supervisor,
rather than his own participation in the unlawful sales.
Oyster Plaza Hotel, Rolito Go and Jennifer Ampel vs. Errol O. Melivo
G.R. No. 217455
October 05, 2016
Facts:
On October 22, 2009, respondent Errol O. Melivo (Melivo) filed before the NLRC a
Complaint for illegal dismissal with prayers for reinstatement and payment of back
wages, holiday pay, overtime pay, service incentive leave, and, 13th month pay against
petitioners Oyster Plaza Hotel (Oyster Plaza), Rolito Go (Go), and Jennifer
Ampel (Ampel).
The Summons, dated October 26, 2009, together with a copy of the complaint, was
served on the petitioners thru registered mail. The said summons ordered the petitioners
to appear before the Labor Arbiter (LA) for mandatory conciliation/mediation
conferences on November 23, 2009 and December 1, 2009. The registry return
receipt, dated November 27, 2009, showed that the summons and the copy of the
complaint were duly served. The petitioners, however, failed to appear during the
scheduled conferences. Thereafter, the case was set for formal hearing on January 14, 2010
and a notice of hearing was sent to the petitioners, requiring them to appear before the
LA and file their position paper, with a warning that failure to appear therein would be
construed as a waiver of the opportunity to be heard. The notice, however, was returned
unserved as there was no one to receive the same. The formal hearing was, thus, reset to
February 17, 2010, and a notice of hearing was again sent to the petitioners, wherein they
were reminded to file their position paper. The registry return receipt showed that the
said notice was received by a certain Charlie Miraña (Miraña) on January 25, 2010. At the
February 17, 2010 hearing, however, only Melivo appeared.
On even date, Melivo filed his Position Paper, alleging the following: that Oyster Plaza
was a business entity engaged in the business of hotel operation, under the
ownership/management of Go and Ampel; that in August 2008, Oyster Plaza hired him
as a trainee room boy; that in November 2008, Oyster Plaza hired him as a probationary
room boy and he was made to sign an employment contract but he was not furnished a
copy, that the said contract expired in March 2009 and his work ended; that on April 7,
2009, Oyster Plaza hired him again as a room boy, but without any employment contract
or document; and that in September 2009, his supervisor Ampel verbally told him that
his contract was expiring, thus, he must stop reporting for work.
For the last time, another notice of hearing12 for the March 24, 2010, was again sent to the
petitioners with a directive to file their position paper, but it was again returned
unserved. Hence, the case was submitted for decision ex parte.
Issue:
Whether or not Melivo was illegally dismissed.
Ruling:
Yes.
Probation is the period during which the employer may determine if the employee is
qualified for possible inclusion in the regular force. 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. An employee allowed to work beyond the
probationary period is deemed a regular employee.
In Holiday Inn Manila vs. NLRC (Holiday Inn), the Court considered therein
complainant's 3-week on-the-job training (OJT) period as her probationary employment
period. The Court explained that the complainant was certainly under observation
during her 3-week OJT such that if her services proved unsatisfactory, she could have
been dropped anytime during said period. On the other hand, when her services were
continued after her training, the employer in effect recognized that she had passed
probation and was qualified to be a regular employee. Thus, the Court ruled that the
complainant therein attained regular employment status when she was formally placed
under probation after her OJT.
The present case involves substantially the same factual considerations as that of Holiday
Inn. In this case, Melivo was first hired as a trainee in August 2008. His training lasted
for three (3) months. As a room boy, his performance was certainly under observation.
Thus, it can be reasonably deduced that Melivo's probationary employment actually
started in August 2008, at the same time he started working as a trainee. Therefore, when
he was re-hired as room boy after his training period sometime in November 2008 he
attained regular employment status.
Assuming arguendo that the 3-month training period could be considered a probationary
period, the conclusion would still be the same. It should be remembered that Melivo was
again employed as a room boy in November 2008 under probationary status for five (5)
months or until March 2009. Records would show that Melivo had completed his
probationary employment. Thus, when Oyster Plaza re-hired him for the third time on
April 7, 2009, he became its regular employee thereof.
The petitioners' contention that Melivo was hired as a project employee is untenable.
Under Article 280 of the Labor Code, as amended, a project employee is one 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. Here, the contract of employment failed to indicate the specific project or
undertaking for which Oyster Plaza sought Melivo's services. Moreover, as correctly
noted by the NLRC, the petitioners failed to submit a report of Melivo's termination to
the nearest public employment office, as required under Section 2 of D.O. No. 19.
As a regular employee, Melivo could only be dismissed for just or authorized causes after
affording him the procedural requirement of notice and hearing. The petitioners failed
to adduce evidence that Melivo's dismissal was for a just or authorized cause, or that he
was sufficiently notified and given opportunity to be heard why his employment should
not be terminated. Hence, Melivo's dismissal was illegal.
Ramil R. Valenzuela vs. Alexandra Mining and Oil Ventures, Inc. (AMOVI) and
Cesar E. Detera
G.R. No. 222419
October 05, 2016
Facts:
In his Position Paper, Valenzuela alleged that he was hired as a company driver of
AMOVI on January 12, 2008, with an eight-hour work shift from 8:00 a.m. to 5:00 p.m.
and with a monthly salary of P12,000.00. On June 15, 2013, after five years and five months
of service, he was told that he can no longer continue to work as there were no
forthcoming funds to pay for his salary.
For their part, the respondents alleged that Valenzuela was actually hired as a family
driver of the Deteras. They alleged, however, that the P12,000.00 monthly salary of
Valenzuela was charged to AMOVFs account for convenience. They averred that on June
15, 2013, Valenzuela informed Cesar's wife, Annlynn, that he was going home to his
province to visit his parents. Annlynn granted him leave but when she asked him whether
he can return for work the following Monday, Valenzuela told her that he would give her
a call. Come Monday, Valenzuela did not show up for work and did not also call to inform
the Deteras of the reason behind his absence. This caused them inconvenience as their
daughter's schooling has started and it was Valenzuela's responsibility to bring her to
and from school.
A week later, Valenzuela showed up at the Deteras' residence and informed them that he
was resigning and asked for his separation pay. To obviate further verbal altercation,
Annlynn agreed but asked him to submit a resignation letter. Ultimately, Annlynn told
him to make up his mind but Valenzuela just walked out and never returned.
In his Reply, Valenzuela emphasized that he did not just suffer to work for the company
but also drove for the members of the Detera family. He denied that he ever asked
permission to visit his parents in Bicol, as the Deteras knew that his parents had long
been dead. Moreover, the remains of his deceased parents were buried in Pateros. He
alleged that he actually reported for work on June 17, 2013, but was prevented by Cesar
who told him that his service is no longer needed as there were no funds forthcoming to
pay for his salary.
Issue:
Whether or not Valenzuela was illegally dismissed.
Ruling:
Yes.
It is noteworthy to emphasize that in all the pleadings submitted by Cesar before the LA,
NLRC and CA, he vigorously refuted the existence of an employer-employee relationship
between AMOVI and Valenzuela, and at the same time, presented himself as the real
employer of the latter. His argument was that Valenzuela was not a company driver but
a family driver of the Deteras.
The question regarding who may be deemed the real employer of Valenzuela had been
unanimously resolved and agreed by the LA, NLRC and the CA to be AMOVI. The labor
tribunals and the CA were all in accord that Valenzuela was an employee of AMOVI as
evidenced by the identification card and payslips stating the company as his employer.
Moreover, the CA held that, utilizing the four-fold test of employer-employee
relationship, the result would show that Valenzuela was under the control of AMOVI.
The CA, however, erred in holding that there was no evidence of dismissal as it is clear
from Cesar's own admission that Valenzuela was unceremoniously dismissed from
service. In all his pleadings, while claiming to be the real employer of Valenzuela, Cesar
impliedly admitted dismissing him from employment by repeatedly invoking Article 150
of the Labor Code to justify his action.
On the basis of the foregoing provision, Cesar asseverated that as a family driver,
Valenzuela's service may be terminated at will by his employer. Thus, there is implied
admission that he indeed terminated Valenzuela out of his own volition, without
sufficient ground and notice. Unfortunately for Cesar, the labor tribunals and the CA all
agreed that Valenzuela was a company employee and his admission on the fact of the
latter's dismissal only established that it was done without regard to substantive and
procedural due process.
Evidently, the respondents raised no valid ground to justify Valenzuela's dismissal. As

admitted by Cesar, Valenzuela was terminated at will. This was corroborated by
Valenzuela's claim that when he returned for work on June 17, 2013, he was simply told
that he can no longer continue to work as there were no funds forthcoming to pay off his
salary.
Further, the twin requirement of notice and hearing for a valid termination was not
observed by the respondents. Valenzuela was not at all informed of the ground of his
dismissal and was deprived the opportunity to explain his side. He was rashly dismissed
from service without a valid ground and the required notices.
A. Nate Casket Maker and/or Armando and Anely Nate vs. Elias V. Arango, et al.
G.R. No. 192282
October 05, 2016
Facts:
Petitioners Armando and Anely Nate are the owners/proprietors of A. Nate Casket
Maker. They employed respondents on various dates as carpenters, mascilladors and
painters in their casket-making business from 1998 until their alleged termination in
March 2007. Petitioners alleged in their Position Paper that respondents
are pakyaw workers who are paid per job order. Respondents are "stay-in" workers with
free board and lodging, but they would "always" drink, quarrel with each other on petty
things such that they could not accomplish the job orders on time. Hence, petitioners
would then be compelled to "contract out" to other workers for the job to be finished. On
February 3, 2007, they met with respondents in order to present a proposed employment
agreement which would change the existing pakyaw system to "contractual basis" and
would provide for vacation leave and sick leave pay and other benefits given to regular
employees. Petitioners alleged that the proposed employment agreement would be more
beneficial to respondents.
On the other hand, respondents alleged in their Position Paper, that they worked from
Monday to Saturday, from 7:00a.m. to 10:00 p.m., with no overtime pay and any monetary
benefits despite having claimed for such. On March 15, 2007, they were called by
petitioners and were made to sign a Contract of Employment with the following terms
and conditions: (1) they shall be working on contractual basis for a period of five months;
(2) renewal of employment contract after such period shall be on a case-to-case basis or
subject to respondents' efficiency and performance; (3) petitioners shall reserve the right
to terminate their employment should their performance fall below expectations or if the
conditions under which they were employed no longer exist; (4) their wages shall be on
a piece-rate basis; (5) in the performance of their tasks, they shall be obliged to strictly
follow their work schedules; (6) they shall not be eligible to avail of sick leave or vacation
leave, nor receive 13th month pay and/or bonuses, or any other benefits given to a regular
employee. Respondents then alleged that when they were adamant and eventually
refused to sign the contract, petitioners told them to go home because their employment
has been terminated.
Issue:
Whether or not respondents were illegally dismissed.
Ruling:
In termination cases, the burden of proving just and valid cause for dismissing an
employee from his employment rests upon the employer, and the latter's failure to do so
would result in a finding that the dismissal IS unjustified. Petitioners failed to discharge
this burden.
It must be emphasized that employers cannot seek refuge under whatever terms of the
agreement they had entered into with their employees. The law, in defining their
contractual relationship, does so, not necessarily or exclusively upon the terms of their
written or oral contract, but also on the basis of the nature of the work of employees who
had been called upon to perform. The law affords protection to an employee, and it will
not countenance any attempt to subvert its spirit and intent. A stipulation in an
agreement can be ignored as and when it is utilized to deprive the employee of his
security of tenure. The sheer inequality that characterizes employer employee relations,
where the scales generally tip against the employee, often scarcely provides him real and
better options.
A regular employment, whether it is one or not, is aptly gauged from the concurrence, or
the non-concurrence, of the following factors (a) the manner of selection and
engagement of the putative employee; (b) the mode of payment of wages; (c) the
presence or absence of the power of dismissal; and (d) the presence or absence of the
power to control the conduct of the putative employee or the power to control the
employee with respect to the means or methods by which his work is to be accomplished.
The "control test" assumes primacy in the overall consideration. Under this test, an
employment relation obtains where work is performed or services are rendered under
the control and supervision of the party contracting for the service, not only as to the
result of the work but also as to the manner and details of the performance desired.
There is no dispute that the tasks performed by respondents as carpenters, painters,

and mascilladors were necessary and desirable in the usual business of petitioners who
are engaged in the manufacture and selling of caskets. We have to also consider the
length of time that respondents worked for petitioners, commencing on various dates
from 1998 to 2007. In addition, the power of control of petitioners over respondents is
clearly present in this case. Respondents follow the steps in making a casket, as instructed
by the petitioners, like carpentry, mascilla, rubbing and painting. They had their own
notebooks where they listed the work completed with their signature and the date
finished. The same would be checked by petitioners as basis for the compensation for the
day. Thus, petitioners wielded control over the respondents in the discharge of their
work.
As regular employees, respondents were entitled to security of tenure and could be
dismissed only for just or authorized causes and after the observance of due process. The
right to security of tenure is guaranteed under Article XIII, Section 3 of the 1987
Constitution.
Petitioners violated respondents' rights to security of tenure and constitutional right to

due process in not even serving them with a written notice of termination which would
recite any valid or just cause for their dismissal. Respondents were merely told that their
services are terminated. Thus, the Court of Appeals correctly ruled that private
respondents were illegally dismissed.
Errol Ramirez, et al. vs. Polyson Industries, Inc. and Wilson S. Yu

G.R. No. 207898
October 19, 2016
Facts:
In its Position Paper submitted to the NLRC, Polyson alleged that: on April 28, 2011, it
received a notice of hearing from the DOLE with respect to the petition for certification
election filed by Obrero; on May 31, 2011, Polyson, through counsel and management
representative, met with the officers of Obrero, led by the union president, herein
petitioner Ramirez; Obrero asked that it be voluntarily recognized by Polyson as the
exclusive bargaining agent of the rank-and-file employees of Polyson, but the latter
refused and opted for a certification election; furious at such refusal, the Obrero officers
threatened the management that the union will show its collective strength in the
coming days; on June 7, 2011, Polyson received a rush order from one of its clients for the
production of 100,000 pieces of plastic bags; the management of Polyson informed the
operators of its Cutting Section that they would be needing workers to work overtime
because of the said order; based on the usual practice of the company, those who intend
to perform overtime work were expected to sign the "time sheet" indicating their
willingness to work after their shift; on June 7, 2011, the supervisors approached the
operators but were told that they would be unable to work overtime because they have
other commitments after their shift; the supervisors then requested that the operators
set aside their time for the following day to work beyond their regular shift; on June 8,
2011, five (5) operators indicated their desire to work overtime; however, after their
regular shift, three of the five workers did not work overtime which resulted in the delay
in delivery of the client's order and eventually resulted in the cancellation of the said
order by reason of such delay; when management asked the workers, who initially
manifested their desire to work overtime, to indicate in the time sheet the reason for
their failure to do so, two of the three workers, namely, Leuland Visca (Visca) and Samuel
Tuting (Tuting) gave the same reason, to wit: "Ayaw nila/ng iba na mag-OT [overtime]
ako"; the management then conducted an investigation and a hearing where Visca
affirmed his previous claim that petitioners were the ones who pressured him to desist
from rendering overtime work; on even date, Tuting executed a written statement
claiming that herein petitioners induced or threatened them not to work overtime; the
management then gave notices to petitioners asking them to explain why no disciplinary
action would be taken against them; petitioners submitted their respective explanations
to the management denying their liability; after evaluation, the management informed
petitioners that it has decided to terminate petitioners' employment on the ground that
they instigated an illegal concerted activity resulting in losses to the company.
In their Position Paper, petitioners denied the allegations of Polyson contending that
they were terminated from their employment not because they induced or threatened
their co-employees not to render overtime work but because they established a union
which sought to become the exclusive bargaining agent of the rank-and-file employees
of Polyson; that their termination was undertaken without affording them substantive
and procedural due process; and that Polyson is guilty of unfair labor practice.
Subsequently, on June 29, 2011, Obrero filed a Notice of Strike with the National
Conciliation and Mediation Board (NCMB) which was predicated on various grounds,
among which was the alleged illegal dismissal of herein petitioners.
Thereafter, on July 21, 2011, the DOLE Secretary certified the labor dispute to the NLRC
for immediate compulsory arbitration where the parties were required to maintain
the status quo, in accordance with Article 263(g) of the Labor Code.
On December 26, 2011, the NLRC rendered its Decision finding petitioners illegally
dismissed from their employment and ordering their reinstatement to their former
positions without loss of seniority rights and other privileges and benefits as well as to
pay petitioners their backwages and attorney's fees. The NLRC ruled that, for failure of
Polyson to submit in evidence petitioners' supposed written explanations in answer to
the company's Notice to Explain, Polyson failed to discharge its burden of proving that
petitioners were indeed terminated for a valid cause and in accordance with due process.
Issue:
Whether or not petitioners' dismissal from their employment was valid.
Ruling:
Yes.
Due process under the Labor Code involves two aspects: first is substantive, which refers
to the valid and authorized causes of termination of employment under the Labor Code;
and second is procedural, which points to the manner of dismissal. Thus, to justify fully
the dismissal of an employee, the employer must, as a rule, prove that the dismissal was
for a just or authorized 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.
In the present case, petitioners failed to convince this Court that the NLRC's findings
that they instigated the slowdown on June 8, 2011 are not reinforced by substantial
evidence. Verily, said findings have to be maintained and upheld. This Court reiterates,
as a reminder to labor leaders, the rule that union officers are duty-bound to guide their
members to respect the law. Contrarily, if the officers urge the members to violate the
law and defy the duly-constituted authorities, their dismissal from the service is a just
penalty or sanction for their unlawful acts.
The Court agrees with both the NLRC and the CA that petitioners are guilty of instigating
their co-employees to commit slowdown, an inherently and essentially illegal activity
even in the absence of a no-strike clause in a collective bargaining contract, or statute or
rule. Jurisprudence defines a slowdown as follows:
x x x a "strike on the installment plan;" as a willful reduction in the rate of work by

concerted action of workers for the purpose of restricting the output of the employer, in
relation to a labor dispute; as an activity by which workers, without a complete stoppage
of work, retard production or their performance of duties and functions to compel
management to grant their demands. The Court also agrees that such a slowdown is
generally condemned as inherently illicit and unjustifiable, because while the
employees "continue to work and remain at their positions and accept the wages paid to
them," they at the same time "select what part of their allotted tasks they care to perform
of their own volition or refuse openly or secretly, to the employer's damage, to do other
work;" in other words, they "work on their own terms.
The Court is not persuaded by petitioners' contention that they are not guilty of "illegal
concerted activity" as they claim that this term contemplates a "careful planning of a
considerable number of participants to insure that the desired result is attained."
Nothing in the law requires that a slowdown be carefully planned and that it be
participated in by a large number of workers. The essence of this kind of strike is that the
workers do not quit their work but simply reduce the rate of work in order to restrict the
output or delay the production of the employer. It has been held that while a cessation
of work by the concerted action of a large number of employees may more easily
accomplish the object of the work stoppage than if it is by one person, there is, in fact no
fundamental difference in the principle involved as far as the number of persons involved
is concerned, and thus, if the act is the same, and the purpose to be accomplished is the
same, there is a strike, whether one or more than one have ceased to work. Furthermore,
it is not necessary that any fixed number of employees should quit their work in order to
constitute the stoppage a strike, and the number of persons necessary depends in each
case on the peculiar facts in the case and no definite rule can be laid down. As discussed
above, petitioners engaged in slowdown when they induced two of their co-workers to
quit their scheduled overtime work and they accomplished their purpose when the
slowdown resulted in the delay and restriction in the output of Polyson on June 8, 2011.
With respect to procedural due process, it is settled that in termination proceedings of

employees, procedural due process consists of the twin requirements of notice and
hearing.The employer must furnish the employee with two written notices before the
termination of employment can be effected: (1) the first apprises the employee of the
particular acts or omissions for which his dismissal is sought; and (2) the second informs
the employee of the employer's decision to dismiss him. The requirement of a hearing is
complied with as long as there was an opportunity to be heard, and not necessarily that
an actual hearing was conducted. In the present case, Polyson was able to establish that
these requirements were sufficiently complied with.
Leo's Restaurant and Bar Cafe (Restobar), the Mountain Suite Business Apartelle,
Leo Y. Lua and Amelia Lua vs. Laarne C. Bensing
G.R. No. 208535
October 19, 2016
Facts:
On January 2, 2002, Kimwa Construction & Development Corporation (Kimwa)
employed respondent as liaison officer. Allegedly, Kimwa also operated Leo's Restaurant
and Bar Cafe (Restobar), and the Mountain Suite Business Apartelle (Apartelle); on July
4, 2005, it appointed respondent as Administrative Officer/Human Resource (HR) Head
of these establishments with a salary of P15,000.00 per month; and, said appointment
took effect on October 18, 2005 when the establishments became fully operational.
Thereafter, Leo Y. Lua (Leo), the Manager of the Restobar and the Apartelle, issued upon
respondent a Memorandum9 requesting her to temporarily report at Kimwa's Main
Office starting December 30, 2005.
On December 30, 2005, respondent received another Memorandum from Leo requiring
her to explain the circumstances surrounding the agreement between the Restobar and
Pepsi Products Philippines, Inc. (Pepsi), and the benefits she derived therefrom. Leo
accused her of having signed said contract without authority from him and of not
informing him of the benefits arising from the contract. The Memorandum also indicated
that Pepsi gave the Restobar 10 cases of soft drinks during its opening night, and
additional 67 cases for December 2005 but its records reflected receiving only 20 out of
said 67 cases.
In her Explanation, respondent stated that on October 24, 2005, in the presence of
Jovenal Ablanque (Ablanque), Sales Manager of Pepsi, Leo verbally authorized her to sign
the contract with Pepsi on behalf of the Restobar. The following day, Ablanque, returned
to the Restobar, and respondent signed the contract pursuant to Leo's verbal instruction.
She gave no explanation anent the benefits arising from the contract as she purportedly
did not intervene in Leo and Ablanque's discussion on the matter. She added that the
Restobar received only 10 and additional 20 cases of Pepsi drinks, and she did not receive
personal benefits arising from the contract.
On January 2, 2006, Leo issued another Memorandum requiring respondent to answer

why she signed the Pepsi contract even without authority to do so, and to explain
whether her apology addressed to Leo was an acceptance of her fault on the charges
against her.
In her Answer, respondent remained firm that she did not receive any personal benefits
from Pepsi. Also, she stated that she apologized to Leo because she knew that the latter
had "feelings of doubt" about her but it was not because she accepted the accusations
against her.
Later, in a Memorandum dated January 3, 2006, respondent was required to answer these
charges: 1) she committed dishonesty when she charged to the Restobar's account 50%
of the food she ordered therefrom without approval of its Owner or Manager; 2) she
violated her duties when she did not inform Leo of the signing of the Pepsi contract; and,
3) she failed to account for 47 soft drinks cases that Pepsi gave the Restobar.
In her Explanation, respondent asserted that the charges of dishonesty was not related
to the Pepsi Qonteact such that she opted not to answer said accusation. With regard to
the alleged missing Pepsi drinks, she affirmed that Pepsi clarified the matter already,
particularly to where these soft drinks were placed or given.
In a Letter dated January 4, 2006, Pepsi, through its Settlement and Credit Manager
Jerome T. Eslabon, certified that Pepsi gave the Restobar 10 cases of Pepsi products on its
opening day, and 20 cases of Pepsi 12 oz. on December 7, 2005. It stressed that it did riot
give cash assistance or cash equivalent to any staff of the Restobar. It also asked Leo to
disregard the erroneous volume of documents it inadvertently gave him, and assured him
that Pepsi already adjusted his records to reflect the correct figures.
However, on January 12, 2006, on the ground of loss of trust and confidence, Leo
terminated respondent effective January 15, 2006.
Issue:
Whether or not respondent was validly dismissed on the ground of loss of trust and
confidence.
Ruling:
No.
Sufficient pieces of evidence show that Kimwa, Leo, and Amelia owned, managed, and
operated the Restobar and the Apartelle. They also continuously employed respondent,
previously as liaison officer and thereafter as Administrative Officer/HR Head of the
Restobar and the Apartelle.
An employer has the right to dismiss an employee for just causes, which include willful
breach of trust and confidence reposed on him or her by the employer. To temper such
right to dismiss, and to reconcile it with the employee's security of tenure, it is the
employer who has the burden to show that the dismissal of the employee is for a just
cause. Such determination of just cause must also be made with fairness, in good faith,
and only after observance of due process of law.
Moreover, to dismiss an employee on the ground of loss of trust and confidence, two
requisites must concur: (a) the concerned employee must be holding a position of trust;
and, (b) the loss of trust must be based on willful breach of trust based on clearly
established facts.
Loss of trust and confidence as a ground for dismissal is never intended for abuse by
reason of its subjective nature. It must be pursuant to a breach done willfully, knowingly
and purposely without any valid excuse. It must rest on substantial grounds and not on
mere suspicion, whims, or caprices of the employer.
In fine, "loss of confidence should not be simulated. It should not be used as a subterfuge
for causes which are improper, illegal, or unjustified. Loss of confidence may not be
arbitrarily asserted in the face of overwhelming evidence to the contrary. It must be
genuine, not a mere afterthought to justify earlier action taken in bad faith."
As far as the first requisite is concerned, respondent is shown to occupy a position of

trust as her managerial work was directly related to management policies, and generally
required exercise of discretion and independent judgment.
Nonetheless, the second requirement is wanting since petitioners failed to prove that
their loss of trust on respondent was founded on clearly established facts.
Even granting for the sake of argument that respondent signed the Pepsi contract
without the express authority from Leo, her act was well within her functions. As above
quoted, respondent 1) had the authority in all operational, administrative and functional
matters of the Restobar and the Apartelle; and, 2) had the duty to oversee the entire
operations of the business, including the over-all property/furniture, maintenance and
expenditures.
Therefore, having entered the Pepsi contract is not sufficient basis for petitioners to lose
their; trust in respondent. Leo authorized her to enter said agreement. Even assuming
that there was no explicit order for her to do so, respondent still acted within her
authority as in-charge of all operation, administrative and functional matters of the
establishments.
Indeed, there was no malice or any fraudulent intent on the part of respondent when she
sighed the Pepsi contract. There is likewise no evidence that she personally benefited
therefrom. In fact, the Restobar itself received the items donated by Pepsi, and the
Restobar did not suffer any damage arising from the Pepsi contract.
Loss of trust and confidence must stem from dishonest, deceitful or fraudulent acts. In
the absence of such malicious intent or fraud on the part of respondent, she committed
no willful breach of trust against her employer.
In addition, the Court finds that the charge that respondent failed to account for a certain
number of products Pepsi donated to the Restobar is without basis
Geraldine Michelle B. Fallarme and Andrea Martinez-Gacos vs. San Juan

de Dios Educational Foundation, Inc., Chona M. Hernandez, Valeriano
Alejandro III, Sr., Concepcion Gabatino, D.C., and Sr. Josefina Quiachon,
D.C.
G.R. Nos. 190015 & 190019
September 14, 2016
Facts:
Petitioners were hired by San Juan de Dios Educational Foundation, Inc.
(respondent college), for full-time teaching positions.
The appointment of petitioner Fallarme was effective at the start of the first
semester of School Year (SY) 2003-2004 as signified by a memorandum issued by
the school informing her that she had been hired. The memorandum did not
specify whether she was being employed on a regular or a probationary status.
Aside from being appointed to a faculty position, she was also appointed to
perform administrative work for the school as personnel officer8 and to serve as
head of the Human Development Counseling Services.
Despite having served as a faculty member since SY 2003-2004, Fallarme was

asked only on 1 March 2006 to sign and submit to respondent Chona M.
Hernandez, dean of general education, a written contract on the nature of the
former's employment and corresponding obligations. The contract was
denominated as "Appointment and Contract for Faculty on Probation"
(appointment contract), and its effectivity period covered the second semester of
SY 2005-2006 - specifically from 4 November 2005 to 18 March 2006. The
appointment contract specified the status of Fallarme as a probationary faculty
member.
After the expiration of the contract, respondent college informed her that it would
not be renewed for the first semester of SY 2006-2007. When she asked on what
basis her contract would not be renewed, she was informed that it was the school's
"administrative prerogative."
Petitioner Martinez-Gacos taught at respondent college from the start of SY 2003-
2004 and continued to do so for a total of six semesters and one summer. Her
engagement as a faculty member was signified by a memorandum issued by the
school, which informed her that she had been hired. The memorandum, which
was similar to that issued to Fallarme, did not specify whether Martinez-Gacos
was being employed on a regular or a probationary status.
Like Fallarme, even though Martinez-Gacos had been employed as a faculty

member since SY 2003-2004, it was only on 1 March 2006 that the latter was
ordered by respondent Valeriano Alejandro III to sign and submit a written
contract on the nature of her employment and corresponding obligations. The
terms of the contract were similar to those in the contract signed by Fallarme. It
was also denominated as "Appointment and Contract for Faculty on
Probation," and its effectivity period also covered the second semester of SY 2005-
2006 - specifically from 4 November 2005 to 18 March 2006. Under the
appointment contract, the probationary status of Martinez-Gacos was likewise
specified for the first time.
After the lapse of the contract's effectivity, she was similarly informed that her
contract would not be renewed for the first semester of SY 2006-2007. She was
also told that the nonrenewal of her contract was made on the basis of
"administrative prerogative."
Issues:
a. Were petitioners regular employees of respondent college?
b. Was petitioners' dismissal for a valid cause?
c. If the dismissal of petitioners was for a valid cause, was the proper dismissal
procedure observed?
Ruling:
a. Yes.
While the parties did not contest the allegation that petitioners were
employed as probationary employees, a review of the records will show that
they were considered regular employees since Day One of their
employment.
It is established that while the Labor Code provides general rules as to

probationary employment, these rules are supplemented by the Manual of
Regulations for Private Schools with respect to the period of probationary
employment of private school teachers.
As prescribed by the 1992 Manual, a teacher must satisfy the following

requisites to be entitled to regular faculty status: (1) must be a full-time
teacher; (2) must have rendered three years of service (or six consecutive
semesters of service for teachers on the tertiary level); and (3) that service
must have been satisfactory.
In this case, the first two requisites for regularization under the 1992
Manual - full-time faculty status and completion of the probationary period
- are conceded in favor of petitioners. However, the parties disagree on the
fulfillment of the third requisite: whether petitioners' performance within
the probationary period was satisfactory.
Indeed, the determination of whether the performance of probationary

teaching personnel has been sufficiently satisfactory as to warrant their
regularization lies in the hands of the school pursuant to its administrative
prerogative, which is an extension of its academic freedom under Section
5(2), Article XIV of the Constitution. Academic freedom gives the school
the discretion and the prerogative to impose standards on its teachers and
to determine whether these have been met upon the conclusion of the
probationary period.
It must be pointed out that the school's exercise of administrative

prerogative in this respect is not plenary as respondents would like us to
believe. The exercise of that prerogative is still subject to the limitations
imposed by the Labor Code and jurisprudence on valid probationary
employment.
In Abbott Laboratories v. Alcaraz, this Court explained that valid

probationary employment under Art. 281 presupposes the concurrence of
two requirements: (1) the employer must have made known to the
probationary employee the reasonable standard that the latter must
comply with to qualify as a regular employee; and (2) the employer must
have informed the probationary employee of the applicable performance
standard at the time of the latter's engagement. Failing in one or both, the
employee, even if initially hired as a probationary employee, shall be
considered a regular employee.
With respect to the regularization of probationary teachers, the standards

laid down in Abbott Laboratories apply to the third requisite under the 1992
Manual: that they must have rendered satisfactory service. As observed by
this Court in Colegio del Santisimo Rosario v. Rojo, the use of the
term satisfactory "necessarily connotes the requirement for schools to set
reasonable standards to be followed by teachers on probationary
employment. For how else can one determine if probationary teachers have
satisfactorily completed the probationary period if standards therefor are
not provided?" Therefore, applying Article 281 of the Labor Code, a school
must not only set reasonable standards that will determine whether a
probationary teacher rendered satisfactory service and is qualified for
regular status; it must also communicate these standards to the teacher at
the start of the probationary period. Should it fail to do so, the teacher shall
be deemed a regular employee from Day One.
However, the records lack evidence that respondent college clearly and
directly communicated to petitioners, at the time they were hired, what
reasonable standards they must meet for the school to consider their
performance satisfactory and for it to grant them regularization as a result.
Respondents claim that the standards were provided in the appointment

contracts signed by petitioners. Each of the contracts supposedly provided
that it "incorporates by reference the school policies, regulations,
operational procedures and guidelines provided for in the Manual of
Operations of the School xxx." However, this claim defeats respondents'
own defense, because the appointment contracts invoked were signed by
petitioners only at the start of the second semester of SY 2005-2006.
Nonetheless, it is clear and undisputed that petitioners were hired by

respondent college as early as 2003, but were required to sign appointment
contracts for the first time only in 2005. An examination of the records will
show that when they were hired in 2003, they each signed a mere
memorandum informing them that they had passed the qualifying
examinations for faculty members, and that they were being hired effective
first semester of SY 2003-2004. The memorandum did not indicate their
status as probationary employees, the specific period of effectivity of their
status as such, and the reasonable standards they needed to comply with
to be granted regular status. The failure to inform them of these matters
was in violation of the requirements of valid probationary employment. It
also violated Section 91 of the 1992 Manual.
Respondents were clearly remiss in their duty under the Labor Code to
inform petitioners of the standards for the latter's regularization.
Consequently, petitioners ought to be considered as regular employees of
respondent college right from the start.
b. Yes.
Dismissals have two facets: the legality of the act of dismissal, which
constitutes substantive due process; and the legality of the manner of
dismissal, which constitutes procedural due process.
With respect to substantive due process, insubordination or willful

disobedience is one of the just causes of dismissal under Article 282 of the
Labor Code. For there to be a valid cause, 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 pertinent to the duties that the employee has been engaged to
discharge.
Moreover, to be considered as a valid cause analogous to that specified in

the law, it is simply required that the cause must be due to the voluntary
or willful act or omission of the employee.
Furthermore, under the 1992 Manual, the following has also been
enumerated as one of the valid causes for termination, in addition to those
found in the Labor Code:
(f) The sale of tickets or the collection of any contributions in any form
or for any purpose of project whatsoever, whether voluntary or
otherwise, from pupils, students and school personnel xxx.
In this case, the records bear out the following misdemeanors of

petitioners:
(1) Both petitioners were remiss in their obligation to secure

respondent college's consent before they sold computerized final
examination sheets to their students. They failed to do so despite the
prior advice of their subject area coordinator that the dean's approval
must first be secured before examination sheets could be sold.
(2) Petitioner Fallarme failed to secure respondent college's

consent before selling sociology textbooks to her students during the
second semester of SY 2005-2006. This rule was violated even after it
had been clearly discussed during their department's general meeting
held at the opening of SY 2005-2006. The teachers were then told that
they were prohibited from transacting business with any publishing
house or collecting any payment without informing their respective
area chairs.
(3) Petitioner Martinez-Gacos organized out-of-campus

activities with students, again without respondent college's
permission and in violation of the school's Student Handbook.
The above infractions imputed by respondent college to petitioners were

admitted by the latter in their letters to respondents and in their Petition
before this Court. They made that admission in conjunction with their
defense that the supposed infractions did not cause serious damage to
respondents and were but a part of their academic freedom and freedom
of expression, among others.
We find that these infractions committed by petitioners in connection with

their jobs have been established by substantial evidence and constitute
willful disobedience or conduct analogous thereto.
c. No.
For termination based on a just cause, as in this case, the law requires two
written notices before the termination of employment: (1) a written notice
served by the employer on the employee specifying the ground for
termination and giving a reasonable opportunity for that employee to
explain the latter's side; and (2) a written notice of termination served by
the employer on the employee indicating that upon due consideration of
all the circumstances, grounds have been established to justify the latter's
termination.
We find a complete deviation from the two-notice rule in this case. The
records show that respondent college effectively dismissed petitioners by
sending them a written notice informing them that the school would no
longer renew their contracts for the forthcoming semester. We find that
the letters were abruptly sent and lacked any specification of the grounds
for their termination. Neither did the letters give petitioners the
opportunity to explain their side. To aggravate the matter, upon their
inquiry into the reason behind their termination, all that respondent
college cited was its supposed "administrative prerogative," which was
misplaced as discussed earlier.
In Agabon v. National Labor Relations Commission, this Court held that if

the dismissal was for a valid cause, failure to comply with the proper
procedural requirements shall not nullify the dismissal, but shall only
warrant the payment of indemnity in the form of nominal damages.
Narciso T. Matis vs. Manila Electric Company

G.R. No. 206629
September 14, 2016
Facts:
Respondent Manila Electric Company (Meralco) hired petitioner Matis, and
complainants Nemencio Hipolito, Jr. (Hipolito), Raymundo M. Zufiiga (Zuniga),
Gerardo de Guia (De Guia), and Ricardo Ignacio (Ignacio) on various dates and in
various capacities. At the time of their dismissal, Matis was a foreman; Hipolito
and Zuniga were acting foremen; De Guia was a stockman/driver; and Ignacio was
a leadman.
On July 27, 2006, Matis and the others were dismissed on the grounds of serious
misconduct, fraud or willful breach of trust, commission of a crime or offense
against the employer and other causes analogous to the foregoing. They were
dismissed for their alleged cooperation in the pilferages of Meralco's electrical
supplies by one Norberto Llanes (Llanes), a non-Meralco employee, particularly,
in an incident which took place on May 25, 2006. On that same day, Matis and the
rest of the crew of Trucks 1837 and 1891 were replacing a rotten pole in
Pacheco Subdivision, Dalandan, Valenzuela City.
In a Memorandum dated June 16, 2006, Meralco required them to appear before
Meralco's counsel for an investigation relative to the incident on May 25, 2006.
Matis and the others denied any involvement in the stealing of the company
properties. Subsequently, they were dismissed.
Issue:
Whether or not petitioner Matis was illegally dismissed.
Ruling:
No.
Records reveal that it was not only on May 25, 2006 that Llanes, the pilferer, was
seen during a Meralco operation as he was previously noticed by Meralco
employees in past operations. Also, the evidence ascertained the presence of Matis
in the worksite where the pilferage took place, and his familiarity with Llanes.
Matis's tolerance of the activities of Llanes demonstrates his complicity in the
theft, and not a mere want of care in the performance of his duty or gross
negligence.
Assuming Matis were negligent, his inaction can only be regarded as a single or
isolated act of negligence which cannot be considered as gross and habitual,
hence, cannot be considered as a just cause for his dismissal. Nevertheless, such
finding will not warrant the reversal of the instant case.
Article 282 (c) of the Labor Code provides that an employer may terminate an
employment for fraud or willful breach by the employee of the trust reposed in
him by his employer or duly-authorized representative. It is stressed that loss of
confidence as a just cause for the termination of employment is based on the
premise that the employee holds a position where greater trust is placed by
management and from whom greater fidelity to duty is correspondingly
expected. The essence of the offense for which an employee is penalized is the
betrayal of such trust.
Loss of confidence as a ground for dismissal has never been intended to afford an
occasion for abuse by the employer of its prerogative, as it can easily be subject to
abuse because of its subjective nature. A 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.
Matis alleges that he may not be removed on the ground of breach of trust and
confidence as he was not a managerial employee or an employee primarily
entrusted with the handling of company funds or property.
We are not persuaded. Loss of confidence applies to: (1) employees occupying
positions of trust and confidence, the managerial employees; and (2) employees
who are routinely charged with the care and custody of the employer's
money or property which may include rank-and-file
employees, e.g., cashiers, auditors, property custodians, or those who, in the
normal routine exercise of their functions, regularly handle significant amounts
of money or property.
It is established that Matis was a foreman with a monthly salary of P57,000.00 at

the time of his dismissal. The vehicles being utilized in the repair and
maintenance of Meralco's distribution lines ordinarily carried necessary
equipment, tools, supplies and materials. Thus, Matis, as the foreman, is routinely
entrusted with the care and custody of Meralco's properties in the exercise of his
function.
Proof beyond reasonable doubt is not needed to justify the loss of confidence as
long as 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 of his position.32 Meralco was
able to establish through substantial evidence that it has reasonable ground to
believe that Matis's involvement in the incident rendered him unworthy of the
trust and confidence reposed upon him as a foreman of Meralco.
As settled in Vergara v. NLRC, the filing of the complaint by the public prosecutor
is sufficient ground for a dismissal of an employee for loss of trust and confidence.
The evidence supporting the criminal charge, found sufficient to show prima
facie guilt after preliminary investigation, constitutes just cause for termination
based on loss of trust and confidence.34In this case, the Assistant City Prosecutor
of Valenzuela City recommended the filing of information for qualified theft
against Matis and the others.
Additionally, an employee's acquittal in a criminal case does not automatically

preclude a determination that he has been guilty of acts inimical to the employer's
interest resulting in loss of trust and confidence. An acquittal in
criminal prosecution does not have the effect of extinguishing liability for
dismissal on the ground of breach of trust and
confidence. The trial court acquitted Matis and the others due to
insufficiency of evidence to warrant conviction beyond reasonable doubt. While
the evidence presented failed to satisfy the quantum of proof required in criminal
cases, the same substantially proved the dishonest act of Matis which warranted
his dismissal from employment.
To be sure, length of service is taken into consideration in imposing the penalty

to be meted upon an erring employee. However, in cases of breach of trust and
loss of confidence, the length of time, if considered at all, shall be taken against
the employee, as his involvement in dishonest acts reflects a regrettable lack of
loyalty which should have been strengthened, instead of betrayed. Unlike other
just causes for dismissal, trust in an employee, once lost is difficult, if not
impossible, to regain. In the case at bar, Matis's involvement in the pilferage of
Meralco's properties resulted in respondent's loss of confidence in him. If
considered, petitioner's length of service should be taken against him as his
familiarity with Llanes, his disregard of the company rules, and passivity during
the thievery echo his disloyalty with his employer which he served for thirty-one
years. As such, fairness dictates that Matis, who has breached the confidence
reposed on him, should not be allowed to continue his employment with Meralco.
Holcim Philippines, Inc. vs. Renante J. Obra

G.R. No. 220998
August 8, 2016
Facts:
Respondent was employed by petitioner as packhouse operator in its La Union
Plant for nineteen (19) years, from March 19, 19946 until August 8, 2013. As
packhouse operator, respondent ensures the safe and efficient operation of
rotopackers, auto-bag placers, and cariramats, as well as their auxiliaries. At the
time of his dismissal, he was earning a monthly salary of P29,988.00.
On July 10, 2013, at around 4 o'clock in the afternoon, respondent was about to
exit Gate 2 of petitioner's La Union Plant when the security guard on duty, Kristian
Castillo (Castillo), asked him to submit himself and the backpack he was carrying
for inspection. Respondent refused and confided to Castillo that he has a piece of
scrap electrical wire in his bag. He also requested Castillo not to rep0rt the
incident to the management, and asked the latter if respondent could bring the
scrap wire outside the company premises; otherwise, he will return it to his locker
in the Packhouse Office. However, Castillo did not agree, which prompted
respondent to turn around and hurriedly go back to the said office where he took
the scrap wire out of his bag. Soon thereafter, a security guard arrived and directed
him to go to the Security Office where he was asked to write a statement regarding
the incident.
In his statement, respondent admitted the incident, but asserted that he had no
intention to steal. He explained that the 16-meter electrical wire was a mere scrap
that he had asked from the contractor who removed it from the Packhouse Office.
He also averred that as far as he knows, only scrap materials which are to be taken
out of the company premises in bulk required a gate pass and that he had no idea
that it was also necessary to takeout a piece of loose, scrap wire out of the
company's premises. Respondent also clarified that he hurriedly turned around
because he had decided to just return the scrap wire to the said office.
Issue:
Whether or not respondent's misconduct is so gross as to deserve the penalty of
dismissal from service.
Ruling:
No.
There is no question that the employer has the inherent right to discipline,
including that of dismissing its employees for just causes. This right is, however,
subject to reasonable regulation by the State in the exercise of its police power.
Accordingly, the finding that an employee violated company rules and regulations
is subject to scrutiny by the Court to determine if the dismissal is justified and, if
so, whether the penalty imposed is commensurate to the gravity of his offense.
While there is no dispute that respondent took a piece of wire from petitioner's
La Union Plant and tried to bring it outside the company premises, he did so in
the belief that the same was already for disposal. Notably, petitioner never denied
that the piece of wire was already for disposal and, hence, practically of no value.
At any rate, petitioner did not suffer any damage from the incident, given that
after being asked to submit himself and his bag for inspection, respondent had a
change of heart and decided to just return the wire to the Packhouse Office.
Respondent has also shown remorse for his mistake, pleading repeatedly with
petitioner to reconsider the penalty imposed upon him.
Time and again, the Court has held that infractions committed by an employee
should merit only the corresponding penalty demanded by the circumstance. The
penalty must be commensurate with the act, conduct or omission imputed to the
employee.
Herein respondent deserves compassion and humane understanding more than

condemnation, especially considering that he had been in petitioner's employ for
nineteen (19) years already, and this is the first time that he had been involved in
taking company property, which item, at the end of the day, is practically of no
value. Besides, respondent did not occupy a position of trust and confidence, the
loss of which would have justified his dismissal over the incident. As packhouse
operator, respondent's duties are limited to ensuring the safe and efficient
operation of rotopackers, auto-bag placers, and cariramats, as well as their
auxiliaries. He is not a managerial employee 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, or one who, in the normal and routine exercise of his
functions, regularly handles significant amounts of money or property. Neither
can respondent's infraction be characterized as a serious misconduct which,
under Article 282 (now Article 297) of the Labor Code, is a just cause for dismissal.
Misconduct is an improper or wrong conduct, or 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 dismissal within the text and meaning of Article
282 (now Article 297) 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, as in this case where the item which respondent tried to takeout
was practically of no value to petitioner. Moreover, ill will or wrongful intent
cannot be ascribed to respondent, considering that, while he asked Castillo not to
rep0rt the incident to the management, he also volunteered the information that
he had a piece of scrap wire in his bag and offered to return it if the same could
not possibly be brought outside the company premises sans a gate pass.
In fine, the dismissal imposed on respondent as penalty for his attempt to take a
piece of scrap wire is unduly harsh and excessive. Having established that
respondent's dismissal was too harsh a penalty for attempting to take a piece of
scrap wire that was already for disposal and, hence, practically of no value, and
considering that petitioner was in good faith when it dismissed respondent for his
misconduct, the Court deems it proper to order the reinstatement of respondent
to his former position but without backwages. Respondent was not entirely
faultless and therefore, should not profit from a wrongdoing.
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.
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.
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 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
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. 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 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.
Baguio Central University
vs. Ignacio Gallente
G.R. No. 188267. December 2, 2013
J. Brion
They are not required to present proof beyond reasonable doubt as the mere existence
of a basis for believing that such employee has breached the trust of the employer would
suffice for the dismissal. Thus, as long as the employer “has reasonable ground
to believe that the employee concerned is responsible for the purported misconduct, and
the nature of his participation therein renders him unworthy of the trust and confidence
demanded of his position,” the dismissal on this ground is valid.
Facts:
Baguio Central University (BCU) hired petitioner Ignacio Gallente as instructor and was
later on promoted as the dean of BCU’s College of Arts and Sciences and Public
Administration. Gallente, using the name “Genesis Gallente,” along with six other
incorporators, organized the GRC Review and Language Center, Inc. (GRC). The GRC’s
Articles of Incorporation (AOI) listed its primary purpose as “to conduct review classes for
teachers, nursing, engineering and other professional and technical for Board Licensure
examinations and Civil Service Professional examination,” and its
secondary purpose as “to conduct tutorial and proficiency trainings for foreign
languages.” This AOI also listed the BCU as the GRC’s primary address.
The BCU’s President, Dr. Margarita Fernandez, subsequently called Gallente’s attention
regarding the establishment of the GRC and his use of the BCU as the GRC’s address and
of the BCU’s resources. The BCU’s officers conducted grievance meetings with Gallente to
allow him to explain his side. On September 30, 2005, Gallente tendered his resignation by
letter.
Gallente filed before the LA a complaint for illegal (constructive) dismissal.
The LA found that Gallente was illegally dismissed. NLRC partially granted BCU’s appeal.
The NLRC found justifiable grounds for the BCU’s loss of trust and confidence
that rendered Gallente’s dismissal valid. CA set aside NLRC’s ruling and reinstated LA’s
ruling.
Issue:
Whether Gallante was validly dismissed on the ground of loss of trust and confidence.
Ruling:
Loss of trust and confidence is a just cause for dismissal under Article282(c) of the Labor
Code. Article 282(c) provides that an employer may terminate an employment for “fraud
or willful breach by the employee of the trust reposed in him by his employer or duly
authorized representative.” However, in order for the employer to properly invoke this
ground, the employer must satisfy two conditions.
First, the employer must show that the employee concerned holds a position of trust and
confidence. Jurisprudence provides for two classes of positions of trust. The first
class consists of managerial employees, or those who by the nature of their position, are
entrusted with confidential and delicate matters and from whom greater fidelity to duty is
correspondingly expected.
Article 212(m) of the Labor Code defines managerial employees as those who are “vested
with powers or prerogatives to lay down and execute management polices and/or to hire,
transfer, suspend, lay-off, recall, discharge, assign or discipline employees, or to effectively
recommend such managerial actions.” The second class includes “cashiers, auditors,
property custodians, or those who, in the normal and routine exercise of their functions,
regularly handle significant amounts of [the employer’s] money or property”
Second, the employer must establish the existence of an act justifying the loss of trust and
confidence. To be a valid cause for dismissal, the act that betrays the employer’s trust must
be real, i.e., founded on clearly established facts and the employee’s breach of the trust
must be willful, i.e.,it was done intentionally, knowingly and purposely, without justifiable
excuse
In Lopez v. Keppel Bank Philippines, Inc., the Court repeated the guidelines for the
application of loss of confidence as follows: (1) 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 may 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 an earlier action
taken in bad faith. As applied to the dismissal of managerial employees, employers – as a
rule – enjoy wider latitude of discretion.
They are not required to present proof beyond reasonable doubt as the mere existence of a
basis for believing that such employee has breached the trust of the employer would suffice
for the dismissal. Thus, as long as the employer “has reasonable ground
to believe that the employee concerned is responsible for the purportedmisconduct, and
the nature of his participation therein renders him unworthy of the trust and confidence
demanded of his position,” the dismissal on this ground is valid.
REXIE A. HORMILLOSA vs. COCA-COLA BOTTLERS PHILS., INC.,

represented by its Iloilo Plant Human Resource Head, ROBERTO RICHARD H.
DOLAR
G.R. No. 198699, October 9, 2013
J. MENDOZA
There are two (2) classes of positions of trust. The first class consists of managerial
employees. They are defined as 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
consists of cashiers, auditors, property custodians, etc. They are defined as those who in the
normal and routine exercise of their functions, regularly handle significant amounts of money
or property.
Clearly, Hormillosa occupies a position of trust. As correctly pointed out by the CA,
there was a high degree of trust and confidence reposed on him and when this confidence was
breached, the employer was justified in taking the appropriate disciplinary action.
Facts:
Rexie Hormillosa was employed as a route salesman by Coca-Cola Bottlers Phils., Inc.
(CBPI). His duties included, among others, selling CBPI’s soft drink products, either on
cash or on credit basis; receiving payments from proceeds of the sale or payments of past
due or current accounts; issuing sales invoices; and receiving empty bottles and cases of
soft drinks (empties).
Concerning the sales invoices, he was authorized to issue them on a cash and credit basis.
He prepared the invoices stating the names of the customers, the quantity and kind of
merchandise purchased, and the corresponding amounts. He was required to make the
customers sign the invoices, especially in cases they were on credit basis, and leave copies
with them. The invoices were then submitted to the Finance Department for accounting
and auditing. Due to their delicate position, route salesmen, like Hormillosa, were given a
handbook entitled, CCBPI Employee Code of Disciplinary Rules and Regulations. This set
of rules and regulations served as their guide in the performance of their duties. Hormillosa
received his copy.
Sometime in the early part of 1999, the then CBPI District Sales Supervisor, Raul S. Tiosayco
III (Tiosayco), conducted a verification and audit of the accounts handled by Hormillosa.
He discovered transactions in violation of CCBPI Employee Code of Disciplinary Rules and
Regulations and for failure to explain such violation, Hormillosa was terminated. In
addition to his termination, CBPI also filed several criminal cases against him citing his
fraudulent acts.
On May 24, 1999, Hormillosa filed a complaint for ULP (harassment due to union activities
and union busting), Illegal Dismissal, Illegal Deduction, Illegal Grounding, Non-payment
of Commission, Non-payment of 13th Month pay, Violation of CBA, alleging that he was a
member of the Board of Directors of CBPI’s employees union and he became its secretary
on March 7, 1999. As secretary, he sent a copy of the new list of union officers to the
management with a warning that if CBPI would not stop harassing the members of the
union, it would declare a strike.
Labor Arbiter (LA) dismissed Hormillosa’s complaint for illegal dismissal, ruling that his
termination was proper. On appeal, the NLRC, on January 17, 2002, ordered the remand of
the case to the SRAB to give Hormillosa the opportunity to confront the witnesses and
evidence against him. On the SRAB, LA Acosta, found that Hormillosa was illegally
dismissed but did not order his reinstatement due to strained relations. NLRC affirmed LA
Acosta’s ruling. CA nullified and set aside the NLRC decision and held that the dismissal of
Hormillosa was valid.
Issue:
Whether Hormillosa was illegally dismissed.
Ruling:
Hormillosa was validly dismissed.
In Bristol Myers Squibb (Phils.), Inc. v. Baban, the Court discussed the requisites for a valid
dismissal on the ground of loss of trust and confidence as follows:
It is clear that Article 282(c) of the Labor Code allows an employer to terminate the
services of an employee for loss of trust and confidence. The right of employers to
dismiss employees by reason of loss of trust and confidence is well established in
jurisprudence.
The first requisite for dismissal on the ground of loss of trust and confidence is that the
employee concerned must be one holding a position of trust and confidence. Verily, We
must first determine if respondent holds such a position.
There are two (2) classes of positions of trust. The first class consists of managerial
employees. They are defined as 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
consists of cashiers, auditors, property custodians, etc. They are defined as those who in
the normal and routine exercise of their functions, regularly handle significant amounts of
money or property.
Clearly, Hormillosa occupies a position of trust. As correctly pointed out by the CA, there
was a high degree of trust and confidence reposed on him and when this confidence was
breached, the employer was justified in taking the appropriate disciplinary action.
With regard to the second requisite for dismissal on the ground of loss of trust and
confidence, the Court finds that Hormillosa committed acts which warranted his dismissal
from employment.
Hormillosa cannot deny that fact that he issued sales invoices to Arnold Store, a store
unregistered or unaccredited with CBPI. He transacted with the said store using the
account of Virgie Bucaes, proprietor of Virgie’s Eatery. Bucaes, who had an outlet profile
with CBPI, was assigned with Control No. 0027069. Hormillosa extended credit to Arnold
Store, an unknown customer to CBPI, as documented by two credit sales invoices, Invoice
Nos. 79872 and 79873, amounting to P5,600.00 and P4,806.00respectively. By doing so, he
gave a false and misleading representation that the account was that of Bucaes. CBPI had a
set of rules and regulations, one of which was that only those outlets, which had outlet
control, were entitled to enjoy credit from CBPI. Salesmen were not allowed to extend
credit to those who had no outlet numbers or outlet profiles from CBPI. Evidently,
Hormillosa disregarded and disobeyed the company rules.
Worth mentioning is the fact that Hormillosa did not deal with his employer in good faith.
The records show that when Tiosayco, on March 17,1999, directed Hormillosa to submit his
written explanation on March 20,1999, he sent instead a letter stating that the investigation
would be moot and academic because he had already filed a case against the company for
ULP. As can be gleaned from the records, he filed a complaint against CBPI only on March
24, 1999, negating his earlier statement that he had supposedly filed a case before Tiosayco
sent the memorandum.
In the case at bench, the cause for the dismissal from employment of Hormillosa clearly
falls under Article 282 of the Labor Code. Therefore, he is not entitled to any separation
pay.
NATHANIEL DONGON vs. RAPID MOVERS AND FORWARDERS CO., INC., ET AL.
G.R. No. 163431. August 28, 2013
J. Bersamin
Willful disobedience to the lawful orders of an employer is one of the valid grounds to
terminate an employee under Article 296 of the Labor Code. For willful disobedience to be a
ground, it is required that: (a) the conduct of the employee must be willful or intentional; and
(b) the order the employee violated must have been reasonable, lawful, made known to the
employee, and must pertain to the duties that he had been engaged to discharge. Under the
foregoing standards, the disobedience attributed to the employee could not be justly
characterized as willful within the contemplation of Article 296 of the Labor Code. He neither
benefitted from it, nor thereby prejudiced the business interest of Rapid Movers.
Facts:
Petitioner Rapid is engaged in the hauling and trucking business while private respondent
Nathaniel T. Dongon is a former truck helper leadman. Private respondent’s area of
assignment is the Tanduay Otis Warehouse where he has a job of facilitating the loading
and unloading of the petitioner’s trucks. On 23 April 2001, private respondent and his
driver, Vicente Villaruz, were in the vicinity of Tanduay as they tried to get some goods to
be distributed to their clients. Tanduay’s security guard called the attention of private
respondent as to the fact that Mr. Villaruz’s was not wearing an Identification Card (I.D.
Card). Private respondent, then, assured the guard that he will secure a special permission
from the management to warrant the orderly release of goods. Instead of complying with
his compromise, private respondent lent his I.D. Card to Villaruz; and by reason of such
misrepresentation, private respondent and Mr. Villaruz got a clearance from Tanduay for
the release of the goods. However, the security guard, who saw the misrepresentation
committed by private respondent and Mr. Villaruz, accosted them and reported the matter
to the management of Tanduay.
On 23 May 2001, after conducting an administrative investigation, private respondent was
dismissed from the petitioning Company. On 01 June 2001, private respondent filed a
Complaint for Illegal Dismissal.
The Labor Arbiter dismissed the complaint, and ruled that respondent Rapid Movers
rightly exercised its prerogative to dismiss petitioner. On appeal, however, the NLRC
reversed the Labor Arbiter, and held that Rapid Movers had not discharged its burden to
prove the validity of petitioner’s dismissal from his employment. The CA reinstated the
decision of the Labor Arbiter, and upheld the right of Rapid Movers to discipline its
workers.
Issue:
Whether or not the dismissal of petitioner on the ground of willful disobedience to the
company regulation lawful
Ruling:
Petitioner was not guilty of willful disobedience; hence, his dismissal was illegal.
Petitioner maintains that willful disobedience could not be a ground for his dismissal
because he had acted in good faith and with the sole intention of facilitating deliveries for
Rapid Movers when he allowed Villaruz to use his company ID.
Willful disobedience to the lawful orders of an employer is one of the valid grounds to
terminate an employee under Article 296 (formerly Article 282) of the Labor Code. For
willful disobedience to be a ground, it is required that: (a) the conduct of the employee
must be willful or intentional; and (b) the order the employee violated must have been
reasonable, lawful, made known to the employee, and must pertain to the duties that he
had been engaged to discharge. Willfulness must be attended by a wrongful and perverse
mental attitude rendering the employee’s act inconsistent with proper subordination. In
any case, the conduct of the employee that is a valid ground for dismissal under the Labor
Code constitutes harmful behavior against the business interest or person of his employer.
It is implied that in every act of willful disobedience, the erring employee obtains undue
advantage detrimental to the business interest of the employer.
Under the foregoing standards, the disobedience attributed to petitioner could not be
justly characterized as willful within the contemplation of Article 296 of the Labor Code.
He neither benefitted from it, nor thereby prejudiced the business interest of Rapid
Movers. His explanation that his deed had been intended to benefit Rapid Movers was
credible. There could be no wrong or perversity on his part that warranted the termination
of his employment based on willful disobedience.
It is true that an employer is given a wide latitude of discretion in managing its own affairs.
The broad discretion includes the implementation of company rules and regulations and
the imposition of disciplinary measures on its employees. But the exercise of a
management prerogative like this is not limitless, but hemmed in by good faith and a due
consideration of the rights of the worker. In this light, the management rerogative will be
upheld for as long as it is not wielded as an implement to circumvent the laws and oppress
labor.
To us, dismissal should only be a last resort, a penalty to be meted only after all the
relevant circumstances have been appreciated and evaluated with the goal of ensuring
that the ground for dismissal was not only serious but true.
HEIRS OF LORENZO BUENSUCESO, REPRESENTED BY GERMAN BUENSUCESO,

AS SUBSTITUTED BY LLUMINADA BUENSUCESO, ET AL. VS. LOVY PEREZ,
SUBSTITUTED BY ERLINDA PEREZ-HERNANDEZ, ET AL.
G.R. No. 173926, March 6, 2013
J. Brion
While a tenant with a CLT is deemed the owner of a landholding, the CLT does not vest
full ownership on him. The tenant-holder of a CLT merely possesses an inchoate right that is
subject to compliance with certain legal preconditions for perfecting title and acquiring full
ownership. The holder must first comply with certain mandatory requirements to effect a
transfer of ownership. Failure on tenant’s part to comply with his obligations under the CLT
will not cause the automatic cancellation of the CLT nor of the disputed lot’s reversion to the
landowner.
Abandonment is a ground for the cancellation of a CLT and the forfeiture of the farmer-
beneficiary’s right to the landholding. Nevertheless, for a cancellation or forfeiture to take
place, the proper procedures must be observed and a final judgment rendered declaring a
cancellation or forfeiture.
Facts:
German was the son and heir of Lorenzo Buensuceso, the farmer-beneficiary of an
agricultural lot, situated in Sto. Cristo, Gapan, Nueva Ecija (disputed lot). The disputed lot
was awarded to Lorenzo pursuant to Operation Land Transfer under Presidential Decree
(P.D.) No. 27. Upon Lorenzo’s death, German allegedly immediately occupied the disputed
lot and had been cultivating and residing within its premises since then. German claimed
that, in 1989, Lovy Perez forcibly entered the disputed lot, thus, compelling him to file a
petition for recovery of possession with the PARAD.
In her answer with counterclaim, Lovy argued that she is the real and lawful tenant of the
disputed lot as evidenced by: (1)the duly acknowledged and registered contract of leasehold,
between her and the landowner, Joaquin Garces, which Lorenzo signed as a witness; and
(2)the certifications issued by the Municipal Agrarian Reform Officer (MARO) of the
Department of Agrarian Reform(DAR), Gapan, Nueva Ecija, and by the Barangay Agrarian
Reform Council stating that she is the disputed lot’s registered agricultural lessee. She also
claimed that she has been paying the lease rentals to Garces, as shown by receipts, and the
irrigation services beginning 1984 as certified to by the National Irrigation Administration.
The PARAD dismissed the petition. The DARAB affirmed in toto the PARAD’s decision. The
CA granted Lovy’s appeal and reversed the DARAB resolution. Hence, this petition.
Issue:
1. Whether or not petitioner is the owner of the disputed lot

2. Whether or not the lease contract between Lovy and Garces is valid
3. Whether or not Lorenzo abandoned the disputed lot
Ruling:
On the issue of ownership of the disputed lot
We agree with the CA that the mere issuance of the CLT does not vest full ownership on
the holder and does not automatically operate to divest the landowner of all of his rights
over the landholding. The holder must first comply with certain mandatory requirements
to effect a transfer of ownership. Under R.A. No. 6657 in relation with P.D. No. 2728 and
E.O. No. 228, the title to the landholding shall be issued to the tenant-farmer only upon the
satisfaction of the following requirements: (1) payment in full of the just compensation for
the landholding, duly determined by final judgment of the proper court; (2) possession of
the qualifications of a farmer-beneficiary under the law; (3) full-pledged membership of the
farmer-beneficiary in a duly recognized farmers’ cooperative; and (4) actual cultivation of
the landholding. We explained in several cases that while a tenant with a CLT is deemed
the owner of a landholding, the CLT does not vest full ownership on him. The tenant-holder
of a CLT merely possesses an inchoate right that is subject to compliance with certain legal
preconditions for perfecting title and acquiring full ownership. For these reasons, we hold
that Lorenzo’s right and claim to ownership over the disputed lot were, at most, inchoate.
In the same vein, we hold that German – as Lorenzo’s heir – is not automatically rendered
the owner of the disputed lot. German must also still first comply with certain procedural
and mandatory requirements in order to acquire Lorenzo’s rights under the CLT, including
the right to acquire ownership of the disputed lot. Under Section 27 of R.A. No. 6657, lands
not yet fully paid by the beneficiary may be transferred, with prior approval of the DAR, to
any heir of the beneficiary who, as a condition for such transfer, shall cultivate the land for
himself.
On the validity of the lease contract between Garces and Lovy
Garces had no authority to execute the lease contract. While Garces, as landowner, retained
an interest over the disputed lot, any perceived failure on Lorenzo’s part to comply with his
obligations under the CLT did not cause the automatic cancellation of the CLT nor of the
disputed lot’s reversion to Garces. Lands acquired under P.D. No. 27 do not revert to the
landowner, and this is true even if the CLT is cancelled. The land must be transferred back
to the government and Garces could not, by himself, institute Lovy as the new tenant-
beneficiary.
Thus, we declare the lease contract between Garces and Lovy as void. Consequently, we
cannot recognize Lovy’s claim that she is the present and actual agricultural lessee of the
disputed lot.
As to whether Lorenzo abandoned the disputed lot
Abandonment is a ground for the termination of tenancy relations under Section 8 of R.A.
No. 3844, and, under Section 22 of R.A. No. 6657 as well as under DAR Administrative Order
No. 02-94 in relation to Section 22, R.A. 6657, disqualifies the beneficiary of lots awarded
under P.D. No. 27 from its coverage. To additionally reiterate what we have discussed above,
actual cultivation of the farmholding is a mandatory condition for the transfer of rights
under the CLT to qualify the transferee as a beneficiary under Section 22 of R.A. No. 6657.
For abandonment to exist, the following requisites must concur: (1) a clear intent to
abandon; and (2) an external act showing such intent. The term is defined as the “willful
failure of the ARB, together with his farm household, to cultivate, till, or develop his land
to produce any crop, or to use the land for any specific economic purpose continuously for
a period of two calendar years.” It entails, among others, the relinquishment of possession
of the lot for at least two (2) calendar years and the failure to pay the amortization for the
same period. “What is critical in abandonment is intent which must be shown to be
deliberate and clear.” The intent must be established by the factual failure to work on the
landholding absent any valid reason as well as a clear intent, which is shown as a separate
element.
In the present case, Lorenzo, in allowing and acquiescing to the execution of the lease
contract through his signature, with presumed full awareness of its implications, effectively
surrendered his rights over the disputed lot. His signing of the lease contract constitutes
the external act of abandonment.
We reiterate that abandonment is a ground for the cancellation of a CLT and the forfeiture
of the farmer-beneficiary’s right to the landholding. Nevertheless, for a cancellation or
forfeiture to take place, the proper procedures must be observed and a final judgment
rendered declaring a cancellation or forfeiture.
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."
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 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
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.
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.
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 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

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
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.
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.
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.
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:
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
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 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.
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.
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
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;
(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)

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.
xxx
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
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.
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.
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
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 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 misconduct and loss of trust and confidence.
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.
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
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 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 trust and confidence.
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
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.
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
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.
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.
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 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:
(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his
employer or representative in connection with his work;
xxxx

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 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.
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.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.

— 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
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.
THE NEW PHILIPPINE SKYLANDERS, INC. and/or JENNIFER M. ENANO-

BOTE, Petitioners, v.FRANCISCO N. DAKILA, Respondent
G.R. No. 199547 : September 24, 2012
FACTS:
Respondent Dakila was employed by petitioner corporation as early as 1987 and

terminated for cause in April 1997 when the corporation was sold. In May 1997, he was
rehired as consultant by the petitioners under a Contract for Consultancy Services dated
April 30, 1997.
Thereafter, in a letter dated April 19, 2007, respondent Dakila informed petitioners of his
compulsory retirement effective May 2, 2007 and sought for the payment of his
retirement benefits pursuant to the Collective Bargaining Agreement. His request,
however, was not acted upon. Instead, he was terminated from service effective May 1,
2007.
Consequently, respondent Dakila filed a complaint for constructive illegal dismissal,

non-payment of retirement benefits, under/non-payment of wages and other benefits of
a regular employee, and damages against petitioners, The New Philippine Skylanders,
Inc. and its President and General Manager, Jennifer M. Eno-Bote, before the NLRC. He
averred, among others, that the consultancy contract was a scheme to deprive him of the
benefits of regularization, claiming to have assumed tasks necessary and desirable in the
trade or business of petitioners and under their direct control and supervision. In
support of his claim, he submitted, among others, copies of his time cards, Official
Business Itinerary Slips, Daily Attendance Sheets and other documents prescribing the
manner in which his tasks were to be accomplished under the control of the petitioners
and acknowledging his status as a regular employee of the corporation.
ISSUE:
Whether or not there is basis to hold petitioner Jennifer M. Eno-Bote, President and
General Manager of The New Philippine Skylanders, Inc., jointly and severally liable with
the corporation for the payment of the monetary awards.
RULING:
None.
The mere lack of authorized or just cause to terminate one's employment and the failure
to observe due process do not ipso facto mean that the corporate officer acted with
malice or bad faith. There must be independent proof of malice or bad faith which was
not established in this case. Perforce, petitioner Jennifer M. Eno-Bote cannot be made
personally liable for the liabilities of the corporation which, by legal fiction, has a
personality separate and distinct from its officers, stockholders and members. Moreover,
for lack of factual and legal bases, the awards of moral and exemplary damages cannot
also be sustained.
PARK HOTEL, J's PLAYHOUSE BURGOS CORP., INC., and/or GREGG HARBUTT,
General Manager, ATTY. ROBERTO ENRIQUEZ, President, and BILL
PERCY, Petitioners, v. MANOLO SORIANO, LESTER GONZALES, and YOLANDA
BADILLA, Respondents
G.R. No. 171118 : September 10, 2012
FACTS:
Respondent Manolo Soriano (Soriano) was hired by Park Hotel in July 1990 as
Maintenance Electrician, and then transferred to Burgos in 1992. Respondent Lester
Gonzales (Gonzales) was employed by Burgos as Doorman, and later promoted as
Supervisor. Respondent Yolanda Badilla (Badilla) was a bartender of J's Playhouse
operated by Burgos.
In October of 1997, Soriano, Gonzales and Badilla were dismissed from work for allegedly
stealing company properties. As a result, respondents filed complaints for illegal
dismissal, unfair labor practice, and payment of moral and exemplary damages and
attorney's fees, before the Labor Arbiter (LA). In their complaints, respondents alleged
that the real reason for their dismissal was that they were organizing a union for the
company's employees.
On the other hand, petitioners alleged that aside from the charge of theft, Soriano and
Gonzales have violated various company rules and regulations contained in several
memoranda issued to them. After dismissing respondents, Burgos filed a case for
qualified theft against Soriano and Gonzales before the Makati City Prosecutor's Office,
but the case was dismissed for insufficiency of evidence.
ISSUE:
Whether or not the respondents were validly dismissed.
RULING:
No.
The requisites for a valid dismissal are: (a) the employee must be afforded due
process, i.e., he must be given an opportunity to be heard and defend himself; and (b)
the dismissal must be for a valid cause as provided in Article 282 of the Labor Code, or
for any of the authorized causes under Articles 283 and 284 of the same Code. In the case
before us, both elements are completely lacking. Respondents were dismissed without
any just or authorized cause and without being given the opportunity to be heard and
defend themselves. The law mandates that the burden of proving the validity of the
termination of employment rests with the employer. Failure to discharge this evidentiary
burden would necessarily mean that the dismissal was not justified and, therefore,
illegal. Unsubstantiated suspicions, accusations, and conclusions of employers do not
provide for legal justification for dismissing employees. In case of doubt, such cases
should be resolved in favor of labor, pursuant to the social justice policy of labor laws
and the Constitution.
Anent the unfair labor practice, Article 248 (a) of the Labor Code considers it an unfair
labor practice when an employer interferes, restrains or coerces employees in the
exercise of their right to self-organization or the right to form an association. In order to
show that the employer committed unfair labor practice under the Labor Code,
substantial evidence is required to support the claim. Substantial evidence has been
defined as such relevant evidence as a reasonable mind might accept as adequate to
support a conclusion. In the case at bar, respondents were indeed unceremoniously
dismissed from work by reason of their intent to form and organize a union. As found by
the LA:
The immediate impulse of respondents (petitioners herein), as in the case at bar, was to
terminate the organizers. Respondents (petitioners herein) have to cripple the union at
sight, to frustrate attempts of employees from joining or supporting it, preventing them,
at all cost and to frustrate the employees bid to exercise their right to self-organization. x
xx
MYLENE CARVAJAL, Petitioner, v. LUZON DEVELOPMENT BANK AND/OR OSCAR

Z. RAMIREZ, Respondents
G.R. NO. 186169 - August 1, 2012
FACTS:
Petitioner Mylene Carvajal was employed as a trainee-teller by respondent Luzon

Development Bank (Bank) on 28 October 2003 under a six-month probationary
On 10 December 2003, the Bank sent petitioner a Memorandum directing her to explain
in writing why she should not be subjected to disciplinary action for "chronic tardiness"
on November 3, 5, 6, 14, 18, 20, 21 and 28 2003 or for a total of eight (8) times. Petitioner
apologized in writing and explained that she was in the process of making adjustments
regarding her work and house chores. She was thus reprimanded in writing and
reminded of her status as a probationary employee. Still, on 6 January 2004, a second
Memorandum was sent to petitioner directing her to explain why she should not be
suspended for "chronic tardiness" on 13 occasions or on December 2, 3, 4, 5, 8, 10, 11, 12,
15, 16, 18, 22, and 23 2003. On 7 January 2004, petitioner submitted her written
explanation and manifested her acceptance of the consequences of her actions. On 12
January 2004, petitioner was informed, through a Memorandum, of her suspension for
three (3) working days without pay effective 21 January 2004. Finally, in a Memorandum
dated 22 January 2004, petitioner s suspension was lifted but in the same breath, her
employment was terminated effective 23 January 2004.
ISSUE:
Assuming that petitioner was not apprised of the standards concomitant to her job, i.e.
standard on punctuality – must abide by the work hours imposed by the bank – whether
or not petitioner may be validly terminated for failure to qualify as a regular employee by
reason of habitual tardiness.
RULING:
Yes.
A probationary employee, like a regular employee, enjoys security of tenure. However, in

cases of probationary employment, aside from just or authorized causes of termination,
an additional ground is provided under Article 281 of the Labor Code, i.e., 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.
Punctuality is a reasonable standard imposed on every employee, whether in

government or private sector. As a matter of fact, habitual tardiness is a serious offense
that may very well constitute gross or habitual neglect of duty, a just cause to dismiss a
regular employee. Assuming that petitioner was not apprised of the standards
concomitant to her job, it is but common sense that she must abide by the work hours
imposed by the bank. Satisfactory performance is and should be one of the basic
standards for regularization. Naturally, before an employer hires an employee, the
former can require the employee, upon his engagement, to undergo a trial period during
which the employer determines his fitness to qualify for regular employment based on
reasonable standards made known to him at the time of engagement.
It is evident that the primary cause of respondent’s dismissal from her probationary
employment was her “chronic tardiness.” At the very start of her employment, petitioner
already exhibited poor working habits. Even during her first month on the job, she
already incurred eight (8) tardiness. Respondent also cited other infractions such as
unauthorized leaves of absence, mistake in clearing of a check, and underperformance.
All of these infractions were not refuted by petitioner.
LEGEND HOTEL (MANILA), owned by TITANIUM CORPORATION, and/or,

NELSON NAPUD, in his capacity as the President of Petitioner
Corporation, Petitioner, v. HERNANI S. REALUYO, also known as JOEY
ROA, Respondent.
G.R. NO. 153511 - July 18, 2012
FACTS:
This labor case for illegal dismissal involves a pianist employed to perform in the
restaurant of a hotel. On August 9, 1999, respondent, whose stage name was Joey R. Roa,
filed a complaint for alleged unfair labor practice, constructive illegal dismissal, and the
underpayment/nonpayment of his premium pay for holidays, separation pay, service
incentive leave pay, and 13111 month pay. He prayed for attorney's fees, moral damages
off P100,000.00 and exemplary damages for P100,000.00.
Respondent averred that he had worked as a pianist at the Legend Hotel s Tanglaw
Restaurant from September 1992 with an initial rate of P400.00/night that was given to
him after each night s performance; that his rate had increased to P750.00/night; and
that during his employment, he could not choose the time of performance, which had
been fixed from 7:00 pm to 10:00 pm for three to six times/week. He added that the
Legend Hotel s restaurant manager had required him to conform with the venue s motif;
that he had been subjected to the rules on employees representation checks and chits, a
privilege granted to other employees; that on July 9, 1999, the management had notified
him that as a cost-cutting measure his services as a pianist would no longer be required
effective July 30, 1999; that he disputed the excuse, insisting that Legend Hotel had been
lucratively operating as of the filing of his complaint; and that the loss of his
employment made him bring his complaint.
In its defense, petitioner denied the existence of an employer-employee relationship with

respondent, insisting that he had been only a talent engaged to provide live music at
Legend Hotel s Madison Coffee Shop for three hours/day on two days each week; and
stated that the economic crisis that had hit the country constrained management to
dispense with his services.
ISSUES:
Whether or not respondent’s petition for certiorari before the CA was improper as a
remedy against the NLRC due to its raising mainly questions of fact and because it did
not demonstrate that the NLRC was guilty of grave abuse of discretion.
respondent.
If respondent was petitioner’s employee, whether or not he was validly terminated.
Ruling:
No. Here, Certiorari was the proper recourse.
There is no longer any doubt that a petition for certiorari brought to assail the decision
of the NLRC may raise factual issues, and the CA may then review the decision of the
NLRC and pass upon such factual issues in the process. The power of the CA to review
factual issues in the exercise of its original jurisdiction to issue writs of certiorari is based
on Section 9 of Batas Pambansa Blg. 129, which pertinently provides that the CA "shall
have the power to try cases and conduct hearings, receive evidence and perform any and
all acts necessary to resolve factual issues raised in cases falling within its original and
appellate jurisdiction, including the power to grant and conduct new trials or further
proceedings."
Yes.
A review of the circumstances reveals that respondent was, indeed, petitioner s

employee. He was undeniably employed as a pianist in petitioner s Madison Coffee
Shop/Tanglaw Restaurant from September 1992 until his services were terminated on
July 9, 1999.
First of all, petitioner actually wielded the power of selection at the time it entered into
the service contract dated September 1, 1992 with respondent. This is true,
notwithstanding petitioner s insistence that respondent had only offered his services to
provide live music at petitioner s Tanglaw Restaurant, and despite petitioner s position
that what had really transpired was a negotiation of his rate and time of availability. The
power of selection was firmly evidenced by, among others, the express written
recommendation dated January 12, 1998 by Christine Velazco, petitioner s restaurant
manager, for the increase of his remuneration.
Petitioner could not seek refuge behind the service contract entered into with
respondent. It is the law that defines and governs an employment relationship, whose
terms are not restricted to those fixed in the written contract, for other factors, like the
nature of the work the employee has been called upon to perform, are also considered.
The law affords protection to an employee, and does not countenance any attempt to
subvert its spirit and intent. Any stipulation in writing can be ignored when the
employer utilizes the stipulation to deprive the employee of his security of tenure. The
inequality that characterizes employer-employee relations generally tips the scales in
favor of the employer, such that the employee is often scarcely provided real and better
options.
Secondly, petitioner argues that whatever remuneration was given to respondent were
only his talent fees that were not included in the definition of wage under the Labor
Code; and that such talent fees were but the consideration for the service contract
entered into between them.
The argument is baseless.
Respondent was paid P400.00 per three hours of performance from 7:00 pm to 10:00 pm,
three to six nights a week. Such rate of remuneration was later increased to P750.00
upon restaurant manager Velazco s recommendation. There is no denying that the
remuneration denominated as talent fees was fixed on the basis of his talent and skill
and the quality of the music he played during the hours of performance each night,
taking into account the prevailing rate for similar talents in the entertainment industry.
Respondent s remuneration, albeit denominated as talent fees, was still considered as

included in the term wage in the sense and context of the Labor Code, regardless of how
petitioner chose to designate the remuneration. Anent this, Article 97(f) of the Labor
Code clearly states:
xxx wage paid to any employee shall mean the remuneration or earnings, however
designated, capable of being expressed in terms of money, whether fixed or ascertained
on a time, task, piece, or commission basis, or other method of calculating the same,
which is payable by an employer to an employee under a written or unwritten contract
of employment for work done or to be done, or for services rendered or to be rendered,
and includes the fair and reasonable value, as determined by the Secretary of Labor, of
board, lodging, or other facilities customarily furnished by the employer to the
employee.
Clearly, respondent received compensation for the services he rendered as a pianist in

petitioner s hotel. Petitioner cannot use the service contract to rid itself of the
consequences of its employment of respondent. There is no denying that whatever
amounts he received for his performance, howsoever designated by petitioner, were his
wages.
It is notable that under the Rules Implementing the Labor Code and as held in Tan v.
Lagrama, every employer is required to pay his employees by means of a payroll, which
should show in each case, among others, the employee s rate of pay, deductions made
from such pay, and the amounts actually paid to the employee. Yet, petitioner did not
present the payroll of its employees to bolster its insistence of respondent not being its
employee.
That respondent worked for less than eight hours/day was of no consequence and did
not detract from the CA s finding on the existence of the employer-employee
relationship. In providing that the " normal hours of work of any employee shall not
exceed eight (8) hours a day," Article 83 of the Labor Code only set a maximum of
number of hours as "normal hours of work" but did not prohibit work of less than eight
hours.
Thirdly, the power of the employer to control the work of the employee is considered the
most significant determinant of the existence of an employer-employee relationship.
This is the so-called control test, and is premised on whether the person for whom the
services are performed reserves the right to control both the end achieved and the
manner and means used to achieve that end.
Petitioner submits that it did not exercise the power of control over respondent and cites
the following to buttress its submission, namely: (a) respondent could beg off from his
nightly performances in the restaurant for other engagements; (b) he had the sole
prerogative to play and perform any musical arrangements that he wished; (c) although
petitioner, through its manager, required him to play at certain times a particular music
or song, the music, songs, or arrangements, including the beat or tempo, were under his
discretion, control and direction; (d) the requirement for him to wear barong Tagalog to
conform with the Filipiniana motif of the venue whenever he performed was by no
means evidence of control; (e) petitioner could not require him to do any other work in
the restaurant or to play the piano in any other places, areas, or establishments, whether
or not owned or operated by petitioner, during the three hour period from 7:00 pm to
10:00 pm, three to six times a week; and (f) respondent could not be required to sing,
dance or play another musical instrument.
A review of the records shows, however, that respondent performed his work as a pianist
under petitioner s supervision and control. Specifically, petitioner s control of both the
end achieved and the manner and means used to achieve that end was demonstrated by
the following, to wit:
He could not choose the time of his performance, which petitioners had fixed from 7:00
pm to 10:00 pm, three to six times a week;
He could not choose the place of his performance;
The restaurant s manager required him at certain times to perform only Tagalog songs or
music, or to wear barong Tagalog to conform to the Filipiniana motif;
He was subjected to the rules on employees representation check and chits, a privilege
granted to other employees.
Relevantly, it is worth remembering that the employer need not actually supervise the
performance of duties by the employee, for it sufficed that the employer has the right to
wield that power.
Lastly, petitioner claims that it had no power to dismiss respondent due to his not being
even subject to its Code of Discipline, and that the power to terminate the working
relationship was mutually vested in the parties, in that either party might terminate at
will, with or without cause.
The claim is contrary to the records. Indeed, the memorandum informing respondent of
the discontinuance of his service because of the present business or financial condition
of petitioner showed that the latter had the power to dismiss him from employment.
No.
Retrenchment is one of the authorized causes for the dismissal of employees recognized
by the Labor Code. It is a management prerogative resorted to by employers to avoid or
to minimize business losses. On this matter, Article 283 of the Labor Code states:
Article 283. Closure of establishment and reduction of personnel. The employer may also
terminate the employment of any employee due to the installation of labor-saving
devices, redundancy, retrenchment to prevent losses or the closing or cessation of
operation of the establishment or undertaking unless the closing is for the purpose of
circumventing the provisions of this Title, by serving a written notice on the workers and
the Ministry of Labor and Employment at least one (1) month before the intended date
thereof. xxx. In case of retrenchment to prevent losses and in cases of closures or
cessation of operations of establishment or undertaking not due to serious business
losses or financial reverses, the separation pay shall be equivalent to one (1) month pay
or at least one-half (1/2) month pay for every year of service, whichever is higher. A
The Court has laid down the following standards that an employer should meet to justify
retrenchment and to foil abuse, namely:
The expected losses should be substantial and not merely de minimis in extent;
The substantial losses apprehended must be reasonably imminent;
The retrenchment must be reasonably necessary and likely to effectively prevent the
expected losses; and
The alleged losses, if already incurred, and the expected imminent losses sought to be
forestalled must be proved by sufficient and convincing evidence.
Anent the last standard of sufficient and convincing evidence, it ought to be pointed out
that a less exacting standard of proof would render too easy the abuse of retrenchment
as a ground for termination of services of employees.
In termination cases, the burden of proving that the dismissal was for a valid or
authorized cause rests upon the employer. Here, petitioner did not submit evidence of
the losses to its business operations and the economic havoc it would thereby
imminently sustain. It only claimed that respondent s termination was due to its
"present business/financial condition." This bare statement fell short of the norm to
show a valid retrenchment. Hence, we hold that there was no valid cause for the
retrenchment of respondent.
Indeed, 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. Thus, by its
failure to present sufficient and convincing evidence to prove that retrenchment was
necessary, respondent s termination due to retrenchment is not allowed.
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-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.
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 trust and confidence.
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.
obvious intention of 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.
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 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 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
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 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 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

in character, 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 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:
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.
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 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.
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:
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

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 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 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 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, 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.
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.
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.
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.
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
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 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.
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 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 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

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.
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
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, 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
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.
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 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:
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

(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
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.
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.
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.
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. Hence, this petition.
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.

in character, and implies wrongful intent and not mere error in judgment. To constitute a
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. 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
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.
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.
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. 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 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 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.
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 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.
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.”
Jurisprudence also recognizes the status of regular seasonal employees.
Art. 280. Regular and casual employment. The provisions of written agreement to the
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.

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.
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 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 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:

(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
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
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.
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

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

(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 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.
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.
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 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.
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.
ROLANDO DS. TORRES vs. RURAL BANK OF SAN JUAN, INC. ET AL.
G.R. No. 184520. March 13, 2013
J. Reyes
An employer has the right to dismiss an employee by reason of willful breach of the
trust and confidence reposed in him. To temper the exercise of such prerogative, the law
imposes the burden of proof upon the employer to show that the dismissal of the employee
is for just cause failing which would mean that the dismissal is not justified. The law
mandates that before validity can be accorded to a dismissal premised on loss of trust and
confidence, two requisites must concur, viz: (1) the employee concerned must be holding a
position of trust; and (2) the loss of trust must be based on willful breach of trust founded
on clearly established facts. The SC ruled that the act of issuing the clearance could not be
considered a willful breach of that trust. The Court has repeatedly emphasized that the act
that breached the trust must be willful such that it was done intentionally, knowingly, and
purposely, without justifiable excuse
Facts:
The petitioner was initially hired by Rural Bank of San Juan Inc. (RBSJI) as Personnel
and Marketing Manager in 1991. In June 1996, the petitioner was offered the position of
Vice-President for RBSJI’s newly created department, Allied Business Ventures. He
accepted the offer and concomitantly relinquished his post. The vacancy created was filled
by respondent Jobel who temporarily held the position concurrently as a Corporate
Planning and Human Resources Development Head.
Petitioner was temporarily assigned as the manager of the N. Domingo branch of

respondent RBSJI, in view of the resignation of Jacinto Figuroa. Three days after his
assignment, Figuroa requested the petitioner to signed a standard employment clearance
pertaining to the former’s accountabilities with RBSJI. The petitioner, however, issued a
clearance only for the Figuroa’s paid cash advances and salary loan, after being shown
receipts by the bank’s cashier.
It turned out that Figuroa is still liable for unpaid cash advances and involved in a
P11-million fraudulent transaction that exposed the bank to a lawsuit. Because the clearance
issued by the petitioner effectively barred the bank from going after Figuroa, petitioner was
dismissed from the service by RBSJI on the ground of loss of trust and confidence.
Aggrieved, the petitioner filed a complaint for illegal dismissal. The Labor Arbiter
ruled in favor of the petitioner holding that the act of issuing the clearance was not a valid
and justifiable ground for the bank to lose trust and confidence in him. The Labor Arbiter
was affirmed by the National Labor Relations Commission (NLRC).
The Court of Appeals, however, reversed the ruling of the NLRC and held that the
petitioner was dismissed for just cause as he failed to exercise prudence in clearing the bank
manager of his accountabilities given that the same were yet to be audited.
Issue:
Whether or not the petitioner was validly dismissed from employment
Ruling:
The respondents failed to prove that the petitioner was dismissed for a just cause.
As provided in Article 282 of the Labor Code, an employer has the right to dismiss
an employee by reason of willful breach of the trust and confidence reposed in him. To
temper the exercise of such prerogative, the law imposes the burden of proof upon the
employer to show that the dismissal of the employee is for just cause failing which would
mean that the dismissal is not justified.
The law mandates that before validity can be accorded to a dismissal premised on
loss of trust and confidence, two requisites must concur, viz: (1) the employee concerned
must be holding a position of trust; and (2) the loss of trust must be based on willful breach
of trust founded on clearly established facts.
The presence of the first requisite is thus certain. Anent the second requisite, the
Court finds that the respondents failed to meet their burden of proving that the petitioner’s
dismissal was for a just cause.
As correctly argued by the petitioner, the onus of submitting a copy of the clearance
allegedly exonerating Figuroa from all his accountabilities fell on the respondents. It was
the single and absolute evidence of the petitioner’s act that purportedly kindled the
respondents’ loss of trust. Without it, the respondents’ allegation of loss of trust and
confidence has no leg to stand on and must thus be rejected. Moreover, one can reasonably
expect that a copy of the clearance, an essential personnel document, is with the
respondents. Their failure to present it and the lack of explanation for such failure or the
document’s unavailability props up the presumption that its contents are unfavorable to
the respondents’ assertions.
At any rate, the absence of the clearance upon which the contradicting claims of the
parties could ideally be resolved should work against the respondents. With only sworn
pleadings as proof of their opposite claims on the true contents of the clearance, the Court
is bound to apply the principle that the scales of justice should be tilted in favor of labor in
case of doubt in the evidence presented.
The SC ruled that the act of issuing the clearance could not be considered a willful
breach of that trust. The Court has repeatedly emphasized that the act that breached the
trust must be willful such that it was done intentionally, knowingly, and purposely, without
justifiable excuse, as distinguished from an act done carelessly, thoughtlessly, heedlessly or
inadvertently.
ZENAIDA D. MENDOZA vs. HMS CREDIT CORPORATION, et. al.

G.R. No. 187232, April 17, 2013
CJ. SERENO
Loss of trust is a legal ground for terminating the services of an employee particularly
for employees holding managerial positions. The discovery of a falsehood of a managerial
employee where she claimed to be a CPA but in fact was not is a ground constituting loss of
trust.
But having a sufficient ground for termination is not enough– the Supreme Court
emphasized the need for performing the proper procedure for termination. If the dismissal is
based on just cause, then the non-compliance with non-procedural due process should not
render the termination from employment illegal or ineffectual. Instead, the employer must
indemnify the employee in the form of nominal damages.
Facts:
Petitioner Zenaida D. Mendoza (Mendoza) was the Chief Accountant of respondent

HMS Credit Corporation (HMS Credit). During her employment, she simultaneously
serviced three other three companies, all part of the Honda Motor Sports Group (HMS
Group), namely, Honda Motor Sports Corporation (Honda Motors), Beta Motor Trading
Incorporated (Beta Motor) and Jianshe Cycle World (Jianshe). Mendoza avers that after she
submitted the audited financial statements of Honda Motors, Beta Motor, and Jianshe, her
superior summoned Mendoza to advise her of her termination from service. She claims
that she was even told to leave the premises without being given the opportunity to collect
her personal belongings and was prohibited from entering the premises of the office. On
the other hand, respondents maintain that Mendoza was hired on the basis of her
qualification as a Certified Public Accountant (CPA), which turned out to be a
misrepresentation. They likewise contend that not only did she fail to disclose knowledge
of the resignations of two HMS Group officers, Art Labasan (Labasan) and Jojit de la Cruz
(de la Cruz), and their subsequent transfer to a competitor company, but she also had a
hand in pirating them. Thus, on 12 April 2002, they supposedly confronted her about these
matters. In turn, she allegedly told them that if they had lost their trust in her, it would be
best for them to part ways.
The accountant filed a case for illegal dismissal with the National Labor Relations
Commission (NLRC), where the Labor Arbiter ruled that she had been illegally dismissed
and that her dismissal was done in violation of due process requirements. On appeal, the
NLRC found that there was no illegal dismissal as the parties entered into a compromise
agreement where the accountant would voluntarily resign in exchange for separation
benefits. This decision was affirmed by the Court of Appeals
Issues:
1. Whether or not HMS Credit Corporation et.al. had timely filed their appeal with
the NLRC
2. Whether or not Mendoza was illegally dismissed
Ruling:
Timely filing of the appeal before the NLRC
The relevant portion of Article 223 of the Labor Code on appeals of decisions, awards
or orders of the Labor Arbiter as follows:
Art. 223. x x x In case of a judgment involving a monetary award, an appeal by the
employer may be perfected only upon the posting of a cash or surety bond issued by a
reputable bonding company duly accredited by the Commission in the amount equivalent
to the monetary award in the judgment appealed from.
In Pasig Cylinder v. Rollo, this Court explained that the required posting of a bond
equivalent to the monetary award in the appealed judgment may be liberally interpreted
as follows:
x x x. True, Article 223 of the Labor Code requires the filing of appeal bond "in the
amount equivalent to the monetary award in the judgment appealed from." However, both
the Labor Code and this Court’s jurisprudence abhor rigid application of procedural rules
at the expense of delivering just settlement of labor cases. Petitioners’ reasons for their
filing of the reduced appeal bond — the downscaling of their operations coupled with the
amount of the monetary award appealed — are not unreasonable. Thus, the recourse
petitioners adopted constitutes substantial compliance with Article 223 consistent with our
ruling in Rosewood Processing, Inc. v. NLRC, where we allowed the appellant to file a
reduced bond of P50,000 (accompanied by the corresponding motion) in its appeal of an
arbiter’s ruling in an illegal termination case awarding P789,154.39 to the private
respondents.
In the case at bar, HMS et. al. filed a Motion to Reduce Appeal Bond, tendering the
sum of P650,000 – instead of the P1,025,081.82 award stated in the Decision of the Labor
Arbiter – because it was allegedly what respondents could afford, given the business losses
they had suffered at that time. Upon the denial by the NLRC of this Motion, respondents
promptly complied with its directive to post the differential in the amount of P122, 801.66,
which had been computed without including the award of moral and exemplary damages
and attorney’s fees. Following the pronouncement in Pasig Cylinder, the CA was correct in
holding that the appeal was timely filed on account of respondents’ substantial compliance
with the requirement under Article 223.
Illegal dismissal of Mendoza
HMS Credit were unable to discharge their burden to prove the contemporaneous
existence of an intention on the part of Mendoza to resign and an overt act of resignation.
Aside from their self-serving allegation that she had offered to resign after they had
expressed their loss of trust in her, there is nothing in the records to show that she
voluntarily resigned from her position in their company. In this regard, it is worthy to
underscore the established rule that the filing of a complaint for illegal dismissal is
inconsistent with resignation or abandonment. Moreover, the conclusion of the NLRC and
the CA that Mendoza voluntarily resigned in consideration of respondents’ supposed
payment of a settlement is bereft of any basis. The lower tribunals merely surmised that
the parties forged a compromise agreement despite respondents’ own admission that they
never decided thereon. In fact, the records are clear that none of the parties claimed the
existence of any settlement in exchange for her resignation.
From the foregoing discussion, it is evident that although there was a just cause for
terminating the services of Mendoza, respondents were amiss in complying with the two-
notice requirement. Following the prevailing jurisprudence on the matter, if the dismissal
is based on a just cause, then the non-compliance with procedural due process should not
render the termination from employment illegal or ineffectual. Instead, the employer must
indemnify the employee in the form of nominal damages. Therefore, the dismissal of
Mendoza should be upheld, and respondents cannot be held liable for the payment of
either backwages or separation pay. Considering all the circumstances surrounding this
case, this Courts finds the award of nominal damages in the amount of P30,000 to be in
order.
MANILA JOCKEY CLUB, INC. vs. AIMEE TRAJANO

G.R. No. 160982, June 26, 2013
J. Bersamin
The loss of trust and confidence, to be a valid ground for dismissal, must be based on
a wilful breach of trust and confidence founded on clearly established facts.“A breach is wilful
if it is done intentionally, knowingly and purposely, without justifiable excuse, as
distinguished from an act done carelessly, thoughtlessly, heedlessly or inadvertently. It must
rest on substantial grounds and not on the employer‘s arbitrariness, whims, caprices or
suspicion; otherwise, the employee would eternally remain at the mercy of the employer. An
ordinary breach is not enough. Moreover, the loss of trust and confidence must be related to
the employee‘s performance of duties. In this case, as a selling teller, respondent held a
position of trust and confidence. Although the act complained of – the unauthorized
cancellation of the ticket was related to her work as a selling teller, petitioner did not establish
that the cancellation of the ticket was intentional, knowing and purposeful on her part in
order for her to have breached the trust and confidence reposed in her by petitioner, instead
of being only out of an honest mistake.
Facts:
MJCI had employed Trajano as a selling teller of betting tickets since November
1989. On April 25, 1998, a complaint against Trajano brought to the reliever-supervisor by
a certain bettor named “Tito” who had reported the cancellation of his ticket that had
already won the first leg (Race 14) of the daily double bet. The reliever-supervisor told
Trajano to submit a written explanation about the ticket cancellation incident. The next
day (April 26, 1998), she submitted the handwritten explanation to Atty. Joey R. Galit,
Assistant Racing Supervisor. She then resumed her work as a selling teller, until later that
day, when she received an inter-office correspondence signed by Atty. Galit informing her
that she was being placed under preventive suspension effective April 28, 1998, for an
unstated period of time. At the end of thirty days of her suspension, Trajano reported for
work. But she was no longer admitted. She then learned that she had been dismissed when
she read a copy of an inter-office correspondence about her termination posted in a selling
station of MJCI.
Trajano instituted a complaint for illegal dismissal against MJCI in the Department
of Labor and Employment (DOLE). She claimed that her dismissal was not based on any of
the grounds enumerated under Article 282 of the Labor Code; that her dismissal on the
ground of unauthorized cancellation of ticket had no basis.
The Labor Arbiter dismissed the complaint for illegal dismissal upon finding that
Trajano’s gross negligence in the performance of her job warranted the termination of her
employment. Trajano appealed to the NLRC. The NLRC rendered its decision reversing and
setting aside the decision of the Labor Arbiter and declaring Trajano to have been illegally
dismissed by MJCI without just or authorized cause and without due process of law. The
CA upheld the decision of the NLRC.
Issue:
1. Whether or not there was just cause when Petitioner (MJCI) dismissed Respondent
Aimee O. Trajano from the service
2. Whether or not Petitioner MJCI complied with the due process requirement when
it effected the dismissal of Respondent Trajano.
Ruling:
The valid termination of an employee may either be for just causes under Article 282
or for authorized causes under Article 283 and Article 284 all of the Labor Code. Loss of the
employer‘s trust and confidence is a just cause under Article 282(c), a provision that ideally
applies only to cases involving an employee occupying a position of trust and confidence,
or to a situation where the employee has been routinely charged with the care and custody
of the employer‘s money or property. But the loss of trust and confidence, to be a valid
ground for dismissal, must be based on a willful breach of trust and confidence founded on
clearly established facts. “A breach is willful,” according to AMA Computer College, Inc. v.
Garay, G.R. No. 162468, January 23, 2007, “if it is done intentionally, knowingly and
purposely, without justifiable excuse, as distinguished from an act done carelessly,
thoughtlessly, heedlessly or inadvertently. It must rest on substantial grounds and not on
the employer‘s arbitrariness, whims, caprices or suspicion; otherwise, the employee would
eternally remain at the mercy of the employer.” An ordinary breach is not enough.
Moreover, the loss of trust and confidence must be related to the employee‘s
performance of duties. In this case, as a selling teller, respondent held a position of trust
and confidence. The nature of her employment required her to handle and keep in custody
the tickets issued and the bets made in her assigned selling station. The bets were funds
belonging to her employer. Although the act complained of – the unauthorized
cancellation of the ticket (i.e., unauthorized because it was done without the consent of
the bettor) – was related to her work as a selling teller, petitioner did not establish that the
cancellation of the ticket was intentional, knowing and purposeful on her part in order for
her to have breached the trust and confidence reposed in her by petitioner, instead of being
only out of an honest mistake.
As for the requirement of giving the notice of dismissal, the posting of the notice of
termination at MJCI’s selling stations did not satisfy it, and the fact that Trajano was
eventually notified of her dismissal did not cure the infirmity. It is notable, indeed, that the
NLRC explicitly found in its October 27, 1999 decision that MJCI did not comply, to wit:
In this case, there is the first written notice required but none of the second notice
that informs her of the employer’s or MJCI’s decision to dismiss her. In fact, it was not even
shown that the investigator, Atty. Joey Galit, whose office is that of an assistant racing
manager, has the company’s authority to dismiss the complainant, since that power is
usually lodged with the head of the human resource department or with the President, but
unusual with an assistant manager. The complainant asserts that she was never furnished
a copy of her termination letter and what she had submitted as evidence on record was one
of those copies posted on all selling stations of MJCI. This accusation was not answered by
the respondents nor have they ever proved that they had furnished the complainant a
written notice of the decision of MJCI to terminate her services on the ground of serious
violation of company policy (dishonesty).
CENTURY IRON WORKS, INC. and BENITO CHUA vs. ELETO B. BAÑAS
G.R. No. 184116, June 19, 2013
J. Brion
Loss of confidence applies to: (1) employees occupying positions of trust and
confidence, the managerial employees; and (2) employees who are routinely charged with the
care and custody of the employer’s money or property which may include rank-and-file
employees. Examples of rank-and-file employees who may be dismissed for loss of confidence
are cashiers, auditors, property custodians, or those who, in the normal routine exercise of
their functions, regularly handle significant amounts of money or property. Thus, in this case,
a rank-and-file employee who is routinely charged with the care and custody of the employer‘s
money or property may be dismissed on the ground of loss of confidence.
Facts:
Eleto B. Bañas worked at Century Iron as an inventory comptroller. Century Iron

received letters of complaint from its gas suppliers regarding alleged massive shortage of
empty gas cylinders; after investigation of Century Iron, it found that Bañas failed to make
a report of the missing cylinders. Century terminated Bañas’ services on grounds of loss of
trust and confidence, and habitual and gross neglect of duty making the latter file a case of
illegal dismissal. Bañas alleged that he merely worked as an inventory clerk who is not
responsible for the lost cylinders and pointed out that his tasks were limited to conducting
periodic and yearly inventories, and submitting his findings to the personnel officer. He
maintained that unlike a supervisory employee, he was not required to post a bond and he
did not have the authority to receive and/or release cylinders in the way that a
warehouseman does. Therefore, he cannot be terminated on the ground of loss of
confidence. Century countered that Bañas was a supervisory employee who was responsible
for the lost cylinders. They maintained that Bañas committed numerous infractions during
his tenure amounting to gross and habitual neglect of duty. They reiterate that since Bañas
was a supervisory employee, he could be dismissed on the ground of loss of confidence.
Finally, the petitioners claim that Bañas was grossly and habitually negligent in his duty
which further justified his termination.
Issues:
1. Whether or not loss of confidence is a ground for terminating a rank-and-file

employee who is not routinely charged with the care and custody of the employer’s
money or property
2. Whether or not Bañas was grossly and habitually neglectful of his duties
Ruling:
Bañas did not occupy a position of trust and confidence nor was he in charge of the
care and custody of Century Iron’s money or property.
Bañas did not occupy a position of trust and confidence nor was he routinely in
charge with the care and custody of Century Iron’s money or property, his termination on
the ground of loss of confidence was misplaced. The Supreme Court pointed out in this
respect that loss of confidence applies to: (1) employees occupying positions of trust and
confidence, the managerial employees; and (2) employees who are routinely charged with
the care and custody of the employer’s money or property which may include rank-and-file
employees. Examples of rank-and-file employees who may be dismissed for loss of
confidence are cashiers, auditors, property custodians, or those who, in the normal routine
Thus, the phrasing of the petitioners’ second assignment of error is inaccurate because a
rank-and-file employee who is routinely charged with the care and custody of the
employer’s money or property may be dismissed on the ground of loss of confidence.
Bañas was grossly and habitually neglectful of his duties.
The evidence on record shows that Bañas committed numerous infractions in his
one year and eleven-month stay in Century Iron. On different instances, Century Iron gave
Bañas a warning for failing to check the right quantity of materials subject of his inventory;
he also went undertime; and two instances of an absence without asking for prior leave. He
was further warned for failure to implement proper warehousing and housekeeping
procedures; and, he failed to ensure sufficient supplies of oxygen-acetylene gases during
business hours. Century Iron’s accounting department also found out that Bañas made
double and wrong entries in his inventory.
Under 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. Fraud and willful neglect of duties imply bad faith of the employee in failing to
perform his job, to the detriment of the employer and the latter’s business. Habitual
neglect, on the other hand, implies repeated failure to perform one's duties for a period of
time, depending upon the circumstances.
Such numerous infractions are sufficient to hold him grossly and habitually
negligent. His repeated negligence is not tolerable. The totality of infractions or the number
of violations he committed during his employment merits his dismissal. Moreover, gross
and habitual negligence includes unauthorized absences and tardiness, as well as gross
inefficiency, negligence and carelessness.
Besides, the determination of who to keep in employment and who to dismiss for
cause is one of Century Iron's prerogatives. Time and again, SC has recognized that the
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. It would be the height of injustice if we force an
employer to retain the services of an employee who does not value his work.
CONCRETE SOLUTIONS, INC. VS. ARTHUR CABUSAS

G.R. No. 177812, June 19, 2013
J. Peralta
To constitute abandonment, two elements must concur, to wit: (1) the 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. Abandonment is a matter of intention and cannot
lightly be presumed from certain equivocal acts. To be a valid cause for dismissal for
abandonment, there must be clear proof of deliberate and unjustified intent to sever the
employer employee relationship. Clearly, the operative act is still the employee's ultimate act
of putting an end to his employment.
Facts:
Respondent Arthur Cabusas (respondent) was hired by petitioner Primary

Structures Corporation (PSC) as transit mixer driver for petitioner Concrete Solutions
Inc. (CSI) - Batching Plant Project.
The respondent filed a complaint for unfair labor practice, illegal dismissal, non-
payment of holiday pay, premium pay for holiday, rest day, night shift premium, separation
pay and moral damages against petitioners. Respondent alleged that it was not true that he
went on AWOL. He alleged that when the administrative investigation on his alleged theft
of company property was conducted and terminated on May 4, 2001, his counsel asked to
be furnished a copy of the result of the investigation. Since then, they eagerly waited for
such result, thus they were surprised to receive a telegram on May 26, 2001 where he was
said to have been AWOL since May 5, 2001. Immediately upon receipt of the telegram,
respondent went to petitioners' office, but he was refused entry for the reason that he was
AWOL. Moreover, there was no valid cause for his dismissal and petitioners found the lame
excuse of declaring him AWOL if only to create a semblance of justification for his unlawful
termination. He alleged that petitioners' imputation that he committed dishonest acts was
founded on falsehood and fabrications as no evidence was presented during the so-called
administrative hearing, except the self-serving and perjured statements of petitioners'
employees who were merely cajoled into making unfounded stories. Respondent prayed
for his reinstatement.
The Labor Arbiter dismissed the case and found that respondent was validly
dismissed from his employment as he abandoned his job; that he failed to report for work
despite the directive through a telegram for him to report back to work. The NLRC reversed
the decision of the Labor Arbiter. The CA affirmed the NLRC decision finding that
respondent was illegally dismissed. Hence, this petition.
Issue:
Whether or not respondent deliberately abandoned his work which is a just cause
for his dismissal
Ruling:
To constitute abandonment, two elements must concur, to wit: (1) the 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. Abandonment is a matter
of intention and cannot lightly be presumed from certain equivocal acts. To be a valid cause
for dismissal for abandonment, there must be clear proof of deliberate and unjustified
intent to sever the employer employee relationship. Clearly, the operative act is still the
employee's ultimate act of putting an end to his employment.
We find that the elements of abandonment are lacking. The CA did not commit any
reversible error in affirming the NLRC's decision that respondent was illegally dismissed
for petitioners' failure to substantiate their claim that the former abandoned his work. The
circumstances obtaining in this case do not indicate abandonment.
Respondent explained that his absence from work was due to the fact that he and
his counsel had asked and were waiting for a copy of result of the investigation on his
alleged act of theft or dishonesty conducted on May 4, 2001 but were not given at all. We
find his absence from work not sufficient to establish that he already had intention of
abandoning his job. Besides, settled is the rule that mere absence or failure to report for
work is not tantamount to abandonment of work. Even the failure to report for work after
a notice to return to work has been served does not necessarily constitute abandonment.
There is no showing of respondent's intent to sever the employer-employee

relationship. It is also notable that when respondent was refused entry to petitioners'
premises and the letter of former's counsel was refused acceptance by the latter, there is
already constructive dismissal which led respondent to seek recourse by filing an illegal
dismissal case against petitioners on May 30, 2001. The proximity of respondent's filing of
the complaint from the time he received the telegram and was refused entry to petitioners'
premises showed that he had the least intention of abandoning his job. 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.
Considering that respondent was dismissed prior to the expiration of the duration
of his employment and without a valid or just cause, his termination was therefore illegal.
However, respondent could no longer be reinstated since the project he was assigned to
already completely finished. However, we find that he is entitled to the salary
corresponding to the unexpired portion of his employment. Respondent is entitled to the
payment of his salary from the time he was not admitted back to work on May 26, 2001 up
to June 23, 2001, the expiration of his employment contract.
SURIGAO DEL NORTE ELECTRIC COOPERATIVE, INC. AND/OR DANNY Z.

ESCALANTE vs. TEOFILO GONZAGA
G.R. No. 187722. June 10, 2013
J. Perlas-Bernabe
dismissal is for a valid cause. Failing in which, the law considers the matter a case of illegal
dismissal. The Court finds that employer was able to prove, by substantial evidence, that there
lies a valid cause to terminate repondent’s employment.
However, jurisprudence dictates that it is not enough that the employee is given an
“ample opportunity to be heard” if company rules or practices require a formal hearing or
conference. In such instance, the requirement of a formal hearing and conference becomes
mandatory. Employer failed to comply with its own company policy, violating the proper
termination procedure. In this relation, case law states that an employer who terminates an
employee for a valid cause but does so through invalid procedure is liable to pay the latter
nominal damages.
Facts:
Petitioner Surigao Del Norte Electric Cooperative, Inc. (SURNECO) hired Gonzaga
as its lineman. On June 26, 2001, petitioner Danny Escalante (Escalante), General Manager
of SURNECO, issued Memorandum with attached report of SURNECO’s Internal Auditor,
Pedro Denolos (Collection Report) and two (2) sets of summaries of collections and
remittances (Summaries), seeking an explanation from Gonzaga regarding his remittance
shortages in the total amount of ₱314,252.23.
Gonzaga asked for an extension of three (3) weeks within which to submit his
explanation since he needed to go over the voluminous receipts of collections and
remittances with the assistance of an accountant. On the same day, he sent another letter,
denying any unremitted amount on his part and thereby, requesting that the charges
against him be lifted. Attached to the same letter is an Audit Opinion prepared by one
Leonides Laluna (Laluna), a certified public accountant (CPA), stating that the Internal
Auditor’s Report cannot accurately establish any remittance shortage on Gonzaga’s part
since the amount of collections stated in the Summaries was not supported by any bills or
official receipts. After due investigation, Gonzaga was found guilty of gross and habitual
neglect of duties and responsibilities, misappropriation of REC funds and failure to remit
collections/monies that would warrant his dismissal.
Gonzaga filed a complaint with NLRC Regional Arbitration- Butuan City for illegal
dismissal. The LA rendered a Decision, finding that petitioners were unable to show that
Gonzaga’s dismissal was just and valid and thus, ordered that the latter be reinstated to
his former position without loss of seniority rights and with payment of full backwages,
moral and exemplary damages, and attorney’s fees. Aggrieved, petitioners elevated the
matter to the NLRC. The NLRC vacated the ruling of the LA, finding Gonzaga to have been
dismissed for a just and valid cause. The CA reversed and set aside the NLRC’s ruling and,
instead, reinstated the LA’s decision. Hence, this petition.
Issue:
Whether or not respondent have been dismissed for a just and valid cause
Ruling:
dismissal is for a valid cause. Failing in which, the law considers the matter a case of illegal
dismissal. In this relation, the quantum of proof which the employer must discharge is
substantial evidence which, as defined in case law, means 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. Applying the foregoing principles
to this case, the Court finds that petitioners were able to prove, by substantial evidence,
that there lies a valid cause to terminate Gonzaga’s employment.
The Court concurs with the NLRC’s finding that petitioners’ evidence adequately
supports the conclusion that Gonzaga misappropriated the funds of the cooperative. The
data indicated therein show gaping discrepancies between Gonzaga’s collections and
remittances, of which he was accountable for. In this accord, the burden of evidence shifted
to Gonzaga to prove that the reflected shortage was not attributable to him. However,
despite being allowed to peruse the bills and receipts on record together with the assistance
of an accountant and a counsel during the investigation proceedings, Gonzaga could not
reconcile the amounts of his collections and remittances and, instead, merely interposed
bare and general denials.
All told, considering the totality of circumstances in this case, the Court finds the
evidence presented by the petitioners, as opposed to the bare denial of Gonzaga, sufficient
to constitute substantial evidence to prove that he committed serious misconduct and
gross and habitual neglect of duty to warrant his dismissal from employment. Such are just
causes for termination.
Jurisprudence dictates that it is not enough that the employee is given an “ample
opportunity to be heard” if company rules or practices require a formal hearing or
conference. In such instance, the requirement of a formal hearing and conference becomes
mandatory. The rationale behind this mandatory characterization is premised on the fact
that company rules and regulations which regulate the procedure and requirements for
termination, are generally binding on the employer. Records reveal that while Gonzaga was
given an ample opportunity to be heard within the purview of the foregoing principles,
SURNECO, however, failed to show that it followed its own rules which mandate that the
employee who is sought to be terminated be afforded a formal hearing or conference. As
above-discussed, SURNECO remains bound by – and hence, must faithfully observe – its
company policy embodied in Section 16.5 of its own Code of Ethics.
Accordingly, since only an informal inquiry was conducted in investigating

Gonzaga’s alleged cash shortages, SURNECO failed to comply with its own company policy,
violating the proper termination procedure altogether. In this relation, case law states that
an employer who terminates an employee for a valid cause but does so through invalid
procedure is liable to pay the latter nominal damages. Hence, although the dismissal
stands, the Court deems it appropriate to award Gonzaga nominal damages in the amount
of P30,000.00.
PNOC-ENERGY DEVELOPMENT CORP., ET AL. vs. JOSELITO L. ESTRELLA

G.R. No. 197789. July 8, 2013
J. Perlas-Bernabe
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 282
of the Labor Code. Not every form of misconduct can be considered as a just cause for
termination. For misconduct to be serious and therefore a valid ground for dismissal, it must
be (1) of grave and aggravated character and not merely trivial or unimportant and (2)
connected with the work of the employee.
Facts:
At the time of his dismissal, Estrella was the Senior Logistics Assistant at the
Materials Control Department of petitioner PNOC-Energy Development Corporation
(PNOC-EDC), then a government-owned and controlled corporation engaged in the
exploration and utilization of renewable energy resources. As Senior Logistics Assistant,
Estrella’s duties included initiating and handling the terms and conditions for the bidding
of heavy and support equipment rentals for PNOC-EDC’s project locations, and evaluating
and recommending bid contracts for management approval.
On July 5, 2005, Estrella was dismissed based on willful dishonesty, extortion, grave
misconduct and misbehavior, and abuse of authority, on account of his alteration,
tampering or manipulation of the Bid Summary as well as his attempt to extort from Jacabe,
a contractor. This prompted him to file a complaint for illegal dismissal, with prayer for
reinstatement and payment of full backwages and exemplary damages, against petitioners.
The Labor Arbiter found Estrella to have been illegally dismissed, observing that he
did not act with bad faith and malice in the performance of his duties. On appeal, the NLRC
affirmed in toto the LA’s decision. The CA affirmed the decision of the NLRC in sustaining
the LA’s decision. Nonetheless, the CA conceded that Estrella did indeed commit
infractions but ruled that dismissal was an inappropriate penalty, considering his 21 long
years of unblemished service with PNOC-EDC. Hence, this petition.
Issue:
Whether or not the CA erred in affirming the labor tribunals’ pronouncement that
Estrella had been illegally dismissed
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
282 of the Labor Code. Not every form of misconduct can be considered as a just cause for
termination. The law explicitly qualifies that the misconduct must be both serious and
made in connection with the employee’s work. As clarified in Cosmos Bottling Corp. v.
Fermin:
Misconduct involves “the transgression of some established and definite rule of

action, forbidden act, a dereliction of duty, willful in character, and implies wrongful intent
and not mere error in judgment.” For misconduct to be serious and therefore a valid ground
for dismissal, it must be (1) of grave and aggravated character and not merely trivial or
unimportant and (2) connected with the work of the employee.
Applying these principles to the case at bar, the Court finds that the CA committed
no reversible error when it found no grave abuse of discretion on the part of both the LA
and NLRC in ruling that Estrella was illegally dismissed from his employment.
Records disclose that PNOC-EDC dismissed Estrella on the ground of serious

misconduct which was mainly hinged on Estrella’s alteration and/or tampering of lessors’
bids and extortion.
Petitioners impute that Estrella used his position and authority to exert undue
pressure on Jacobe to give in to his personal demands, and in the process, tainted the
integrity of PNOC-EDC’s bidding process. This conclusion was largely based on the
Committee’s finding that Estrella altered JR Car Services’ bid from three (3) units to one (1)
unit for the AUV Category, coupled with the fact that Estrella sent several text messages to
Jacobe asking for personal favors, such as a free cable unit. Ruling on the matter, the LA,
the NLRC, and the CA all observed that such infraction was only minor in nature which did
not warrant his dismissal.
JESSIE G. MARTINEZ vs. CENTRAL PANGASINAN ELECTRIC COOPERATIVE,

INC. (CENPELO)
G.R. No. 192306, July 15, 2013
J. Perlas-Bernabe
To validly dismiss an employee on the ground of loss of trust and confidence under
Article 296(c) of the Labor Code, the following guidelines must be observed: (1) the employee
concerned 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. Petitioner's failure to properly account for
his shortage of a significant amount is enough reason for respondent to lose trust and
confidence in him.
Facts:
Respondent CENPELCO employed petitioner Jessie Martinez on a contractual basis

and, was subsequently regularized as a billing clerk at the former's main Designated Acting
Member. On January 7, 2002, respondent gave petitioner the position of teller. On April 26,
2002, respondent’s Internal Audit Department (IAD) conducted a cash count audit, the
IAD Officer-in-Charge, analyzed the audit results and concluded that there was an error in
the count of cashier for Area VI, regarding the breakdown of collection turned over by
petitioner for April 23, 2002. In view of such audit, petitioner was required to submit
explanation letter. He further admitted the existence of such shortage and tried to offset
the same with his alleged overage on April 23, 2002. On June 30 2002, the Company’s
Grievance Committee submitted its report recommending petitioner’s termination from
employment on the ground of loss of trust and confidence as well as the filing of the
appropriate case in court. On November 26, 2002, petitioner was dismissed from service,
prompting him to file a complaint for illegal dismissal.
The Labor Arbiter (LA) ruled Martinez’s dismissal illegal. The NLRC reversed the
LA’s ruling, declaring Martinez’s dismissal valid. The CA affirmed the NLRC’s ruling. The
CA held that the anomalies charged against Martinez are duly substantiated as such finding
is supported by an audit report.
Issue:
Whether or not petitioner’s dismissal on the ground of loss of trust and confidence
is valid
Ruling:
To validly dismiss an employee on the ground of loss of trust and confidence under
Article 296(c) (formerly Article 282[c]) of the Labor Code, the following guidelines must be
observed: (1) the employee concerned 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 (Philippine
Plaza Holdings, Inc. v. Epicospe, G.R. No. 192826, February 27, 2013).
Anent the first requisite, it is noteworthy to mention that there are two classes of
positions of trust, namely: (1) 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 (2)
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. Being an employee tasked to collect payments and remit
the same to respondent, petitioner belongs to the latter class and thus, occupies a position
Anent the second requisite, the audit report conducted on petitioner's cash count
revealed that he had a shortage in the amount of P44,846.77 in his remittance for April 25,
2002. When asked to explain such shortage, petitioner not only admitted the same but even
tried to exculpate himself from liability by attempting to offset said shortage with his
alleged overage on April 23, 2002 in the amount of P45,682.58. This practice should never
be countenanced because it would allow the employees to patch up inaccuracies or even
their own wrongdoings and thus, the true revenues or losses of the company will never be
correctly identified. Verily, this irregular practice would be detrimental to the interests of
the employer whose bread and butter depend solely on realized profits. Perforce,
petitioner's failure to properly account for his shortage of such a significant amount is
enough reason for respondent to lose trust and confidence in him.
D.M. CONSUNJI CORPORATION vs. COURT OF APPEALS AND ROGELIO P.

BELLO
G.R. No. 159371, July 29, 2013
J. Bersamin
For the resignation of an employee to be a viable defense in an action for illegal

dismissal, an employer must prove that the resignation was voluntary, and its evidence
thereon must be clear, positive and convincing. The employer has the burden to prove the due
execution and genuineness of the document as a letter of resignation. The employer cannot
rely on the weakness of the employee's evidence.
Facts:
Bello brought a complaint for illegal dismissal and damages against DMCI and/or
Rachel Consunji. In his position paper, he claimed that DMCI had employed him as a
mason without any interruption from February 1, 1990 until October 10, 1997. On the other
hand, in its position paper submitted on March 6, 2000, DMCI contended that Bello had
only been a project employee, as borne out by his contract of employment and appointment
papers and that although his last project employment contract had been set to expire on
October 7, 1997, he had tendered his voluntary resignation on October 4, 1997 for health
reasons that had rendered him incapable of performing his job, per his resignation letter.
The Executive Labor Arbiter (ELA) found petitioner guilty of illegal dismissal and
was ordered to reinstate respondent immediately. On appeal to the National Labor
Relations Commission, the ELA’s order was set aside on the ground that the employee was
a project employee and resigned voluntary. The Court of Appeals (CA) held that respondent
had already acquired the status of a regular employee because his “repeated re-hiring and
the continuing need for his services over a long span of time had undeniably made him a
regular employee.” As a regular employee, his removal was not one of the authorized causes
found under the Labor Code. Moreover, the mason’s supposedly voluntary resignation was
not given merit since records showed that the ELA “concluded that the handwriting in the
supposed resignation letter was undeniably different from that of complainant” and the
construction company failed to rebut the discrepancy in the signatures.
Issue:
1. Whether or not private respondent was a regular employee

2. Whether or not private respondent was dismissed or voluntarily resigned
Ruling:
A project employee is, therefore, one who is hired for a specific project or
undertaking, and the completion or termination of such project or undertaking has been
determined at the time of engagement of the employee. In the context of the law, Bello was
a project employee of DMCI at the beginning of their employer-employee relationship. The
project employment contract they then entered into clearly gave notice to him at the time
of his engagement about his employment being for a specific project or phase of work. He
was also thereby notified of the duration of the project, and the determinable completion
date of the project.
However, the history of Bello’s appointment and employment showed that he

performed his tasks as a mason in DMCI’s various constructions projects. Based on the
foregoing, we affirm the CA’s conclusion that Bello acquired in time the status of a regular
employee by virtue of his continuous work as a mason of DMCI.
It is settled that the extension of the employment of a project employee long after
the supposed project has been completed removes the employee from the scope of a project
employee and makes him a regular employee. In this regard, the length of time of the
employee’s service, while not a controlling determinant of project employment, is a strong
factor 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. Verily, the principal test for determining whether an employee is a project
employee, as distinguished from a regular employee, is whether or not he is assigned to
carry out a specific project or undertaking, the duration and scope of which are specified
at the time he is engaged for the project.
The Supreme Court agreed with the ruling of the CA explaining that the CA’s
reliance on the ELA’s findings were warranted - The CA’s reliance on the conclusion and
finding by ELA was warranted. Her observation that the handwriting in the resignation
letter was ‘undeniably different’ from that of Bello could not be ignored or shunted aside
simply because she had no expertise to make such a determination… Yet, even had the
letter been actually signed by him, the voluntariness of the resignation could not be
assumed from such fact alone. His claim that he had been led to believe that the letter
would serve only as the means of extending his sick leave from work should have alerted
DMCI to the task of proving the voluntariness of the resignation. It was obvious that, if his
claim was true, then he did not fully comprehend the import of the letter, rendering the
resignation farcical. Under the circumstances, DMCI became burdened with the obligation
to prove the due execution and genuineness of the document as a letter of resignation.
We reiterate that it is axiomatic in labor law that the employer who interposes the
defense of voluntary resignation of the employee in an illegal dismissal case must prove by
clear, positive, and convincing evidence that the resignation was voluntary; and that the
employer cannot rely on the weakness of the defense of the employee.
PHILIPPINE NATIONAL BANK vs. MARY SHEILA ARCOBILLAS
G.R. No. 179648. August 7, 2013
J. Del Castillo
The court ruled that employer’s act cannot be considered as gross as to warrant her
termination from employment. Gross neglect of duty denotes a flagrant and culpable refusal
or unwillingness of a person to perform a duty. It refers to negligence characterized by the
want of even slight care, acting or omitting to act in a situation where there is a duty to act,
not inadvertently but willfully and intentionally, with a conscious indifference to
consequences insofar as other persons may be affected. The misposting was not deliberately
done as to constitute as gross negligence. Rather, it was a case of simple neglect brought
about by carelessness.
Facts:
On May 15, 1998, the Foreign Currency Denomination Savings Account (FCD-S/A)
30570355-1 of Avelina Nomad-Spoor was credited with US$138.This account was with the
petitioner Philippine National Bank (PNB). However, instead of posting the peso
equivalent of P5,517.10, respondent Mary Sheila Arcobillas, the assigned administrative
teller at PNB Bacolod-Lacson branch, erroneously posted US$5,517.10, resulting in an
overcredit of US$5,379.10. That amount was later withdrawn by Nomad-Spoor on May 29,
1998 and June 8, 1998, to the damage of PNB in the amount of P214,641.23.
PNB found Arcobillas guilty of gross neglect of duty and meted upon her the penalty
of forced resignation with benefits, to take effect immediately upon her receipt thereof.
When her plea for reconsideration was denied, Arcobillas instituted a complaint for illegal
dismissal with money claims against PNB, its senior manager and senior vice-president.
The labor arbiter ordered her reinstatement to her former position with full back
wages from the date of promulgation of the decision, and the payment of 13th month pay
for the year 1999, unpaid salaries for the period February 2000 to March 15, 2000 and
attorney’s fees. The National Labor Relations Commission (NLRC) affirmed the decision
with modification regarding the sharing of financial losses. The Court of Appeals (CA)
affirmed the decision of the NLRC with modification on the sharing of losses between
petitioner and respondent. From the CA decision, petitioner PNB filed with the Supreme
Court a petition for review on certiorari.
Issue:
Whether or not private respondent’s dismissal on the ground of habitual negligence

was justified under Article 282 of the Labor Code
Ruling:
Taking into consideration the circumstances attendant to Arcobillas’s infraction,
the National Labor Relations Commission (NLRC) correctly affirmed the Labor Arbiter’s
finding that there was no sufficient basis to hold her guilty of gross and habitual neglect of
duty, which would justify her termination from employment. To warrant removal from
service, the negligence should be gross and habitual. Although it was her second time to
commit misposting (i.e., the first misposting was in 1995 while the second misposting was
committed in 1998), Arcobillas’s act cannot be considered as gross as to warrant her
termination from employment. Gross neglect of duty “denotes a flagrant and culpable
refusal or unwillingness of a person to perform a duty.” It “refers to negligence
characterized by the want of even slight care, acting or omitting to act in a situation where
there is a duty to act, not inadvertently but willfully and intentionally, with a conscious
indifference to consequences insofar as other persons may be affected.” As aptly held by
the labor tribunals, the misposting was not deliberately done as to constitute as gross
negligence. Rather, it was a case of simple neglect brought about by carelessness which, as
satisfactorily explained by Arcobillas, was the effect of her heavy workload that day and the
headache she was experiencing.
As to the modification made by the CA, it may be recalled that it ordered PNB and
Arcobillas to share the financial losses of P214,641.23 in a 40-60 ratio. It ruled that PNB is
partly liable for its loss for being negligent in the selection and supervision of its employees,
applying the ruling made by this Court in The Consolidated Bank & Trust Corp. v. Court of
Appeals and Philippine Bank of Commerce v. Court of Appeals. In the said cases, the banks
were made to shoulder part of the loss suffered by its clients due to the negligence of its
employees under the principle of respondeat superior or command responsibility. The
Court ruled that the banks have a fiduciary relationship with its client and must be
answerable for any breach in their contractual duties to its clients.
We, however, find that the CA erred in applying the ruling in these cases since they
involve different sets of facts and are not decisive of the instant case. In both the cited
cases, the banks, through their employees, were negligent, and this caused damage to their
clients. These differ from the instant case in that the resulting damage here was caused to
PNB and not to its clients. And as PNB certainly has the right to expect diligence from its
employees and has the prerogative to discipline them for acts inimical to its interests, the
NLRC is justified in allocating the loss suffered by it among those employees who proved
to be negligent in their respective duties.
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 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.
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.
MZR INDUSTRIES, MARILOU R. QUIROZ AND LEA TIMBAL vs. MAJEN COLAMBOT
G.R. No. 179001. August 28, 2013
J. Peralta
In illegal dismissal cases, the employer bears the burden of proving that the
termination was for a valid or authorized cause, in the present case, however, the facts and
the evidence do not establish a prima facie case that the employee was dismissed from
employment. Before the employer must bear the burden of proving that the dismissal was
legal, the employee must first establish by substantial evidence the fact of his dismissal from
service. If there is no dismissal, then there can be no question as to the legality or illegality
thereof.
Facts:
Petitioner Marilou Quiroz, Owner and Vice- President for Finance and Marketing of MZR,
hired respondent Majen Colambot (Colambot) as messenger. Colambot's duties and
responsibilities included field, messengerial and other liaison work.
However, beginning 2002, Colambot's work performance started to deteriorate. Petitioners

issued several memoranda to Colambot for habitual tardiness, negligence, and violations
of office policies. He was also given written warnings for insubordination committed on
August 27, 2003 and September 11-12, 2003;on September 16, 2003 for negligence caused by
careless handling of confidential office documents;on September 22, 2004 for leaving his
post without proper turnover; and, on October 4, 2004 for insubordination.
Petitioners claimed that despite written warnings for repeated tardiness and
insubordination, Colambot failed to mend his ways. Hence, in a Memorandum11dated
October 25, 2004 issued by petitioner Lea Timbal (Timbal), MZR's Administrative Manager,
Colambot was given a notice of suspension for insubordination and negligence.
Petitioners claimed they waited for Colambot to report back for work on December 7, 2004,
but they never heard from him anymore. Later, petitioners were surprised to find out that
Colambot had filed a complaint for illegal suspension, underpayment of salaries, overtime
pay, holiday pay, rest day, service incentive leave and 13th month pay. On December 16,
2004, the complaint was amended to illegal dismissal, illegal suspension, underpayment of
salaries, holiday pay, service incentive pay, 13th month pay and separation pay.
The labor arbiter rendered a decision declaring respondents guilty of illegal dismissal. The
NLRC pointed out that Colambot's complaint was unsupported by any evidence and was
not even made under oath, thus, lacking in credibility and probative value. The Court of
Appeals granted the petition and reversed the decision of NLRC.
Issue:
Whether or not the complainant was illegally dismissed from the service
Ruling:
While we recognize the rule that in illegal dismissal cases, the employer bears the burden
of proving that the termination was for a valid or authorized cause, in the present case,
however, the facts and the evidence do not establish a prima facie case that the employee
was dismissed from employment. Before the employer must bear the burden of proving
that the dismissal was legal, the employee must first establish by substantial evidence the
fact of his dismissal from service. If there is no dismissal, then there can be no question as
to the legality or illegality thereof.
In the present case, other than Colambot's unsubstantiated allegation of having been
verbally terminated from his work, there was no evidence presented to show that he was
indeed dismissed from work or was prevented from returning to his work. In the absence
of any showing of an overt or positive act proving that petitioners had dismissed
respondent, the latter's claim of illegal dismissal cannot be sustained – as the same would
be self-serving, conjectural and of no probative value.
However, while the Court concurs with the conclusion of the NLRC that there was no illegal
dismissal, no dismissal having actually taken place, the Court does not agree with its
findings that Colambot committed abandonment of work.
In a number of cases, this Court consistently held that to constitute abandonment of work,
two elements must be present: first, the employee must have failed to report for work or
must have been absent without valid or justifiable reason; and second, there must have
been a clear intention on the part of the employee to sever the employer-employee
relationship manifested by some overt act.
In the instant case, other than Colambot's failure to report back to work after suspension,
petitioners failed to present any evidence which tend to show his intent to abandon his
work. It is a settled rule that mere absence or failure to report for work is not enough to
amount to abandonment of work. There must be a concurrence of the intention to abandon
and some overt acts from which an employee may be deduced as having no more intention
to work.
Suffice it to say that, it is the employer who has the burden of proof to show a deliberate
and unjustified refusal of the employee to resume his employment without any intention
of returning. It is therefore incumbent upon petitioners to ascertain the respondents’
interest or non-interest in the continuance of their employment. This, petitioners failed to
do so.
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-
40 | P a g e
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.
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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.
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.
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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.
40 | P a g e
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
40 | P a g e
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
40 | P a g e
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
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.
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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 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
40 | P a g e
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
40 | P a g e
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 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.
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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)
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:
(8) 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
for the 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
40 | P a g e
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.
3. Due Process
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.
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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.
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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, 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
40 | P a g e
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
40 | P a g e
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.
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
PERT/CPM MANPOWER EXPONENT CO., INC., Petitioner, v. ARMANDO A.

VINUY A, LOUIE M. ORDOVEZ, ARSENIO S. LUMANTA,. JR., ROBELITO S.
ANIPAN, VIRGILIO R. ALCANTARA, MARINO M. ERA, SANDY 0. ENJAMBRE and
NOEL T. LADEA, Respondents
G.R. NO. 197528 - September 5, 2012
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FACTS:
The respondents alleged that the agency deployed them between March 29, 2007 and
May 12, 2007 to work as aluminum fabricator/installer for the agency’s principal,
Modern Metal Solution LLC/MMS Modern Metal Solution LLC (Modern Metal) in
Dubai, United Arab Emirates.
The respondents employment contracts, which were approved by the Philippine

Overseas Employment Administration (POEA), provided for a two-year employment,
nine hours a day, salary of 1,350 AED with overtime pay, food allowance, free and
suitable housing (four to a room), free transportation, free laundry, and free medical
and dental services. They each paid a P 15,000.00 processing fee.
On April 2, 2007, Modern Metal gave the respondents, except Era, appointment
letters with terms different from those in the employment contracts which they signed
at the agency s office in the Philippines. Under the letters of appointment, their
employment was increased to three years at 1,000 to 1,200 AED and food allowance of
200 AED.
The respondents claimed that they were shocked to find out what their working and
living conditions were in Dubai. They were required to work from 6:30 a.m. to 6:30
p.m., with a break of only one hour to one and a half hours. When they rendered
overtime work, they were most of the time either underpaid or not paid at all. Their
housing accommodations were cramped and were shared with 27 other occupants.
The lodging house was in Sharjah, which was far from their jobsite in Dubai, leaving
them only three to four hours of sleep a day because of the long hours of travel to and
from their place of work; there was no potable water and the air was polluted.
When the respondents received their first salaries (at the rates provided in their
appointment letters and with deductions for placement fees) and because of their
difficult living and working conditions, they called up the agency and complained
40 | P a g e
about their predicament. The agency assured them that their concerns would be
promptly addressed, but nothing happened.
On May 5, 2007, Modern Metal required the respondents to sign new employment
contracts, except for Era who was made to sign later. The contracts reflected the terms
of their appointment letters. Burdened by all the expenses and financial obligations
they incurred for their deployment, they were left with no choice but to sign the
contracts. They raised the matter with the agency, which again took no action.
On August 5, 2007, despondent over their unbearable living and working conditions
and by the agency s inaction, the respondents expressed to Modern Metal their desire
to resign. Out of fear, as they put it, that Modern Metal would not give them their
salaries and release papers, the respondents, except Era, cited personal/family
problems for their resignation. Era mentioned the real reason "because I dont (sic)
want the company policy" for his resignation.
It took the agency several weeks to repatriate the respondents to the Philippines. They
all returned to Manila in September 2007. Except for Ordovez and Enjambre, all the
respondents shouldered their own airfare.
ISSUE:
Whether or not respondents were illegally dismissed.
RULING:
Yes.
In fact, the agency and its principal, Modern Metal, committed flagrant violations of
the law on overseas employment, as well as basic norms of decency and fair play in an
40 | P a g e
employment relationship, pushing the respondents to look for a better employment
and, ultimately, to resign from their jobs.
First. The agency and Modern Metal are guilty of contract substitution. The
respondents entered into a POEA-approved two-year employment contract, with
Modern Metal providing among others, as earlier discussed, for a monthly salary of
1350 AED. On April 2, 2007, Modern Metal issued to them appointment
letters whereby the respondents were hired for a longer three-year period and a
reduced salary, from 1,100 AED to 1,200 AED, among other provisions. Then, on May 5,
2007, they were required to sign new employment contracts reflecting the same terms
contained in their appointment letters, except that this time, they were hired as
"ordinary laborer," no longer aluminum fabricator/installer. The respondents
complained with the agency about the contract substitution, but the agency refused or
failed to act on the matter.
The fact that the respondents’ contracts were altered or substituted at the workplace
had never been denied by the agency. On the contrary, it admitted that the contract
substitution did happen when it argued, "as to their claim for underpayment of salary,
their original contract mentioned 1350 AED monthly salary, which includes allowance
while in their Appointment Letters, they were supposed to receive 1,300 AED. While
there was a difference of 50 AED monthly, the same could no longer be claimed by
virtue of their Affidavits of Quitclaims and Desistance."
Clearly, the agency and Modern Metal committed a prohibited practice and engaged in
illegal recruitment under the law. Article 34 of the Labor Code provides:
Art. 34. Prohibited Practices. It shall be unlawful for any individual, entity, licensee, or
holder of authority:
x x x
40 | P a g e
To substitute or alter employment contracts approved and verified by the Department
of Labor 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, Article 38 of the Labor Code, as amended by R.A. 8042, defined "illegal
recruitment" to include the following act:
To substitute or alter to the prejudice of the worker, 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 period of the expiration of the
same without the approval of the Department of Labor and Employment.
Second. The agency and Modern Metal committed breach of contract. Aggravating
the contract substitution imposed upon them by their employer, the respondents were
made to suffer substandard (shocking, as they put it) working and living
arrangements. Both the original contracts the respondents signed in the Philippines
and the appointment letters issued to them by Modern Metal in Dubai provided for
free housing and transportation to and from the jobsite. The original contract
mentioned free and suitable housing. Although no description of the housing was
made in the letters of appointment except: "Accommodation: Provided by the
company," it is but reasonable to think that the housing or accommodation would be
"suitable."
Third. With their original contracts substituted and their oppressive working and
living conditions unmitigated or unresolved, the respondents decision to resign is not
surprising. They were compelled by the dismal state of their employment to give up
their jobs; effectively, they were constructively dismissed. A constructive dismissal or
discharge is "a quitting because continued employment is rendered impossible,
unreasonable or unlikely, as, an offer involving a demotion in rank and a diminution in
pay."
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Without doubt, the respondents continued employment with Modern Metal had
become unreasonable.
We thus cannot accept the agency s insistence that the respondents voluntarily
resigned since they personally prepared their resignation letters in their own
handwriting, citing family problems as their common ground for resigning. As the CA
did, we find the resignation letters "dubious," not only for having been lopsidedly
worded to ensure that the employer is rendered free from any liability, but also for the
odd coincidence that all the respondents had, at the same time, been confronted with
urgent family problems so that they had to give up their employment and go home.
The truth, as the respondents maintain, is that they cited family problems as reason
out of fear that Modern Metal would not give them their salaries and their release
papers. Only Era was bold enough to say the real reason for his resignation to protest
company policy.
We likewise find the affidavits of quitclaim and release which the respondents
executed suspect. Obviously, the affidavits were prepared as a follow through of the
respondents supposed voluntary resignation. Unlike the resignation letters, the
respondents had no hand in the preparation of the affidavits. They must have been
prepared by a representative of Modern Metal as they appear to come from a standard
form and were apparently introduced for only one purpose to lend credence to the
resignation letters.
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
40 | P a g e
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.
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
40 | P a g e
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:
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,
40 | P a g e
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, 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
40 | P a g e
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
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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.
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
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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
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.
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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.
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
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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.
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
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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:
In their respective memoranda, the parties stated their positions and arguments
on the above issues:
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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?
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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 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
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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.
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:
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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 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
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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.
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.
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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
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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
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:
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(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.
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
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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 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.
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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

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,
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,
workers.
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 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
40 | P a g e
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%
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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 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
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
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[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.
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
40 | P a g e
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 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
40 | P a g e
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:
1. Whether Manarpiis was illegally dismissed

2. Whether abandonment of work is a ground for dismissal
Ruling:
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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
40 | P a g e
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.
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
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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 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:
(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,
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,
workers.
In due regard of these requisites, the Court observes that Pepsi had validly
implemented its retrenchment program:
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(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.
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
40 | P a g e
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.”
ZUELLIG FREIGHT AND CARGO SYSTEMS vs. NLRC AND SAN MIGUEL
G.R. No. 157900, July 22, 2013
J. Bersamin
A change in the corporate name does not make a new corporation, whether effected
by a special act or under a general law. It has no effect on the identity of the corporation,
or on its property, rights, or liabilities. The corporation, upon such change in its name, is
in no sense a new corporation, nor the successor of the original corporation. It is the same
corporation with a different name, and its character is in no respect changed.
Facts:
Private respondent Ronaldo V. San Miguel was employed as a checker/customs

representative of Zeta Brokerage Corp. (Zeta) since Dec. 15, 1985. Respondent brought a
complaint for unfair labor practice, illegal dismissal, non-payment of salaries and moral
damages against petitioner, formerly known as Zeta. He alleged that he and other
employees of Zeta were informed that Zeta would cease operations and that all affected
employees, including him, would be separated from the service effective March 31, 1994.
He reluctantly accepted separation pay subject to the outstanding offer to be hired for
his former position by the petitioner. On April 15, 1994, he was summarily terminated,
without any valid cause and due process. Respondent contended that the amendments
of the articles of incorporation of Zeta were for the purpose of changing the corporate
name, broadening the primary functions, and increasing the capital stock; and that such
amendment could not mean that Zeta had been thereby dissolved.
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Petitioner Zuellig Freight and Cargo Systems contended that San Miguel’s
termination from Zeta had been for a cause authorized by the Labor Code. Zeta, its
predecessor-in-interest, had complied with the requirements for termination due to the
cessation of business operations.
Labor Arbiter rendered a decision holding that San Miguel had been illegally
dismissed. Petitioner appealed, but the NLRC affirmed the decision of the LA. Petitioner
then filed a petition for certiorari in the CA. The CA affirmed the decision of the NLRC.
Issue:
Whether or not the cessation of business of Zeta a bona fide closure to be

regarded as a valid ground for the termination of employment of respondent within the
ambit of Article 283 of the Labor Code
Ruling:
Article 283 provides that the employer may also terminate the employment of any
employee due to the installation of labor-saving devices, redundancy, retrenchment to
prevent losses or the closing or cessation of operation of the establishment or
undertaking unless the closing is for the purpose of circumventing the provisions of this
Title, by serving a written notice on the workers and the Department of Labor and
Employment at least one (1) month before the intended date thereof. Verily, the
amendments of the articles of incorporation of Zeta to change the corporate name to
Zuellig Freight and Cargo Systems, Inc. did not produce the dissolution of the former as
a corporation. For sure, the Corporation Code defined and delineated the different modes
of dissolving a corporation, and amendment of the articles of incorporation was not one
of such modes. The effect of the change of name was not a change of the corporate being,
for, as well stated in Philippine First Insurance Co., Inc. v. Hartigan: “The changing of the
name of a corporation is no more the creation of a corporation than the changing of the
name of a natural person is begetting of a natural person. The act, in both cases, would
seem to be what the language which we use to designate it imports – a change of name, and
not a change of being.”
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A change in the corporate name does not make a new corporation, whether
effected by a special act or under a general law. It has no effect on the identity of the
corporation, or on its property, rights, or liabilities. The corporation, upon such change
in its name, is in no sense a new corporation, nor the successor of the original
corporation. It is the same corporation with a different name, and its character is in no
respect changed.
In short, Zeta and petitioner remained one and the same corporation. The change
of name did not give petitioner the license to terminate employees of Zeta like
respondent without just or authorized cause. The situation was not similar to that of an
enterprise buying the business of another company where the purchasing company had
no obligation to rehire terminated employees of the latter. Petitioner, despite its new
name, was the mere continuation of Zeta’s corporate being, and still held the obligation
to honor all of Zeta’s obligations, one of which was to respect respondent’s security of
tenure. The dismissal of respondent from employment on the pretext that petitioner,
being a different corporation, had no obligation to accept him as its employee, was illegal
and ineffectual.
MANILA POLO CLUB EMPLOYEES’ UNION (MPCEU) FUR-TUCP vs. MANILA

POLO CLUB, INC.
G.R. No. 172846, July 24, 2013
J. Peralta
This case involves a closure of business undertaking, not retrenchment. Unlike

retrenchment, closure or cessation of business, as an authorized cause of termination of
employment, need not depend for validity on evidence of actual or imminent reversal of the
employer's fortune. Article 283 authorizes termination of employment due to business
closure, regardless of the underlying reasons and motivations therefor, be it financial losses
or not.
Facts:
Petitioner Manila Polo Club Employees Union (MPCEU), which is affiliated with
the Federation of Unions of Rizal (FUR)-TUCP, is a legitimate labor organization duly
registered with the Department of Labor and Employment (DOLE), while respondent
Manila Polo Club, Inc. is a non-profit and proprietary membership organization which
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provides recreation and sports facilities to its proprietary members, their dependents,
and guests.
On December 13, 2001, the Board of Directors of respondent unanimously resolved

to completely terminate the entire operations of its Food and Beverage (F & B) outlets,
except the Last Chukker, and award its operations to a qualified restaurant operator or
caterer. Subsequently, on March 22, 2002, respondent’s Board approved the
implementation of the retrenchment program of employees who are directly and
indirectly involved with the operations of the F & B outlets and authorized then General
Manager Philippe D. Bartholomi to pay the employees’ separation pay.
Treating the incident as respondent’s way of terminating union members under

the pretense of retrenchment to prevent losses, petitioner filed a Step II grievance and
requested for an immediate meeting with the Management. When the Management
refused, petitioner filed a Notice of Strike before the National Conciliation and Mediation
Board (NCMB) for illegal dismissal, violation/non-implementation of the Collective
Bargaining Agreement (CBA), union busting, and other unfair labor practices (ULP).
The Voluntary Arbitrator dismissed petitioner’s complaint for lack of merit, but
without prejudice to the payment of separation pay to the affected employees. Upon an
exhaustive examination of the evidence presented by the parties, the CA affirmed in toto
the VA’s Decision and denied the substantive aspects of petitioner’s motion for
reconsideration; hence, this petition.
Issue:
Whether or not the retrenchment of the 117 union members is legal
Ruling:
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It is apparent from the records that this case involves a closure of business
undertaking, not retrenchment. The legal requirements and consequences of these two
authorized causes in the termination of employment are discernible.
Retrenchment is the reduction of personnel for the purpose of cutting down on

costs of operations in terms of salaries and wages resorted to by an employer because of
losses in operation of a business occasioned by lack of work and considerable reduction
in the volume of business. Closure of a business or undertaking due to business losses is
the reversal of fortune of the employer whereby there is a complete cessation of business
operations to prevent further financial drain upon an employer who cannot pay anymore
his employees since business has already stopped.
One of the prerogatives of management is the decision to close the entire

establishment or to close or abolish a department or section thereof for economic
reasons, such as to minimize expenses and reduce capitalization.
While the Labor Code provides for the payment of separation package in case of
retrenchment to prevent losses, it does not obligate the employer for the payment thereof
if there is closure of business due to serious losses.
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. Unlike
retrenchment, closure or cessation of business, as an authorized cause of termination of
employment, need not depend for validity on evidence of actual or imminent reversal of
the employer's regardless of the underlying reasons and motivations therefore, be it
financial losses or not.
Closure or cessation of operations of establishment or undertaking may either be

partial or total. (B) Closure or cessation of operations of establishment or undertaking
may or may not be due to serious business losses or financial reverses. However, in both
instances, proof must be shown that: (1) it was done in good faith to advance the
employer’s interest and not for the purpose of defeating or circumventing the rights of
employees under the law or a valid agreement; and (2) a written notice on the affected
employees and the DOLE is served at least one month before the intended date of
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termination of employment. (C) The employer can lawfully close shop even if not due to
serious business losses or financial reverses but separation pay, which is equivalent to at
least one month pay as provided for by Article 283 of the Labor Code, as amended, must
be given to all the affected employees. (D) If the closure or cessation of operations of
establishment or undertaking is due to serious business losses or financial reverses, the
employer must prove such allegation in order to avoid the payment of separation pay.
Otherwise, the affected employees are entitled to separation pay. (E) The burden of
proving compliance with all the above-stated falls upon the employer.
2. CHATEAU ROYALE SPORTS AND COUNTRY CLUB, INC., Petitioner,

v.RACHELLE G. BALBA AND MARINEL N. CONSTANTE, Respondents
G.R. No. 197492, January 18, 2017
Facts:
On August 28, 2004, the petitioner, a domestic corporation operating a resort
complex in Nasugbu, Batangas, hired the respondents as Account Executives on
probationary status.4 On June 28, 2005, the respondents were promoted to
Account Managers effective July 1, 2005, with the monthly salary rate of
P9,000.00 plus allowances totaling to P5,500.5 As part of their duties as Account
Managers, they were instructed by the Director of Sales and Marketing to
forward all proposals, event orders and contracts for an orderly and systematic
bookings in the operation of the petitioner's business. However, they failed to
comply with the directive. Accordingly, a notice to explain was served on them,6
to which they promptly responded.7
On October 4, 2005, the management served notices of administrative hearing

on the respondents. Thereupon, they sent a letter of said date asking for a
postponement of the hearing. Their request was, however, denied by the letter
dated October 7, 2005, and at the same time informed them that the petitioner's
Corporate Infractions Committee had found them to have committed acts of
insubordination, and that they were being suspended for seven days from
October 10 to 17, 2005, inclusive.
The suspension order was lifted even before its implementation on October 10,
2005.
On October 10, 2005, the respondents filed a complaint for illegal suspension
and non-payment of allowances and commissions.
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On December 1, 2005, the respondents amended their complaint to include
constructive dismissal as one of their causes of action based on their information
from the Chief Financial Officer of the petitioner on the latter's plan to transfer
them to the Manila Office.13 The proposed transfer was prompted by the
shortage of personnel at the Manila Office as a result of the resignation of three
account managers and the director of sales and marketing. Despite attempts to
convince them to accept the transfer to Manila, they declined because their
families were living in Nasugbu, Batangas.
Issue:
Whether or not respondents were constructively dismissed.
Ruling:
No.
In the resolution of whether the transfer of the respondents from one area of
operation to another was valid, finding a balance between the scope and
limitation of the exercise of management prerogative and the employees' right to
security of tenure is necessary. We have to weigh and consider, on the one hand,
that management has a wide discretion to regulate all aspects of employment,
including the transfer and re-assignment of employees according to the
exigencies of the business; and, on the other, that the transfer constitutes
constructive dismissal when it is unreasonable, inconvenient or prejudicial to
the employee, or involves a demotion in rank or diminution of salaries, benefits
and other privileges, or when the acts of discrimination, insensibility or disdain
on the part of the employer become unbearable for the employee, forcing him to
forego her employment.
In this case of constructive dismissal, the burden of proof lies in the petitioner as
the employer to prove that the transfer of the employee from one area of
operation to another was for a valid and legitimate ground, like genuine business
necessity. We are satisfied that the petitioner duly discharged its burden, and
thus established that, contrary to the claim of the respondents that they had
been constructively dismissed, their transfer had been an exercise of the
petitioner's legitimate management prerogative.
To start with, the resignations of the account managers and the director of sales
and marketing in the Manila office brought about the immediate need for their
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replacements with personnel having commensurate experiences and skills. With
the positions held by the resigned sales personnel being undoubtedly crucial to
the operations and business of the petitioner, the resignations gave rise to an
urgent and genuine business necessity that fully warranted the transfer from the
Nasugbu, Batangas office to the main office in Manila of the respondents,
undoubtedly the best suited to perform the tasks assigned to the resigned
employees because of their being themselves account managers who had
recently attended seminars and trainings as such. The transfer could not be
validly assailed as a form of constructive dismissal, for, as held in Benguet
Electric Cooperative v. Fianza, management had the prerogative to determine the
place where the employee is best qualified to serve the interests of the business
given the qualifications, training and performance of the affected employee.
Secondly, although the respondents' transfer to Manila might be potentially

inconvenient for them because it would entail additional expenses on their part
aside from their being forced to be away from their families, it was neither
unreasonable nor oppressive. The petitioner rightly points out that the transfer
would be without demotion in rank, or without diminution of benefits and
salaries. Instead, the transfer would open the way for their eventual career
growth, with the corresponding increases in pay. It is noted that their prompt
and repeated opposition to the transfer effectively stalled the possibility of any
agreement between the parties regarding benefits or salary adjustments.
Thirdly, the respondents did not show by substantial evidence that the
petitioner was acting in bad faith or had ill-motive in ordering their transfer. In
contrast, the urgency and genuine business necessity justifying the transfer
negated bad faith on the part of the petitioner.
Lastly, the respondents, by having voluntarily affixed their signatures on their

respective letters of appointment, acceded to the terms and conditions of
employment incorporated therein. One of the terms and conditions thus
incorporated was the prerogative of management to transfer and re-assign its
employees from one job to another "as it may deem necessary or advisable."
DUE PROCESS
Toyota Pasig, Inc. vs. Vilma S. De Peralta

G.R. No. 213488
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November 07, 2016
Facts:
Essentially, respondent alleged that petitioner - a corporation engaged in the business of
car dealership, including service and sales of parts and accessories of Toyota motor
vehicles7 initially hired her as a cashier in March 1997. Eventually in 2004, she worked
her way up to the position of Insurance Sales Executive (ISE) which she held from 2007
to 2012 and where she received various distinctions from petitioner, including "Best
Insurance Sales Executive" for the years 2007 and 2011. However, things turned sour when
her husband, Romulo "Romper" De Peralta, also petitioner's employee and the President
of the Toyota Shaw-Pasig Workers Union - Automotive Industry Workers Alliance
(TSPWU-AIWA), organized a collective bargaining unit through a certification
election. According to respondent, petitioner suddenly dismissed from service the
officials/directors of TSPWU-AIWA, including her husband. Thereafter, petitioner
allegedly started harassing respondent for her husband's active involvement in TSPWU-
AIWA, which resulted to the issuance of a Notice to Explain dated January 3, 2012
accusing her of "having committed various acts" relative to the processing of insurance
of three (3) units as "outside transactions" and claiming commissions therefor, instead of
considering the said transactions as "new business accounts" under the dealership's
marketing department. Accordingly, she was preventively suspended because of such
charge. On February 3, 2012, respondent received a Notice of Termination, which
prompted her to file the instant complaint, where she also prayed for the payment of her
earned substantial commissions, tax rebates, and other benefits dating back from July
2011 to January 2012, amounting to P617,248.08.
In their defense, petitioner and Lim, et al. maintained that respondent was dismissed
from service for just cause and with due process. They explained that respondent was
charged and proven to have committed acts of dishonesty and falsification by claiming
commissions for new business accounts which should have been duly credited to the
dealership's marketing department. They further averred that respondent's claims for
commissions, tax rebates, and other benefits were unfounded and without
documentation and validation.
Issue:
Whether or not respondent’s monetary claims partake of unpaid wages/salaries, as well
as the labor standard benefits of employees as provided by law - e.g., 13th month pay,
overtime pay, service incentive leave pay, night differential pay, holiday pay - and as such,
petitioner, as employer, bears the burden of proving the payment of such monetary
claims or that respondent was not entitled thereto.
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Ruling:
Yes.
In this case, respondent's monetary claims, such as commissions, tax rebates for achieved
monthly targets, and success share/profit sharing, are given to her as incentives or forms
of encouragement in order for her to put extra effort in performing her duties as an ISE.
Clearly, such claims fall within the ambit of the general term "commissions" which in
turn, fall within the definition of wages pursuant to prevailing law and jurisprudence.
Thus, respondent's allegation of nonpayment of such monetary benefits places the
burden on the employer, i.e., petitioner, to prove with a reasonable degree of certainty
that it paid said benefits and that the employee, i.e., respondent, actually received such
payment or that the employee was not entitled thereto. The Court's pronouncement
in Heirs of Ridad v. Gregorio Araneta University Foundation is instructive on this matter,
to wit:
Well-settled is the rule that once the employee has set out with particularity in his
complaint, position paper, affidavits and other documents the labor standard benefits he
is entitled to, and which he alleged that the employer failed to pay him, it becomes the
employer's burden to prove that it has paid these money claims. One who pleads
payment has the burden of proving it, and even where the employees must allege non-
payment, the general rule is that the burden rests on the employer to prove payment,
rather than on the employees to prove non-payment. The reason for the rule is that the
pertinent personnel files, payrolls, records, remittances, and other similar documents
which will show that overtime, differentials, service incentive leave, and other claims of
the worker have been paid - are not in the possession of the worker but in the custody
and absolute control of the employer. (Emphasis and underscoring supplied)
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,
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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 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
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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
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:
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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:
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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.
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.
SANGWOO PHILIPPINES, INC. and/or SANG IK JANG, JISSO JANG, WISSO JANG
and NORBERTO TADEO
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vs. SANGWOO PHILIPPINES, INC. EMPLOYEE UNION - OLALIA, represented by
PORFERIA G.R. No. 173154, December 9, 2013
J. PERLAS-BERNABE
In this case, considering that SPI closed down its operations due to serious business
losses and that said closure appears to have been done in good faith, the Court -similar to
the case of Industrial Timber -deems it just to reduce the amount of nominal damages to
be awarded to each of the minority employees from P50,000.00 to P10,000.00. To be clear,
the foregoing award should only obtain in favor of the minority employees and not for those
employees who already received sums equivalent to separation pay and executed quitclaims
"releasing [SPI] now and in the future any claims and obligation which may arise as results
of [their] employment with the company." For these latter employees who have already
voluntarily accepted their dismissal, their executed quitclaims practically erased the
consequences of infirmities on the notice of dismissal, at least as to them.
Facts:
During the collective bargaining agreement (CBA) negotiations between Sangwoo

Philippines, Inc. Employees Union – Olalia (SPEU) and Sangwoo Philippines, Inc.(SPI),
the latter filed with the Department of Labor and Employment (DOLE) a letter-notice of
temporary suspension of operations for one (1) month, beginning September 15, 2003,
due to lack of orders from its buyers. Negotiations on the CBA, however, continued and
on September 10, 2003, the parties signed a handwritten Memorandum of Agreement.
Thereafter, SPI posted, in conspicuous places within the company premises, notices of
its permanent closure and cessation of business operations, effective March 16, 2004, due
to serious economic losses and financial reverses. The DOLE was furnished a copy of said
notice on February 13, 2004, together with a separate letter notifying it of the company’s
permanent closure. SPEU was also furnished with a copy of the notice of permanent
closure. Forthwith, SPI offered separation benefits of one-half (½) month pay for every
year of service to each of its employees. 234 employees of SPI accepted the offer, received
the said sums and executed quitclaims. Those who refused the offer, i.e., the minority
employees, were nevertheless given until March 25, 2004 to accept their checks and
correspondingly, execute quitclaims. However, the minority employees did not claim the
said checks.
SPEU filed a complaint for unfair labor practice, illegal closure, illegal dismissal, damages
and attorney’s fees before the Regional Arbitration Branch IV of the NLRC.
The Labor Arbiter (LA) ruled in favor of SPI. Consequently, the LA held that SPI was not
guilty of unfair labor practice, and similarly observed that it duly complied with the
requirement of furnishing notices of closure to its employees and the DOLE. NLRC
sustained the ruling of the LA, albeit with modification. The CA held that the minority
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employees were not entitled to separation pay considering that the company’s closure
was due to serious business losses.
Issues:
1. Whether the minority employees are entitled to separation pay
2. Whether SPI complied with the notice requirement of Article 297 (formerly
Article 283) of the Labor Code.
Ruling:
Both petitions are partly meritorious.
A. Non-entitlement to Separation Benefits.
Closure of business is the reversal of fortune of the employer whereby there is a complete
cessation of business operations and/or an actual locking-up of the doors of
establishment, usually due to financial losses. Closure of business, as an authorized cause
for termination of employment, aims to prevent further financial drain upon an employer
who cannot pay anymore his employees since business has already stopped. In such a
case, the employer is generally required to give separation benefits to its employees,
unless the closure is due to serious business losses.
In this case, the LA, NLRC, and the CA all consistently found that SPI indeed suffered
from serious business losses which resulted in its permanent shutdown and accordingly,
held the company’s closure to be valid. It is a rule that absent any showing that the
findings of fact of the labor tribunals and the appellate court are not supported by
evidence on record or the judgment is based on a misapprehension of facts, the Court
shall not examine a new the evidence submitted by the parties. Perforce, without any
cogent reason to deviate from the findings on the validity of SPI’s closure, the Court thus
holds that SPI is not obliged to give separation benefits to the minority employees
pursuant to Article 297 of the Labor Code as interpreted in the case of Galaxie. As such,
SPI should not be directed to give financial assistance amounting to P15,000.00 to each
of the minority employees based on the Formal Offer of Settlement. If at all, such formal
offer should be deemed only as a calculated move on SPI’s part to further minimize the
expenses that it will be bound to incur should litigation drag on, and not as an indication
that it was still financially sustainable. However, since SPEU chose not to accept, said
offer did not ripen into an enforceable obligation on the part of SPI from which financial
assistance could have been realized by the minority employees.
B. Insufficient Notice of Closure.
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Article 297 of the Labor Code provides that before any employee is terminated due to
closure of business, it must give a one (1) month prior written notice to the employee and
to the DOLE. In this relation, case law instructs that it is the personal right of the
employee to be personally informed of his proposed dismissal as well as the reasons
therefor; and such requirement of notice is not a mere technicality or formality which
the employer may dispense with. Since the purpose of previous notice is to, among
others, give the employee some time to prepare for the eventual loss of his job, the
employer has the positive duty to inform each and every employee of their impending
termination of employment. To this end, jurisprudence states that an employer’s act of
posting notices to this effect in conspicuous areas in the workplace is not enough. Verily,
for something as significant as the involuntary loss of one’s employment, nothing less
than an individually-addressed notice of dismissal supplied to each worker is proper. As
enunciated in the case of Galaxie:
Finally, with regard to the notice requirement, the Labor Arbiter found, and it was upheld
by the NLRC and the Court of Appeals, that the written notice of closure or cessation
of Galaxie’s business operations was posted on the company bulletin board one month
prior to its effectivity. The mere posting on the company bulletin board does not,
however, meet the requirement under Article [297] of "serving a written notice on the
workers."The purpose of the written notice is to inform the employees of the specific date
of termination or closure of business operations, and must be served upon them at least
one month before the date of effectivity to give them sufficient time to make the
necessary arrangement. In order to meet the foregoing purpose, service of the written
notice must be made individually upon each and every employee of the
company.(Emphasis and underscoring supplied; citations omitted)
Keeping with these principles, the Court finds that the LA, NLRC, and CA erred in ruling
that SPI complied with the notice requirement when it merely posted various copies of
its notice of closure in conspicuous places within the business premises. As earlier
explained, SPI was required to serve written notices of termination to its employees,
which it, however, failed to do.It is well to stress that while SPI had a valid ground to
terminate its employees, i.e., closure of business, its failure to comply with the proper
procedure for termination renders it liable to pay the employee nominal damages for
such omission.
In this case, considering that SPI closed down its operations due to serious business
losses and that said closure appears to have been done in good faith, the Court -similar
to the case of Industrial Timber -deems it just to reduce the amount of nominal damages
to be awarded to each of the minority employees from P50,000.00 to P10,000.00. To be
clear, the foregoing award should only obtain in favor of the minority employees and not
for those employees who already received sums equivalent to separation pay and
executed quitclaims "releasing [SPI] now and in the future any claims and obligation
which may arise as results of [their] employment with the company." For these latter
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employees who have already voluntarily accepted their dismissal, their executed
quitclaims practically erased the consequences of infirmities on the notice of dismissal,
at least as to them.
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JARL CONSTRUCTION and ARMANDO K. TEJADA, Petitioners, v. SIMEON A.
ATENCIO, Respondent
G.R. NO. 175969 - August 1, 2012
FACTS:
This case stems from a complaint for illegal dismissal, nonpayment of salaries, and 13th
month pay filed by respondent Simeon A. Atencio (Atencio) with the National Labor
Relations Commission (NLRC) against petitioners JARL Construction (JARL) and its
general manager, Armando K. Tejada (Tejada).
During Atencio s tenure as chief operating manager, his employer JARL had an
existing contract with Caltex Philippines (Caltex) to construct a Caltex service station
in Quezon City (Caltex project). The contract with Caltex prohibited JARL from
subcontracting the project.
Tejada allegedly gave Atencio full authority as JARL s chief operating manager to hire
other subcontractors if necessary. Pursuant to his blanket authority, Atencio hired
DDK Steel Construction and Building Multi-Technology (DDK Steel) for the electrical
installations of the Caltex project.
On May 24, 1999, Tejada informed Atencio and Safemark that JARL was terminating
Atencio’s management and supervision works for the Caltex project effective May 20,
1999. JARL assured Atencio and Safemark that it will pay for the rendered services,
save for a 15% portion thereof, which JARL will retain until Caltex has accepted the
project.
Atencio construed the above letter as a termination of the subcontract between his
company and JARL. Thus, he threatened JARL and Tejada that he will report their
unethical conduct with the Philippine Accreditation Board for possible sanctions.
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Believing, however, that his employment as JARL s chief operating manager was
separate from their subcontracting agreement, Atencio allegedly continued reporting
for work to the Caltex project site until, sometime in June 1999, when he was barred
from entering the said premises.
ISSUES:
Whether petitioners were able to prove their substantial compliance with the
procedural due process requirements.
Whether the receipts issued by Safemark evidencing JARL’s payment for "Professional
Services" suffice as proof of payment of salaries and 13th month pay.
RULING:
Petitioners’ evidence fails to prove their contention that they afforded Atencio with
due process.
The June 21, 1999 letter, which allegedly proves Atencio’s knowledge of the charges
against him, and which allegedly constitutes Atencio’s explanation, clearly discusses an
entirely different topic which is the removal of his construction company from the
Caltex project. In the letter, Atencio states that he was wrong for assuming that there
was a subcontracting agreement between his firm and JARL. He took responsibility for
the misunderstanding between them and apologized. Nowhere in the said letter does
Atencio refer to the charges, which JARL mentioned before the Labor Arbiter as the
causes for his dismissal. Logically, he did not also explain himself as regards the said
charges.
As for the May 24, 1999 letter, which allegedly constitutes the notice of termination of
Atencio s employment as JARL s chief operating manager, the Court agrees with the
CA s appreciation that the said letter involves the termination of the subcontracting
agreement between JARL and Atencio’s company, and not the termination of Atencio s
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employment. This is bolstered by the fact that the said letter is not addressed solely to
Atencio, which should have been the case if it were a letter terminating his
employment. Instead, it is addressed to Safemark, with Atencio in the attention byline,
which supports the conclusion that this letter involves a contract of the corporation,
and not of Atencio only. Moreover, petitioners’ reservation in the May 24, 1999 letter,
which states that JARL will retain a 15% portion of the contract price until Caltex has
accepted the project, is expected in a subcontract agreement, but not in employment
contracts. Clearly, the letter does not meet the statutory requirement of notice of
termination of employment.
The Court thus affirms the appellate court’s ruling that petitioners’ failure to observe
the two-notice rule under Article 277(b) of the Labor Code entitles the respondent to
nominal damages, in accordance with Agabon v. National Labor Relations Commission.
No. Petitioners’ evidence does not support their contention of payment.
When there is an allegation of nonpayment of salaries and other monetary benefits, it

is the employer s burden to prove its payment to its employee. The employer s
evidence must show, with a reasonable degree of certainty, that it paid and that the
workers actually received the payment. "The reason for the rule is that the pertinent
personnel files, payrolls, records, remittances and other similar documents x x x are
not in the possession of the worker but [are] in the custody and absolute control of the
employer."
In the case at bar, the two official receipts issued by Safemark, and offered as JARL s
evidence, only prove that JARL made a total partial payment of P1,891,509.50 to the
said company for its "professional services." Since JARL admits that the said company
actually rendered services for JARL on its Caltex project, the payment can only be
assumed as covering for the said services. There is nothing on the face of the receipts
to support the conclusion that Atencio (and not his company) received it as payment
for his service as a JARL employee.
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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.
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.
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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 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.
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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
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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 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.
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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 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.
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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.
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
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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.
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.
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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
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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 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.
ABBOTT LABORATORIES, PHILS., ET AL. vs. PEARLIE ANN F. ALCARAZ

G.R. No. 192571, July 23, 2013
J. Estella M. Perlas-Bernabe
A company policy partakes of the nature of an implied contract between the

employer and employee.Hence, given such nature, company personnel policies create an
obligation on the part of both the employee and the employer to abide by the same.
An employer who terminates an employee for a valid cause but does so through
invalid procedure is liable to pay the latter nominal damages.Abbott was held liable for
P30,000 as indemnity because it failed to comply with its own procedural process in
terminating probationary employees
Facts:
Respondent Pearlie Ann F. Alcaraz signed an employment contract with

petitioner Abbott Laboratories, Philippines, which stated, inter alia, that she was to be
placed on probation for six months, from Feb. 15, 2005 to Aug. 14, 2005. On May 23, 2005,
the respondent received a letter from petitioners stating that her services had been
terminated effective May 19, 2005, because she failed to meet the regularization standards
for the position of regulatory affairs manager. Respondent felt that she was unjustly
terminated from her employment and thus, filed a complaint for illegal dismissal. She
contended that she should have already been considered as a regular employee because
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the petitioners had failed to inform her of the reasonable standards for her regularization
upon her engagement as required under Article 295 of the Labor Code.
Abbott maintained that respondent was validly terminated from her probationary
employment given her failure to satisfy the prescribed standards for her regularization
which were made known to her at the time of her engagement.
The Labor Arbiter ruled that the dismissal had been valid. On appeal, the NLRC
reversed the findings of the LA and ruled that there was no evidence showing that
respondent had been apprised of her probationary status and the requirements which
she should have complied with in order to be a regular employee. The Court of Appeals
(CA) found no grave abuse of discretion and accordingly denied the Rule 65 petition that
the petitioner Abbott brought.
Issue:
Whether or not the respondent was validly terminated from her employment
Ruling:
The Supreme Court ruled that Alcaraz’s status as a probationary employee and
her consequent dismissal must stand. Consequently, in holding that Alcaraz was illegally
dismissed due to her status as a regular and not a probationary employee, the court finds
that the National Labor Relations Commission (NLRC) committed a grave abuse of
discretion. The NLRC based its decision on the premise that Alcaraz’s receipt of her job
description and Abbott’s Code of Conduct and Performance Modules was not equivalent
to being actually informed of the performance standards upon which she should have
been evaluated on. It, however, overlooked the legal implication of the other attendant
circumstances as detailed herein, which should have warranted a contrary finding that
Alcaraz was indeed a probationary and not a regular employee—more particularly the
fact that she was well aware of her duties and responsibilities and that her failure to
adequately perform would lead to her non-regularization and eventually, her
termination.
A different procedure is applied when terminating a probationary employee; the

usual two-notice rule does not govern. Section 2, Rule I, Book VI of the Implementing
Rules of the Labor Code states that “[i]f the termination is brought about by the x x x
failure of an employee to meet the standards of the employer in case of probationary
employment, it shall be sufficient that a written notice is served the employee, within a
reasonable time from the effective date of termination.”
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In this case, respondent’s dismissal was effected through a letter dated May 19,
2005 which she received on May 23, 2005 and again on May 27, 2005. Stated therein were
the reasons for her termination, i.e., that after proper evaluation, Abbott determined
that she failed to meet the reasonable standards for her regularization considering her
lack of time and people management and decision-making skills, which are necessary in
the performance of her functions as Regulatory Affairs Manager. Undeniably, this written
notice sufficiently meets the criteria set forth above, thereby legitimizing the cause and
manner of respondent’s dismissal as a probationary employee under the parameters set
by the Labor Code.
Nonetheless, despite the existence of a sufficient ground to terminate

respondent’s employment and Abbott’s compliance with the Labor Code termination
procedure, it is readily apparent that Abbott breached its contractual obligation to
respondent when it failed to abide by its own procedure in evaluating the performance
of a probationary employee. Veritably, a company policy partakes of the nature of an
implied contract between the employer and employee.
Hence, given such nature, company personnel policies create an obligation on the
part of both the employee and the employer to abide by the same. Records show that
Abbott’s PPSE procedure mandates, inter alia, that the job performance of a probationary
employee should be formally reviewed and discussed with the employee at least twice:
first on the third month and second on the fifth month from the date of employment.
Abbott is also required to come up with a Performance Improvement Plan during the
third month review to bridge the gap between the employee’s performance and the
standards set, if any. In addition, a signed copy of the PPSE form should be submitted to
Abbott’s HRD as the same would serve as basis for recommending the confirmation or
termination of the probationary employment. In this case, it is apparent that Abbott
failed to follow the above-stated procedure in evaluating respondent.
Case law has settled that an employer who terminates an employee for a valid
cause but does so through invalid procedure is liable to pay the latter nominal damages.
Therefore, the Court deems it appropriate to fix the amount of nominal damages at the
amount of P30,000.00, consistent with its rulings in both Agabon and Jaka.
JURISDICTIONS, REMEDIES, ACTIONS AND PROCEEDINGS
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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 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.
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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
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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 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.
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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.
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.
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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 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.
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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.
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
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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 so-called corporate tort of a close
corporation, it is the person "actively engaged" in the management of the corporation
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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
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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.
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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 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.
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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.
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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 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
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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,
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
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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 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:
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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.anRoblesVirtualawlibra
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 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 trust and confidence.
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
40 | P a g e
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.
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.
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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.
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.
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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
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,
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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
40 | P a g e
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.
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.
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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.
Issue
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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
40 | P a g e
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 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
40 | P a g e
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
Powerhouse Staffbuilders International, Inc. vs. Romelia Rey, et al.

G.R. No. 190203
November 07, 2016
Facts:
Powerhouse hired respondents Romelia Rey, Liza Cabad, Evangeline Nicmic, Eva
Lameyra, Rosario Abordaje, Lilybeth Magalang, Venia Buyag, Jaynalyn Nolledo, Iren
Nicolas, Aileen Samalea, Susan Ybañez, Cheryl Ann Oria, Ma. Liza Seraspi and Katherine
Oracion (respondent employees) as operators for its foreign principal, Catcher Technical
Co. Ltd./Catcher Industrial Co. Ltd. (Catcher), based in Taiwan, each with a monthly
salary of NT$15,840.00 for the duration of two years commencing upon their arrival at
the jobsite. They were deployed on June 2, 2000. Sometime in February 2001, Catcher
informed respondent employees that they would be reducing their working days due to
low orders and financial difficulties. The respondent employees were repatriated to the
Philippines on March 11, 2001.
On March 22, 2001, respondent employees filed separate complaints for illegal dismissal,
40 | P a g e
refund of placement fees, moral and exemplary damages, as well as attorney's fees,
against Powerhouse and Catcher before the Labor Arbiter (LA) which were later
consolidated upon their motion. They alleged that on March 2, 2001, Catcher informed
them that they would all be repatriated due to low orders of Catcher. Initially, they
refused to be repatriated but they eventually gave in because Catcher stopped providing
them food and they had to live by the donations/dole outs from sympathetic friends and
the church. Furthermore, during their employment with Catcher, the amount of
NT$10,000.00 was unjustifiably deducted every month for eight to nine months from
their individual salaries.
On the other hand, Powerhouse maintained that respondent employees voluntarily gave
up their jobs following their rejection of Catcher's proposal to reduce their working days.
It contended that before their repatriation, each of the respondents accepted payments
by way of settlement, with the assistance of Labor Attache Romulo Salud.
During the proceedings before the LA, Powerhouse moved to implead JEJ International
Manpower Services (JEJ) as respondent on account of the alleged transfer to the latter of
Catcher's accreditation. The motion was granted and JEJ submitted its position paper,
arguing that the supposed transfer of accreditation to it did not affect the joint and
solidary liability of Powerhouse in favor of respondent employees. It averred that any
contract between JEJ and Powerhouse could not be enforced in the case as it involved no
employer-employee relationship and is therefore outside the jurisdiction of the labor
arbiter.
Issues:
a. Whether or not respondent employees' dismissal and/or pretermination of their
employment contracts is illegal.
b. Whether or not JEJ could be held liable for the monetary claims of respondent employees
on account of the alleged transfer of accreditation to it.
Ruling:
a. Yes.
The onus of proving that an employee was not dismissed or, if dismissed, his dismissal
was not illegal, fully rests on the employer, and the failure to discharge the onus would
mean that the dismissal was not justified and was illegal. The burden of proving the
allegations rests ufon the party alleging and the proof must be clear, positive, and
convincing.
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Here, there is no reason to overturn the factual findings of the Labor Arbiter, the NLRC
and the CA, all of which have unanimously declared that respondent employees were
made to resign against their will after the foreign principal, Catcher, stopped providing
them food for their subsistence as early as March 2, 2001, when they were informed that
they would be repatriated, until they were repatriated on March 11, 2001.
The filing of complaints for illegal dismissal immediately after repatriation belies the
claim that respondent employees voluntarily chose to be separated and repatriated.
Voluntary repatriation, much like resignation, is inconsistent with the filing of the
complaints.
b. No.
Nothing in the two letters attached by Powerhouse in its motion for reconsideration
before the NLRC proved that the alleged transfer pushed through with
POEA's imprimatur. At best, these show that Catcher intended to appoint JEJ as its new
agent and Powerhouse had no objection to such transfer.
Even the Affidavit of Assumption of Responsibility submitted to the CA cannot absolve

Powerhouse of its liability.
The terms of Section 10 of R.A. No. 8042 clearly states the solidary liability of the principal
and the recruitment agency to the employees and this liability shall not be affected by
any substitution, amendment or modification for the entire duration of the employment
contract.
In Skippers United Pacific, Inc. v. Maguad, we ruled that the provisions of the POEA Rules
and Regulations are clear enough that the manning agreement extends up to and until
the expiration of the employment contracts of the employees recruited and employed
pursuant to the said recruitment agreement. In that case, we held that the Affidavits of
Assumption of Responsibility, though valid as between petitioner Skippers United Pacific
Inc. and the other two manning agencies, were not enforceable against the respondents
(the employees) because the latter were not parties to those agreements.
In this case, even if there was transfer of accreditation by Catcher from Powerhouse to
JEJ, Powerhouse's liability to respondent employees remained intact because respondent
employees are not privy to such contract, and in their overseas employment contract
approved by POEA, Powerhouse is the recruitment agency of Catcher. To relieve
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Powerhouse from liability arising from the approved overseas employment contract is to
change the contract without the consent from the other contracting party, respondent
employees in this case.
To rule otherwise and free Powerhouse of liability against respondent employees would
go against the rationale of R.A. No. 8042 to protect and safeguard the rights and interests
of overseas Filipinos and overseas Filipino workers, in particular, and run contrary to this
law's intention to an additional layer of protection to overseas workers. This ensures that
overseas workers have recourse in law despite the circumstances of their employment.
By providing that the liability of the foreign employer may be "enforced to the full extent"
against the local agent, the overseas worker is assured of immediate and sufficient
payment of what is due them. Corollarily, the provision on joint and several liability in
R.A. No. 8042 shifts the burden of going after the foreign employer from the overseas
worker to the local employment agency. However, the local agency that is held to answer
for the overseas worker's money claims is not left without remedy. The law does not
preclude it from going after the foreign employer for reimbursement of whatever
payment it has made to the employee to answer for the money claims against the foreign
employer.
Buenaflor Car Services, Inc. vs. Cezar Durumpili David, Jr.

G.R. No. 222730
November 07, 2016
Facts:
Respondent was employed as Service Manager by petitioner, doing business under the
trade name "Pronto! Auto Services." In such capacity, he was in charge of the overall day-
to-day operations of petitioner, including the authority to sign checks, check vouchers,
and purchase orders.
In the course of its business operations, petitioner implemented a company policy with
respect to the purchase and delivery of automotive parts and products. The process
begins with the preparation of a purchase order by the Purchasing Officer, Sonny D. De
Guzman (De Guzman), which is thereafter, submitted to respondent for his review and
approval. Once approved and signed by respondent and De Guzman, the duplicate copy
of the said order is given to petitioner's supplier who would deliver the goods/supplies.
De Guzman was tasked to receive such goods and thereafter, submit a copy of the
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purchase order to petitioner's Accounting Assistant, Marilyn A. Del Rosario (Del
Rosario), who, in turn, prepares the request for payment to be reviewed by her immediate
supervisor, Finance Manager and Chief Finance Officer Ruby Anne B. Vasay (Vasay).
Once approved, the check voucher and corresponding check are prepared to be signed
by any of the following officers: respondent, Vasay, or Vice President for Operations
Oliver S. Buenaflor (Buenaflor). It was company policy that all checks should be issued
in the name of the specific supplier and not in "cash," and that the said checks are to be
picked up from Del Rosario at the company's office in Muntinlupa City.
On August 8, 2013, Chief Finance Officer Cristina S. David (David) of petitioner's affiliate
company, Diamond IGB, Inc., received a call from the branch manager of ChinaBank, SM
City Bicutan Branch, informing her that the latter had cleared several checks issued by
petitioner bearing the words "OR CASH" indicated after the payee's name. Alarmed,
David requested for petitioner's Statement of Account with scanned copies of the cleared
checks bearing the words "OR CASH" after the payee's name. The matter was then
immediately brought to petitioner's attention through its President, Exequiel T. Lampa
(Lampa), and an investigation was conducted.
On August 22, 2013, Lampa and petitioner's Human Resource Manager, Helen Lee (Lee),
confronted Del Rosario on the questioned checks. Del Rosario readily confessed that
upon respondent's instruction, she inserted the words "OR CASH" after the name of the
payees when the same had been signed by all the authorized signatories. She also
implicated De Guzman, who was under respondent's direct supervision, for preparing
spurious purchase orders that were used as basis in issuing the subject checks, as well as
petitioner's messenger/driver, Jayson G. Caranto (Caranto), who was directed to encash
some of the checks, with both persons also gaining from the scheme. Her confession was
put into writing in two (2) separate letters both of even date (extrajudicial confession).
As a result, respondent, together with Del Rosario, De Guzman, and Caranto, were placed
under preventive suspension for a period of thirty (30) days, and directed to submit their
respective written explanations. The ensuing investigation revealed that there were
twenty-seven (27) checks with the words "OR CASH" inserted after the payee's name, all
signed by respondent and either Vasay or Buenaflor, in the total amount of P1,021,561.72.
For his part, respondent vehemently denied the charges against him. He claimed that he
has no control over the company's finance and billing operations, nor the authority to
instruct Del Rosario to make any check alterations, which changes, if any, must be made
known to Vasay or Buenaflor.
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On September 20, 2013, respondent and his co-workers were served their respective
notices of termination16 after having been found guilty of violating Items B (2), (3) and/or
G (3) of the company's Code of Conduct and Behavior, particularly, serious misconduct
and willful breach of trust.
Issue:
Ruling:
No.
In the case at bar, respondent's termination was grounded on his violation of petitioner's
Code of Conduct and Behavior, which was supposedly tantamount to (a) serious
misconduct and/or (b) willful breach of the trust reposed in him by his employer.

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 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.
On the other hand, for loss of trust to be a ground for dismissal, the employee must be
holding a position of trust and confidence, and 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 for the misconduct and that the nature of the employee's participation
therein rendered him unworthy of the trust and confidence demanded by his
position.
Petitioner's claims of serious misconduct and/or willful breach of trust against

respondent was hinged on his alleged directive to petitioner's Accounting Assistant, Del
Rosario, to insert the word "OR CASH" in the checks payable to petitioner's supplier/s
after the same had been sigued by the authorized officers contrary to company policy.
Accordingly, respondent was accused of conspiring with his co-employees in the
irregular issuance of twenty-seven (27) checks which supposedly resulted in the
defraudation of the company in the total amount of P1,021,561.72.
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While there is no denying that respondent holds a position of trust as he was charged
with the overall day-to-day operations of petitioner, and as such, is authorized to sign
checks, check vouchers, and purchase orders, he argues, in defense, that he had no
control over the company's finance and billing operations, and hence, should not be held
liable. Moreover, he asserts that he had no power to instruct Del Rosario to make any
check alterations, which changes, if any, must be made known to Vasay or Buenaflor.
Although respondent's statements may be true, the Court, nonetheless, observes that it
is highly unlikely that respondent did not have any participation in the above-mentioned
scheme to defraud petitioner. It is crucial to point out that the questioned checks would
not have been issued if there weren't any spurious purchase orders. As per company
policy, the procurement process of petitioner begins with the preparation of purchase
orders by the Purchasing Officer, De Guzman. These purchase orders have to be
approved by respondent himself before the delivery and payment process can
even commence. It is only after the issuance of the approved purchase orders that
petitioner's suppliers are directed to deliver the ordered goods/supplies, and from there,
requests for payment and the issuance of checks (through Del Rosario) would be made.
Thus, being the approving authority of these spurious purchase orders, respondent
cannot disclaim any culpability in the resultant issuance of the questioned checks.
Clearly, without the approved purchase orders, there would be no delivery of
goods/supplies to petitioner, and consequently, the payment procedure would not even
begin. These purchase orders were, in fact, missing from the records, and respondent,
who had the primary authority for their approval, did not, in any manner, account for
them.
Notably, the fact that respondent signed the checks prior to their alterations does not
discount his participation. To recall, the checks prepared by Del Rosario were first
reviewed by her immediate supervisor, Finance Manager and Chief Finance Officer,
Vasay, and once approved, the check vouchers and corresponding checks were signed by
respondent, followed by either Vasay, or Vice President for Operations Buenaflor. To
safeguard itself against fraud, the company implemented the policy that all checks to its
suppliers should be issued in their name and not in "cash." Thus, if the checks would be
altered prior to the signing of all these corporate officers, then they would obviously not
pass petitioner's protocol. It is therefore reasonable to conclude that the alterations were
calculated to be made after all the required signatures were obtained; otherwise, the
scheme would not come into fruition.
Respondent was directly implicated in the controversy through the extrajudicial
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confession of his co-employee, Del Rosario, who had admitted to be the author of the
checks' alterations, although mentioned that she did so only upon respondent's
imprimatur. The NLRC, as affirmed by the CA, however, deemed the same to be
inadmissible in evidence on account of the res inter alios acta rule, which, as per Section
30, Rule 130 of the Rules of Court, provides that the rights of a party cannot be prejudiced
by an act, declaration, or omission of another. Consequently, an extrajudicial confession
is binding only on the confessant and is not admissible against his or her co-accused
because it is considered as hearsay against them.
However, the NLRC should not have bound itself by the technical rules of procedure as
it is allowed to be liberal in the application of its rules in deciding labor cases. The NLRC
Rules of Procedure state that "[t]he rules of procedure and evidence prevailing in courts
of law and equity shall not be controlling and the Commission shall use every and all
reasonable means to ascertain the facts in each case speedily and objectively, without
regard to technicalities of law or procedure x x x."
In any case, even if it is assumed that the rule on res inter alios acta were to apply in this
illegal dismissal case, the treatment of the extrajudicial confession as hearsay is bound
by the exception on independently relevant statements. "Under the doctrine of
independently relevant statements, regardless of their truth or falsity, the fact that such
statements have been made is relevant. The hearsay rule does not apply, and the
statements are admissible as evidence. Evidence as to the making of such statement is
not secondary but primary, for the statement itself may constitute a fact in issue or be
circumstantially relevant as to the existence of such a fact." Verily, Del Rosario's
extrajudicial confession is independently relevant to prove the participation of
respondent in the instant controversy considering his vital role in petitioner's
procurement process. The fact that such statement was made by Del Rosario, who was
the actual author of the alterations, should have been given consideration by the NLRC
as it is directly, if not circumstantially, relevant to the issue at hand.
Case law states that "labor suits require only substantial evidence to prove the validity of
the dismissal." Based on the foregoing, the Court is convinced that enough substantial
evidence exist to support petitioner's claim that respondent was involved in the afore-
discussed scheme to defraud the company, and hence, guilty of serious misconduct
and/or willful breach of trust which are just causes for his termination. Substantial
evidence is defined as such amount of relevant evidence that a reasonable mind might
accept as adequate to justify a conclusion, which evidentiary threshold petitioner
successfully hurdled in this case.
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MARIA VICTORIA TOLENTINO-PRIETO vs. ROBERT S. ELVAS
G.R. No. 192369
November 09, 2016;
ROBERT S. ELVAS vs. INNSBRUCK INTERNATIONAL TRADING AND/OR
MARIVIC TOLENTINO (A.K.A. MARIA VICTORIA TOLENTINO-PRIETO)
G.R. No. 193685
November 09, 2016
Facts:
Innsbruck International Trading (Innsbruck), owned by Maria Victoria Toletino-Prieto
(Tolentino) [collectively, respondents], is engaged in the sanitation and fumigation of
garbage dump trucks. The Municipal Government of Rodriguez, Rizal, awarded it with
the operation of the Wash Bay Station, a government project that involves the fumigation
or decongestion of garbage dump trucks coming from all over Metro Manila, for the
purpose of reducing or eliminating the odor caused by the dumping of garbage at the
Rodriguez, Rizal landfill. Elvas was employed as a checker at the Wash Bay Station. He
records the number of dump trucks sanitized by Innsbruck and collects P30.00 from each
of the truck fumigated. For a 12-hour day's work, he receives a salary of
P250.00. Sometimes, he also discharges the function of a cashier with a duty to collect
payments from other checkers and surrender them to the money collector.
Sometime in February 2006, Tolentino allegedly discovered, based on the station logbook
report and the report made by the Wash Bay Station Municipal Supervisor, that there
were discrepancies between the number of dump trucks recorded and the amount of
payment remitted by Elvas and the other employees. Tolentino then sent a Letter-
Memorandum dated May 25, 2006 to Elvas giving him 24 hours from receipt to explain
why his employment should not be terminated because of his involvement in the non-
remittance of collections. Elvas responded in a Letter dated May 29, 2006, asserting that
he cannot answer the allegation against him given the limited period of time, and the
fact that he was not furnished with the station logbook and other related documents. He
warned Tolentino that her accusation is a form of coercion and an act constituting
constructive dismissal. He asked her to desist from pursuing acts which cause him
anxiety and sleepless nights. Thereafter, on September 11, 2006, he filed a Complaint for
illegal dismissal, underpayment of salaries, 13thmonth pay, Emergency Cost of Living
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Allowance (ECOLA) and separation pay in lieu of reinstatement against respondents
before the NLRC.
The LA ruled in favor of Elvas and declared that he was illegally terminated from his
employment. The LA noted that the admissions of Rabe and Constantino cannot be used
against Elvas because nowhere in their affidavit did they state that the latter was an
accomplice in their misappropriation. Other than the daily remittance and summary of
purchases, Tolentino failed to adduce any evidence to support Elvas' participation in the
misappropriation. There was likewise no abandonment of work on the part of Elvas
because he had duly established that he continued working for Tolentino despite the low
pay and the dire state and condition of the Rizal landfill.21 Rather, the LA found that the
charge of abandonment does not square with the recorded fact that Elvas was being
accused of misappropriation and was actually charged in court with estafa thereby
indicating his undesirability within the work premises and the pressure for him to leave.
It is more indicative of constructive dismissal rather than abandonment of work.
In its Decision, the CA sustained the NLRC in allowing respondents' appeal but as to the
merits of the case, it reversed the latter and reinstated the LA's Decision that Elvas was
Issue:
Whether or not the CA erred in ruling on the question of Elvas' illegal dismissal
considering that it was not raised as an issue in Elvas' petition before it.
Ruling:
No.
Article 229 of the Labor Code mandates that appeals from the judgment of the LA which
involve a monetary award may be perfected only upon posting of a cash or surety bond
issued by a reputable bonding company duly accredited by the NLRC in the amount
equivalent to the monetary award in the judgment appealed from.
The statutory and regulatory provisions explicitly provide that an appeal from the LA to
the NLRC must be perfected within 10 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.
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The second requisite is the crux of the present controversy. Respondents seasonably filed
a memorandum of appeal and posted a surety bond in an amount equivalent to the
monetary award of the LA, but the bond turned out to be spurious upon verification of
Elvas. Respondents immediately put up a new and genuine bond to replace the old one.
The NLRC and the CA allowed the appeal.
We find no cogent reason to disturb the ruling of the courts a quo. While posting of an
appeal bond is mandatory and jurisdictional, we sanction the relaxation of the rule in
certain meritorious cases. These cases include instances in which (1) there was substantial
compliance with the Rules, (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. The first and second
instances are present in this case.
As correctly found by the CA, respondents substantially complied with the rules as shown
by their lack of intention to evade the requirement of appeal bond. Upon being informed
of the spuriousness of the bond, they dismissed their counsel of record who was allegedly
responsible for its submission and hired another lawyer who submitted a genuine
bond. Both the NLRC and the CA found good faith on the part of respondents, stating
that the filing of the alleged fake bond was without their knowledge and that they did
not purposely post a spurious bond. We adhere to a strict application of Article 229 of
the Labor Code when appellants do not post an appeal bond at all; but here an appeal
bond was actually filed. Strict application of the rules is therefore uncalled for.
Further, Article 227 of the same Code authorizes the NLRC to "use every and all
reasonable means to ascertain the facts in each case speedily and objectively, without
regard to technicalities of law or procedure." In the case before us, the NLRC opined that
it is in the best interest of justice that the appeal be allowed so that the case could be
resolved on its merits. In this regard, we cite Rada v. NLRC, where we ruled that the NLRC
did not commit grave abuse of discretion when it entertained the employer's appeal
despite the posting of the surety bond beyond the reglementary period. We explained
that "[w]hile it is true that the payment of the supersedeas bond is an essential
requirement in the perfection of an appeal, however, where the fee had been paid
although payment was delayed, the broader interests of justice and the desired objective
of resolving controversies on the merits demands that the appeal be given due course."
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All told, the NLRC and the CA did not err when they admitted respondents' appeal.
The CA may rule upon an unassigned error to arrive at a complete and just resolution of
the case.
Rightfully so, as borne by the record and as admitted by Elvas, the only error raised in
the CA is whether the NLRC committed grave abuse of discretion in giving due course to
respondents' appeal. Elvas did not ask the CA to review the finding of the NLRC that he
was not illegally dismissed. Yet, the CA reversed that finding and declared that Elvas was
illegally terminated from service. Conscious of the fact that it was not raised as an issue,
the CA explained that ruling on the merits is necessary for a complete and just resolution
of the case.
We concur with the CA. Our rules recognize the broad discretionary power of an
appellate court to waive the lack of proper assignment of errors and to consider errors
not assigned. The CA has ample authority to review errors not raised in the following
instances:
(a) When the question affects jurisdiction over the subject matter;
(b) Matters that are evidently plain or clerical errors within contemplation of law;
(c) Matters whose consideration is necessary in arriving at a just decision and complete
resolution of the case or in serving the interests of justice or avoiding dispensing
piecemeal justice;
(d) Matters raised in the trial court and are of record having some bearing on the issue
submitted that the parties failed to raise or that the lower court ignored;
(e) Matters closely related to an error assigned; and
(f) Matters upon which the determination of a question properly assigned is dependent.
Evidently, the exceptions obtain in this case. The CA effectively avoided dispensing
piecemeal justice when it did not confine itself to the resolution only of the procedural
aspect of the case but ruled on the merits that is, the issue of illegal dismissal. Since the
LA and the NLRC had varying views of the merits, it would best serve the interest of
justice that the CA lays the issue to a definitive rest. Additionally, it cannot be gainsaid
that an appeal throws the entire case open for review.
Manila Doctors College and Teresita O. Turla vs. Emmanuel M. Olores

G.R. No. 225044
October 03, 2016
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Facts:
Respondent was a faculty member of petitioner Manila Doctors College (MDC) assigned
at the Humanities Department of the College of Arts and Sciences.7 On June 7, 2010, he
was dismissed for Grave Misconduct, Gross Inefficiency, and Incompetence, after due
investigation finding him. guilty of employing a grading system that was not in
accordance with the guidelines set by MDC. Respondent lost no time in filing a case for
illegal dismissal, money claims, regularization, damages, and attorney's fees against
petitioners MDC and Teresita O. Turla (petitioners), President of MDC, before the
NLRC, docketed as NLRC-NCR Case No. 06-08402-10, claiming that there was no just
cause for his dismissal, and that he should be accorded a permanent appointment after
having served as an instructor on a full-time basis for five (5) consecutive years.
Issue:
Whether or not the CA correctly ruled that he LA's order of reinstatement is immediately
executory; thus, the employer has to either re-admit the employee to work under the
same terms and conditions prevailing prior to his dismissal, or to reinstate him in the
payroll; and that even if such order of reinstatement is reversed on appeal, the employer
is still obliged to reinstate and pay the wages of the employee during the period of appeal
until reversal by a higher court or tribunal.
Ruling:
Yes.
Under Article 223 (now Article 229) of the Labor Code, "the decision of the [LA]
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 option of the employer, merely reinstated in the
payroll. The posting of a bond by the employer shall not stay the execution for
reinstatement x x x." Verily, the employer is duty-bound to reinstate the employee,
failing which, the employer is liable instead to pay the dismissed employee's
salary.
However, in the event that the LA's decision is reversed by a higher tribunal, the
employer's duty to reinstate the dismissed employee is effectively terminated. This
means that an employer is no longer obliged to keep the employee in the actual service
or in the payroll. The employee, in tum, is not required to return the wages that he had
received prior to the reversal of the LA's decision. Notwithstanding the reversal of the
finding of illegal dismissal, an employer, who, despite the LA's order of
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reinstatement, did not reinstate the employee during the pendency of the appeal
up to the reversal by a higher tribunal may still be held liable for the accrued
wages of the employee, i.e., the unpaid salary accruing up to the time of the
reversal. 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.
In this case, petitioners contend that that they should not be faulted for failing to enforce
the December 8, 2010 Decision of LA Amansec which had given respondent the option
to receive separation pay in lieu of reinstatement for the reason that it was respondent
who failed to choose either relief. However, as above-discussed, the reinstatement aspect
of the LA's Decision is immediately executory and, hence, the active duty to reinstate the
employee - either actually or in payroll - devolves upon no other than the employer, even
pending appeal.
Clearly, the statement of such directive is only secondarily followed by the alternative
option given to respondent. This is consistent with the above-stated conclusion that the
duty to reinstate is initiated by, as it only devolves upon, the employer from the time the
LA renders its Decision directing reinstatement.
Therefore, the Court cannot subscribe to the theory postulated by petitioners that the
aforementioned LA Decision took out from their hands the duty to reinstate respondent,
for to do so would be to frustrate the immediate and self-executory nature of the
reinstatement aspect of the LA's Decision as provided by law. To emphasize, to the point
of repetition, petitioners were duty-bound to reinstate respondent either by admitting
him back to work under the same terms and conditions prevailing prior to his dismissal,
or by merely reinstating him in the payroll, which alternative options must be exercised
in good faith; otherwise, they are bound to pay his accrued salaries.
The Court is not unaware of the peculiarity attending educational institutions where the
engagement of faculty members and the assignment of teaching loads are done at the
commencement of each semester.58 In the early case of the University of Santo Tomas v.
NLRC (UST),59 the Court, while pronouncing that the dismissed faculty members must
be actually reinstated during the pendency of the labor dispute between the faculty union
and the University, took into account the fact that the return-to-work order was given in
the middle of the first semester of the academic year, and that any change of faculty
members at such time would adversely affect and prejudice the students. Consequently,
the Court ordered that actual reinstatement take effect at the start of the second
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semester, and adjudged the faculty members as entitled to full wages, backwages and
other benefits prior to reinstatement to their actual teaching loads.
In this case, while petitioners could not actually reinstate respondent at the time of the
issuance of LA Amansec's December 8, 2010 Decision, following the ruling in the
aforementioned case of UST, as it would be impracticable and detrimental to the
students to change teachers in the middle of the semester, petitioners should nonetheless
have given respondent his new teaching load assignments and schedules at the beginning
of the succeeding semester, whether or not respondent was present during such
assignment. After all, it can be gleaned from the arguments presented by petitioners that
the presence of respondent during the assignment of teaching loads and schedules is
merely for conferment regarding availability and preference, and petitioners could
always require respondent to report for work on the pre-assigned schedules. Had
petitioners done so despite the absence of respondent, it would have indicated their
sincere willingness to comply with the reinstatement order. But they did not. There was
even no proof that petitioners required respondent to report for assignment of teaching
load and schedules. Besides, respondent's alleged failure to secure teaching load
assignments did not prevent petitioners from simply reinstating him in the payroll as an
alternative. Sadly, petitioners also failed to employ the same.
Rodfhel Baclaan Torrefiel, et al. vs. Beauty Lane Phils., Inc./Ms. Ma.
Henedina D. Tobojka
G.R. No. 214186
August 3, 2016
Facts:
As exclusive distributor of "Brazilian Blowout," Beauty Lane provides free training

to its prospective buyers through its "beauty educators" who conduct trainings
and demonstrations at the company's training center, located in its three (3)-
storey warehouse in Las Pifias City. The second floor of the said warehouse is used
as storage area, while a portion of the ground floor serves as sleeping area of some
of its employees.
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On January 3 to 5, 2013, respondents conducted an inventory in the warehouse and
discovered discrepancies between the recorded stocks and the actual stocks of
supply, particularly its "Brazilian Blowout" product.
Thus, respondents conducted an investigation and installed closed circuit

television (CCTV) cameras on the premises. On January 25, 2013, Beauty
Lane received information from its Sales Manager, Mark Quibral (Quibral), that
one of its former employees is selling sets of "Brazilian Blowout" at a much lower
price. This prompted the warehouse supervisors to meet and discuss the results of
the inventory, by virtue of which it was discovered that some sets of "Brazilian
Blowout" were incomplete. It appeared that a different item is taken from each set
and the items taken are combined to make a complete set.
On February 1, 2013, respondents conducted a full-blown investigation,

summoning and questioning employees on their involvement in the apparent
pilferage. After comparing its client list vis-a-vis the salons and online sellers
offering "Brazilian Blowout," respondents discovered that Rean Metro Salon, a
client registered under the account of Torrefiel who is a Sales Coordinator, had
not been ordering "Brazilian Blowout" for months but continued to offer it and its
allied services. Various salons and online sites were also selling whole sets of
"Brazilian Blowout" as well as incomplete sets, which respondents surmised were
leftovers from the sets used during training sessions. They also discovered that
Torrefiel and Lao, a beauty educator, sold Gigi Professional Waxing System to
Angelic Nails Spa and Waxing Salon, which is not among respondents' approved
clients.
On February 4, 2013, respondents issued Notices to Explain and Preventive

Suspension against petitioners and two (2) other employees, including Marcel
Mendoza (Mendoza), a beauty educator who also happened to operate his own
salon.
On February 27, 2013, an administrative hearing was held where petitioners,

however, failed to appear. Instead, they sent letters stating that they had already
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submitted their respective written explanations, and that they had an
appointment with the Department of Labor of Employment (DOLE) on the same
day. After assessing the evidence before them, respondents sent Notices of
Termination to petitioners on February 28, 2013. Meanwhile, in an entrapment
operation conducted by the National Bureau of Investigation on February 18, 2013,
two (2) former employees, namely, Romar Geroleo and Cipriano Layco, were
caught in possession of "Brazilian Blowout" products.
On March 18, 2013, petitioners filed a complaint for illegal dismissal and money
claims before the NLRC, averring that respondents had no valid cause in
dismissing them as none of them had access to the stolen products.
Issue:
Whether or not petitioners were illegally dismissed.
Ruling:
Yes.
In this case, respondents dismissed petitioners on the strength of circumstantial

evidence which did not establish their participation in the pilferage. As aptly
pointed out by the NLRC, the statements given by Mendoza and Gonzales only
prove that Torrefiel and Lao offered them "Brazilian Blowout" products at a lower
price. There is nothing in their testimonies that prove that Torrefiel and Lao
pilfered the said items from Beauty Lane. On the other hand, Torrefiel and Lao
persuasively explained that Tagupa, the owner of Skinsational Salon which is one
of Beauty Lane's clients, had asked for their help in disposing of the "Brazilian
Blowout" products she previously bought from Beauty Lane but did not sell well
in her salon. This statement was corroborated by Tagupa herself who executed an
affidavit.
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At this juncture, it should be pointed out that while Torrefiel was essentially a
salesman, he did not occupy a position of trust and confidence, the loss of which
is a just cause for dismissal. To recall, there are two (2) classes of positions of trust:
the first class consists of 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 consists of cashiers, auditors, property
custodians, and the like who, in the normal and routine exercise of their functions,
regularly handle significant amounts of money or property.
Here, respondents have not shown that Torrefiel had access to their money or
property. On the contrary, Torrefiel maintained that he merely took orders from
clients but had no access to the respondents' products which are handled by
warehouse supervisors and sales assistants. At any rate, even assuming that he
regularly handled significant amounts of money or property, he cannot be
dismissed on the ground of loss of trust and confidence considering that the basis
therefor has not been established. It is settled that for dismissal based on such
ground to be valid, the act that would justify the loss of trust and confidence must
be based on a willful breach of trust and founded on clearly established facts which
was not the case here.
The Court also agrees with the NLRC' s observation that the rudiments of due
process were not observed in dismissing Suacillo and Orenday. As correctly
pointed out by the NLRC, the copies of the Notices to Explain and
Preventive Suspension issued to them did not specify the charges against them
but simply stated that they condoned and failed to report anomalies to the
management. Time and again, the Court has repeatedly held that two (2) written
notices are required before termination of employment can be legally effected,
namely: ( 1) the notice which apprises the employee of the particular acts or
omissions for which his dismissal is sought; and (2) the subsequent notice which
informs the employee of the employer's decision to dismiss him. The failure to
inform an employee of the charges against him deprives him of due process.
Besides, Suacillo and Orenday were not among those questioned during the
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February 1, 2013 investigation. Hence, they cannot be presumed to know exactly
what anomalies respondents were referring to.
In any event, there was no valid reason for their dismissal considering the lack of
proof of their involvement in the alleged pilferage.
All told, the respondents failed to prove by substantial evidence that petitioners
were the authors of or at least participated in the alleged pilferage of the "Brazilian
Blowout" products. Unlike respondents' two (2) former employees, namely,
Romar Geroleo and Cipriano Layco, who were caught red-handed in an
entrapment operation, no direct evidence showing petitioners' guilt was
presented and respondents relied on inconclusive circumstantial evidence in
determining who the perpetrators of the pilferage are. While proof beyond
reasonable doubt is not required in dismissing an employee, the employer must
prove by substantial evidence the facts and incidents upon which the accusations
are made.86 Unsubstantiated suspicions, accusations, and conclusions of the
employer, as in this case, are not enough to justify an employee's 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.
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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 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
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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
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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 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.
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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.
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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
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
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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 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
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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
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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 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.
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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, 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
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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.
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SKM ART CRAFT CORPORATION, Petitioner,
vs. EFREN BAUCA, PATRICIO OLMILLA ZALDY ESCALARES, et. al.
G.R. No. 171282, November 27, 2013

J. VILLARAMA, JR.
In case, where the the business of the employee was suspended because of a fire that
caused severe damage. The respondents were already illegally dismissed noting that the
petitioner’s manifestation dated October 2, 2001 that it is willing to admit respondents if
they return to work was belatedly made, almost one year after petitioner’s suspension of
operations expired in November 2000. We find that petitioner no longer recalled, nor
wanted to recall, respondents after six months, pursuant to Art 286 of the Labor Code, bona
fide suspension.
Facts:
The 23 respondents were employed by petitioner SKM Art Craft Corporation which is
engaged in the handicraft business. On April 18, 2000, a fire occurred at the inspection
and receiving/repair/packing area of petitioner’s premises in Intramuros, Manila.
Because of the severe damage, petitioner informed respondents that it will suspend its
operations for six months, effective May 9, 2000.
On May 16, 2000, after receiving notice of the suspension of petitioner’s operations, the
23 respondents (and other co-workers) filed a complaint for illegal dismissal, they alleged
that there was discrimination in choosing the workers to be laid off and that petitioner
had discovered that most of them were members of a newly-organized union. Petitioner
denied the claim of illegal dismissal and said that Article 2867 of the Labor Code allows
the bona fide suspension of a business or undertaking for a period not exceeding six
months.
Labor Arbiter (LA) ruled that respondents were illegally dismissed and ordered petitioner
to reinstate them and pay them back wages. The National Labor Relations Commission
(NLRC) set aside the Labor Arbiter’s Decision and ruled that there was no illegal
dismissal. The NLRC ordered that respondents be reinstated to their former positions
but it deleted the award of back wages. The CA set aside the NLRC Decision and
Resolution and reinstated the Labor Arbiter’s Decision.
Issue:
Whether the respondents have been illegally dismissed.
Ruling:
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SC agrees with the NLRC that the suspension of petitioner’s operation is valid, the Labor
Arbiter and the CA are correct that respondents were illegally dismissed since they were
not recalled after six months, after the bona fide suspension of petitioner’s operations.
Under Article 286 of the Labor Code, the bona fide suspension of the operations of a
business or undertaking for a period not exceeding six months shall not terminate
employment. Article 286 provides,
ART. 286. When employment not deemed terminated. – The bona fide suspension
of the operations of a business or undertaking for a period not exceeding six (6)
months, or the fulfillment by the employee of a military or civic duty shall not
terminate employment.
In all such cases, the employer shall reinstate the employee to his former position without
loss of seniority rights if he indicates his desire to resume his work not later than one (1)
month from the resumption of operations of his employer or from his relief from the
military or civic duty.
The NLRC correctly noted that the complaint for illegal dismissal filed by respondents
was premature since it was filed only eight days after petitioner announced that it will
suspend its operations for six months. In Nippon Housing Phil., Inc. v. Leynes, we said
that a complaint for illegal dismissal filed prior to the lapse of said six months is generally
considered as prematurely filed.
In this case, however, we agree with the Labor Arbiter and the CA that respondents were
already considered illegally dismissed since petitioner failed to recall them after six
months, when its bona fide suspension of operations lapsed. We stress that under Article
286 of the Labor Code, the employment will not be deemed terminated if the bona fide
suspension of operations does not exceed six months. But if the suspension of operations
exceeds six months, the employment will be considered terminated. In Valdez v. NLRC,
we explained:
Under Article 286 of the Labor Code, the bona fide suspension of the operation of
a business or undertaking for a period not exceeding six months shall not
terminate employment. Consequently, when the bona fide suspension of the
operation of a business or undertaking exceeds six months, then the employment
of the employee shall be deemed terminated. By the same token and applying said
rule by analogy, if the employee was forced to remain without work or assignment
for a period exceeding six months, then he is in effect constructively dismissed.
In Waterfront Cebu City Hotel v. Jimenez, we also said:

Under Art. 286 of the Labor Code, a bona fide suspension of business operations
for not more than six (6) months does not terminate employment. After six (6)
months, the employee may be recalled to work or be permanently laid off. In this
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case, more than six (6) months have elapsed from the time the Club ceased to
operate. Hence, respondents’ termination became permanent.
Indeed, petitioner’s manifestation dated October 2, 2001 that it is willing to admit

respondents if they return to work was belatedly made, almost one year after petitioner’s
suspension of operations expired in November 2000. We find that petitioner no longer
recalled, nor wanted to recall, respondents after six months.
SME Bank Inc., Abelardo P. Samson, Olga Samson and Aurelio Villaflor, Jr. Vs.
Peregrin T. De Guzman, Eduardo M. Agustin, Jr., Elicerio Gaspar, Ricardo
Gaspar, Jr., Eufemia Rosete, Fidel Espiritu, Simeon Espiritu, Jr., and Liberato
Mangoba/SME Bank Inc., Abelardo P. Samson, Olga Samson and Aurelio
Villaflor, Jr. Vs. Elicerio Gaspar, Ricardo Gaspar, Jr., Eufemia Rosete, Fidel
Espiritu, Simeon Espiritu, Jr., and Liberato Mangoba
G.R. No. 184517/G.R. No. 186641, October 8, 2013
EN BANC
The Samson Group contends that Elicerio, Ricardo, Fidel, and Liberato voluntarily
resigned from their posts, while Eufemia retired from her position. SC disagrees. While
resignation letters containing words of gratitude may indicate that the employees were not
coerced into resignation, this fact alone is not conclusive proof that they intelligently, freely
and voluntarily resigned. To rule that resignation letters couched in terms of gratitude are,
by themselves, conclusive proof that the employees intended to relinquish their posts would
open the floodgates to possible abuse. In order to withstand the test of validity, resignations
must be made voluntarily and with the intention of relinquishing the office, coupled with
an act of relinquishment. Therefore, in order to determine whether the employees truly
intended to resign from their respective posts, we cannot merely rely on the tenor of the
resignation letters, but must take into consideration the totality of circumstances in each
particular case.
Facts:
Respondent employees Elicerio Gaspar (Elicerio), Ricardo Gaspar, Jr.(Ricardo), Eufemia

Rosete (Eufemia), Fidel Espiritu (Fidel), Simeon Espiritu, Jr. (Simeon, Jr.), and Liberato
Mangoba (Liberato) were employees of Small and Medium Enterprise Bank,
Incorporated (SME Bank).Originally, the principal shareholders and corporate directors
of the bank were Eduardo M. Agustin, Jr. (Agustin) and Peregrin de Guzman, Jr. (De
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Guzman). In June 2001, SME Bank experienced financial difficulties. To remedy the
situation, the bank officials proposed its sale to Abelardo Samson (Samson).
Pursuant to Samson, Agustin and De Guzman’s agreement, Simeon Espiritu (Espiritu),

then the general manager of SME Bank, held a meeting with all the employees of the
head office and of the Talavera and Muñoz branches of SME Bank and persuaded them
to tender their resignations, with the promise that they would be rehired upon
reapplication. His directive was allegedly done at the behest of petitioner Olga Samson.
Relying on this representation, some of the respondents tendered their resignation and
retirements.
After the sale had taken place, the respondent employees, except for Simeon, Jr., were
not rehired. After a month in service, Simeon, Jr. again resigned on October 2001.
Respondent-employees demanded the payment of their respective separation pays, but
their requests were denied. Respondent employees filed a Complaint before the National
Labor Relations Commission (NLRC) for unfair labor practice; illegal dismissal; illegal
deductions; underpayment; and nonpayment of allowances, separation pay and 13th
month pay.
Labor arbiter (LA) ruled that the buyer of an enterprise is not obliged to absorbed the
former employees unless there is an express stipulation. However, LA also found that
respondent employees were illegally dismissed, however, only held that the former
employees were liable for the employee’s claims. For LA’s failure to award backwages,
respondent employees appealed to the NLRC affirmed the decision of LA that the
respondents were, indeed, illegally dismissed but modified the decision ruling that
Agustin, De Guzman and the Samson Group should be held jointly and severally liable
for the employees’ separation pay and backwages. CA affirmed NLRC’s ruling.
Issue:
Whether respondent employees were illegally dismissed and, if so, which of the parties
are liable for the claims of the employees and the extent of the reliefs that may be
awarded to these employees.
Ruling:
The Samson Group contends that Elicerio, Ricardo, Fidel, and Liberato voluntarily
resigned from their posts, while Eufemia retired from her position. As their resignations
and retirements were voluntary, they were not dismissed from their employment. In
support of this argument, it presented copies of their resignation and retirement
letters, which were couched in terms of gratitude.
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We disagree. While resignation letters containing words of gratitude may indicate that
the employees were not coerced into resignation, this fact alone is not conclusive proof
that they intelligently, freely and voluntarily resigned. To rule that resignation letters
couched in terms of gratitude are, by themselves, conclusive proof that the employees
intended to relinquish their posts would open the floodgates to possible abuse. In order
to withstand the test of validity, resignations must be made voluntarily and with the
intention of relinquishing the office, coupled with an act of relinquishment. Therefore,
in order to determine whether the employees truly intended to resign from their
respective posts, we cannot merely rely on the tenor of the resignation letters, but must
take into consideration the totality of circumstances in each particular case.
Here, the records show that Elicerio, Ricardo, Fidel, and Liberato only tendered
resignation letters because they were led to believe that, upon reapplication, they would
be reemployed by the new management. As it turned out, except for Simeon, Jr., they
were not rehired by the new management. Their reliance on the representation that they
would be reemployed gives credence to their argument that they merely submitted
courtesy resignation letters because it was demanded of them, and that they had no real
intention of leaving their posts. We therefore conclude that Elicerio, Ricardo, Fidel, and
Liberato did not voluntarily resign from their work; rather, they were terminated from
their employment.
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ERIC ALVAREZ, substituted by ELIZABETH ALVAREZ-CASAREJOS
vs. GOLDEN TRI BLOC, INC. and ENRIQUE LEE
G.R. No. 202158, September 25, 2013
J. REYES
Where the accused is an outlet supervisor was dismissed by the company on the
ground of loss of trust and confidence, where the former is arguing that the ground is not
applicable to him because he is only a supervisor and not a managerial employee, SC had
ruled that the position the accused is holding is unmistakably one imbued with trust and
confidence as he is charged with the delicate task of overseeing the operations and
manpower of three stores owned by GTBI. As a supervisor, a high degree of honesty and
responsibility, as compared with ordinary rank-and-file employees, was required and
expected of him. The fact that he was not charged with the custody of the company’s money
or property is in consequential because he belongs to the first class of employees occupying
position of trust and not to the fiduciary rank and file class.
Facts:
Golden Tri Bloc, Inc. (GTBI) hired Eric Valdez as a Service Crew in one of its Dunkin
Donuts franchise store in Antipolo City. He was then promoted as Outlet Supervisor and
was assigned to three (3) Dunkin Donuts outlets located at San Roque, Cogeo and Super
8, Masinag, all in Antipolo City. On May 27, 2009, the petitioner reported for duty at
around 12:30 in the afternoon at Dunkin Donuts, Super 8, Masinag branch. Since his
timecard was at the San Roque branch, he telephoned Chastine Kaye Sambo (Sambo),
shift leader, and requested her to "punch-in" his time card to reflect that he is already on
duty, which Sambo obliged. Roland Salindog (Salindog), the petitioner’s senior officer
called the Super 8, Masinag branch and verified that he has indeed reported for work.
The following day, however, the petitioner was informed by Sambo that both of them are
suspended and thereafter, GTBI notified the petitioner of its decision to terminate his
employment effective that day on the ground of loss of trust. He then filed a complaint
for illegal dismissal with claims for sick leave pay, separation pay and moral and
exemplary damages, arguing that the ground relied upon for his termination is not
applicable to him because he is a supervisor and not a managerial employee.
For its part, GTBI maintained that it had justifiable reason to lose trust in and dismiss
the petitioner for having committed a dishonest act punishable under the company’s
Code of Conduct and Discipline with termination from employment.
Labor Arbiter ruled in favor of Valdez and found that he has been illegally dismissed.
Aggrieved, GTBI appealed to the National Labor Relations Commission (NLRC) and to
bolster its position that the petitioner was not illegally dismissed, GTBI submitted
records of infractions committed by Valdez before the incident in issue. GTBI explained
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that it found no need to present the foregoing records before the LA considering that the
petitioner’s last offense of dishonesty was sufficiently serious to justify his dismissal.
NLRC denied the appeal. On motion for reconsideration, the NLRC reversed its initial
ruling and gave credence to records of the petitioner’s previous infractions and based
thereon, found his dismissal valid. CA upheld NLRC’s conclusions.
Issue:
1. Whether Valdez was illegally dismissed.
2. Whether the NLRC and CA erred in applying the totality of infractions doctrine.
Ruling:
The petition is bereft of merit.
Loss of trust and confidence will validate an employee’s dismissal only upon compliance
with certain requirements, namely: (1) the employee concerned must be holding a
position of trust and confidence; and (2) there must be an act that would justify the loss
There are two classes of positions of trust. First, 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 to other officers or members
of the managerial staff. The second class consists of the fiduciary rank-and-file
employees, such as cashiers, auditors, property custodians, or those who, in the normal
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.
It is undisputed that at the time of his dismissal, the petitioner was holding supervisory
position after having risen from the ranks since the start of his employment. His position
is unmistakably one imbued with trust and confidence as he is charged with the delicate
task of overseeing the operations and manpower of three stores owned by GTBI. As a
supervisor, a high degree of honesty and responsibility, as compared with ordinary rank-
and-file employees, was required and expected of him. The fact that he was not charged
with the custody of the company’s money or property is in consequential because he
belongs to the first class of employees occupying position of trust and not to the fiduciary
rank and file class.
The second requirement for dismissal due to loss of trust and confidence is further
qualified by jurisprudence. The complained act must be work related such as would show
the employee concerned to be unfit to continue working for the employer and it must be
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based on a willful breach of trust and founded on clearly established facts. The basis for
the dismissal must be clearly and convincingly established but proof beyond reasonable
doubt is not necessary.
The analogous factual findings of the CA and the NLRC conform to the foregoing
guidelines. The punching of time card is undoubtedly work related. It signifies and
records the commencement of one’s work for the day. It is from that moment that an
employee dons the cape of duties and responsibilities attached to his position in the
workplace. It is the reckoning point of the employer’s corresponding obligation to him –
to pay his salary and provide his occupational and welfare protection or benefits. Any
form of dishonesty with respect to time cards is thus no trivial matter especially when it
is carried out by a supervisory employee like the petitioner.
The transgression imputed to the petitioner was likewise attended with willfulness. It
must be noted that the petitioner misled the labor tribunals in claiming that during his
entire 12-year stint with GTBI, he was never meted with any disciplinary action. Records,
however, disprove such claim. Additional evidence were submitted by GTBI before the
NLRC on appeal and as correctly ruled by the CA, the same may be allowed as the rules
of evidence prevailing in courts of law or equity are not controlling in labor proceedings.
The said evidence shows at least three (3) different offenses – ranging from tardiness,
negligence in preparing inventory to dishonesty relating to his timecard – repeatedly
committed by the petitioner over the years and for which he has been constantly
disciplined. On July 4, 2003, the petitioner was found guilty of asking an employee to
punch-in his time card for him. He was suspended for 45 days with a warning that a
recurrence of the same act will merit dismissal from service. He, however, disregarded
this incident and the corrective intention of disciplinary action taken on him when he
repeated the same act on May 27, 2009.
A repetition of the same offense for which one has been previously disciplined and
cautioned evinces deliberateness and willful intent; it negates mere lapse or error in
judgment. While it may be assumed that the petitioner has become stubborn or has
forgotten the 2003 episode, it should not work to his advantage, because either cause
demonstrates his in difference to GTBI’s policies on employees’ conduct and discipline.
Based on this consideration, taken together with his numerous other offenses, GTBI had
compelling reasons to conclude that the petitioner has become unfit to remain in its
employ.
The NLRC and the CA were thus correct in applying the totality of infractions rule and
in adjudging that the petitioner's dismissal was grounded on a just and valid cause.
Furthermore, the standards of procedural due process were likewise observed in effecting
the petitioner's dismissal.
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DARIO NACAR vs. GALLERY FRAMES AND/OR FELIPE BORDEY, JR.
G.R. No. 189871. August 13, 2013
J. Peralta
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.
Facts:
Petitioner Dario Nacar filed a complaint for constructive dismissal against respondents
Gallery Frames (GF) and/or Felipe Bordey, Jr. On Oct. 15, 1998, the labor arbiter rendered
a decision finding him dismissed from employment without a valid or just cause. He was
awarded backwages and separation pay in lieu of reinstatement in the amount of
P158,919.92.
Petitioner prevailed in his case throughout the National Labor Relations Commission
(NLRC), the Court of Appeals (CA), and the Supreme Court. After the finality of the SC
decision, Nacar filed a motion before the LA for recomputation as he alleged that his
backwages should be computed from the time of his illegal dismissal (January 24, 1997)
until the finality of the SC decision (May 27, 2002) with interest. The LA denied the
motion as he ruled that the reckoning point of the computation should only be from the
time Nacar was illegally dismissed January 24, 1997) until the decision of the LA (October
15, 1998). The LA reasoned that the said date should be the reckoning point because
Nacar did not appeal hence as to him, that decision became final and executory.
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Issue:
1. Whether or not the LA is correct

2. Whether or not recomputation violated the principle of immutability of
judgments
Ruling:
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 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 respondents 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 back wages are to be
computed up to that point.
Anent the issue of award interest in the form of actual or compensatory damages, to
recapitulate and for future guidance, the guidelines laid down in the case of Eastern
Shipping Lines G.R. No. 97412, July 12, 1994, 234 SCRA 78, are accordingly modified to
embody BSP-MB Circular No. 799, as follows:
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II. With regard particularly to an award of interest in the concept of actual and
compensatory damages, the rate of interest, as well as the accrual thereof, is
imposed, as follows:
1. When the obligation is breached, and it consists in the payment of a

sum of money, i.e., a loan or forbearance of money, the interest due
should be that which may have been stipulated in writing.
Furthermore, the interest due shall itself earn legal interest from the
time it is judicially demanded. In the absence of stipulation, the rate
of interest shall be six percent per annum to be computed from
default, i.e., from judicial or extrajudicial demand under and subject
to the provisions of Article 1169 of the Civil Code.
2. When an obligation, not constituting a loan or forbearance of money,

is breached, an interest on the amount of damages awarded may be
imposed at the discretion of the court at the rate of 6% per annum. No
interest, however, shall be adjudged on unliquidated claims or
damages, except when or until the demand can be established with
reasonable certainty. Accordingly, where the demand is established
with reasonable certainty, the interest shall begin to run from the time
the claim is made judicially or extrajudicially (Art. 1169, Civil Code),
but when such certainty cannot be so reasonably established at the
time the demand is made, the interest shall begin to run only from the
date the judgment of the court is made (at which time the
quantification of damages may be deemed to have been reasonably
ascertained). The actual base for the computation of legal interest
shall, in any case, be on the amount finally adjudged.
3. When the judgment of the court awarding a sum of money becomes

final and executory, the rate of legal interest, whether the case falls
under paragraph 1 or paragraph 2, above, shall be six percent per
annum from such finality until its satisfaction, this interim period
being deemed to be by then an equivalent to a forbearance of credit.
OLYMPIA HOUSING, INC., vs. ALLAN LAPASTORA and IRENE UBALUBAO

G.R. No.187691, January 13, 2016
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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.
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(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
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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
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

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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.
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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
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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.
JOSE EMMANUEL P. GUILLERMO v. CRISANTO P. USON

G.R. No. 198967, March 07, 2016
FACTS:
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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 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.
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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.
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
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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.
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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 an obvious "scheme to avoid
liability" which jurisprudence has always looked upon with a suspicious eye in order to
protect the rights of labor.
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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
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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 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.
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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:
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
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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 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
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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
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 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.
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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
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them minimum wages, holiday, premium, service incentive leave, and thirteenth month
pays as well as the cost of living 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:
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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 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.
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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 (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.
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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 quitclaim related only to the settlement of the retirement
benefits, which benefits could not be confused with the reliefs related to the complaint
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
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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 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
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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:
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Yes, the quitclaim was valid and binding.
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
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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

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.
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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.
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
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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.
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:
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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.
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
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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

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
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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 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
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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
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.
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LORENZO T. TANGGA-ANvs. PHILIPPINE TRANSMARINE CARRIERS, INC., ET
AL.
G.R. No. 180636. March 13, 2013
J. Del Castillo
In case the Court finds illegal dismissal, two factors are to be considered in the award: 1:
the unexpired portion of the contract and 2) the computation of the monthly salaries to
be awarded. It is the obligation of the employer to pay an illegally dismissed employee or
worker the whole amount of the salaries or wages, plus all other benefits and bonuses
and general increases, to which he would have been normally entitled had he not been
dismissed and had not stopped working.
Facts:
On Jan. 31, 2002, petitioner Lorenzo T. Tangga-an entered into an overseas employment
contract with respondent Philippine Transmarine Carriers, Inc. (PTC) for and on behalf
of its foreign employer, Universe Tankship Delaware, LLC. Under the employment
contract, he was to be employed for six months as chief engineer of the vessel the S.S.
Kure.
Unsatisfied with petitioner’s performance, respondent terminated his services and

repatriated him to the Philippines on April 4, 2002.
Tangga-an filed a complaint against respondent for illegal dismissal with a prayer for
payment of salaries for the unexpired portion of his contract, leave pay, exemplary and
moral damages, attorney’s fees and interest.
The Court of Appeals adhered to the decisions of the Labor Arbiter and the National
Labor Relations Commission (NLRC) finding illegal dismissal. But on the subject of
monetary awards, the CA considered only petitioner’s monthly US$5,000.00 basic salary
and disregarded his monthly US$2,500.00 vacation leave pay and US$700.00 tonnage
bonus. It likewise held that petitioner’s “unexpired portion of contract” for which he is
entitled to back salaries should only be three months pursuant to Section 10 of RA 8042.
Issue:
Whether or not the Court of Appeals err in excluding the petitioner’s vacation leave pay
and tonnage bonus in the computation of his back salaries
Ruling:
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In the very heart of the judicial system, labor cases occupy a special place. More than the
State guarantees of protection of labor and security of tenure, labor disputes involve the
fundamental survival of the employees and their families, who depend upon the former
for all the basic necessities in life. Thus, petitioner must be awarded his salaries
corresponding to the unexpired portion of his six-months employment contract, or
equivalent to four months. This includes all his corresponding monthly vacation leave
pay and tonnage bonuses which are expressly provided and guaranteed in his
employment contract as part of his monthly salary and benefit package. These benefits
were guaranteed to be paid on a monthly basis, and were not made contingent. In fact,
their monetary equivalent was fixed under the contract: US$2,500.00 for vacation leave
pay and US$700.00 for tonnage bonus each month. Thus, petitioner is entitled to back
salaries of US$32,800 (or US$5,000 + US$2,500 + US$700 = US$8,200 x 4 months).
Article 279 of the Labor Code mandates that an employee’s full backwages shall be
inclusive of allowances and other benefits or their monetary equivalent. It is the
obligation of the employer to pay an illegally dismissed employee or worker the whole
amount of the salaries or wages, plus all other benefits and bonuses and general
increases, to which he would have been normally entitled had he not been dismissed and
had not stopped working. This well defined principle has likewise been lost on the CA in
the consideration of the case.
REINSTATEMENT
3RD ALERT SECURITY AND DETECTIVE SERVICES, INC. v ROMUALDO NAVIA

G.R. No. 200653, June 13, 2012
The Facts
This case started from an illegal dismissal complaint filed by Romualdo Navia against 3rd
Alert.
On November 30, 2005, the labor arbiter issued a decision that Navias dismissal was
illegal. 3rd Alert appealed to the National Labor Relations Commission (NLRC) which
affirmed the ruling of the labor arbiter. 3rd Alerts motion for reconsideration of the NLRC
decision was denied in a resolution dated October 19, 2008.
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From this ruling, 3rd Alert filed an appeal with the CA (docketed as CA-G.R. SP No.
106963) with a prayer for the issuance of a temporary restraining order. The CA denied
the appeal; 3rd Alert moved for a motion for reconsideration but the motion was also
denied.
The writ of execution (CA-G.R. SP No. 117361)
In the meantime, on January 29, 2009, the NLRC issued an Entry of Judgment certifying
that the NLRC resolution dated October 19, 2008 has become final and executory. Thus,
Navia filed with the labor arbiter an ex-parte motion for recomputation of back wages
and an ex-parte motion for execution based on the recomputed back wages.
On November 10, 2009, the labor arbiter issued a writ of execution to enforce the
recomputed monetary awards.
3rd Alert appealed the recomputed amount stated in the writ of execution to the NLRC.
3rd Alert also alleged that the writ was issued with grave abuse of discretion since there
was already a notice of reinstatement sent to Navia.
The NLRC dismissed the appeal, ruling that 3rd Alert is guilty of bad faith since there
was no earnest effort to reinstate Navia. The NLRC also ruled that there was no notice or
reinstatement sent to Navias counsel. A motion for reconsideration was filed, but it was
likewise denied.
3rd Alert filed a petition for certiorari with the CA which found the petition without merit
because Navia had not been reinstated either physically or in the payroll. The CA also
denied the motion for reconsideration filed by 3rd Alert; hence, this petition.
Issue
Whether the CA erred in ruling that the NLRC did not commit any grave abuse of
discretion.
Ruling
We do not see any grave abuse of discretion after a close examination of the petition and
the attached records where 3rd Alert insists that a copy of the manifestation on
reinstatement had been sent to Navias counsel and was received by a certain Biznar.
Time and again, we have held that this Court is not a trier of facts. In the absence of any
attendant grave abuse of discretion, these findings are entitled not only to respect, but
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to our final recognition in this appellate review. Since it was ruled that there had been
no notice of reinstatement sent to Navia or his counsel, as also affirmed by the CA, we
cannot rule otherwise in the absence of any compelling evidence.
Article 223 of the Labor Code provides that in case there is an order of reinstatement, the
employer must admit the dismissed employee under the same terms and conditions, or
merely reinstate the employee in the payroll. The order shall be immediately executory.
Thus, 3rd Alert cannot escape liability by simply invoking that Navia did not report for
work. The law states that the employer must still reinstate the employee in the payroll.
Where reinstatement is no longer viable as an option, separation pay equivalent to one
(1) month salary for every year of service could be awarded as an alternative.
Since the proceedings below indicate that 3rd Alert failed to adduce additional evidence
to show that it tried to reinstate Navia, either physically or in the payroll, we adopt as
correct the finding that there was no earnest effort to reinstate Navia. The CA was correct
in affirming the judgment of the NLRC in this regard.
We also take note that 3rd Alert resorted to legal tactics to frustrate the execution of the
labor arbiters order; for about four (4) years, it evaded the obligation to reinstate Navia.
By so doing, 3rd Alert has made a mockery of justice. We thus find it proper, under the
circumstances, to impose treble costs against 3rd Alert for its utter disregard to comply
with the writ of execution. To reiterate, no indication exists showing that 3rd Alert exerted
any efforts to reinstate Navia; worse, 3rd Alerts lame excuse of having sent a notice of
reinstatement to a certain Biznar only compounded the intent to mislead the courts.
Also, the main issue of this case, finding Navia to have been illegally dismissed, has
already attained finality. Litigation must end and terminate sometime and somewhere,
and it is essential for an effective and efficient administration of justice that, once a
judgment has become final, the winning party be not deprived of the fruits of the
verdict.The order is to reinstate Navia; sadly, the mere execution of this judgment has to
even reach the highest court of the land, thereby frustrating the entire judicial process.
This justifies the treble costs we now impose against 3rd Alert.
It is settled that in actions for recovery of wages or where an employee was forced to
litigate and incur expenses to protect his right and interest, he is entitled to an award of
attorney's fees. Navia, having been compelled to litigate due to 3rd Alerts failure to satisfy
his valid claim, is also entitled to attorney's fees of ten percent (10%) of the total award
at the time of actual payment, following prevailing jurisprudence.
RETIREMENT
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BANCO FILIPINO SAVINGS AND MORTGAGE BANK vMIGUELITO M. LAZARO
G.R. No. 185346, June 27, 2012
MIGUELITO M. LAZARO vBANCO FILIPINO SAVINGS AND MORTGAGE BANK

and TEODORO O. ARCENAS, JR., BF RETIREMENT FUND AND PERFECTO YASAY
JR.
G.R. No. 185442, June 27, 2012
The Facts
On 1 February 1968, Lazaro started working for Banco Filipino as a probationary

employee. Rising from the ranks, he was promoted to the position of assistant manager,
which he held until the bank was closed by the Central Bank of the Philippines on 25
January 1985. Notwithstanding the cessation of the regular operations of the bank, Lazaro
was reemployed on 16 April 1992 as a member of a task force assigned to collect its
delinquent accounts.
After the Supreme Court Court adjudged that the banks closure was illegal, Banco
Filipino eventually reopened in June 1992. Lazaro continued to work for the bank until
he retired from his last post as assistant vice-president on 1 December 1995. Thereafter,
he was paid retirement benefits for 20 years and 7 months of service pegged at his latest
gross salary rate of ₱38,000 per month.
Lazaro, however, demanded a higher amount. Specifically, he asserted that since his
employment lasted from 1 February 1968 until 1 December 1995, he should be credited
with 27 years and 10 months of service. Additionally, he claimed that the base amount of
his retirement pay should be increased from ₱38,000 to ₱50,000 to reflect the salary
increase given by the bank to its senior officers in December 1995.
Aside from demanding his retirement pay differential, Lazaro also required Banco
Filipino to pay the 10% attorneys fees it received while foreclosing delinquent accounts.
Furthermore, he sought the payment of his 10% profit share from 1984 to 1995.
Banco Filipino refused the additional demands of Lazaro. As a result, he filed a Complaint
for underpayment of retirement benefits, as well as nonpayment of attorneys fees and
profit shares before the Labor Arbiter (LA).
In its defense, Banco Filipino emphasized that Lazaro was entitled only to 20 years and
7months of service, for he could not include in his employment the period of 7 years
within which the bank was ordered closed.
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Banco Filipino also denied the contention of Lazaro that the basis of his retirement pay
should be increased from ₱38,000 to ₱50,000. According to the bank, Lazaro was not
covered by the salary increase granted in December 1995, since he had resigned as early
as 1 December 1995. In this regard, the bank cited the Rules of the Banco Filipino
Retirement Fund as follows:
The normal retirement date of a member shall be a lump sum

amount or gratuity equal to one and one-half months salary for every year
of service based on the final salary of the member. Credit will be given for
incomplete years pro-rated at one-twelfth (1/12) of the full years credit for
each month of service.
As regards the attorneys fees, the bank argued that Lazaro was not
entitled thereto, because he had merely performed his functions as a legal
counsel of the bank, for which he was already compensated. Lastly, Banco
Filipino refused to give profit shares without the Monetary Boards approval
as required by law.
Ultimately, the LA gave credence to the banks defenses and, hence, denied all of Lazaros
demands. On appeal, the National Labor Relations Commission (NLRC) affirmed the LAs
Decision.
After receiving the adverse judgment, Lazaro pursued the action before the CA. The
appellate court modified the LA’s Decision and held that Lazaro was entitled to
retirement pay differential. It reasoned that, as a consequence of the banks continued
operations notwithstanding the receivership proceedings, Banco Filipino could not
disclaim the work performed by Lazaro during the said period. Thus, the whole duration
of seven years must be included in computing his retirement pay differential.
Issues
Whether the CA gravely erred in granting retirement pay differentials to Lazaro
Ruling
Retirement Pay Differentials
In essence, Banco Filipino maintains that the seven-year period when it was under
liquidation should not be credited in computing Lazaros retirement pay because, during
that period, the bank was considered closed. It cites, as further basis, G.R. No. 165367
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pertaining to Banco Filipino Staff Association v. Banco Filipino Savings and Mortgage Bank
to support the exclusion of the liquidation period.
This contention is without merit, for it inaccurately portrays the status of a bank under
liquidation. In Philippine Veterans Bank v. NLRC, this Court explained that banks under
liquidation retain their legal personality. In fact, even if they are prohibited from
conducting regular banking business, it is necessary that debts owed to them be
collected. Lazaro performed the duty of foreclosing debts in favor of Banco Filipino. It
cannot rightfully disclaim Lazaros work that benefitted it. Consequently, we find no
grievous error committed by the CA in crediting the years covered by the liquidation
period as part of Lazaros retirement pay.
With respect to Banco Filipino Staff Association v. Banco Filipino Savings and Mortgage
Bank, which Banco Filipino cites in order toprove that this Court had earlier excluded
the seven-year period of closure from the length of service of the banks employees, the
CA read the case correctly; i.e. that this Court did not categorically exclude the seven-
year period of closure from the length of service of Banco Filipino employees. Thus, the
bank cannot use our pronouncement in the said case to defeat Lazaros claim for
retirement pay differential.
Notably, Lazaro remains unsatisfied with the award of retirement pay differential. He
seeks these further adjustments: (1) the basis for the computation of his retirement pay
should be increased from ₱38,000 to ₱50,000; and (2) the retirement pay differential
should include 8 years, and not just 7 years and 7 months of his service.
With respect to the claim that the base for computing the retirement pay should be
₱50,000 and not ₱38,000, the courts a quo found that since the applicable Rules of the
Banco Filipino Retirement Fund state that the computation shall be for each completed
month of service, Lazaro who did not complete his services for December 1995 cannot
claim the salary increase granted, when he has already left Banco Filipino, and credit it
to his retirement pay. Conversely, Lazaro argues that the Rules of the Banco Filipino
Retirement Fund do not explicitly state that the computation shall be for each completed
month of service.
Referring to the Rules of the Banco Filipino Retirement Fund, this Court observes that
they refer to the final salary of the employee as basis for computing the latters retirement
pay.
As established by the LA, the NLRC and the CA, the final salary of Lazaro was ₱38,000,
and not ₱50,000. This consistent factual determination can no longer be retried. It is
aphoristic that a reexamination of factual findings cannot be done through a petition for
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review on certiorari under Rule 45 of the Rules of Court, because this Court reviews only
questions of law.
With regard to the second adjustment Lazaro prays for, we note that he assiduously went
through the whole process of appeal to seek a rounding off of his 27 years and 10 months
of work to 28 years and consequently obtain a higher retirement pay. Considering the
banks grant of 20 years and 7 months of retirement pay, plus the CA’s award of a 7-year
retirement pay differential, in effect, only 5 months worth of prorated retirement pay
remains unsettled. At this juncture, this Court reminds everyone that while access to the
courts is guaranteed, there must be limits thereto.
We rule that the CA committed no reversible error when it did not round off Lazaros
length of service. To begin with, his plea for rounding off his length of service is
mistakenly based on Article 287 of the Labor Code, which provides:
Art. 287. Retirement. Any employee may be retired upon

reaching the retirement age established in the collective bargaining
agreement or other applicable employment contract.
In case of retirement, the employee shall be entitled to receive

such retirement benefits as he may have earned under existing laws
and any collective bargaining agreement and other agreements:
Provided, however, that an employee's retirement benefits under
any collective bargaining and other agreements shall not be less
than those provided herein.
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. x x x. (Emphasis supplied.)
Lazaro cannot anchor his claim on the said provision, because governing in this case is
the Rules of the Banco Filipino Retirement Fund. Indeed, as found in the Implementing
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Rules of the Retirement Pay Law and in jurisprudence, only in the absence of an
applicable retirement agreement shall Article 287 of the Labor Code apply. There is a
proviso however, that an employee's retirement benefits under any agreement shall not
be less than those provided in the said article.
It cannot be gainsaid that the Rules of the Banco Filipino Retirement Fund provide for
benefits lower than those in the Labor Code. In fact, the bank offers a retirement pay
equivalent to one and one-half month salary for every year of service, a rate over and
above the one-half month salary threshold provided by the law.
Moreover, although the Rules of the Banco Filipino Retirement Fund do not grant a
rounding off scheme, they nonetheless provide that prorated credit shall be given for
incomplete years, regardless of the fraction of months in the retirees length of service.
Hence, even if the retiree rendered only a fraction of five months, the retiree shall still be
credited with retirement benefits based on the fraction of five months of service actually
rendered.
Notwithstanding the lack of a rounding-up provision, still, the higher retirement pay,
together with the prorated crediting, cannot be deemed to be less favorable than that
provided for by the law. Ultimately, the more important threshold to be considered in
construing whether the retirement agreement provides less benefits, compared to those
provided by the Retirement Pay Law, is that the retirement benefits in the said agreement
should at least amount to one-half of the employees monthly salary.
Therefore, considering that Lazaro is bound by the terms of the Rules of the Banco
Filipino Retirement Fund, it follows that he cannot claim his 27 years and 10 months of
work to be rounded off to 28 years in order to obtain a higher retirement pay.
2. JULIETA B. STA. ANA, Petitioner, v.MANILA JOCKEY CLUB, INC.,

Respondent
G.R. No. 208459, February 15, 2017
Facts:
In May 1977, MJCI, a domestic corporation with legislative franchise to operate
horse race betting,6 hired Julieta B. Sta. Ana (Sta. Ana) as outlet teller of its off-
track betting (OTB) station in Tayuman, Manila (OTB Tayuman). Because horse
racing was not on a daily basis, Sta. Ana's work schedule was only for 12 days per
month with shifts from 5 p.m. to 10:30 p.m. on weekdays, and 1 p.m. to 7 p.m. on
weekends.
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On November 13, 2008, however, MJCI issued a Memorandum9 stating that its
Treasury Department was discovered to have been illegally appropriating funds
and lending it out to the employees of MJCI As a result, MJCI required its
officers and employees to report any loan obtained from said department or any
of its personnel.
On December 21, 2008, MJCI's Internal Auditing Department (IAD) submitted

its Preliminary Report10 indicating that its Agudo OTB Branch (OTB Agudo) had
unaccounted check remittances amounting to P44,377,455.00 for the period
January 10, 2008 to November 30, 2008.
On January 8, 2009, MJCI, through its Special Disciplinary Committee (SDC),

formally charged11 Sta. Ana with Dishonesty and other fraudulent acts.
In her Explanation,13 Sta. Ana denied committing any offense. She contended
that even prior to the takeover of the new management of MJCI, she had been
engaged in the lending business to augment her income.
Later, MJCI served upon Sta. Ana a Notice of Investigation14 reiterating the
accusations against her, and narrating the circumstances surrounding her case.
The Notice further informed Sta. Ana of her 30-day suspension without pay
effective January 16, 2009.
In her Answer,16 Sta. Ana averred that she did not know anything regarding
MJCI's unaccounted money and that her suspension was unjust. She maintained
that she did not violate any company rule by engaging in the lending business.
On January 30, 2009, Sta. Ana attended the hearing conducted by MJCI.
In its February 13, 2009 Report,20 the SDC found that Sta. Ana extended loans to
the employees of MJCI during office hours using its personnel as messenger. It
further stated that on one occasion, Sta. Ana used corporate funds without
MJCI's authority, and with the assistance of Tejada.21
Consequently, the SDC found Sta. Ana guilty of conspiring to defraud, illegally
take funds, and cause irreparable damage to MJCI; as such, MJCI lost its trust on
her. It also declared that even granting that there was no conspiracy, Sta. Ana,
nonetheless, committed gross inexcusable negligence for failure to perform her
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duties and protect the interest of MJCI. SDC recommended the dismissal of Sta.
Ana and the filing of criminal cases for qualified theft and other appropriate
charges.
On February 16, 2009, MJCI issued a Notice of Termination22 to Sta. Ana.
Issue:
Whether or not Sta. Ana was validly dismissed on the ground of loss of trust and
confidence.
Ruling:
No.
The uniform finding of the LA, NLRC, and CA that Sta. Ana was validly
dismissed is unjustified because salient facts were overlooked, which, if properly
considered, will prove the absence of just cause in dismissing her from work.
It is settled that the employer has the right to dismiss an employee for just
causes, which include willful breach of trust and confidence. Complementary to
such right is the burden of the employer to prove that the employee's dismissal
is for a just cause, and the employer afforded the latter due process before
termination.34
In this regard, to legally dismiss an employee on the ground of loss of trust, the
employer must establish that a) the employee occupied a position of trust and
confidence, or has been routinely charged with the care and custody of the
employer's money or property; b) the employee committed a willful breach of
trust based on clearly established facts; and, c) such loss of trust relates to the
employee's performance of duties.35 In fine, there must be actual breach of duty
on the part of the employee to justify his or her dismissal on the ground of loss
of trust and confidence.36
In Manila Jockey Club, Inc. v. Trajano,37 where therein respondent was also a
teller working for MJCI, like Sta. Ana, the Court determined that the position of
a selling teller is a position of trust and confidence since it requires the handling
and custody of tickets issued and bets made in the teller's station. Thus, Sta. Ana
undoubtedly occupied a position of trust and confidence.
However, while Sta. Ana occupied such position of trust and MJCI afforded her
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procedural due process, her dismissal is still unwarranted because MJCI failed to
discharge its burden of proving that she willfully breached its trust, and such
loss of trust relates to Sta. Ana's performance of duties.
To recall, MJCI issued a formal charge against Sta. Ana for dishonesty and other
fraudulent acts for stealing or attempting to steal corporate assets; malversation;
and engaging in anomalous transactions. In its Report dated February 13, 2009,
the SDC specifically accused her of having used a co-employee in her personal
business during office hours; and, having lent money to another using MJCI's
fund without authority.
These allegations, however, are not supported by clear and convincing evidence.
One, MJCI argued that Sta. Ana used its personnel in her lending business
during office hours. It will be recalled that Sta. Ana was dismissed on February
16, 2009 pursuant to the SDC Report dated February 13, 2009. Notably, however,
the specific statements as regards the accusation that Sta. Ana used in her
lending business an MJCI employee were mentioned for the first time only in the
SDC Report dated April 22, 2009.
Also worth stressing is the fact that MJCI did not refute Sta. Ana's assertion that
the company rules do not prohibit its employees from engaging in their own
personal businesses. Likewise, the investigation conducted by MJCI pertained
only to OTB Agudo, which was not the branch where Sta. Ana was assigned.
Moreover, there was no showing that Sta. Ana's branch (OTB Tayuman) had
incurred any shortage in its remittance to MJCI.
It is a cardinal rule that loss of trust and confidence should be genuine, and not
simulated; it must arise from dishonest or deceitful conduct, and must not be
arbitrarily asserted in the face of overwhelming contrary evidence.44 While proof
beyond reasonable doubt is not required; loss of trust must have some basis or
such reasonable ground for one to believe that the employee committed the
infraction, and the latters participation makes him or her totally unworthy of the
trust demanded by the position.45
Here, MJCI failed to prove that Sta. Ana committed willful breach of its trust.
Particularly, it failed to establish that Sta. Ana used its employee for her personal
business during office hours, and used its money; without authority, to lend
money to another. Hence, to dismiss her on the ground of loss of trust and
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confidence is unwarranted.46
Under these circumstances, Sta. Ana is entitled to receive backwages and

separation pay.
An illegally dismissed employee is entitled to two separate reliefs: full backwages

and reinstatement. In such case where reinstatement is no longer an option,
payment of separation pay is justified. The Court considers "considerable time,"
which includes the lapse of eight years or more (from the filing of the complaint
up to the resolution of the case) to support the grant of separation pay in lieu of
reinstatement. Considering that about eight years had passed from the time that
Sta. Ana filed her complaint on February 25, 2009 then, her reinstatement is an
impractical option. Thus, instead of reinstatement, the Court grants her
separation pay of one month for every year of service. As regards backwages, she
is entitled to receive full backwages, which include allowances and other
benefits due her or their monetary equivalent, computed from the time her
compensation was withheld up to the finality of this Decision.47
Finally, the Court finds that Sta. Ana is entitled to moral and exemplary damages
as well as attorney's fees as she prayed for in her Complaint.
The grant of moral damages is allowed where the employer acted in bad faith or
in such a manner oppressive to labor.48
During the administrative hearing, MJCI received in evidence relevant

documents establishing her capacity to engage in a lending business, and
proving that she did not engage in any activity to defraud MJCI. Also a plain
reading of the statements of Santos and Pimentel would show that they did not
explicitly declare that Sta. Ana used another employee during office hours as
conduit in her business. However, despite all these clear pieces of evidence, and
only on mere allegation of loss of trust, MJCI still dismissed her.
Therefore, for acting in "bad faith or such conscious design to do a wrongful act
for a dishonest purpose,"49 MJCI is liable to pay Sta. Ana P50,000.00 as moral
damages. It is also liable to pay her P50,000.00 as exemplary damages to deter
other employers from committing the same or similar act. At the same time, the
Court awards in her favor attorney's fees equivalent to 10% of the total monetary
award as she was compelled to litigate in order to protect her rights.50 The legal
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interest of 6% per annum shall be imposed on the total monetary awards from
the finality of this Decision until its full satisfaction.
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 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.
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Issue:
Whether the CA erred in ordering the LA to recompute the

monetary awards
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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:
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
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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
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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.
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.
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BANI RURAL BANK INC. ENOC THEATER I AND II and/or RAFAEL DE GUZMAN
vs. TERESA DE GUZMAN, EDGAR C. TAN and TERESA G. TAN
G.R. No.170904, November 13, 2013
J. BRION
There were no two final NLRC decisions affecting the computation of the
backwages, he NLRC disregarded Labor Arbiter Gambito's first computation. In the
dispositive portion of its July 31, 1998 decision, the NLRC modified the final March 17, 1995
resolution. The first part of this decision -the original ruling of illegal dismissal -was left
untouched while the second part of the decision -the monetary award and its computation
-was altered to conform with the strained relations between the parties that became
manifest during the execution phase of the March 17, 1995 resolution.
The effect of the modification of the March 17, 1995 resolution of the NLRC was two-
fold: the reinstatement aspect of the March 17, 1995 resolution was expressly substituted by
an order of payment of separation pay; and two the July 31, 1998 decision of the NLRC now
provided for two monetary awards (backwages and separation pay). The July 31, 1998
decision of the NLRC became final since neither parties appealed.
Facts:
The respondents were employees of Bani Rural Bank, Inc. and ENOC Theatre I and II
who filed a complaint for illegal dismissal against the petitioners. The complaint was
initially dismissed by Labor Arbiter Roque B. de Guzman on March 15, 1994. On appeal,
the National Labor Relations Commission (NLRC) reversed Labor Arbiter De Guzman's
findings, and ruled that the respondents had been illegally dismissed. The parties did not
file any motion for reconsideration or appeal. The March 17, 1995 resolution of the NLRC
became final and executory and the computation of the awards was remanded to the
labor arbiter for execution purposes.
The first computation of the monetary award under the March,17 1995 resolution of the
NLRC. The respondents appealed Labor Arbiter Gambito's computation with the NLRC.
In a Decision dated July 31, 1998, the NLRC modified the terms of the March 17, 1995
resolution insofar as it clarified the phrase less earnings elsewhere. The NLRC
additionally awarded the payment of separation pay, in lieu of reinstate men. The
respondents filed a motion for reconsideration on whether the award of backwages was
still included in the judgment. The NLRC dismissed the motion for having been filed out
of time.
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The recomputation of the monetary awards of the respondents' backwages and
separation pay, according to the decision dated July 31, 1998 and the modified terms of
the March 17, 1995 resolution of the NLRC, was referred to Labor Arbiter Gambito. In the
course of the recomputation, the petitioners filed before Labor Arbiter Gambito a Motion
to Quash Writ of Execution and Suspend Further Execution they reiterated their position
that the respondents backwages should be computed only up to August 25, 1995, citing
the alleged manifestation made by the respondents, through Samuel de la Cruz, as their
basis.
In an order dated July 12, 2000, Labor Arbiter Gambito computed the respondents
backwages only up to August 25, 1995. Upon appeal, the NLRC ruled that the
computation of the respondents backwages should be until January 29 1999 which was
the date when the July 31, 1998 decision attained finality
Issue:
Whether the respondents’ backwages had been correctly computed under the decision
of the NLRC, as confirmed by the CA, in light of the circumstance that there were two
final NLRC decisions affecting the computation of the backwages
Ruling:
In Session Delights Ice Cream and Fast Foods v. Court of Appeals (Sixth Division), we
held that a decision in an illegal dismissal case consists essentially of two components:
The first is that part of the decision that cannot now be disputed because it has been
confirmed with finality. This is the finding of the illegality of the dismissal and the awards
of separation pay in lieu of reinstatement, backwages.
The second part is the computation of the awards made.
The first part of the decision stems from the March 17, 1995 NLRC resolution finding an
illegal dismissal and defining the legal consequences of this dismissal. The second part
involves the computation of the monetary award of backwages and the respondents'
reinstatement. Under the terms of the March 17, 1995 resolution, the respondents'
backwages were to be computed from the time of the illegal dismissal up to their
reinstatement.
In the first computation of the backwages, Labor Arbiter Gambito confronted the
following circumstances and the Sheriffs Report dated November 8, 1995: first, how to
interpret the phrase less earnings elsewhere as stated in the dispositive portion of the
March 17, 1995 resolution of the NLRC; second, the effect of the alleged manifestation
(dated October 9, 1995) of Samuel that the respondents were only interested in the
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monetary award, not in their reinstatement; and third, the effect of the respondents'
counsel's statement during the pre-execution proceedings that the respondents simply
wanted to be reinstated.
The records indicate that the respondents denied Samuel's statement and asked for
reinstatement through their counsel. Nevertheless, Labor Arbiter Gambito relied on
Samuel's statement and fixed the computation date of the respondents' backwages to be
up to and until August 25, 1995 or the date the order of execution was issued for the
NLRC's March 17, 1995 decision. As stated in his July 12, 2000 order, Labor Arbiter
Gambito found it fair and just that in the execution of the NLRC's decision, the
computation of the respondents' backwages should "stop at that time when it was put on
record by them [respondents] that they had no desire to return to work."
The NLRC disregarded Labor Arbiter Gambito's first computation. In the dispositive
portion of its July 31, 1998 decision, the NLRC modified the final March 17, 1995
resolution. The first part of this decision -the original ruling of illegal dismissal -was left
untouched while the second part of the decision -the monetary award and its
computation -was altered to conform with the strained relations between the parties that
became manifest during the execution phase of the March 17, 1995 resolution.
The effect of the modification of the March 17, 1995 resolution of the NLRC was two-fold:
the reinstatement aspect of the March 17, 1995 resolution was expressly substituted by an
order of payment of separation pay; and two the July 31, 1998 decision of the NLRC now
provided for two monetary awards (backwages and separation pay). The July 31, 1998
decision of the NLRC became final since neither parties appealed.
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

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 recomputation 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-
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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 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
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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.
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
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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.
[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
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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.
ALEXANDER B. BAÑARES vs. TABACO WOMEN'S TRANSPORT SERVICE

COOPERATIVE (TAWTRASCO), REPRESENTED BY DIR. RENOL BARCEBAL, ET AL.
G.R. No. 197353, April 1, 2013
J. Velasco Jr.
An employee entitled to reinstatement shall either be admitted back to work under the
same terms and conditions prevailing prior to his dismissal or separation. An illegally
dismissed employee is entitled to reinstatement without loss of seniority rights and to
other established employment privileges, and to his full back wages. The boarding house
privilege, being an established perk accorded to petitioner, ought to have been granted
him if a real and authentic reinstatement to his former position as general manager is to
be posited.
Facts:
Petitioner Alexander B. Bañares worked for some time as general manager of

respondent Tabaco Women’s Transport Service Cooperative (TAWTRASCO). He filed a
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complaint for illegal dismissal and payment of monetary claims against TAWTRASCO.
The Labor Arbiter rendered a decision in the illegal dismissal case ordering the
reinstatement of the petitioner employee to his former position as general manager of
respondent transport company without loss of seniority rights and granting his
monetary claims.
In compliance with the decision,TAWTRASCO directed the petitioner to report at the

company’s Virac, Catanduanes terminal to supervise the terminal’s operations under a
memorandum order stating his duties and responsibilities as general manager. Barely a
week into his new assignment, petitioner, thru a memorandum report, proposed the
construction/rehabilitation of the passenger lounge in the Virac terminal, among other
improvements. The proposal came with a request for a monthly lodging
accommodation allowance which he used to enjoy in his previous assignment for the
duration of his stay in Virac. While the management eventually approved the desired
construction projects, it denied petitioner’s plea for cash lodging allowance. Hence, he
stopped reporting to work and filed a complaint for non-payment of salaries.
Issue:
Whether or not there was a proper and genuine reinstatement of petitioner to his former
position of General Manager of TAWTRASCO without loss of seniority rights and
privileges
Ruling:
The SC held that there was no real, bona fide reinstatement of the petitioner by virtue
of his assignment to the Virac, Catanduanes terminal of respondent transport company.
Under Article 223 of the Labor Code, an employee entitled to reinstatement “shall
either be admitted back to work under the same terms and conditions prevailing prior
to his dismissal or separation x x x.” An illegally dismissed employee is entitled to
reinstatement without loss of seniority rights and to other established employment
privileges, and to his full back wages. The boarding house privilege, being an
established perk accorded to petitioner, ought to have been granted him if a real and
authentic reinstatement to his former position as general manager is to be posited.
It cannot be stressed enough that TAWTRASCO withheld petitioner’s salaries for and
after his purported refusal to report for work at the Virac terminal. The reality,
however, is that TAWTRASCO directed petitioner to work under terms and conditions
prejudicial to him, the most hurtful cut being that he was required to work without a
decent office, partly performing a checker’s job. This embarrassing work arrangement is
what doubtless triggered the refusal to work, which under the premises appears
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justified.
Generally, employees have a demandable right over benefits voluntarily granted to

them by their employers. And if the grant or benefit is founded on an express policy or
has, for a considerable period, been given regularly and deliberately, then the grant
ripens into a vested right that the employer cannot unilaterally diminish, discontinue
or eliminate. So it must be here with respect, at the minimum, to the lodging
accommodation which TAWTRASCO, as found by the National Labor Relations
Commission, appears to have regularly extended for free for some time to petitioner.
VENANCIO S. REYES, EDGARDO C. DABBAY, ET AL. vs. RP GUARDIANS

SECURITY AGENCY, INC.
G.R. No. 193756, April 10, 2013
J. Mendoza
An employee who is unjustly dismissed from work shall be entitled to reinstatement

without loss of seniority rights and other privileges, and to his full backwages, inclusive of
allowances and to his other benefits or their monetary equivalent computed from the time
his compensation was withheld up to the time of actual reinstatement. If reinstatement is
not possible, however, the award of separation pay is proper.
Backwages and reinstatement are separate and distinct reliefs given to an illegally
dismissed employee in order to alleviate the economic damage brought about by the
employee’s dismissal. “Reinstatement is a restoration to a state from which one has been
removed or separated” while “the payment of backwages is a form of relief that restores
the income that was lost by reason of the unlawful dismissal.” Therefore, the award of one
does not bar the other.
Facts:
Petitioners Reyes, Dabbay, Vigilia, Calanno, Supe, Jr., Trinidad, and Duldulao
(petitioners) were hired by respondent as security guards. They were deployed to
various clients of respondent, the last of which were the different branches of Banco
Filipino. In September 2006, respondent’s security contract with Banco Filipino was
terminated. In separate letters, petitioners were individually informed of the
termination of the security contract. In two (2) memoranda, dated September 21, 2006
and September 29, 2006, petitioners were directed to turnover their duties and
responsibilities to the incoming security agency and were advised that they would be
placed on floating status while waiting for available post. Petitioners waited for their
next assignment, but several months lapsed and they were not given new assignments.
Consequently, on April 10, 2007, petitioners filed a complaint for constructive dismissal.
Respondent claimed that there was no dismissal, of petitioners, constructive or
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otherwise, and asserted that their termination was due to the expiration of the service
contract which was co-terminus with their contract of employment.
In a complaint for constructive dismissal, the Labor Arbiter (LA), the National Labor
Relations Commission (NLRC) and the Court of Appeals (CA) found that petitioners
were constructively dismissed. The CA, however, reduced the computation of the LA
and NLRC of the separation pay from one month to one-half month per year of service.
Issue:
Whether or not the petitioners were constructively dismissed and they are entitled to
separation pay and backwages
Ruling:
There is no doubt that petitioners were constructively dismissed. The LA, the NLRC
and the CA were one in their conclusion that respondent was guilty of illegal dismissal
when it placed petitioners on floating status beyond the reasonable six-month period
after the termination of their service contract with Banco de Oro.
Temporary displacement or temporary off-detail of security guard is, generally, allowed

in a situation where a security agency’s client decided not to renew their service
contract with the agency and no post is available for the relieved security guard. Such
situation does not normally result in a constructive dismissal.
Nonetheless, when the floating status lasts for more than six (6) months, the employee
may be considered to have been constructively dismissed.
Settled is the rule that that an employee who is unjustly dismissed from work shall be
entitled to reinstatement without loss of seniority rights and other privileges, and to his
full backwages, inclusive of allowances and to his other benefits or their monetary
equivalent computed from the time his compensation was withheld up to the time of
actual reinstatement. If reinstatement is not possible, however, the award of separation
pay is proper.
Backwages and reinstatement are separate and distinct reliefs given to an illegally
dismissed employee in order to alleviate the economic damage brought about by the
employee’s dismissal. “Reinstatement is a restoration to a state from which one has
been removed or separated” while “the payment of backwages is a form of relief that
restores the income that was lost by reason of the unlawful dismissal.” Therefore, the
award of one does not bar the other.
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The normal consequences of respondents’ illegal dismissal, then, are reinstatement
without loss of seniority rights, and payment of back wages 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 month
salary for every year of service should be awarded as an alternative. The payment of
separation pay is in addition to payment of back wages.
In this case, respondent would have been liable for reinstatement and payment of back
wages. Reinstatement, however, was no longer feasible because, as found by the LA,
respondent had already ceased operation of its business. Thus, back wages and
separation pay, in the amount of one month for every year of service, should be paid in
lieu of reinstatement.
POSEIDON INTERNATIONAL MARITIME SERVICES, IN., vs. TITO R. TAMALA,

FELIPE S. SAURIN, JR., ARTEMIO A. BO-OC AND JOEL S. FERNANDEZ
G.R. No. 186475, June 26, 2013
J. Brion
The Supreme Court considered the quitclaim to be valid. Generally, the Court looks with
disfavor at quitclaims executed by employees for being contrary to public policy.
However, when the person making the waiver has done so voluntarily, with a full
understanding of its terms and with the payment of credible and reasonable
consideration, the court have no option but to recognize the transaction to be valid and
binding.
Facts:
In 2004, Poseidon hired the respondents, in behalf of Van Doorn, to man the fishing
vessels of Van Doorn and those of its partners – Dinko Tuna Farmers Pty. Ltd. (Dinko)
and Snappertuna Cv. Lda. (Snappertuna) - at the coastal and offshore area of Cape
Verde Islands.
The fishing operations for which the respondents were hired started on September 17,
2004. On November 20, 2004, the operations abruptly stopped and did not resume.
Prior to disembarking the vessel, an agreement was entered into by the seafarers and
the employer that they will receive 100% of their salaries for the remainder of the
unexpired portion of their pre-terminated contract. The next day, another agreement
was entered into by the parties where the seafarers will receive 50% of their salaries for
the remainder of the unexpired portion of the contract. Upon repatriation, the
seafarers received their settlement pay and executed quitclaims accordingly. The
seafarers, despite executing quitclaims, filed a complaint for payment of salaries for the
full unexpired portion of their contract. They alleged that they were coerced to accept
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the 50% settlement previously proposed by the employer because of dire need of
finances and the quitclaims should be invalidated.
The Labor Arbiter and the NLRC found that the quitclaims signed by the seafarers
should bar the claims. However, the Court of Appeals voided the quitclaims
considering that the earlier agreement of payment of 100% salaries for the unexpired
portion of the contract was more in keeping with the Migrant Workers Act for which
reason, the issue was brought up to the Supreme Court.
Issue:
Whether or not respondents’ waivers and quitclaims are valid and these should bar
their claim for unpaid salaries
Ruling:
The waivers and quitclaims signed by the respondents are valid and binding.
Generally, this Court looks with disfavor at quitclaims executed by employees for being
contrary to public policy. Where the person making the waiver, however, has done so
voluntarily, with a full understanding of its terms and with the payment of credible and
reasonable consideration, we have no option but to recognize the transaction to be
valid and binding.
The Court noted that that all the seafarers executed the quitclaim with a full
understanding of their import and consequences. Likewise, the amounts given to them
in exchange for the quitclaims were reasonable considering that they received more
than what they were entitled to under the POEA Contract. Under the POEA Contract,
in case of termination of employment due to discontinuance of voyage, termination pay
is given to the seafarer equivalent to his one month of his basic wage.
The management has the right to regulate the business and control its every aspect.
Included in this management right is the freedom to close or cease its operations for
any reason, as long as it is done in good faith and the employer faithfully complies with
the substantive and procedural requirements laid down by law and jurisprudence. The
Court considered the cessation of operations of the employer to have been done in
good faith and without intent to defeat the protected rights of the seafarers. However,
the employer was adjudged to pay nominal damages of PHP30,000 for failure to comply
with the procedural requirements of terminating the employment of the seafarers.
Under the Labor Code, if employment is being terminated due to an authorized cause
such as cessation of business operations, the employer shall advise in writing the
affected employees and the Department of Labor and Employment of the intended date
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of termination of employment at least one month prior to the cessation of operations.
While this would not affect the validity of the termination of employment, it subjects
the employer to the payment of indemnity in the form of nominal damages.
ALPS TRANSPORTATION AND/OR ALFREDO E. PEREZ VS. ELIPIDIO M.

RODRIGUEZ
G.R. NO. 186732, JUNE 13, 2013
CJ. Sereno
The employer failed to prove that the dismissal was due to a just cause. The Labor Code
provides 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.
An illegally dismissed employee is entitled to the twin remedies of reinstatement and
payment of full backwages. The normal consequences of a finding that an employee has
been illegally dismissed are, firstly, that the employee becomes entitled to reinstatement
to his former position without loss of seniority rights and, secondly, the payment of
backwages corresponding to the period from his illegal dismissal up to actual
reinstatement.
Facts:
Respondent Elpidio Rodriguez was employed as a bus conductor. He entered into an

employment contract with Contract Tours Manpower and was assigned to work with
petitioner ALPS Transportation.
During the course of his employment Rodriguez was found to have committed
irregularities on April 26, 2003, October 12, 2003 and January 26, 2005. The latest
irregularity report dated January 26, 2005 stated that he had collected bus fares without
issuing corresponding tickets for passengers. The report was annotated with the word
“Terminate.”
Rodriguez alleged that he was dismissed from his employment on January 27, 2005, or
the day after the issuance of the last irregularity report. He did not however receive any
written notice of termination. He went back to the bus company a number of times but
it refused to readmit him.
On August 11, 2005, Rodriguez filed before the labor arbiter a complaint for illegal
dismissal, nonpayment of 13th month pay, and damages against ALPS Transportation
and Alfredo E. Perez, the proprietor of petitioner bus company.
Issue:
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Whether or not respondent Rodriguez was validly dismissed
Ruling:
For a dismissal to be valid, the rule is that the employer must comply with both
that the dismissal must be pursuant to either a just or an authorized cause under
Articles 282, 283 or 284 of the Labor Code. Procedural due process, on the other hand,
mandates that the employer must observe the twin requirements of notice and hearing
before a dismissal can be effected.
We find for respondent and rule that the employer failed to prove that the dismissal
was due to a just cause. The Labor Code provides 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.
Here, we agree with Rodriguez’s position that the 26 January 2005 irregularity report,
which served as the basis of his dismissal, may only be considered as an uncorroborated
allegation if unsupported by substantial evidence.
The nature of work of a bus conductor involves inherent or normal occupational risks
of incurring money shortages and uncollected fares. A conductor’s job is to collect exact
fares from the passengers and remit his collections to the company. Evidence must,
therefore, be substantial and not based on mere surmises or conjectures for to allow an
employer to terminate the employment of a worker based on mere allegations places
the latter in an uncertain situation and at the sole mercy of the employer.
An accusation that is not substantiated will not ripen into a holding that there is just
cause for dismissal. A mere accusation of wrongdoing or a mere pronouncement of lack
of confidence is not sufficient cause for a valid dismissal of an employee. Thus, the
failure of the petitioners to convincingly show that the respondent misappropriated the
bus fares renders the dismissal to be without a valid cause. To add, jurisprudence
dictates that if doubt exists between the evidence presented by the employer and the
employee, the scales of justice must be tilted in favor of the latter.
Thus, we rule that petitioners have failed to prove that the termination of Rodriguez’s
employment was due to a just cause. Having found that Rodriguez was illegally
dismissed, we now rule on petitioners’ liabilities and respondent’s entitlements under
the law.
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An illegally dismissed employee is entitled to the twin remedies of reinstatement and
payment of full backwages. The normal consequences of a finding that an employee has
been illegally dismissed are, firstly, that the employee becomes entitled to
reinstatement to his former position without loss of seniority rights and, secondly, the
payment of backwages corresponding to the period from his illegal dismissal up to
actual reinstatement. The statutory intent on this matter is clearly discernible.
Reinstatement restores the employee who was unjustly dismissed to the position from
which he was removed, that is, to his status quo ante dismissal, while the grant of
backwages allows the same employee to recover from the employer that which he had
lost by way of wages as a result of his dismissal. These twin remedies — reinstatement
and payment of backwages — make the dismissed employee whole who can then look
forward to continued employment. Thus, do these two remedies give meaning and
substance to the constitutional right of labor to security of tenure.
Thus, the CA committed no reversible error in upholding the NLRC’s order to reinstate
Rodriguez and in directing the payment of his full backwages, from the time he was
illegally dismissed until his actual reinstatement.
ST. JOSEPH ACADEMY OF VALENZUELA FACULTY ASSOCIATION vs. ST. JOSEPH

ACADEMY OF VALENZUELA, ET AL.,
G.R. No. 182957, June 13, 2013
J. Reyes
Reinstatement or payment of separation pay and award of backwages is proper only in

cases of illegal dismissal. Nevertheless, the Court, in exceptional cases, has granted
financial assistance to legally dismissed employees as an act of “social justice” or based
on “equity” so long as the dismissal was not for serious misconduct, does not reflect on
the employee’s moral character, or would involve moral turpitude.
In this case, the dismissal of the 13 non-licensees was due to their failure to possess
teaching licenses. It was not due to any serious misconduct or infraction reflecting their
moral character. This being the case, the Court, in keeping with equity and social justice,
grants the award of financial assistance to the 13 non-licensees equivalent to one-half
(1/2) month’s pay for every year of service rendered with SJAV.
Facts:
The dispute arose from a notice of strike filed by the petitioner against respondent St.
Joseph Academy of Valenzuela (SJAV) for illegal termination of non-licensees teachers
and union busting. The SOLE assumed jurisdiction after the parties agreed to submit
the case for voluntary arbitration.
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The SOLE ordered the reinstatement of those non-licensees with a valid temporary or
special permit with full backwages up to the date of their actual reinstatement. The
SOLE, however, also ordered that they shall only serve for the remaining period
corresponding to the period of validity of their permit.
The CA, however, ruled that reinstatement is no longer possible inasmuch as it is the
Department of Education, Culture and Sports that can assign the para-teachers to
schools as it may determine. Moreover, SJAV cannot be deprived of its right to choose
its teachers and the positions have already been actually filled up. The CA also deleted
the award of backwages since, as found by the SOLE, there was no illegal dismissal
committed by SJAV, the non-licensees not being its regular employees. Hence, this
petition.
Issue:
Whether or not the CA committed an error in deleting the award of backwages and
reinstatement originally granted by the SOLE
Ruling:
Reinstatement or payment of separation pay, and award of backwages is proper only in

cases of illegal dismissal.
Generally, the finding of illegal dismissal entitles an employee to the twin remedies of
reinstatement and payment of backwages. Article 279 of the Labor Code states, in part,
that an employee who is unjustly dismissed from work shall be entitled to
reinstatement without loss of seniority rights and other privileges and to his full
backwages, inclusive of allowances, and to his other benefits or their monetary
equivalent computed from the time his compensation was withheld from him up to the
time of his actual reinstatement.
In this case, the SOLE and the CA were one in ruling that there was no illegal dismissal
committed by SJAV against the non-licensees. As both stressed by the SOLE and the
CA, R.A. No. 7836 provides that no person shall engage in teaching and/or act as
professional teacher unless he is a duly registered professional teacher, and a holder of
a valid certificate of registration and a valid professional license or a holder of a valid
special/temporary permit. Obviously, aside from the finding that there was no illegal
dismissal, the non-licensees cannot be reinstated since they do not possess the
necessary qualification for them to be engaged in teaching and/or act as professional
teachers. This conclusion binds the Court, especially in the absence of any
circumstance that militates against such conclusion.
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Consequently, the Court finds that the CA did not commit an error in ruling that
reinstatement is not possible. In the same light, the Court finds that the CA, likewise,
did not commit an error in deleting the award of backwages. As previously stressed,
payment of backwages and other benefits is justified only if the employee was illegally
dismissed.
Nevertheless, the Court, in exceptional cases, has granted financial assistance to legally
dismissed employees as an act of “social justice” or based on “equity” so long as the
dismissal was not for serious misconduct, does not reflect on the employee’s moral
character, or would involve moral turpitude. In Nissan Motor Philippines, Inc. v. Angelo,
the Court ruled that, inspired by compassionate and social justice, it has in the past
awarded financial assistance to dismissed employees when circumstances warranted
such an award. Meanwhile, in Pharmacia and Upjohn, Inc. v. Albayda, Jr., the Court held
that an award to the employee of separation pay by way of financial assistance,
equivalent to one-half (1/2) month’s pay for every year of service, is equitable. The
Court, in Pharmacia, noted, among others, that although the employee’s actions
constituted a valid ground to terminate his services, the same is not so reprehensible as
to warrant complete disregard of his long years of service.
Similarly in this case, the dismissal of the 13 non-licensees was due to their failure to
possess teaching licenses. It was not due to any serious misconduct or infraction
reflecting their moral character. Records also bear that they have been in the employ of
SJAV from five (5) to nine (9) years, and as observed by the SOLE, SJAV has not shown
any dissatisfaction with their teaching services, “otherwise, x x x, it would not have kept
them under its [employ] for such quite a period of time.” This being the case, the Court,
in keeping with equity and social justice, grants the award of financial assistance to the
13 non-licensees equivalent to one-half (1/2) month’s pay for every year of service
rendered with SJAV.
POLYMER RUBBER CORPORATION & JOSEPH ANG vs. BAYOLO SALAMUNDING

G.R. No. 185160. July 24, 2013
J. Reyes
An employer who is found guilty of unfair labor practice in dismissing his employee may
not be ordered so to pay backwages beyond the date of closure of business where such
closure was due to legitimate business reasons and not merely an attempt to defeat the
order of reinstatement.
Facts:
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Respondent Bayolo Salamuding, Mariano Gulanan and Rodolfo Raif (referred to as the
complainants) were employees of petitioner Polymer Rubber Corporation (Polymer),
who were dismissed after allegedly committing certain irregularities against Polymer.
On July 24, 1990, the three employees filed a complaint against Polymer and Ang
(petitioners) for unfair labor practice, illegal dismissal, non-payment of overtime
services, violation of Presidential Decree No. 851, with prayer for reinstatement and
payment of back wages, attorney’s fees, moral and exemplary damages.
The SC rendered a decision dismissing the complaint for ULP but directing the
respondent to reinstate complainants to their former position with full back wages
from the time they were illegally dismissed up to the time of reinstatement.
On September 30, 1993, Polymer ceased its operations. In the latter part of 2004,
Polymer with all its improvements in the premises was gutted by fire. On December 2,
2004, the complainants filed a Motion for Recomputation and Issuance of Fifth (5th)
Alias Writ of Execution. The Research and Computation Unit of the NLRC came up
with the total amount of P2,962,737.65. Due to the failure of the petitioners to
comment/oppose the amount despite notice, the LA approved said amount.
On November 10, 2005, the petitioners moved to quash the 5th alias writ of execution,
and to lift the notice of garnishment. They alleged that: a) Ang should not be held
jointly and severally liable with Polymer since it was only the latter which was held
liable in the decision of the LA, NLRC and the Supreme Court; b) the computation of
the monetary award in favor of the complainants in the amount of P2,962,737.65 was
misleading, anomalous and highly erroneous; and c) the decision sought to be
enforced by mere motion is already barred by the statute of limitations.
The LA granted the motion. The NLRC affirmed the findings of the LA in a Decision.
the CA found merit with the petition. The CA stated that there has to be a responsible
person or persons working in the interest of Polymer who may also be considered as the
employer. Since Ang as the director of Polymer was considered the highest ranking
officer of Polymer, he was therefore properly impleaded and may be held jointly and
severally liable for the obligations of Polymer to its dismissed employees.
Issue:
1. Whether or not the Officer of the Corporation cannot be personally held liable
and be made to pay the liability of the corporation
2. Whether or not the losing party cannot be held liable to pay the salaries and
benefits of the employees beyond the companies existence
Ruling:
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In the instant case, the CA imputed bad faith on the part of the petitioners when
Polymer ceased its operations the day after the promulgation of the SC resolution in
1993 which was allegedly meant to evade liability. The CA found it necessary to pierce
the corporate fiction and pointed at Ang as the responsible person to pay for
Salamuding’s money claims. Except for this assertion, there is nothing in the records
that show that Ang was responsible for the acts complained of. At any rate, we find
that it will require a great stretch of imagination to conclude that a corporation would
cease its operations if only to evade the payment of the adjudged monetary awards in
favor of three (3) of its employees.
To hold Ang personally liable at this stage is quite unfair. The judgment of the LA, as
affirmed by the NLRC and later by the SC had already long become final and executory.
It has been held that a final and executory judgment can no longer be altered. The
judgment 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, and regardless
of whether the modification is attempted to be made by the court rendering it or by the
highest Court of the land.“Since the alias writ of execution did not conform, is different
from and thus went beyond or varied the tenor of the judgment which gave it life, it is a
nullity. To maintain otherwise would be to ignore the constitutional provision against
depriving a person of his property without due process of law.”
Anent the computation of their liability for the payment of separation pay in lieu of
reinstatement in favor of Salamuding, the Court agrees with the ruling of the LA that it
must be computed only up to the time Polymer ceased operations in September 1993.
The computation must be based on the number of days when Polymer was in actual
operation. It cannot be held liable to pay separation pay beyond such closure of
business because even if the illegally dismissed employees would be reinstated, they
could not possibly work beyond the time of the cessation of its operation. In the case of
Chronicle Securities Corp. v. NLRC, we ruled that even an employer who is “found
guilty of unfair labor practice in dismissing his employee may not be ordered so to
pay backwages beyond the date of closure of business where such closure was due to
legitimate business reasons and not merely an attempt to defeat the order of
reinstatement.
CONSTRUCTIVE DISMISSAL
Soliman Security Services, Inc. and Teresita L. Soliman vs. Igmedio C.

Sarmiento, et al.
G.R. No. 194649
August 10, 2016
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Facts:
Respondents were hired as security guards by petitioner Soliman Security
Services, Inc. and were assigned to Interphil Laboratories, working seven (7) days
a week for twelve (12) straight hours daily. Respondents alleged that during their
employment - from May 1997 until January 2007 for Robis and from May 2003
until January 2007 for Sarmiento and Cada - they were paid only P275.00 a day for
eight (8) hours of work or P325.00 for twelve (12) hours of work but were not paid
ECOLA, night shift differentials, holiday pay, as well as rest day premiums. For
cash bond and mutual aid contributions, the amounts of P400.00 and Pl 00.00,
respectively, were deducted from their salaries per month. Respondents claimed
that they sought a discussion of the nonpayment of their benefits with petitioner
Teresita Soliman but the latter refused to take heed and told them to tender their
resignations instead. According to respondents, on 21 January 2007, they received
an order relieving them from their posts and since then, they were not given any
assignments.
On the other hand, the agency's version of the story hinges on an alleged
placement of the respondents under a "floating status." The agency admitted
relieving the respondents from duty on 20 January 2007 but insists that the same
was only done pursuant to its contract with client Interphil Laboratories. To
support this claim, petitioners presented a standing contract5 with Astrazeneca
Pharmaceuticals, Interphil' s predecessor-in-interest. The contract contained
stipulations pertaining to the client's policy of replacing guards on duty every six
( 6) months without repeat assignment. The agency further posits that respondent
guards were directed several times to report to the office for their new
assignments but they failed to comply with such directives.
Issues:
Whether or not the placing by the agency, in this case, of a security guard on
floating status is tantamount to constructive dismissal
Ruling:
Yes.
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The Court is mindful of the fact that most contracts for services stipulate that the
client may request the replacement of security guards assigned to it. Indeed, the
employer has the right to transfer or assign its employees from one area of
operation to another, "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." During that period of time when they are in between
assignments or when they are made to wait for new assignments after being
relieved from a previous post, guards are considered on temporary "off-detail" or
under "floating status". It has long been recognized by this Court that the industry
practice of placing security guards on floating status does not constitute dismissal,
as the assignments primarily depend on the contracts entered into by the agency
with third parties and the same is a valid exercise of management prerogative.
However, such practice must be exercised in good faith and courts must be
vigilant in assessing the different situations, especially considering that the
security guard does not receive any salary or any financial assistance provided by
law when placed on floating status.
Though respondents were not per se dismissed on 20 January 2007 when they were
ordered relieved from their posts, we find that they were constructively dismissed
when they were not given new assignments. As previously mentioned, placing
security guards under floating status or temporary off-detail has been an
established industry practice. It must be emphasized, however, that they cannot
be placed under floating status indefinitely; thus, the Court has applied Article
29221 (formerly Article 286) of the Labor Code by analogy to set the specific period
of temporary off-detail to a maximum of six (6) months. 22 It must also be clarified
that such provision does not entitle agencies to retain security guards on floating
status for a period of not more than six ( 6) months for whatever reason. Placing
employees on floating status requires the dire exigency of the employer's bona fide
suspension of operation. In security services, this happens when there is a surplus
of security guards over available assignments as when the clients that do not
renew their contracts with the security agency are more than those clients that
do.
It is significant to note that had the reason for such failure to reassign respondents
been the lack of service agreements for a continuous period of six ( 6) months,
petitioner agency could have exercised its right to terminate respondents for an
authorized cause upon compliance with the procedural requirements
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It bears stressing that the only time a prolonged floating status is considered an
authorized cause for dismissal is when the security agency experiences a surplus
of security guards brought about by lack of clients.
Otherwise stated, absent such justification, the placing of a security guard on

floating status is tantamount to constructive dismissal. And, when the floating
status is justified, the lapse of a continuous period of six ( 6) months results in an
authorized cause for termination of employment, the security guard being
entitled, however, to separation pay.
As for the procedural aspect, employer agencies must be reminded that to validly
terminate a security guard for lack of service assignment for a continuous period
of six months, the agency must comply with the provisions of Article 289
(previously Art. 283) of the Labor Code, "which mandates that a written notice
should be served on the employee on temporary off-detail or floating status and
to the DOLE one ( 1) month before the intended date of termination.”
Ernest Galang and Ma. Olga Jasmin Chan vs. BOIE Takeda Chemicals, Inc.
and/or Kazuhiko Nomura
G.R. No. 183934
July 20, 2016
Facts:
Respondent pharmaceutical company Boie Takeda Chemicals, Inc. (BTCI) hired
petitioners Ernesto Galang and Ma. Olga Jasmin Chan in August 28, 1975 and July
20, 1983, respectively. Through the years, petitioners rose from the ranks and were
promoted to Regional Sales Managers in 2000. Petitioners held these positions
until their separation from BTCI on May I, 2004.
In February 2003, the new General Manager, Kazuhiko Nomura (Nomura), asked
petitioners to apply for the position of National Sales Director. Simultaneously,
Nomura also asked Edwin Villanueva (Villanueva) and Mimi Escarte, both Group
Product Managers in the marketing department, to apply for the position of
Marketing Director. All four employees submitted themselves to interviews with
the management. In the end, Nomura hired an outsider from Novartis Company
as Marketing Director, while the position of National Sales Director remained
vacant. Later, however, petitioners were informed that BTCI promoted Villanueva
as National Sales Director effective May 1, 2004. BTCI explained that the
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appointment was pursuant to its management prerogative, and that it arrived at
such decision only "after careful assessment of the situation, the needs of the
position and the qualifications of the respective candidates."
After Villanueva's promotion, petitioners claimed that Nomura threatened to

dismiss them from office if they failed to perform well under the newly appointed
National Sales Director. This prompted petitioners to inquire if they could avail
of early retirement package due to health reasons. Specifically, they requested
Nomura if they could avail of the early retirement package of 150% plus 120o/o of
monthly salary for every year of service tax free, and full ownership of service
vehicle tax free. They claimed that this is the same retirement package given to
previous retirees namely, former Regional Sales Director Jose Sarmiento, Jr.
(Sarmiento), and former National Sales Director Melchor Barretto. Nomura,
however, insisted that such retirement package does not exist and Sarmiento's
case was exceptional since he was just a few years shy from the normal retirement
age.
On April 28, 2004, petitioners intimated their intention to retire in a joint written
letter of resignation22 dated April 28, 2002 (sic) to Nomura, effective on April 30,
2004. Thereafter, petitioners received their retirement package and other
monetary pay from BTCI.
Upon petitioners' retirement, the positions of Regional Sales Manager were

abolished, and a new position of Operations Manager was created. On October
20, 2004, petitioners filed the complaint for constructive dismissal and money
claims before the NLRC Regional Arbitration Branch.
Issues:
a. Whether or not petitioners were constructively dismissed.
b. Whether or not petitioners were discriminated as to their retirement
package.
Ruling:
a. No. Petitioners voluntarily retired from the service, thus were not
constructively dismissed.
Constructive dismissal has often been defined as a "dismissal in disguise"

or "an act amounting to dismissal but made to appear as if it were not." It
exists where there is cessation of work because continued employment is
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rendered impossible, unreasonable or unlikely, as an offer involving a
demotion in rank and a diminution in pay. In some cases, while no
demotion in rank or diminution in pay may be attendant, constructive
dismissal may still exist when continued employment has become so
unbearable because of acts of clear discrimination, insensibility or disdain
by the employer, that the employee has no choice but to resign. Under
these two definitions, what is essentially lacking is the voluntariness in the
employee's separation from employment.
In this case, petitioners were neither demoted nor did they receive a
diminution in pay and benefits. Petitioners also failed to show that
employment is rendered impossible, unreasonable or unlikely.
Petitioners admitted that they have previously intended to retire and were
actually the ones who requested to avail of an early retirement. More, the
circumstances which petitioners claim to have forced them into early
retirement are not of such character that rendered their continued
employment with BTCI as impossible.
It is true that in constructive dismissal cases, the employer is charged with

the burden of proving that its conduct and action or the transfer of an
employee are for valid and legitimate grounds such as genuine business
necessity. However, it is likewise true that in constructive dismissal cases,
the employee has the burden to prove first the fact of dismissal by
substantial evidence. Only then when the dismissal is established that the
burden shifts to the employer to prove that the dismissal was for just
and/or authorized cause. The logic is simple-if there is no dismissal, there
can be no question as to its legality or illegality.
In Portuguez v. GSIS Family Bank (Comsavings Bank), we were confronted

with the same facts where an employee who opted for voluntary retirement
claimed that he was constructively dismissed. In that case, we ruled that it
is the employee who has the onus to prove his allegation that his availment
of the early voluntary retirement program was, in fact, done involuntarily.
Here, records show that petitioners failed to establish the fact of their
dismissal when they failed to prove that their decision to retire is
involuntary. Consequently, no constructive dismissal can be found.
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b. No. Petitioners were not discriminated against in terms of their retirement
package.
The entitlement of employees to retirement benefits must specifically be

granted under existing laws, a collective bargaining agreement or
employment contract, or an established employer policy. Based on both
parties' evidence, petitioners arc not covered by any agreement. There is
also no dispute that petitioners received more than what is mandated by
Article 28771 of the Labor Code. Petitioners, however, claim that they
should have received a larger pay because BTCI has given more than what
they received to previous retirees. In essence, they claim that they were
discriminated against because BTCI did not give them the package of 150%
of monthly salary for every year of service on top of the normal retirement
package.
In Vergara v. Coca-Cola Bottlers Philippines, Inc., we explained that the

burden of proof that the benefit has ripened into company practice, i.e.,
giving of the benefit is done over a long period of time, and that it has been
made consistently and deliberately, rests with the employee. Here,
however, the “concession given to such an employee was not proved (sic)
to be company practice or policy such that petitioners can demand of it
over and above what has been specified in the collective bargaining
agreement."
To prove that their claim on the additional grant of 150 % of salary,

petitioners presented evidence showing that Anita Ducay, Rolando Arada,
Marcielo Rafael, and Sarm1ento, receive s1gnificantly larger
retirement benefits. However, the cases of Ducay, Arada, and Rafael cannot
be used as precedents to prove this specific company practice because
these employees were not shown to be similarly situated in terms of rank,
nor are the applicable retirement packages corresponding to their ranks
alike. Also, these employees, including Sarmiento, all retired in the same
year of 2001, or only within a one-year period. Definitely, a year cannot be
considered long enough to constitute the grant of retirement benefits to
these employees as company practice.
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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 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

Ruling:
No. Not every inconvenience, disruption, difficulty, or disadvantage that

an employee must endure sustains a finding of constructive dismissal. At the
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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:
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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 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.
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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 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
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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.
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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:
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
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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
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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.”
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
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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.
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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.
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
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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.
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
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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 five calendar days from receipt of the notice to
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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.
CANDIDO S. GEMINA JR.

vs. BANKWISE INC. (Thrift Bank), LAZARO LL. MADARA PERFECTO M. PASCUA
and OSMENIO R. GALAPATE
G.R. No. 175365, October 23, 2013
J. REYES
Gemina claims that he was illegally terminated by the petitioner, however, it is a well-
settled rule, however, that before the employer must bear the burden of proving that the
dismissal was legal, the employee must first establish by substantial evidence the fact of his
dismissal from service. Bare allegations of constructive dismissal, when uncorroborated by
the evidence on record, cannot be given credence.
Facts:
Candido S. Gemina, Jr. (Gemina) signed an employment contract with respondent

Bankwise, Inc. (Bankwise). Gemina had a satisfactory performance and was able to bring
in new and former clients to Bankwise. However, when Bankwise was embroiled in a
controversy involving the deposits of Foreign Retirees Association, he started to experience
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difficulty in soliciting new depositors. To alleviate the situation, he suggested innovations
in Bankwise’s marketing strategies to his immediate superiors, respondents Perfecto
Pascua (Pascua) and Osmenio Galapate (Galapate), who then worked out promotional
schemes without his participation. The schemes, however, failed to materialize and he was
blamed for the failure. Thereafter, he was subjected to several forms of harassment by some
officers of Bankwise by forcing him to file an indefinite leave of absence, demanding for the
return of his service vehicle and intentionally delaying the release of his salaries and
allowances. Gemina filed a complaint for constructive dismissal against Bankwise.
For its part, Bankwise pointed out that Gemina’s employment contract stipulated for a fund
level commitment of P100,000,000.00 for the first six (6) months of employment which
Gemina failed to attain. Gemina also incurred absences without leave from February 1 to
15, 2003 and did not bother to inform the bank regarding the reason therefor. Pascua and
Galapate tried to contact him to inquire about the reason of his long absence and requested
him to return the company vehicle but to no avail.
Issue:
Whether Gemina was constructively dismissed.
Ruling:
There was no constructive dismissal.
There is constructive dismissal when "there is cessation of work, because ‘continued

demotion in rank or a diminution in pay’ and other benefits. Aptly called a dismissal in
disguise or an act 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."
As correctly held by the NLRC and the CA, Gemina’s claim of constructive dismissal is not
supported by the facts of the case. Both tribunals ruled that the circumstances mentioned
by Gemina do not partake of discriminatory acts calculated to force him to leave
employment. The acts complained of merely pertain to the legitimate exercise of
management prerogatives. "Settled is the rule that factual findings of labor officials, who
are deemed to have acquired expertise in matters within their jurisdiction, are generally
accorded not only respect but even finality by the courts when supported by substantial
evidence, i.e., the amount of relevant evidence which a reasonable mind might accept as
adequate to justify a conclusion." "The factual findings of the NLRC, when affirmed by the
CA, are generally conclusive on this Court."
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A close scrutiny of the facts of the case will bear out that Gemina indeed failed to state
circumstances substantiating his claim of constructive dismissal. To begin with, he does
not claim to have suffered a demotion in rank or diminution in pay or other benefits. What
he claims is that he had been subjected to several acts of harassment by some of the officers
of Bankwise by way of (1) asking him to take a forced leave of absence, (2) demanding for
the return of his service vehicle, and (3) delaying the release of his salaries and allowances
in order to compel him to quit employment.
It is a well-settled rule, however, that before the employer must bear the burden of proving
that the dismissal was legal, the employee must first establish by substantial evidence the
fact of his dismissal from service. Bare allegations of constructive dismissal, when
uncorroborated by the evidence on record, cannot be given credence.
In the instant case, the records are bereft of substantial evidence that will unmistakably
establish a case of constructive dismissal. An act, to be considered as amounting to
constructive dismissal, 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. Here, the circumstances relayed by Gemina were not clear-cut indications
of bad faith or some malicious design on the part of Bankwise to make his working
environment insufferable.
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HECHANOVA BUGAY VILCHEZ LAWYERS, HECHANOVA & CO., INC.,
ATTY. EDITHA R. HECHANOVA
vs. ATTY. LENY O. MATORRE, Respondent.
G.R. No. 198261, October 16, 2013
J. VILLARAMA, JR.
In case, wherein the former employee voluntary resigned, and now claims that she was
illegally dismissed, the SC ruled in line with settled jurisprudence, since Atty. Matorre
admittedly resigned, that it was incumbent upon her to prove that her resignation was not
voluntary, but was actually a case of constructive dismissal, with clear, positive, and
convincing evidence.
Facts:
Atty. Matorre was hired by by HBV Law Firm as a Senior Associate Attorney. As the
managing partner of HBV Law Firm, Atty. Hechanova was the one who supervised Atty.
Matorre and gave her work assignments. However, as soon as Atty. Matorre started working
she had already express her feelings of being harassed by Atty. Hechanova. Atty. Matorre
also explained that she intended to improve her work and that she was not making excuses
when she could not accomplish assigned tasks on time.
During a meeting between Atty. Matorre and Atty. Hechanova, the former told Atty.
Hechanova that since she (Atty. Hechanova) was not satisfied with her work and because
they were frequently arguing with each other, it would be best if she (Atty. Matorre) resigns
from the firm. Atty. Matorre requested that her resignation be made effective on September
30, 2008, but thinking that the said date was too far off, Atty. Hechanova accepted the
resignation, with the condition that it be made effective on September 15, 2008.
Atty. Matorre filed a complaint for constructive illegal dismissal, nonpayment of separation
pay, and for payment of moral and exemplary damages and attorneys’ fees against HBV
Law Firm.
Labor Arbiter (LA) rendered judgment in favor of HBV Law Firm and held that Atty.
Matorre voluntarily resigned from her employment. The NLRC reversed the Decision of
the LA and declared that Atty. Matorre was illegally dismissed. CA upheld the ruling of the
NLRC and held that no voluntary resignation was made by Atty. Matoore.
Issue:
Whether CA erred in not finding that Atty. Matorre’s resignation was voluntary and that
she was not constructively dismissed.
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Ruling:
SC finds the petition meritorious. The resignation of Atty. Matorre was voluntary and she
was not constructively dismissed.
The case of Vicente v. Court of Appeals (Former 17th Div.) is instructive on this matter. In
the case at bar and in Vicente, the fact of resignation is not disputed, but only the
voluntariness thereof. In Vicente, the employee alleged that her employer forced her to
resign. The Court held that she voluntarily resigned and was not constructively dismissed.
The Court said, Hence, petitioner cannot take refuge in the argument that it is the employer
who bears the burden of proof that the resignation is voluntary and not the product of
coercion or intimidation.
Having submitted a resignation letter, it is then incumbent upon her to prove that the
resignation was not voluntary but was actually a case of constructive dismissal with clear,
positive, and convincing evidence. Petitioner failed to substantiate her claim of
In the case of Atty. Matorre, she also presented no evidence of constructive dismissal, apart
from her self-serving and uncorroborated allegations.
First, Atty. Matorre was not able to present a single witness to corroborate her claims of
verbal abuse and insults from Atty. Hechanova. She was only able to adduce
transcriptions of what she claims were conversations between her and Atty. Hechanova,
and nothing more. These are indeed self-serving and uncorroborated and should not be
given evidentiary weight.
On the other hand, the body of evidence presented by HBV Law Firm would show affidavits
demonstrating that the other personnel in the said law firm neither heard nor saw any
inappropriate behavior on the part of Atty. Hechanova towards Atty. Matorre.
The Affidavit of Gladies Nepomuceno the secretary of HBV Law Firm, states that the said
affiant did "not believe that Atty. Matorre was treated like a slave" by the firm, as Atty.
Matorre argued.
The Affidavit of Gladys C. Vilchez, a partner at HBV Law Firm, states that Atty. Vilchez,
whose room was near Atty. Matorre’s, never heard Atty. Hechanova shout at Atty. Matorre
nor speak to her in an offensive manner.
Second, the act of HBV Law Firm of moving the effectivity date of Atty. Matorre’s
resignation from September 30, 2008 to September 15, 2008 is not an act of harassment, as
Atty. Matorre would have us believe. The 30-day notice requirement for an employee’s
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resignation is actually for the benefit of the employer who has the discretion to waive such
period. Its purpose is to afford the employer enough time to hire another employee if
needed and to see to it that there is proper turn-over of the tasks which the resigning
employee may be handling. As one author puts it,
x x x The rule requiring an employee to stay or complete the 30-day period prior to
the effectivity of his resignation becomes discretionary on the part of management
as an employee who intends to resign may be allowed a shorter period before his
resignation becomes effective.
Moreover, the act of HBV Law Firm of moving the effectivity date of Atty. Matorre’s
resignation to an earlier date cannot be seen as a malicious decision on the part of the firm
in order to deprive Atty. Matorre of an opportunity to seek new employment. This decision
cannot be viewed as an act of harassment but rather merely the exercise of the firm’s
management prerogative. Surely, we cannot expect employers to maintain in their employ
employees who intend to resign, just so the latter can have continuous work as they look
for a new source of income.
Third, the fact that HBV Law Firm was no longer assigning new work to Atty. Matorre after
her resignation is not an act of harassment, but is also an exercise of management
prerogative. Expecting that Atty. Matorre would no longer be working for HBV Law Firm
after three to four weeks, she was no longer given additional assignments to ensure a
smooth turn-over of duties and work. Indeed, having an employee focus on her remaining
tasks and not assigning new ones to her would be beneficial on the part of HBV Law Firm
as there would in fact be less tasks to be turned over to Atty. Matorre’s replacement. Said
actuation is well within the ambit of the firm’s management prerogative, and is certainly
not an act of harassment.
To reiterate, in line with settled jurisprudence, since Atty. Matorre admittedly resigned, it
was incumbent upon her to prove that her resignation was not voluntary, but was actually
a case of constructive dismissal, with clear, positive, and convincing evidence.
As shown above, Atty. Matorre failed to present any evidence of constructive dismissal,
such as proof of the alleged harassment, insults, and verbal abuse she allegedly received
during her stay at HBV Law Firm that led her to terminate her employment. Thus, it can
be concluded that she resigned voluntarily.
Since Atty. Matorre failed to prove that she was illegally or constructively dismissed, there
is no need to discuss the issue of her monetary claims due to her lack of entitlement thereto.
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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
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
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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
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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
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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 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.
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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
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
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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.
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NORKIS TRADING CORPORATION, Petitioner, v. JOAQUIN BUENA VISTA, HENRY
FABROA, RICARDO CAPE, BERTULDO TULOD, WILLY DONDOY ANO and GLEN
VILLARASA, Respondents
G.R. No. 182018 : October 10, 2012
Facts:
The respondents were hired by Norkis Trading, a domestic corporation engaged in the
business of manufacturing and marketing of Yamaha motorcycles and multi-purpose
vehicles, on separate dates and for various positions, particularly:
Name Date of Hiring Position
Joaquin Buenavista March 14, 1994 Operator
Henry Fabroa January 5, 1993 Welder
Ricardo Cape January 1993 Welder/Operator
Bertuldo Tulod November 13, 1994 Welder/Assistant Operator
Willy Dondoyano January 1993 Welder
Glen Villariasa February 1993 Welder
Although they worked for Norkis Trading as skilled workers assigned in the operation of
industrial and welding machines owned and used by Norkis Trading for its business,
they were not treated as regular employees by Norkis Trading. Instead, they were
regarded by Norkis Trading as members of PASAKA, a cooperative organized under the
Cooperative Code of the Philippines, and which was deemed an independent contractor
that merely deployed the respondents to render services for Norkis Trading. The
respondents nonetheless believed that they were regular employees of Norkis Trading,
citing in their Position Paper the following circumstances that allegedly characterized
their employment with the company:
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The work of the operators involves operating industrial machines, such as, press
machine, hydraulic machine, and spotweld machine. On the other hand, the welders
used the welding machines. The machines used by complainants herein respondents in
their work are all owned by respondent Norkis Trading herein petitioner and these are
installed and located in the working area of the complainants inside the company’s
premises.
The complainants produced steel crates which are exported directly by respondent
Norkis Trading to Japan. These crates are used as containers of motorcycle machines and
are shipped from Japan back to respondent Norkis Trading.
The materials and supplies used by complainants in their work are supplied by
respondent Norkis Trading through Benjamin Gulbin, the company’s Stockman, upon
the request of Tirso Maslog, a Leadman also employed by respondent Norkis Trading.
Respondent Norkis Trading gave instructions and supervised the work of complainants
through Edwin Ponce and Kiven Alilin, who are both Leadmen, and Rico Cabanas, who
is the Production Supervisor, of the former.
The salaries of complainants are paid inside the premises of respondent Norkis Trading
by Dalia Rojo and Belen Rubio, who are also employees of the said company assigned at
the accounting office.
Despite having served respondent Norkis Trading for many years and performing the
same functions as regular employees, complainants were not accorded regular status. It
was made to appear that complainants are not employees of said company but that of
respondent PASAKA.
Against the foregoing scenario, the respondents, together with several other
complainants, filed on June 9, 1999 with the Department of Labor and Employment
(DOLE) a complaint against Norkis Trading and PASAKA for labor-only contracting and
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non-payment of minimum wage and overtime pay. The complaint was docketed as LSED
Case No. RO700-9906-CI-CS-168.
The filing of the complaint for labor-only contracting allegedly led to the suspension of
the respondents’ membership with PASAKA. On July 22, 1999, they were served by
PASAKA with memoranda charging them with a violation of the rule against commission
of acts injurious or prejudicial to the interest or welfare of the cooperative. The
memoranda cited that the respondents filing of a case against Norkis Trading had greatly
prejudiced the interest and welfare of the cooperative. In their answer to the
memoranda, the respondents explained that they merely wanted to be recognized as
regular employees of Norkis Trading. The case records include copies of the memoranda
sent to respondents Buenavista, Fabroa and Dondoyano.
On August 16, 1999, the respondents received another set of memoranda from PASAKA,
now charging them with the following violations of the cooperatives rules and
regulations: (1) serious misconduct or wilful disobedience of superiors instructions or
orders; (2) gross and habitual neglect of duties by abandoning work without permission;
(3) absences without filing leave of absence; and (4) wasting time or loitering on
company’s time or leaving their post temporarily without permission during office hours.
Copies of the memoranda sent to Fabroa and Cape form part of the records.
On August 26, 1999, PASAKA informed the respondents of the cooperatives decision to
suspend them for fifteen (15) working days, to be effective from September 1 to 21, 1999,
for violation of PASAKA rules.
The records include copies of the memorandaÏ‚rÎ½ll sent to Fabroa and Cape. The
suspension prompted the respondents to file with the NLRC the complaint for illegal
suspension against Norkis Trading and PASAKA.
The 15-day suspension of the respondents was extended for another period of 15 days,
from September 22, 1999 to October 12, 1999. ll Copies of PASAKAs separate letters ½ll to
Buenavista, Fabroa, Cape and Dondoyano on the cooperatives decision to extend the
suspension form part of the records.
On October 13, 1999, the respondents were to report back to work but during the hearing
in their NLRC case, they were informed by PASAKA that they would be transferred to
Norkis Tradings sister company, Porta Coeli Industrial Corporation (Porta Coeli), as
washers of Multicab vehicles.
The respondents opposed the transfer as it would allegedly result in a change of

employers, from Norkis Trading to Porta Coeli. The respondents also believed that the
transfer would result in a demotion since from being skilled workers in Norkis Trading,
they would be reduced to being utility workers. These circumstances made the
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respondents amend their complaint for illegal suspension, to include the charges of
unfair labor practice, illegal dismissal, damages and attorney’s fees.
Issue:
Whether or not respondents were illegally dismissed by Norkis Trading.
Ruling:
Yes, although not by constructive dismissal as declared by the CA, but by actual
dismissal.
Where an entity is declared to be a labor-only contractor, the employees supplied by said

contractor to the principal employer become regular employees of the latter. Having
gained regular status, the employees are entitled to security of tenure and can only be
dismissed for just or authorized causes and after they had been afforded due process.
Termination of employment without just or authorized cause and without observing
procedural due process is illegal.
In claiming that they were illegally dismissed from their employment, the respondents
alleged having been informed by PASAKA that they would be transferred, upon the
behest of Norkis Trading, as Multicab washers or utility workers to Porta Coeli, a sister
company of Norkis Trading. Norkis Trading does not dispute that such job transfer was
relayed by PASAKA unto the respondents, although the company contends that the
transfer was merely an "offer" that did not constitute a dismissal. It bears mentioning,
however, that the respondents were not given any other option by PASAKA and Norkis
Trading but to accede to said transfer. In fact, there is no showing that Norkis Trading
would still willingly accept the respondents to work for the company. Worse, it still
vehemently denies that the respondents had ever worked for it. Again, all defenses of
Norkis Trading that anchor on the alleged lack of employer-employee relationship
between it and the respondents no longer merit any consideration, given that this
Courts’ finding in G.R. Nos. 180078-79 have become conclusive. Thus, the respondents
transfer to Porta Coeli, although relayed to the respondents by PASAKA was effectively
an act of Norkis Trading. Where labor-only contracting exists, the Labor Code itself
establishes an employer-employee relationship between the employer and the employees
of the labor-only contractor. The statute establishes this relationship for a
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comprehensive purpose: to prevent a circumvention of labor laws. The contractor is
considered merely an agent of the principal employer and the latter is responsible to the
employees of the labor-only contractor as if such employees had been directly employed
by the principal employer.
No further evidence or document should then be required from the respondents to prove
such fact of dismissal, especially since Norkis Trading maintains that it has no duty to
admit and treat said respondents as its employees. Considering that Porta Coeli is an
entity separate and distinct from Norkis Trading, the respondents’ employment with
Norkis Trading was necessarily severed by the change in work assignment. It then did
not even matter whether or not the transfer involved a demotion in the respondents
rank and work functions; the intention to dismiss, and the actual dismissal of the
respondents were sufficiently established.
In the absence of a clear showing that the respondents’ dismissal was for just or
authorized causes, the termination of the respondents’ employment was illegal. What
may be reasonably deduced from the records was that Norkis Trading decided on the
transfer, after the respondents had earlier filed their complaint for labor-only
contracting against the company. Even Norkis Tradings contention that the transfer may
be deemed a valid exercise of management prerogative is misplaced. First, the exercise of
management prerogative presupposes that the transfer is only for positions within the
business establishment. Second, the exercise of management prerogative by employers is
not absolute, as it is limited by law and the general principles of fair play and justice.
MISAMIS ORIENTAL II ELECTRIC SERVICE COOPERATIVE (MORESCO

II), Petitioner, v.VIRGILIO M. CAGALAWAN, Respondent
G.R. NO. 175170 - September 5, 2012
FACTS:
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Cagalawan filed a Complaint for constructive dismissal before the Arbitration branch of
the NLRC against MORESCO II and its officers, Ke-e and Danilo Subrado (Subrado), in
their capacities as General Manager and Board Chairman, respectively.
When the Labor Arbiter, in an Order dated September 13, 2002, directed the parties to
submit their respective verified position papers, only Cagalawan complied. He alleged
that his transfer was unnecessary and was made only in retaliation for his having
executed an affidavit in favor of a co-worker and against MORESCO II. In support of his
contention, Cagalawan submitted a certification executed by the Head of the
disconnection crew of the Gingoog sub-office, Teodoro Ortiz (Ortiz), attesting that the
said sub-office was not undermanned. In fact, when Cagalawan stopped working, no
other employee was transferred or hired in his stead, a proof that there were enough
disconnection crew members in Gingoog sub-office who can very well handle the
assigned tasks. Moreover, Cagalawan claimed that his transfer constituted a demotion
from his position as Acting Head of the disconnection crew which he had occupied for
almost 10 months. As such, he should be considered regular in that position and entitled
to its corresponding salary.
Cagalawan further alleged that his transfer from Balingasag to Gingoog sub-office was
tantamount to illegal constructive dismissal for being prejudicial and inconvenient as he
had to spend an additional amount of P 197.00 a day, leaving him nothing of his salary.
He therefore had no choice but to stop working.
Aside from reinstatement and backwages, Cagalawan sought to recover damages and
attorney s fees because to him, his transfer was effected in a wanton, fraudulent,
oppressive or malevolent manner. Apart from MORESCO II, he averred that Ke-e and
Subrado should also be held personally liable for damages since the two were guilty of
bad faith in effecting his transfer. He believed that Subrado had a hand in his arbitrary
transfer considering that he is the son-in-law of Subrado s opponent in the recent
election for directorship in the electric cooperative. In fact, Subrado even asked a certain
Cleopatra Moreno Manuel to file a baseless complaint against him as borne out by the
declaration of Bob Abao in an affidavit.
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In view of MORESCO II s failure to file a position paper, Cagalawan filed a Motion for
the issuance of an order to declare the case submitted for decision. This was granted in
an Order dated March 14, 2003.
On September 30, 2003, the Labor Arbiter rendered a Decision declaring that Cagalawan
s transfer constituted illegal constructive dismissal. Aside from finding merit in
Cagalawan s uncontroverted allegation that the transfer became grossly inconvenient for
him, the Labor Arbiter found no sufficient reason for his transfer and that the same was
calculated to rid him of his employment, impelled by a vindictive motive after he
executed an Affidavit in favor of a colleague and against MORESCO II.
Thus, the Labor Arbiter ordered Cagalawan s reinstatement to the position of Collector
and awarded him backwages from the date of his transfer on May 16, 2002 up to his
actual reinstatement. However, the Labor Arbiter denied his prayer for regularization.
With respect to damages, the Labor Arbiter found Ke-e to have acted capriciously in
effecting the transfer, hence, he awarded moral and exemplary damages to Cagalawan.
Attorney s fees was likewise adjudged in his favor.
MORESCO II and Cagalawan both appealed the Labor Arbiter s Decision.
In its Memorandum on Appeal, MORESCO II invoked the liberal application of the rules
and prayed for the NLRC to admit its evidence on appeal. MORESCO II denied that
Cagalawan s transfer was done in retaliation for executing an affidavit in favor of a co-
worker. MORESCO II explained that the transfer was in response to the request of the
area manager in Gingoog sub-office for additional personnel in his assigned area. To
substantiate this, it submitted a letter dated May 8, 2002 from Gingoog sub-office Area
Manager, Engr. Ronel B. Canada (Engr. Canada), addressed to Ke-e. In said letter, Engr.
Canada requested for two additional disconnection linemen in order to attain the
collection quota allocated in his area. MORESCO II then averred that as against this
letter of Engr. Canada who is a managerial employee, the certification issued by Ortiz
should be considered as incompetent since the latter is a mere disconnection crew.
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Moreover, Cagalawan s claim of additional expenses brought about by his transfer,
specifically for meal and transportation, deserves no appreciation at all since he would
still incur these expenses regardless of his place of assignment and also considering that
he was provided with a rented motorcycle with fuel and oil allowance.
Also, MORESCO II intimated that it has no intention of removing Cagalawan from its
employ especially since his father-in-law was its previous Board Member. In fact, it was
Cagalawan himself who committed an act of insubordination when he abandoned his
job.
ISSUE:
Whether or not belated submission of evidence may be allowed in this case.
RULING:
No.
Labor tribunals, such as the NLRC, are not precluded from receiving evidence submitted
on appeal as technical rules are not binding in cases submitted before them. However,
any delay in the submission of evidence should be adequately explained and should
adequately prove the allegations sought to be proven.
In the present case, MORESCO II did not cite any reason why it had failed to file its
position paper or present its cause before the Labor Arbiter despite sufficient notice and
time given to do so. Only after an adverse decision was rendered did it present its
defense and rebut the evidence of Cagalawan by alleging that his transfer was made in
response to the letter-request of the area manager of the Gingoog sub-office asking for
additional personnel to meet its collection quota. To our mind, however, the belated
submission of the said letter-request without any valid explanation casts doubt on its
credibility, especially so when the same is not a newly discovered evidence. For one, the
letter-request was dated May 8, 2002 or a day before the memorandum for Cagalawan s
transfer was issued. MORESCO II could have easily presented the letter in the
proceedings before the Labor Arbiter for serious examination. Why it was not presented
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at the earliest opportunity is a serious question which lends credence to Cagalawan s
theory that it may have just been fabricated for the purpose of appeal.
It should also be recalled that after Cagalawan received the memorandum for his transfer
to the Gingoog sub-office, he immediately questioned the basis thereof through a letter
addressed to Ke-e. If at that time there was already a letter-request from the Gingoog
area manager, Ke-e could have easily referred to or specified this in his subsequent
memorandum of May 16, 2002 which served as his response to Cagalawan s queries
about the transfer. However, the said memorandum was silent in this respect.
Nevertheless, Cagalawan, for his part, faithfully complied with the transfer order but
with the reservation to contest its validity precisely because he was not adequately
informed of its real basis.
The rule is that it is within the ambit of the employer s prerogative to transfer an
employee for valid reasons and according to the requirement of its business, provided
that the transfer does not result in demotion in rank or diminution of salary, benefits
and other privileges. This Court has always considered the management s prerogative to
transfer its employees in pursuit of its legitimate interests. But this prerogative should be
exercised without grave abuse of discretion and with due regard to the basic elements of
justice and fair play, such that if there is a showing that the transfer was unnecessary or
inconvenient and prejudicial to the employee, it cannot be upheld.
Here, while we find that the transfer of Cagalawan neither entails any demotion in rank
since he did not have tenurial security over the position of head of the disconnection
crew, nor result to diminution in pay as this was not sufficiently proven by him,
MORESCO II s evidence is nevertheless not enough to show that said transfer was
required by the exigency of the electric cooperative s business interest. Simply stated, the
evidence sought to be admitted by MORESCO II is not substantial to prove that there
was a genuine business urgency that necessitated the transfer.
Notably, the only evidence adduced by MORESCO II to support the legitimacy of the
transfer was the letter-request of Engr. Canada. However, this piece of evidence cannot
in itself sufficiently establish that the Gingoog sub-office was indeed suffering from
losses due to collection deficiency so as to justify the assignment of additional personnel
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in the area. Engr. Canada s letter is nothing more than a mere request for additional
personnel to augment the number of disconnection crew assigned in the area. While it
mentioned that the area s collection efficiency should be improved and that there is a
shortage of personnel therein, it is, standing alone, self-serving and thus cannot be
considered as competent evidence to prove the accuracy of the allegations therein.
MORESCO II could have at least presented financial documents or any other concrete
documentary evidence showing that the collection quota of the Gingoog sub-office has
not been met or could not be reached. It should have also submitted such other
documents which would show the lack of sufficient personnel in the area. Unfortunately,
the area manager s letter provides no more than bare allegations which deserve not even
the slightest credit.
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
evidence. Thus, MORESCO II cannot rely on the weakness of Ortiz s certification in
order to give more credit to its own evidence. Self-serving and unsubstantiated
declarations are not sufficient where the quantum of evidence required to establish a fact
is substantial evidence, described as more than a mere scintilla. "The evidence must be
real and substantial, and not merely apparent." MORESCO II has miserably failed to
discharge the onus of proving the validity of Cagalawan s transfer.
Clearly, not only was the delay in the submission of MORESCO II s evidence not
explained, there was also failure on its part to sufficiently support its allegation that the
transfer of Cagalawan was for a legitimate purpose. This being the case, MORESCO II s
plea that its evidence be admitted in the interest of justice does not deserve any merit.
JOMAR S. VERDADERO, Petitioner, v. BARNEY AUTOLINES GROUP OF

COMPANIES TRANSPORT, INC., and/or BARNEY D. CHITO, ROSELA F. CHITO
and GERARDO GIMENEZ, Respondents
G.R. NO. 195428 - August 29, 2012
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FACTS:
On September 10, 2004, respondent Barney Autolines Group of Companies Transport,

Inc. (BALGCO) hired Verdadero as bus conductor and paid him a salary on commission
basis at the rate of 12% of the gross ticket sales per day.
On January 27, 2008, an altercation took place between Verdadero and respondent Atty.
Gerardo Gimenez (Gimenez), BALGCO s Disciplinary Officer. Gimenez was on board
BALGCO Bus. No. 55455, together with his wife and four other companions, travelling
from Mulanay to Macalelon, Quezon. Verdadero was then the assigned bus conductor.
BALGCO has a company policy of granting free rides to company employees and their
wives. The story started when Verdadero began issuing fare tickets to passengers,
including the wife of Gimenez. The wife informed Verdadero who she was and the
incidents thereafter took two versions as both parties told a different story.
Verdadero furtively reported for work for fear of having another confrontation with
Gimenez. Rosela sent Verdadero a letter, dated February 25, 2008, requiring him to
immediately report for work and finish the pending disciplinary proceedings against
him. On March 28, 2008, Verdadero submitted his Letter-Reply, explaining that he had
been receiving threats. He likewise believed he was already illegally dismissed as he was
not given any work assignment since January 28, 2008. Rosela responded to Verdadero's
letter and reminded him of the letter of apology which he was yet to submit as
compliance. On April 15, 2008, however, Verdadero filed a complaint for illegal dismissal
before the Labor Arbiter (LA), claiming, as well, non-payment of holiday pay, premium
on holiday, 13th month pay, separation pay, retirement benefits, moral and exemplary
damages, and reinstatement plus backwages.
ISSUE:
Whether or not petitioner Verdadero was constructively dismissed.
RULING:
No.
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Constructive dismissal exists where there is cessation of work, because "continued
demotion in rank or a diminution in pay" and other benefits. Aptly called a dismissal in
disguise or an act 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 this case, Verdadero cannot be deemed constructively dismissed. Records do not show
any demotion in rank or a diminution in pay made against him. Neither was there any
act of clear discrimination, insensibility or disdain committed by BALGCO against
Verdadero which would justify or force him to terminate his employment from the
company.
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 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
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that if an employee is on floating status for more than six months, such employee is deemed
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
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allegation of sending Dailig a notice sometime in January 2006, requiring him to report for
work, is unsubstantiated, and thus, self-serving.
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
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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
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
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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 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
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
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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 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
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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 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
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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.
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.
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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

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
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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 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.
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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 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,”
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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.
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.
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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, 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
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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.
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
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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:
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.

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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 deleted because as mentioned, separation pay is only granted as an alternative
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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.”
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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 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
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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.
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
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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.
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
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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.
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
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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 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
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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.
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.
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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
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.
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
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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.
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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 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 constructive dismissal.
THE ORCHARD GOLF AND COUNTRY CLUB vs. AMELIA R. FRANCISCO

G.R. No. 178125, March 18, 2013
J. Del Castillo
Employee’s transfer without basis and resulting to her demotion is tantamount to

constructive dismissal. The fact that employee continued to report for work does not
necessarily suggest that constructive dismissal has not occurred, nor does it operate as a
waiver. Constructive dismissal occurs not when the employee ceases to report for work, but
when the unwarranted acts of the employer are committed to the end that the employee’s
continued employment shall become so intolerable.
The dismissal of employees must be made within the parameters of the law and
pursuant to the basic tenets of equity, justice and fair play. It must not be done arbitrarily
and without just cause.
Facts:
Amelia R. Francisco (Francisco) was employed as Club Accountant to head the

Club’s General Accounting Division. Francisco was charged of insubordination, when she
had failed to draft a letter to SGV & Co., the Club’s external auditor. This resulted to his
suspension without pay for a period of 15 days. Francisco, then, filed a Complaint for illegal
dismissal against the Club. On another instance, Francisco was suspended for another 15
days because of her unauthorized leave/absence. After serving her suspension, Francisco
again was placed on forced leave with pay for 30 days for the alleged reason that the case
of “betrayal of company trust” filed against her has strained her relationship with her
superiors. After the expiration of her forced leave, she has been permanently transferred,
without diminution of benefits, to the Club’s Cost Accounting Section. Francisco protested
that her permanent transfer was made in bad faith; and in her prayer, she sought to be
reinstated to her former position as Club Accountant. The club contends that the transfer
was made in good faith and was made in proper exercise of management prerogative.
Issue:
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Whether or not the transfer of Francisco can be considered as diminution
amounting to constructive dismissal
Ruling:
There was constructive dismissal when Francisco was transferred to the Cost
Accounting Section.
SC shares the CA’s observation that when Francisco was placed on forced leave and
transferred to the Cost Accounting Section, not once was Francisco given the opportunity
to contest these company actions taken against her. It has also not escaped our attention
that just when one penalty has been served by Francisco, another would instantaneously
take its place. And all these happened even while the supposed case against her, the alleged
charge of "betrayal of company trust", was still pending and remained unresolved. In fact,
one of the memoranda was served even at Francisco’s residence.
Not even the claim that her relations with her superiors have been strained could
justify Francisco’s transfer to Cost Accounting Section. Indeed, it appears that her charge
was never resolved. And if Famy, Nuevo and Clemente truly believed that their relations
with Francisco have been strained, then it puzzles the SC why, despite her transfer, she
continues to remain under Famy’s direct supervision.
The fact that Francisco continued to report for work does not necessarily suggest
that constructive dismissal has not occurred, nor does it operate as a waiver. Constructive
dismissal occurs not when the employee ceases to report for work, but when the
unwarranted acts of the employer are committed to the end that the employee’s continued
employment shall become so intolerable. In these difficult times, an employee may be left
with no choice but to continue with his employment despite abuses committed against him
by the employer, and even during the pendency of a labor dispute between them. This
should not be taken against the employee. Instead, we must share the burden of his plight,
ever aware of the precept that necessitous men are not free men.
"An employer is free to manage and regulate, according to his own discretion and
judgment, all phases of employment, which includes hiring, work assignments, working
methods, time, place and manner of work, supervision of workers, working regulations,
transfer of employees, lay-off of workers, and the discipline, dismissal and recall of work.
While the law recognizes and safeguards this right of an employer to exercise what are
clearly management prerogatives, such right should not be abused and used as a tool of
oppression against labor. The company’s prerogatives must be exercised in good faith and
with due regard to the rights of labor. A priori, they are not absolute prerogatives but are
subject to legal limits, collective bargaining agreements and the general principles of fair
play and justice. The power to dismiss an employee is a recognized prerogative that is
inherent in the employer’s right to freely manage and regulate his business. x x x. Such
right, however, is subject to regulation by the State, basically in the exercise of its
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paramount police power. Thus, the dismissal of employees must be made within the
parameters of the law and pursuant to the basic tenets of equity, justice and fair play. It
must not be done arbitrarily and without just cause."
ALFONSO L. FIANZA vs. NATIONAL LABOR RELATIONS COMMISSION ET AL.

G.R. No. 163061, June 26, 2013
CJ. Sereno
Abandonment as a fact and a defense can only be claimed as a ground for dismissal if
the employer follows the procedure set by law. In line with the burden of proof set by law, the
employer who alleges abandonment “has the burden of proof to show a deliberate and
unjustified refusal of the employee to resume his employment without any intention of
returning.” In this case, the respondent company failed to prove the necessary elements of
abandonment. Additionally, the National Labor Relations Commission (NLRC) and the Court
of Appeals (CA) failed to take into account the strict requirements set by jurisprudence when
they determined the existence of abandonment on the basis of mere allegations that were
contradicted by the evidence shown.
Facts:
Fianza was employed as Officer for Social Acceptance of Binga Hydroelectric Plant,
Inc. (BHPI). After 2 years of employment, Fianza did not receive his salary for the first 15
days of the month of February. He was advised not to report for work until his status was
officially clarified by the Manila office.
Petitioner made several inquiries concerning his status and was told by a supervisor
to report for work. However, he was told that the new management committee had to
concur in his reappointment before he could be reinstated in the payroll. It also wanted an
opportunity to determine whether his services would still be necessary.
As the management committee did not act on his inquiries for several months,
Fianza filed a Complaint for illegal dismissal before the Labor Arbiter. Fianza argues that
he was a supervisory employee, as shown by the evidence he presented and the nature of
his work. He further contends that he did not abandon his work, because he always made
sure he followed up the status of his employment, and he was willing to go back to work
once he was re-enrolled in the payroll. BHPI asserts in its Memorandum that the former
was a confidential consultant of its former president and chairperson Catalino Tan. As such,
petitioner’s tenure was therefore co-terminus with that of Mr. Tan.
Issues:
1. Whether or not Fianza abandoned his work

2. Whether or not there exist an employer-employee relationship between BHPI
and Fianza
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Ruling:
Fianza did not abandon his work
Abandonment as a fact and a defense can only be claimed as a ground for dismissal
if the employer follows the procedure set by law. In line with the burden of proof set by
law, the employer who alleges abandonment “has the burden of proof to show a deliberate
and unjustified refusal of the employee to resume his employment without any intention
of returning.” As this Court has stated in Agabon v. National Labor Relations Commission:
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.
From the foregoing, it is clear that BHPI failed to prove the necessary elements of
abandonment. Additionally, the NLRC and the CA failed to take into account the strict
requirements set by jurisprudence when they determined the existence of abandonment
on the basis of mere allegations that were contradicted by the evidence shown. The very
act of filing the Complaint for illegal dismissal should have negated any intention on
petitioner’s part to sever his employment. In fact, it should already have been sufficient
evidence to declare that there was no abandonment of work. The following circumstances
evinced his intent to return to work: (1) His continuous inquiry with respondent about the
status of his work; (2) His willingness to return to work at any time, subject to the approval
of respondent, and his visits to the plant to apply for work; and (3) His filing of an illegal
dismissal case.
Fianza is a regular employee
BHPI claims that because Fianza was a confidential employee of its former
president, his tenure was co-terminus with that of his employer. BHPI, however, failed to
realize however that Mr. Tan, being its president, was clothed with authority to hire
employees on its behalf. This was precisely the import of Fianza’s appointment papers,
which even carried the letterhead of the company. There is no indication from the facts
that his employment was of a confidential nature.
Several things stand out in Fianza’s appointment paper. First, its letterhead is that
of respondent company, indicating the official nature of the document. Second, there is no
indication that the employment is co-terminus with that of the appointing power, or that
the position was a confidential one. In fact, alongside the obligation of Fianza to report to
Mr. Tan, is that of reporting to those whom the latter had designated as well as to the
management in case the former had any suggestion. This description evinces a supervisory
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function, by which the employee will carry out company policy, but can only give
suggestions to management as to the creation or implementation of a new policy. Finally,
the appointment paper recognizes that the petitioner would initially be on probation status
for two months, at the end of which he would be made a permanent employee should his
services be found satisfactory by respondent. All these circumstances are evident from the
appointment paper itself, which belies the claim of BHPI that it had no employer-employee
relationship with Fianza.
TAN BROTHERS CORPORATION OF BASILAN CITY THROUGH ITS

OWNER/MANAGER, MAURO F. TAN vs. EDNA R. ESCUDERO
G.R. No. 188711, July 3, 2013
J. Perez
To constitute abandonment there must be a clear and deliberate intent to discontinue

one's employment without any intention of returning. In this regard, 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. Otherwise stated, absence must
be accompanied by overt acts unerringly pointing to the fact that the employee simply does
not want to work anymore. It has been ruled that 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.
Facts:
Edna Escudero (respondent) was hired as bookkeeper by Tan Brothers Corporation

of Basilan City (petitioners). Respondent filed against petitioners a complaint for illegal
dismissal, underpayment of wages, cost of living allowance and 13th month pay. In support
of the complaint, respondent alleged in her position paper that, starting July 2003, her
monthly salary of P2,500.00 was not paid on time by petitioners. After having the
corporation’s office remodeled in the early part of 2004, petitioners allegedly rented out
the office space respondent used to occupy and ceased giving her further assignments.
Eventually constrained to stop reporting for work ecause of her dire financial condition,
respondent claimed that petitioners “shrewdly maneuvered” her illegal dismissal from
employment.
On the other hand, petitioners averred that respondent was paid a daily wage of
P155.00, and she abandoned her employment when she stopped reporting for work in July
2003. Aside from taking with her most of the corporation’s payrolls, vouchers and other
material documents evidencing due payment of wages and labor standard benefits,
petitioners maintained that, without its knowledge and consent, respondent appropriated
for herself an Olivetti typewriter worth P15,000.00. With respondent’s refusal to heed its
demands for the return of the typewriter, petitioners asseverated that it was left with no
choice but to lodge a complaint with the barangay authorities.
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The LA rendered a decision, finding petitioners guilty of constructively dismissing
respondent from employment. On appeal, the Labor Arbiter’s decision was affirmed in toto.
Issue:
1. Whether or not respondent abandoned her employment

2. Whether or not respondent was constructively dismissed
Ruling:
As defined under established jurisprudence, 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 of the
Labor Code. To constitute abandonment, however, there must be a clear and deliberate
intent to discontinue one's employment without any intention of returning. In this regard,
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. Otherwise stated, absence must be accompanied by overt acts unerringly
pointing to the fact that the employee simply does not want to work anymore. It has been
ruled that 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.
On the theory that the same is proof enough of the desire to return to work, the
immediate filing of a complaint for illegal dismissal – more so when it includes a prayer for
reinstatement – has been held to be totally inconsistent with a charge of abandonment
While it is true that respondent’s complaint prayed for separation pay in lieu of
reinstatement, petitioners loses sight of the fact, however, that it had the burden of proving
its own allegation that respondent had abandoned her employment in July 2003. As
allegation is not evidence, the rule has always been to the effect that a party alleging a
critical fact must support his allegation with substantial evidence which has been construed
to mean such relevant evidence as a reasonable mind will accept as adequate to support a
conclusion. It is, on the other hand, doctrinal that abandonment is a matter of intention
and cannot, for said reason, be lightly inferred, much less legally presumed from certain
equivocal acts. Viewed in the light of respondent’s persistence in reporting for work despite
the irregular payment of her salaries starting July 2003, the Court found that her subsequent
failure to do so as a consequence of petitioners’ non-payment of her salaries in May 2004 is
hardly evincive of an intention to abandon her employment. Indeed, mere absence or
failure to report for work, even after a notice to return work has been served, is not enough
to amount to an abandonment of employment.
Constructive dismissal occurs when there is cessation of work because continued

employment is rendered impossible, unreasonable, or unlikely as when there is a demotion
in rank or diminution in pay or when a clear discrimination, insensibility, or disdain by an
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employer becomes unbearable to the employee leaving the latter with no other option but
to quit (The University of Immaculate Conception v. NLRC, G.R. No. 181146, January 26,
2011). The test is whether a reasonable person in the employee's position would have felt
compelled to give up his position under the circumstances (Philippine Veterans Bank v.
NLRC, G.R. No. 188882, March 30, 2010). Much though petitioners may now be inclined to
disparage the same as mere alibis, the fact that respondent was deprived of office space,
was not given further work assignment and was not paid her salaries until she was left with
no choice but stop reporting for work all combine to make out a clear case of constructive
dismissal. Having been constructively dismissed, Escudero was correctly found entitled to
backwages and attorney's fees by the Labor Arbiter, the NLRC and the CA.
JENNY F. PECKSON vs. ROBINSONS SUPERMARKET CORPORATION, JODY

GADIA, ROENA SARTE AND RUBY ALEX
G.R. No. 198534. July 3, 2013
J. Reyes
If the transfer of an employee is not unreasonable, or inconvenient, or prejudicial to

him, and it does not involve a demotion in rank or a diminution of his salaries, benefits and
other privileges, the employee may not complain that it amounts to a constructive dismissal.
Facts:
The petitioner first joined the Robinsons Supermarket Corporation (RSC) as a Sales
Clerk on November 3, 1987. On October 26, 2006, she was holding the position of Category
Buyer when respondent Roena Sarte (Sarte), RSC’s Assistant Vice-President for
Merchandising, reassigned her to the position of Provincial Coordinator, effective
November 1, 2006. Claiming that her new assignment was a demotion because it was
non-supervisory and clerical in nature, the petitioner refused to turn over her
responsibilities to the new Category Buyer, or to accept her new responsibilities as
Provincial Coordinator. The petitioner had already filed a complaint for constructive
dismissal against RSC, Sarte, Gadia and Alex (respondents).
The LA dismissed the petitioner’s complaint and ruled that job reassignment or
classification is a strict prerogative of the employer, and that the petitioner cannot refuse
her transfer from Category Buyer to Provincial Coordinator since both positions
commanded the same salary structure, high degree of responsibility and impeccable
honesty and integrity. The NLRC sustained the findings of the LA. The CA affirmed the
decision of the NLRC.
Issue:
Whether or not petitioner’s reassignment was a demotion amounting to

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Ruling:
This Court has consistently refused to interfere with the exercise by management of
its prerogative to regulate the employees’ work assignments, the working methods and the
place and manner of work.
As we all know, there are various laws imposing all kinds of burdens and obligations
upon the employer in relation to his employees, and yet as a rule this Court has always
upheld the employer’s prerogative to regulate all aspects of employment relating to the
employees’ work assignment, the working methods and the place and manner of work.
Indeed, labor laws discourage interference with an employer’s judgment in the conduct of
his business.
In Philippine Japan Active Carbon Corporation v. NLRC, it was held that the exercise
of management’s prerogative concerning the employees’ work assignments is based on its
assessment of the qualifications, aptitudes and competence of its employees, and by
moving them around in the various areas of its business operations it can ascertain where
they will function with maximum benefit to the company.
As a privilege inherent in the employer’s right to control and manage its enterprise
effectively, its freedom to conduct its business operations to achieve its purpose cannot be
denied. We agree with the appellate court that the respondents are justified in moving the
petitioner to another equivalent position, which presumably would be less affected by her
habitual tardiness or inconsistent attendance than if she continued as a Category Buyer, a
“frontline position” in the day-to-day business operations of a supermarket such as
Robinsons.
If the transfer of an employee is not unreasonable, or inconvenient, or prejudicial to

him, and it does not involve a demotion in rank or a diminution of his salaries, benefits and
other privileges, the employee may not complain that it amounts to a constructive
dismissal.
In the case at bar, we agree with the appellate court that there is substantial showing
that the transfer of the petitioner from Category Buyer to Provincial Coordinator was not
unreasonable, inconvenient, or prejudicial to her. The petitioner failed to dispute that the
job classifications of Category Buyer and Provincial Coordinator are similar, or that they
command a similar salary structure and responsibilities. We agree with the NLRC that the
Provincial Coordinator’s position does not involve mere clerical functions but requires the
exercise of discretion from time to time, as well as independent judgment, since the
Provincial Coordinator gives appropriate recommendations to management and ensures
the faithful implementation of policies and programs of the company. It even has influence
over a Category Buyer because of its recommendatory function that enables the Category
Buyer to make right decisions on assortment, price and quantity of the items to be sold by
the store.
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GILDA C. FERNANDEZ, ET AL. vs. NEWFIELD STAFF SOLUTIONS, INC., ET AL.
G.R. No. 201979, July 10, 2013
J. Villarama, Jr.
Employees who take steps to protest their dismissal cannot logically be said to have
abandoned their work. A charge of abandonment is totally inconsistent with the immediate
filing of a complaint for illegal dismissal. The filing thereof is proof enough of one’s desire to
return to work, thus negating any suggestion of abandonment.
Facts:
Newfield Staff Solutions, Inc. (respondent) hired Gilda Fernandez (petitioner) as

Recruitment Manager. Respondent also hired petitioner Beltran as probationary
Recruitment Specialist. Petitioners guaranteed to perform their tasks for six months and
breach of this guarantee would make them liable for liquidated damages. It was further
provided in their employment agreements that if they want to terminate their employment
agreements after the “guaranteed period of engagement,” they should send a written notice
45 days before the effective date of termination. They should also surrender any equipment
issued to them and secure a clearance. If they fail to comply, respondent can refuse to issue
a clearance and to release any amount due them.
On October 17, 2008, Lopez, Jr., respondent’s General Manager, asked petitioners to
come to his office and terminated their employment on the ground that they failed to
perform satisfactorily. Lopez, Jr. ordered them to immediately turn over the records in their
possession to their successors. A week later, petitioners received Lopez, Jr.’s return-to-work
letters dated October 22, 2008. The letters stated that they did not report since October 20,
2008 without resigning, in violation of their employment agreements. They were directed
to report and explain their failure to file resignation letters. Eventually, they filed a
complaint for illegal dismissal. In their verified joint position paper, respondents stated
that petitioners signed fixed-term employment agreements where they agreed to perform
their tasks for six months. They also agreed to give a written notice 45 days in advance if
they want to terminate their employment agreements. But they never complied with their
undertakings. Thus, respondent claims that petitioners abandoned their jobs.
The Labor Arbiter ruled that petitioners’ dismissal was illegal. The NLRC affirmed
the Labor Arbiter’s decision. The CA reversed the NLRC and dismissed petitioners’
complaint for illegal dismissal. Hence, this petition.
Issue:
1. Whether or not petitioners abandoned their employment

2. Whether or not petitioners were constructively dismissed
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Ruling:
Abandonment is a form of neglect of duty, one of the just causes for an employer to
terminate an employee (Galang v. Malasugui, G.R. No. 174173, March 7, 2012). For
abandonment to exist, two factors must be present: (1) the 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 being
manifested by some overt acts (Josan, JPS, Santiago Cargo Movers v. Aduna, G.R. No. 190794,
February 22, 2012). Since both factors are not present, petitioners are not guilty of
abandonment. One, petitioners were absent because Lopez, Jr. had fired them. Thus, it
cannot fault them for refusing to comply with the return to-work letters and responding
instead with their demand letters. Neither can they be accused of being AWOL or of
breaching their employment agreements.
Indeed, as stated above, respondents cannot claim that no evidence shows that
petitioners were forced not to report for work. Two, petitioners’ protest of their dismissal
by sending demand letters and filing a complaint for illegal dismissal with prayer for
reinstatement shows that petitioners have no intention to sever the employment
relationship. Employees who take steps to protest their dismissal cannot logically be said
to have abandoned their work. A charge of abandonment is totally inconsistent with the
immediate filing of a complaint for illegal dismissal. The filing thereof is proof enough of
one’s desire to return to work, thus negating any suggestion of abandonment.
Petitioners were illegally dismissed since there is no just cause for their dismissal.
Under Article 279 of the Labor Code, as amended, an employee unjustly dismissed from
work is entitled to reinstatement and full back wages from the time his compensation was
withheld from him up to the time of his actual reinstatement. However, the NLRC’s award
of back wages for six months is binding on petitioners who no longer contested and are
therefore presumed to have accepted the adjudication in the NLRC decision and resolution.
This is in accord with the doctrine that a party who has not appealed cannot obtain from
the appellate court any affirmative relief other than the ones granted in the appealed
decision (Filflex Industrial & Manufacturing Corp. v. NLRC, G.R. No. 115395, February 12,
1998).
Similarly, the award of separation pay which was affirmed by the NLRC is binding
on petitioners who even admitted that reinstatement is no longer possible.
LUCIANO P. CAÑEDO vs. KAMPILAN SECURITY AND DETECTIVE AGENCY

AND RAMONCITO L. ARQUIZA
G.R. No. 179326, July 31, 2013
J. Del Castillo
A “floating status” is lawful and not unusual for security guards employed in security
agencies as their assignments primarily depend on the contracts entered into by the agency
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with third parties. A floating status can ripen into constructive dismissal only when it goes
beyond the six-month period allowed by law.
Facts:
Respondent Kampilan Security and Detective Agency hired petitioner Luciano

Cañedo as a security guard on Nov. 20, 1996 and assigned him at the Naga Power Barge 102
of the National Power Corp. (NPC) at Sigpit Load Ends, Lutopan, Toledo City. For not
wearing proper uniform while on duty per report of an NPC personnel, the petitioner was
suspended for a month effective May 8, 2002.
On June 17, 2003, petitione requested Ramoncito L. Arquiza, the respondent’s

general manager, to issue a certification in connection with his intended retirement
effective that month. Arquiza issued a certification dated June 25, 2003 the pertinent
portion of which reads: “This is to certify that Mr. Luciano Paragoso Cañedo, whose address
is at Lower Bunga, Toledo City was employed by this agency from Nov. 20, 1996 up to May
7, 2003 as security guard assigned at NPC, Sigpit Substation. He was terminated from his
employment by this agency on May 7, 2003 as per client’s request.”
Five days after the issuance of the certification, the petitioner filed a complaint for
illegal dismissal, illegal suspension and non-payment of monetary benefits against
respondents. He insisted that the certification states in unequivocal language that he was
terminated from the service.
The labor arbiter ruled that the security guard was indeed illegally dismissed from
service. The National Labor Relations Commission (NLRC), however, found that no illegal
dismissal took place. The Court of Appeals (CA) likewise affirmed the NLRC decision.
Issue:
Whether or not petitioner was dismissed from service
Ruling:
Petitioner relies on the word “terminated” as used in the June 25, 2003 Certification
issued him by respondent Arquiza and argues that the same is a clear indication that he
was dismissed from service. We are, however, not persuaded. Petitioner cannot simply
rely on this piece of document since the fact of dismissal must be evidenced by positive and
overt acts of an employer indicating an intention to dismiss. Here, aside from this single
document, petitioner proffered no other evidence showing that he was dismissed from
employment. While it is true that he was not allowed to report for work after the period
of his suspension expired, the same was due to NPC’s request for his replacement as NPC
was no longer interested in his services. And as correctly argued by respondents, petitioner
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from that point onward is not considered dismissed but merely on a floating status. “Such
a ‘floating status’ is lawful and not unusual for security guards employed in security
agencies as their assignments primarily depend on the contracts entered into by the agency
with third parties.
Countering such status, petitioner contends that even at present, he is still not given
any new duties. A floating status can ripen into constructive dismissal only when it goes
beyond the six-month maximum period allowed by law. In this case, petitioner filed the
Complaint for illegal dismissal even before the lapse of the six-month period. Hence, his
claim of illegal dismissal lacks basis. Moreover and as aptly observed by the NLRC, it was
in fact petitioner who intended to terminate his relationship with respondents through his
planned retirement. This is further bolstered by his prayer in his Complaint where he
sought for separation pay and not for reinstatement.
At any rate, upon a close reading of the June 25, 2003 certification, this Court is of
the opinion that the petitioner was not dismissed from service. The import of the said
certification is that petitioner was assigned in NPC from Nov. 20, 1996 up to May 7, 2003
and that on May 7, 2003, respondents terminated his assignment to NPC upon the latter’s
request. This is the correct interpretation based on the true intention of the parties as
shown by their contemporaneous and subsequent acts and the other evidence on record as
discussed above. Section 12 of Rule 130 of the Rules of Court states that in the construction
and interpretation of a document, the intention of the parties must be pursued. Section 13
of the same Rule further instructs that the circumstances under which a document was
made may be shown in order to ascertain the correct interpretation of a document. To
recap, petitioner was suspended effective May 8, 2003. On June 2, 2003, NPC requested for
his replacement. He then intimated his desire to retire from service on June 17, 2003. These
circumstances negate petitioner’s claim that his services were terminated on May 7, 2003.
Clearly, there is no dismissal to speak of in this case.
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.
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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
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.”
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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)
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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
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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 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.
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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.
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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 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
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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 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
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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.
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
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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 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
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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 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
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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 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
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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 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
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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.
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.
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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.
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CHERYLL SANTOS LEUS vs. ST. SCHOLASTICA'S COLLEGE WESTGROVE and/or
SR. EDNA QUIAMBAO, OSB
G.R. No. 187226, January 28, 2015, J. Reyes
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:
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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:
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
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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 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.
BPI EMPLOYEES UNION-DAVAO CITY-FUBU (BPIEU-DAVAO CITY-FUBU) VS.

BANK OF THE PHILIPPINE ISLANDS (BPI), AND BPI OFFICERS CLARO M. REYES,
CECIL CONANAN AND GEMMA VELEZ
G.R. No. 174912, July 24, 2013
J. Jose C. Mendoza
Contracting out of services is not illegal per se. It is an exercise of business judgment or
management prerogative. Absent proof that the management acted in a malicious or
arbitrary manner, the Court will not interfere with the exercise of judgment by an employer.
BPI’s policy of contracting out cashiering and bookkeeping services was considered as a
valid exercise of management prerogative which is further authorized by the Central Bank
in CBP Circular No. 1388, Series of 199.
Facts:
BOMC, which was created pursuant to Central Bank Circular No. 1388, Series of
1993, and primarily engaged in providing and/or handling support services for banks and
other financial institutions, is a subsidiary of the BPI operating and functioning as an
entirely separate and distinct entity. In a service agreement between BPI and BOMC,
BOMC undertook to provide services such as check clearing, delivery of bank statements,
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fund transfers, card production, operations accounting and control, and cash servicing,
conformably with BSP Circular No. 1388.
The service agreement was implemented in Davao City. Later, a merger between
BPI and FEBTC took effect on April 10, 2000 with BPI as the surviving corporation.
Thereafter, BPI’s cashiering function and FEBTC’s cashiering, distribution and
bookkeeping functions were handled by BOMC. Consequently, twelve (12) former FEBTC
employees were transferred to BOMC to complete the latter’s service complement. BPI
Davao’s rank and file collective bargaining agent, BPI Employees Union Davao City-FUBU
(Union), objected to the transfer of the functions and the twelve (12) personnel to BOMC
contending that the functions rightfully belonged to the BPI employees and that the
Union was deprived of membership of former FEBTC personnel who, by virtue of the
merger, would have formed part of the bargaining unit represented by the Union
pursuant to its union shop provision in the CBA. The Union is of the position that the
outsourcing of jobs included in the existing bargaining unit to BOMC is a breach of the
union-shop agreement in the CBA. In transferring the former employees of FEBTC to
BOMC instead of absorbing them in BPI as the surviving corporation in the merger, the
number of positions covered by the bargaining unit was decreased, resulting in the
reduction of the Union’s membership. For the Union, BPI’s act of arbitrarily outsourcing
functions formerly performed by the Union members and, in fact, transferring a number
of its members beyond the ambit of the Union, is a violation of the CBA and interfered
with the employees’ right to self organization, and claims that it is unfair labor practice
for an employer to outsource the positions in the existing bargaining unit.
Issue:
Whether or not the outsourcing of jobs included in the existing bargaining unit is
an unfair labor practice
Ruling:
The rule now is covered by Article 261 of the Labor Code, which provides that
violations of a Collective Bargaining Agreement, except those which are gross in
character, shall no longer be treated as unfair labor practice and shall be resolved as
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grievances under the Collective Bargaining Agreement. For purposes of this article, gross
violations of Collective Bargaining Agreement shall mean flagrant and/or malicious
refusal to comply with the economic provisions of such agreement. Clearly, only gross
violations of the economic provisions of the CBA are treated as ULP. Otherwise, they are
mere grievances.
In the present case, the alleged violation of the union shop agreement in the CBA,
even assuming it was malicious and flagrant, is not a violation of an economic provision
in the agreement. The provisions relied upon by the Union were those articles referring
to the recognition of the union as the sole and exclusive bargaining representative of all
rank-and-file employees, as well as the articles on union security, specifically, the
maintenance of membership in good standing as a condition for continued employment
and the union shop clause. It failed to take into consideration its recognition of the
bank’s exclusive rights and prerogatives, likewise provided in the CBA, which included
the hiring of employees, promotion, transfers, and dismissals for just cause and the
maintenance of order, discipline and efficiency in its operations.
It is to be emphasized that contracting out of services is not illegal per se. It is an

exercise of business judgment or management prerogative. Absent proof that the
management acted in a malicious or arbitrary manner, the Court will not interfere with
the exercise of judgment by an employer. In this case, bad faith cannot be attributed to
BPI because its actions were authorized by CBP Circular No. 1388, Series of 1993 issued by
the Monetary Board of the then Central Bank of the Philippines (now BangkoSentral ng
Pilipinas). The circular covered amendments in Book I of the Manual of Regulations for
Banks and Other Financial Intermediaries, particularly on the matter of bank service
contracts. A finding of ULP necessarily requires the alleging party to prove it with
substantial evidence. Unfortunately, the Union failed to discharge this burden.
Verily, in one case, the Court held that it is management prerogative to farm out
any of its activities, regardless of whether such activity is peripheral or core in nature
(Alviado v. Procter & Gamble Phils., Inc., G.R. No. 160506, March 9, 2010). What is of
primordial importance is that the service agreement does not violate the employee's right
to security of tenure and payment of benefits to which he is entitled under the law.
Furthermore, the outsourcing must not squarely fall under labor-only contracting where
the contractor or sub contractor merely recruits, supplies or places workers to perform a
job, work or service for a principal or if any of the following elements are present: (a) 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
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placed by such contractor or subcontractor are performing activities which are directly
related to the main business of the principal; or (b) The contractor does not exercise the
right to control over the performance of the work of the contractual employee.
RELEASES AND QUITCLAIM
HYPTE R. AUJERO v PHILIPPINE COMMUNICATIONS SATELLITE CORPORATION

G.R. No. 193484, January 18, 2012
The Facts
Petitioner started working for respondent Philippine Communications Satellite

Corporation (Philcomsat) in 1967 as an accountant in the latter's Finance Department. On
August 15, 2001 or after thirty-four (34) years of service, the petitioner applied for early
retirement. His application for retirement was approved, effective September 15, 2001,
entitling him to receive retirement benefits at a rate equivalent to one and a half of his
monthly salary for every year of service. At that time, the petitioner was Philcomsat's Senior
Vice-President with a monthly salary of P274,805.00.
On September 12, 2001, the petitioner executed a Deed of Release and Quitclaim in
Philcomsat’s favor, following his receipt from the latter of a check in the amount of
P9,439,327.91.
Almost three (3) years thereafter, the petitioner filed a complaint for unpaid retirement
benefits, claiming that the actual amount of his retirement pay is P14,015,055.00 and the
P9,439,327.91 he received from Philcomsat as supposed settlement for all his claims is
unconscionable, which is more than enough reason to declare his quitclaim as null and
void. According to the petitioner, he had no choice but to accept a lesser amount as he was
in dire need thereof and was all set to return to his hometown and he signed the quitclaim
despite the considerable deficiency as no single centavo would be released to him if he did
not execute a release and waiver in Philcomsat's favor.
On May 31, 2006, the Labor Arbiter issued a Decisionin the petitioner’s favor, directing
Philcomsat to pay him the amount of P4,575,727.09 and P274,805.00, representing the
balance of his retirement benefits and salary for the period from August 15 to September
15, 2001, respectively.
In its July 4, 2008 Resolution, the NLRC granted Philcomsat’s appeal and reversed and set
aside LA Lustria’s May 31, 2006 Decision. The NLRC dismissed the petitioner’s complaint
for unpaid retirement benefits and salary in consideration of the Deed of Release and
Quitclaim he executed in September 12, 2001 following his receipt from Philcomsat of the
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amount of P9,439,327.91, which constitutes the full settlement of all his claims against
Philcomsat.
Philcomsat’s appeal to the NLRC from LA Lustria’s May 31, 2006 Decision was filed and its
surety bond posted beyond the prescribed period of ten (10) days. On June 20, 2006, a copy
of the LA’s Decision was served on Maritess Querubin (Querubin), one of Philcomsat’s
executive assistants, as Philcomsat’s counsel and the executive assistant assigned to her
were both out of the office. It was only the following day that Querubin gave a copy of the
said Decision to the executive assistant of Philcomsat’s counsel, leading the latter to believe
that it was only then that the said Decision had been served. In turn, this led Philcomsat’s
counsel to believe that it was on June 21, 2006 that the ten (10) day-period started to run.
Having in mind that the delay was only one (1) day and the explanation offered by
Philcomsat’s counsel, the NLRC disregarded Philcomsat’s procedural lapse and proceeded
to decide the appeal on its merits.
Issues
a. Whether the delay in the filing of Philcomsat’s appeal and posting of surety bond is
inexcusable; and
b. Whether the quitclaim executed by the petitioner in Philcomsat’s favor is valid, thereby
foreclosing his right to institute any claim against Philcomsat.
Ruling
Procedural rules may be relaxed to give way

to the full determination of a case on its
merits.
Confronted with the task of determining whether the CA erred in not finding grave abuse
of discretion in the NLRC's decision to give due course to Philcomsat's appeal despite its
being belatedly filed, this Court rules in Philcomsat's favor.
Procedural rules may be waived or dispensed with in absolutely meritorious cases. A review
of the cases cited by the petitioner, Rubia v. Government Service Insurance System and
Videogram Regulatory Board v. Court of Appeals, where this Court adhered to the strict
implementation of the rules and considered them inviolable, shows that the patent lack of
merit of the appeals render liberal interpretation pointless and naught. The contrary
obtains in this case as Philcomsat's case is not entirely unmeritorious. Specifically,
Philcomsat alleged that the petitioner's execution of the subject quitclaim was voluntary
and he made no claim that he did so. Philcomsat likewise argued that the petitioner's
educational attainment and the position he occupied in Philcomsat's hierarchy militate
against his claim that he was pressured or coerced into signing the quitclaim.
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The emerging trend in our jurisprudence is to afford every party-litigant the amplest
opportunity for the proper and just determination of his cause free from the constraints of
technicalities. Far from having gravely abused its discretion, the NLRC correctly prioritized
substantial justice over the rigid and stringent application of procedural rules. This, by all
means, is not a case of grave abuse of discretion calling for the issuance of a writ of
certiorari.
Absent any evidence that any of the vices of

consent is present and considering the
petitioner’s position and education, the
quitclaim executed by the petitioner
constitutes a valid and binding agreement.
While the law looks with disfavor upon releases and quitclaims by employees who are
inveigled or pressured into signing them by unscrupulous employers seeking to evade their
legal responsibilities, a legitimate waiver representing a voluntary settlement of a laborer's
claims should be respected by the courts as the law between the parties. Considering the
petitioner's claim of fraud and bad faith against Philcomsat to be unsubstantiated, this
Court finds the quitclaim in dispute to be legitimate waiver.
While the petitioner bewailed as having been coerced or pressured into signing the release
and waiver, his failure to present evidence renders his allegation self-serving and inutile to
invalidate the same. That no portion of his retirement pay will be released to him or his
urgent need for funds does not constitute the pressure or coercion contemplated by law.
That the petitioner was all set to return to his hometown and was in dire need of money
would likewise not qualify as undue pressure sufficient to invalidate the quitclaim. "Dire
necessity" may be an acceptable ground to annul quitclaims if the consideration is
unconscionably low and the employee was tricked into accepting it, but is not an acceptable
ground for annulling the release when it is not shown that the employee has been forced
to execute it. While it is our duty to prevent the exploitation of employees, it also behooves
us to protect the sanctity of contracts that do not contravene our laws.
The petitioner is not an ordinary laborer. He is mature, intelligent and educated with a
college degree, who cannot be easily duped or tricked into performing an act against his
will. As no proof was presented that the said quitclaim was entered into through fraud,
deception, misrepresentation, the same is valid and binding. The petitioner is estopped
from questioning the said quitclaim and cannot renege after accepting the benefits
thereunder. This Court will never satisfy itself with surmises, conjectures or speculations
for the purpose of giving imprimatur to the petitioner's attempt to abdicate from his
obligations under a valid and binding release and waiver.
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The petitioner's educational background and employment stature render it improbable
that he was pressured, intimidated or inveigled into signing the subject quitclaim. This
Court cannot permit the petitioner to relieve himself from the consequences of his act,
when his knowledge and understanding thereof is expected. Also, the period of time that
the petitioner allowed to lapse before filing a complaint to recover the supposed deficiency
in his retirement pay clouds his motives, leading to the reasonable conclusion that his claim
of being aggrieved is a mere afterthought, if not a mere pretention.
SOCIAL WELFARE LEGISLATION (P.D. 626)
SSS LAW (R.A. 8282)
Jesus B. Villamor vs. Employees' Compensation Commission and Social Security

System
G.R. No. 204422
November 21, 2016
Facts:
In 1978, petitioner, with Social Security System (SSS) No. 03-4047063-3, was employed by
Valle Verde Country Club, Inc. (VVCCI).
On November 3, 2006, he was brought to Our Lady of Lourdes Hospital, Manila, due to
dizziness associated with numbness and weakness on his left arm and leg. His Cranial
Computed Tomography (CT) scan revealed that he had an “acute non-hemorrhage infarct
on the right pons/basal ganglia."
After more than a week of confinement, petitioner was discharged from the said hospital
with diagnoses of Hypertension Stage 1; Cerebro-Vascular Disease (CVD) Acute, Non-
Hemorrhagic Infarct Right Pons and Right Basal Ganglia; Dyslipidemia (abnormal levels of
lipids [cholesterol triglycerides, or both] carried by lipoproteins in the blood).
On March 9, 2007, petitioner filed before respondent SSS, Pasig City Branch, claims for
sickness benefits under the SSS law and the EC TTD benefits under the EC law for his CVD
or stroke, Infarct Hypertension. Respondent SSS Pasig Branch granted his claim for
sickness benefits under the SSS law. However, it denied his claim for EC TTD benefits on
the ground that there is no causal relationship between his illness and his working
conditions.
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Petitioner appealed the denial of his claim to respondent Employees' Compensation
Commission (ECC).
On November 28, 2011, respondent ECC rendered a Decision affirming the denial of
petitioner's claim due to his failure to adduce substantial evidence that his stroke was work-
related. Respondent ECC ruled that petitioner's illness was a ''result of complications
expected from a progressive disease, atherosclerosis, enhanced by major risk factors such
as history of cigarette smoking and findings of dyslipidemia."
Issue:
Whether or not petitioner’s sickness is work-related, hence, entitles him to the sickness
benefits under the SSS law and the EC TTD benefits under the EC law.
Ruling:
Yes.
The denial of petitioner's claim is based on the factual finding of respondents SSS and ECC
that he is a mere clerk of VVCCI, responsible for the issuance of vouchers and receipts to
its member. Based on this, respondents SSS and ECC ruled that in the absence of any
substantial evidence showing the causal relationship between his stroke and the clerical
nature of his work, petitioner is not entitled to his claim. This factual finding, however, is
not supported by the evidence on record.
In 1978, VVCCI employed petitioner as a waiter. It then transferred him to the Sports
Department as Sports Dispatcher, and later, promoted him as Sports Area In-Charge. His
Identification Card and SSS Employees' Notification Form B-300 both prove his claim that
his position at the club is not a mere clerk but is a Sports Area-In-Charge. In fact, his Job
Description proves that his work is not limited to issuing vouchers and receipts to club
members.
Contrary to the findings of the respondents SSS and ECC, petitioner's job is not a mere
clerk issuing vouchers or receipts. His duties and responsibilities as Sports Area In-Charge
are obviously laborious and stressful since he is tasked to cater to the needs of all club
members and their guests, and to coordinate with the other departments of the club
regarding their needs. He also receives the complaints and requests of club members and
their guests, and ensures that these complaints and requests are properly addressed. To do
all these, he has to move around the club and deal with the club members and their guests.
Obviously, he has to endure both physical and mental stress in order to perform his duties.
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The Amended Rules on Employees' Compensation provides that for an illness or disease to
be compensable, "[it] must be a result of occupational disease listed under Annex 'A' of
these Rules with the conditions set therein satisfied, otherwise, proof must be shown that
the risk of contracting the disease is increased by the working conditions." In the case of
stroke and hypertension, both are compensable since they are listed as occupational
diseases under Nos. 19 and 29, respectively, of Annex "A" of the said rules.
In fact, in Government Service Insurance System v. Baul whether the claimant who was
diagnosed with essential hypertension later suffered a stroke, the Court affirmed the
claimant's entitlement to compensation as both essential hypertension and stroke are
considered occupational diseases.
Taking the cue from the Baul case, the Court finds that petitioner is entitled to
compensation for his illness. Just like in Baul, petitioner was diagnosed with hypertension
and stroke, as evidenced by his medical reports: Cranial CT Scan, Chest X-Ray
Result, Laboratory or Blood Chemistry Result, and Electrocardiogram Result. He was also
able to show that his work and position in the union caused him physical and mental strain
as he had to deal with the demands of various types of people. Thus, there is a probability
that his work and position in the union increased his risk of suffering a stroke, which
affected his brain, caused cerebral infarctions, paralysis of the left side of his body, difficulty
in speaking, and loss of muscular coordination.
Direct evidence showing that his work and position in the union caused his illness is not
necessary. As we have consistently ruled, the test of proof in compensation proceedings is
probability, and not the ultimate degree of certainty. In fact, in claims for compensation,
the strict rules of evidence need not be observed as the primordial and paramount
consideration should be the employee's welfare.
As to the findings of respondents SSS and ECC that petitioner is a chronic smoker and
drinker, the Court finds that it should not bar petitioner's claim for compensation, whether
or not such findings are true. In Government Service Insurance System v. De Castro, the
Court said that:
We find it strange that both the ECC and the GSIS singled out the presence of smoking and
drinking as the factors that rendered De Castro's ailments, otherwise listed as occupational,
to be non-compensable. To be sure, the causes of CAD and hypertension that the ECC listed
and explained in its decision cannot be denied; smoking and drinking are undeniably
among these causes. However, they are not the sole causes of CAD and hypertension and,
at least, not under the circumstances of the present case. For this reason, we fear for the
implication of the ECC ruling if it will prevail and be read as definitive on the effects of
smoking and drinking on compensability issues, even on diseases that are listed as
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occupational in character. The ruling raises the possible reading that smoking and
drinking, by themselves, are factors that can bar compensability.
We ask the question of whether these factors can be sole determinants of compensability
as the ECC has apparently failed to consider other factors such as age and gender from
among those that the ECC itself listed as major and minor causes of atherosclerosis and,
ultimately, of CAD. While age and gender are characteristics inherent in the person (and
thereby may be considered non-work related factors), they also do affect a worker's job
performance and may in this sense, together with stresses of the job, significantly
contribute to illnesses such as CAD and hypertension. To cite an example, some workplace
activities are appropriate only for the young (such as the lifting of heavy objects although
these may simply be office files), and when repeatedly undertaken by older workers, may
lead to ailments and disability. Thus, age coupled with an age-affected work activity may
lead to compensability. From this perspective, none of the ECC's listed factors should be
disregarded to the exclusion of others in determining compensability.
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. This is a
basic legal reality in workers' compensation law. We are therefore surprised that the ECC
and the GSIS simply brushed aside the disability certification that the military issued with
respect to De Castro's disability, based mainly on their primacy as the agencies with
expertise on workers' compensation and disability issues.
While ECC and GSIS are admittedly the government entities with jurisdiction over the
administration of workers' disability compensation and can thus claim primacy in these
areas, they cannot however claim infallibility, particularly when they use wrong or limited
considerations in determining compensability. (Emphasis in the original)
UNITED PHILIPPINE LINES, INC. and HOLLAND AMERICA LINE vs. GENEROSO E.
SIBUG
G.R. No. 201072, April 2, 2014, J. Villarama, Jr.

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.
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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.
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:
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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 supported by substantial evidence.
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
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.

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
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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.
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
obvious intention of 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:
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
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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 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
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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.
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.
obvious intention of 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.
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
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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.
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.
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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.
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
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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:
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No, they are not entitled entitled to the COLA and the BEP on top of their basic
salaries from 1989 up to the present.
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
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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 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
40 | P a g e
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.
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.
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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.
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.
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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.
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,
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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 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
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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.
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
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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 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.
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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.
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
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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. 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
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
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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
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."
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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 paid from the peso equivalent of the total monetary award. The Court held
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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 designated physician.
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.
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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.
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.
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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
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 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. 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
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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, 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:
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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 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;
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(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 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.
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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

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 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
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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
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:
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."
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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.
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
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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
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under the POEA-SEC requiring the referral of the 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
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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 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
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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 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.
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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 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
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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 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
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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 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
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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, 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.
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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.
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.
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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-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
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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 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
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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:
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
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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.
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
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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 benefits to Pellazar thereby disregarding the
Grade 10 disability rating—in accordance with the POEA-SEC—of the company-designated
physicians.
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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
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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.
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.

40 | P a g e
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. 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.
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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 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
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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 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-
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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 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
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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 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.
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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 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 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.
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.
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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, 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.
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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 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:
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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-
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). 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.
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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 during his pre-employment medical
examination was also unsubstantiated, but was a mere hearsay.
Facts:
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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
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as coronaryartery disease and congestive 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.
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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 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."
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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.
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
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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 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.
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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 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
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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.
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.
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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 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
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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 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-designated physician.
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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.
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
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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-
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
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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 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.
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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.
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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.
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.
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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."
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
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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:
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
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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 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
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.
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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.
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.
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
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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 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
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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
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:
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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 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
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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 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.
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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 his employment. Applying the
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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
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the decision of the LA. The Court of Appeals affirmed the decision of NLRC. Hence,
the current petition.
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 disability benefits.
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
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
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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.
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.
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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:
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-
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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, 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
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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 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.
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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 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
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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,"
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.
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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 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
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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.
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
40 | P a g e
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
40 | P a g e
and sets his feet on Philippine soil, he will immediately be arrested and will never be
employed by any vessel ever 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.
40 | P a g e
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 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
40 | P a g e
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. 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.
40 | P a g e
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:
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
40 | P a g e
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.
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.
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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.
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
40 | P a g e
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.
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).
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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.
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
40 | P a g e
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.
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.
40 | P a g e
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.
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
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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 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
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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
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10 of Republic 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. PRUDENTIAL GUARANTEE AND ASSURANCE, INC., DEVELOPMENT BANK OF
THE PHILIPPINES and LAND BANK OF THE PHILIPPINES
G.R. No. 165585, November 20, 2013
J. PERLAS-BERNABE
In this relation, jurisprudence dictates that an answer fails to tender an issue if it does
not comply with the requirements of a specific denial as set out in Sections 8 and 10, Rule 8
of the Rules, resulting in the admission of the material allegations of the adverse party’s
pleadings.
As such, it is a form of judgment that is exclusively based on the submitted pleadings

without the introduction of evidence as the factual issues remain uncontroverted. In this case,
records disclose that in its Answer, GSIS admitted the material allegations of PGAI’s
complaint warranting the grant of the relief prayed for. In particular, GSIS admitted that: (a)
it made a request for reinsurance cover which PGAI accepted in a reinsurance binder effective
for one year; (b) it remitted only the first three reinsurance premium payments to PGAI; (c)
it failed to pay PGAI the fourth and final reinsurance premium installment; and (d) it received
demand letters from PGAI. It also did not refute the allegation of PGAI that it settled
reinsurance claims during the reinsured period. On the basis of these admissions, the Court
finds that the CA did not err in affirming the propriety of a judgment on the pleadings.
Facts:
The National Electrification Administration (NEA) entered into a Memorandum of

Agreement (MOA) with Government Service Insurance System (GSIS) insuring all real and
personal properties mortgaged to it by electrical cooperatives under an Industrial All Risks
Policy (IAR policy). Out of which, 95% was reinsured by GSIS with PGAI for a period of one
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year or from March 5, 1999 to March 5, 2000. GSIS agreed to pay PGAI reinsurance
premiums in an amount per quarter. While GSIS remitted to PGAI the reinsurance
premiums for the first three quarters, it, however, failed to pay the fourth and last
reinsurance premium due on December 5, 1999 despite demands. This prompted PGAI to
file, on November 15, 2001, a Complaint for sum of money (complaint) against GSIS before
the RTC, docketed as Civil Case No. 01-1634.
On December 18, 2001, PGAI filed a Motion for Judgment on the Pleadings averring that
GSIS essentially admitted the material allegations of the complaint, such as: (a) the
existence of the MOA between NEA and GSIS; (b) the existence of the reinsurance binder
between GSIS and PGAI; (c) the remittance by GSIS to PGAI of the first three quarterly
reinsurance premiums; and (d) the failure/refusal of GSIS to remit the fourth and last
reinsurance premium. Hence, PGAI prayed that the RTC render a judgment on the
pleadings pursuant to Section 1, Rule 34 of the Rules of Court (Rules). GSIS opposed the
foregoing motion by reiterating the allegations and defenses in its Answer.
On January 11, 2002, the RTC issued an Order (January 11, 2002 Order) granting PGAI’s
Motion for Judgment on the Pleadings. It observed that the admissions of GSIS that it paid
the first three quarterly reinsurance premiums to PGAI affirmed the validity of the contract
of reinsurance between them. As such, GSIS cannot now renege on its obligation to remit
the last and remaining quarterly reinsurance premium. It further pointed out that while it
is true that the payment of the premium is a requisite for the validity of an insurance
contract as provided under Section 77 of Presidential Decree No. (PD) 612, otherwise
known as "The Insurance Code," it was held in Makati Tuscany Condominium Corp. v.
CA (Makati Tuscany) that insurance policies are valid even if the premiums were paid in
installments, as in this case. Thus, in view of the foregoing, the RTC ordered GSIS to pay
PGAI the last quarter reinsurance premium in the sum of P32,885,894.52, including
interests amounting toP6,519,515.91 as of July 31, 2000 until full payment, attorney’s fees,
and costs of suit. Dissatisfied, GSIS filed a notice of appeal.
Meanwhile, PGAI filed a Motion for Execution Pending Appeal based on the following
reasons: (a) GSIS’ appeal was patently dilatory since it already acknowledged the validity of
PGAI’s claim; (b) GSIS posted no valid defense as its Answer raised no genuine issues; and
(c) PGAI would suffer serious and irreparable injury as it may be blacklisted as a
consequence of the non-payment of premiums due. PGAI also manifested its willingness
to post a sufficient surety bond to answer for any resulting damage to GSIS. The latter
opposed the motion asserting that there lies no sufficient ground or urgency to justify
execution pending appeal. It also claimed that all its funds and properties are exempted
from execution citing Section 39 of Republic Act No. (RA) 8291, otherwise known as "The
Government Service Insurance System Act of 1997."
On February 14, 2002, the RTC issued an Order (February 14, 2002 Order) granting PGAI’s
Motion for Execution Pending Appeal, conditioned on the posting of a bond. It further held
that only the GSIS Social Insurance Fund is exempt from execution. Accordingly, PGAI duly
posted a surety bond which the RTC approved through an Order dated February 19, 2002,
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resulting to the issuance of a writ of execution54 and notices of garnishment (February 19,
2002 issuances), all of even date, against GSIS.
Issue:
Whether the CA erred in sustaining the RTC’s January 11, 2002 Order rendering judgment
on the pleadings.
Ruling:
Judgment on the pleadings is appropriate when an answer fails to tender an issue, or

otherwise admits the material allegations of the adverse party’s pleading. The rule is stated
in Section 1, Rule 34 of the Rules which reads as follows:
Sec. 1. Judgment on the pleadings. – Where an answer fails to tender an issue, or
otherwise admits the material allegations of the adverse party’s pleading, the court
may, on motion of that party, direct judgment on such pleading. x x x.
In this relation, jurisprudence dictates that an answer fails to tender an issue if it does not
comply with the requirements of a specific denial as set out in Sections 8 and 10, Rule 8 of
the Rules, resulting in the admission of the material allegations of the adverse party’s
pleadings.
As such, it is a form of judgment that is exclusively based on the submitted pleadings

without the introduction of evidence as the factual issues remain uncontroverted.
In this case, records disclose that in its Answer, GSIS admitted the material allegations of
PGAI’s complaint warranting the grant of the relief prayed for. In particular, GSIS admitted
that: (a) it made a request for reinsurance cover which PGAI accepted in a reinsurance
binder effective for one year; (b) it remitted only the first three reinsurance premium
payments to PGAI; (c) it failed to pay PGAI the fourth and final reinsurance premium
installment; and (d) it received demand letters from PGAI. It also did not refute the
allegation of PGAI that it settled reinsurance claims during the reinsured period. On the
basis of these admissions, the Court finds that the CA did not err in affirming the propriety
of a judgment on the pleadings.
GSIS’ affirmative defense that the non-payment of the last reinsurance premium merely
rendered the contract ineffective pursuant to Section 77 of PD 612 no longer involves any
factual issue, but stands solely as a mere question of law in the light of the foregoing
admissions hence allowing for a judgment on the pleadings. Besides, in the case of Makati
Tuscany, the Court already ruled that the non-payment of subsequent installment
premiums would not prevent the insurance contract from taking effect; that the parties
intended to make the insurance contract valid and binding is evinced from the fact that the
insured paid – and the insurer received – several reinsurance premiums due thereon,
although the former refused to pay the remaining balance, viz:
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We hold that the subject policies are valid even if the premiums were paid on
installments. The records clearly show that petitioner and private respondent
intended subject insurance policies to be binding and effective notwithstanding the
staggered payment of the premiums. The initial insurance contract entered into in
1982 was renewed in 1983, then in 1984. In those three (3) years, the insurer accepted
all the installment payments. Such acceptance of payments speaks loudly of the
insurer’s intention to honor the policies it issued to petitioner. Certainly, basic
principles of equity and fairness would not allow the insurer to continue collecting
and accepting the premiums, although paid on installments, and later deny liability
on the lame excuse that the premiums were not prepaid in full.
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.
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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."
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
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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 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.
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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 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:
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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 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.
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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 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
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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 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.
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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 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
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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:
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.
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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 repatriation on 2 June 2010 until 3 January 2011, when
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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
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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 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.
TRANSOCEAN SHIP MANAGEMENT (PHILS.), INC., CARLOS S. SALINAS,

AND GENERAL MARINE SERVICES CORPORATION vs. INOCENCIO VEDAD;
INOCENCIO VEDAD vs. TRANCENCIO SHIP MANAGEMENT (PHILS.), INC.,
CARLOS S. SALINAS, AND GENERAL MARINE SERVICES CORPORATION
G.R. Nos. 194490-91; G.R. Nos. 194518 & 194524, March 20, 2013
J. Velasco Jr.
The Supreme Court ruled that seafarer’s tonsil cancer is not work-related. Tonsil
cancer is not included in the list of occupational diseases. Thus, seafarer carried the burden
of showing by substantial evidence that his cancer developed or aggravated from work-
related causes. The seafarer did not present any proof of work-relatedness other than his
bare allegations. Thus, the court has no option but to declare that the company-designated
physician’s certification is the final determination that must prevail.
Facts:
Inocencio was a seafarer employed as second engineer by Transocean Ship

Management (Phils.), Inc. (Transocean), a local manning agency, for its principal, General
Marine Services Corporation (General Marine). Inocencio's employment under the
Philippine Overseas Employment Agency-Standard Employment Contract (POEA-SEC)
was for a 10-month period. Inonencio was deployed and went on board M/V Invicta after
the required pre-employment medical examination (PEME) which gave him a clean bill of
health.
Before the expiry of his 10-month contract, Inocencio was, however, repatriated for
medical reasons. On board M/V lnvicta he fell ill and experienced fever, sore throat and
pain in his right ear. The company-designated doctor conducted tonsillectomy but later
determined that seafarer is suffering from cancer of the tonsil.
A complaint for permanent and total disability benefits was filed by the seafarer and
he was awarded by the Labor Arbiter the amount of US$60,000. The Labor Arbiter held
that the illness is presumed to be work-related and it lasted for more than 120 days.
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On appeal, the NLRC deleted the award of disability benefits because the
presumption of work-relation of the illness was duly rebutted by the opinion of the
company-designated doctor that seafarer’s tonsil cancer is not work-related. However, the
NLRC awarded sick wages to the seafarer equivalent to his 120 days salaries.
Issue:
1. Whether or not tonsil cancer is work-

related illness and thus Inocencio is entitled to permanent total disability benefits
2. Whether or not is Inocencio entitled to
sickness allowance
Ruling:
Tonsil cancer or tonsillar carcinoma is not work-related. It is not included in the list
of occupational diseases. Thus, Inocencio carried the burden of showing by substantial
evidence that his cancer developed or was aggravated from work-related causes. As both
the NLRC and the CA found, he had nothing to supporting his claim other than his bare
allegations.
We note that when Inocencio was repatriated, the company-designated physician,

conducted the examination, diagnosis and treatment of Inocencio until the hispathology
report showed he had cancer of the tonsils. Significantly, the company-designated
physician issued his assessment and medical certification that Inocencio's cancer was not
work-related or work-aggravated. In determining whether or not a given illness is work-
related, it is understandable that a company-designated physician would be more positive
and in favor of the company than, say, the physician of the seafarer's choice. It is on this
account that a seafarer is given the option by the POEA-SEC to seek a second opinion from
his preferred physician. And the law has anticipated the possibility of divergence in the
medical findings and assessments by incorporating a mechanism for its resolution wherein
a third doctor selected by both parties decides the dispute with finality, as provided by Sec.
20(B)(3) of the POEA-SEC quoted above.
Inocencio, however, failed to seek a second opinion from a physician of his choice.
He did not present any proof of work-relatedness other than his bare allegations. Thus, the
court has no option but to declare that the company-designated physician’s certification is
the final determination that must prevail.
The fact that Inocencio's sickness was later medically declared as not work-related
does not prejudice his right to receive sickness allowance, considering that he got ill while
on board the ship and was repatriated for medical treatment before the end of his 10-month
employment contract. Moreover, at the time of his repatriation, his illness was not yet
medically declared as not work-related by company physician; thus, the presumption of
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work-relation of the illness in the POEA Contract applies. As such, the seafarer is entitled
to illness allowance pending the assessment of the company-designated doctor that the
illness is not work-related.
Even if the medical opinion on non-work-relatedness was issued at an early stage,

but the seafarer duly contests the opinion of the company-designated doctor by presenting
a second opinion from the former’s doctor, then he should still be entitled to illness
allowance pending the determination of a third doctor as to work-relation of the illness.
Nevertheless, such entitlement shall not exceed 120 days illness allowance.
MAGSAYSAY MARITIME SERVICES and PRINCESS CRUISE LINES, LTD., vs.

EARLWIN MEINRAD ANTERO F. LAUREL
G.R. No. 195518, March 20, 2013
J. Mendoza
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. The Court
found a reasonable work connection between respondent’s condition at work as pastryman
(cook) and the development of his hyperthyroidism. His constant exposure to hazards such
as chemicals and the varying temperatures, like the heat in the kitchen of the vessel and
the coldness outside, coupled by the stressful tasks in his employment caused, or at least
aggravated, his illness.
Facts:
EarlwinMeinrad Antero F. Laurel (Laurel) was employed by Princess Cruise Lines,

Ltd., through its local manning agency, petitioner Magsaysay Maritime Corporation, as
second pastryman on board the "M/V Star Princess." In the course of the voyage, Laurel fell
ill and was later on repatriated for further evaluation. Seeking medical care upon return,
he was diagnosed with upper respiratory tract infection and hyperthyroidism. Laurel, then,
filed a complaint against the petitioners before the NLRC, claiming medical
reimbursement, sickness allowance, permanent disability benefits, damages, and attorney’s
fees.
MMS argued that Laurel’s illness was not work-related as convincingly proven
through the expert opinion of the company-designated physician. They aver that
hyperthyroidism is not among those listed in the POEA-SEC as an occupational disease,
hence, not compensable. They emphasize that Laurel’s illness was essentially genetic and
was not caused by his employment. Laurel counters that his illness is compensable because
it was acquired during the effectivity of his employment contract while performing his work
aboard the petitioners’ vessel. The fact that Grave’s Disease may be hereditary does not bar
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him from entitlement to disability benefits. Compensability does not require that
employment be the sole cause of the illness. It is enough that there exists a reasonable work
connection. The strenuous condition of his employment on board the MV Star Princess
triggered the development of his hyperthyroidism due to his exposure to varying
temperature and chemical irritants.
Issue:
Whether or not there is a reasonable connection between Laurel’s condition as

pastryman and the development of his hyperthyroidism
Ruling:
Although Graves’ Disease is attributed to genetic influence, SC finds a reasonable

work connection between Laurel’s condition at work as pastryman (cook) and the
development of his hyperthyroidism. 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. Thus, the Court sustains the finding
of the CA that:
Stressful conditions in the environment, in a word, can result in hyperthyroidism,

and the employment conditions of a seafarer on board an ocean-going vessel are likely
stress factors in the development of hyperthyroidism irrespective of its origin. As recounted
by the respondent in his position paper, the work on board the MV Star Princess was a
strenuous one. It involved day-to-day activities that brought him under pressure and strain
and exposed him to chemical and other irritants, and his being away from home and family
only aggravated these stresses.
Indeed, Laurel has shown a reasonable causation between his working condition
and his hyperthyroidism contracted during his employment warranting the recovery of
compensation. 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
PHILIPPINE HAMMONIA SHIP AGENCY, INC. AND DORCHESTER MARINE,

LTD. vs. EULOGIO DUMADAG
G.R. No. 194362, June 26, 2013
J. Brion
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Every seaman and the vessel owner (directly or represented by a local manning
agency) are required to execute the POEA Standard Employment Contract as a condition sine
qua non prior to the deployment for overseas work. The POEA Standard Employment
Contract is supplemented by the CBA between the owner of the vessel and the covered
seaman. The POEA-SEC and the CBA govern the employment relationship 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. Petitioner pursued
his claim without observing the laid-out procedure. Hence, Supreme Court ruled that non-
referral to a third doctor is cause for dismissal of petitioner’s claim.
Facts:
Petitioner hired respondent Dumadag for four months as Able Bodied Seaman for
the vessel Al Hamra, pursuant to the POEA-SEC. Before he boarded the vessel, Dumadag
underwent a pre-employment medical examination and was declared fit to work. Dumadag
had medical consultations during his employment due to a sleeping disorder and body
stiffness. On repatriation, at the end of his contract, the Dumadag was referred to the
company-designated doctor, where he was diagnosed with carpal tunnel syndrome and an
anxiety disorder. After almost four months of treatment, the company-designated doctor
declared Dumadag fit to return to work on November 6 2007. On December 5 2007
Dumadag sought the medical opinion of an orthopaedic doctor, who diagnosed him as still
suffering from carpal tunnel syndrome and issued him with a partial temporary disability
assessment. On January 8 2008, Dumadag consulted a psychiatrist, who found the seafarer
to be suffering from minor depression. On March 8 2008 Dumadag consulted another
doctor, who diagnosed him with carpal tunnel syndrome and an adjustment disorder.
Finally, on April 13 2008 Dumadag consulted a fourth doctor, who assessed him with a
permanent disability due to his medical condition. After consultation with four doctors,
Dumadag filed a complaint for payment of permanent total disability benefits.
The labour arbiter held that the seafarer was entitled to full disability benefits, given
that despite being declared fit to work by the company-designated doctor, he was found by
his own doctors to be still suffering from the same medical condition. The labour arbiter
likewise noted that the best indication that the seafarer was really unfit was that he was
not rehired by the company despite having served it for almost 15 years. The National
Labour Relations Commission (NLRC) and the Court of Appeals both affirmed the labour
arbiter's decision.
Issue:
Whose disability assessment should prevail in a maritime disability claim–the fit-to-

work assessment of the company-designated physician or the contrary opinion of the
seafarer‘s chosen physicians that he is no longer fit to work
Ruling:
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In Vergara v. Hammonia Maritime Services, Inc., G.R. No. 172933, October 6, 2008,
the Court said: “the DOLE, through the POEA, has simplified the determination of liability
for work-related death, illness or injury in the case of Filipino seamen working on foreign
ocean-going vessels. Every seaman and the vessel owner (directly or represented by a local
manning agency) are required to execute the POEA Standard Employment Contract as a
condition sine qua non prior to the deployment for overseas work. The POEA Standard
Employment Contract is supplemented by the CBA between the owner of the vessel and
the covered seaman.”
In this case, Dumadag and the petitioners entered into a contract in accordance with
the POEA-SEC. They also had a CBA. Dumadag‘s claim for disability compensation could
have been resolved bilaterally had the parties observed the procedure laid down in the
POEA-SEC and in their CBA. Section 20(B)(3) of the POEA-SEC provides:
“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
x xxx
If a doctor appointed by the seafarer disagrees with the assessment, a third doctor
may be agreed jointly between the employer and the seafarer. The third doctor’s decision
shall be final and binding on both parties.”
In this case, there was also a collective bargaining agreement which stated that the
assessment must be referred to a third doctor should the findings of the company-
designated doctor and the seafarer's personal doctor differ.
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. Dumadag, however, pursued
his claim without observing the laid-out procedure. He consulted physicians of his choice
regarding his disability after the company-designated physician issued her fit-to-work
certification for him. There is nothing inherently wrong with the consultations as the
POEA-SEC and the CBA allow him to seek a second opinion. The problem only arose when
he pre-empted the mandated procedure by filing a complaint for permanent disability
compensation on the strength of his chosen physicians‘ opinions, without referring the
conflicting opinions to a third doctor for final determination.
The company could not possibly have caused the referral to a third doctor, as it was
unaware that the seafarer was contesting the company-designated doctor's opinion and
that he had secured the opinion of his own doctors. Without a valid referral to a third
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doctor, the complaint should be dismissed, as the company-designated doctor's findings
should be upheld based on the POEA contract and collective bargaining agreement.
The Supreme Court likewise was not persuaded by the argument that the non-hiring
of the seafarer was the best proof that he was disabled. The court noted that no evidence
was presented that the seafarer had sought re-employment with the company or any other
company and was turned down due to his illness. Likewise, it was not shown that as a
matter of course the company would have rehired the seafarer after the expiration of his
contract.
The Supreme Court dismissed the seafarer's complaint.
INTER-ORIENT MARITIME, INCORPORATED and/or TANKOIL CARRIERS,

LIMITED vs. CRISTINA CANDAVA
G.R. No. 201251, June 26, 2013
J. Perlas-Bernabe
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 therein 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.
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.
Facts:
Inter-Orient Maritime Incorporated (Inter-Orient) hired Joselito C. Candava

(Joselito) as an able-bodied seaman for its foreign principal, Tankoil Carriers Limited
(Tankoil). Joselito was then deployed to M/T Demetra and despite expiration of his
contract period, Joselito continued to work aboard the vessel due to the unavailability of a
replacement. A month after return from deployment, Joselito was found to have testicular
tumor (cancer of the testes), abdominal germ cell tumor, metastatic carcinoma to the lungs
and pleural effusion. Joselito accompanied by representatives from petitioner Inter-Orient,
filed complaint for medical benefits. On the same instance, Joselito sought for the
dismissal of his complaint in consideration of a sum of money and executed a Receipt and
Release, releasing Tankoil and Inter-Orient from any claim arising from his employment.
Joselito, later on, passed away.
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Respondent Cristina sent a letter to Inter-Orient, demanding payment of death
benefits but her pleas fell on deaf ears, prompting her to file a complaint for death and
other monetary benefits against Inter-Orient. In her complaint, respondent Cristina
alleged that Joselito did not receive any sickness benefit or medical assistance from
petitioners other than those subject of the release documents which were paid only after
Joselito complied with the requirement of filing his complaints. While admitting that
Joselito was not coerced into signing the release documents, Cristina averred that he was
constrained by his physical and financial condition to accept the measly amount offered by
petitioners. Further, Cristina claimed that Joselito’s death was due to an illness contracted
during the latter’s employment and thus, she is entitled to death compensation, burial
assistance, moral and exemplary damages, and attorney’s fees. For their part, Inter-Orient
claimed that Cristina’s complaint is barred by res judicata or the filing of the previous
complaints by Joselito, which were dismissed upon his motion, and the accompanying
release documents the latter executed.
Issue:
Whether or not Joselito’s death is compensable as to entitle Cristina to claim death

benefits
Ruling:
It bears stressing that 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 therein 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.
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. A meticulous perusal of the records reveals that Joselito
contracted his illness in the course of employment. It cannot also be denied that the same
was aggravated during the same period. Thus, there was a clear causal connection between
such illness and his eventual death, making his death compensable.
Verily, Joselito complained of significant pain in the abdominal region while aboard
M/T Demetra and during the extended period of his employment. Upon undergoing
different medical procedures, the doctors discovered that the tumor in Joselito’s right
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inguinal canal "corresponded to a tumor formation dependent on the right testicle."
Despite the company designated physician’s declaration that Joselito was fit to work, his
condition continued to deteriorate as succeeding medical reports showed the presence of
testicular as well as abdominal germ tumors. His abdominal germ tumor, being in the
midline portion of the body, the most common metastasis (spread) will be in the
lungs. This is supported by medical reports showing the presence of multiple pulmonary
nodules, as well as reactive mesothelial cells, which is consistent with the presence of
metastatic tumor. Thereafter, Joselito underwent thoracentesis which further revealed
malignant cells in his body.
Moreover, Joselito’s Death Certificate stated respiratory failure as the immediate

cause of his death, with pulmonary metastasis as antecedent cause. The underlying cause
for his death was germ cell tumor which may be found, among others, in the testes and the
center back wall of the abdominal cavity. The World Health Organization defines an
underlying cause as the disease or injury that initiated the train of events leading directly
to death, or circumstances of the accident or violence that produced the fatal injury.
Perforce, there existed a clear causal connection between Joselito’s illness which he
contracted during employment and his eventual death.
MAGSAYSAY MARITIME CORPORATION and/or WESTFAL-LARSEN AND CO.,

A/S, vs. NATIONAL LABOR RELATIONS COMMISSION, First Division, and WILSON
G. CAPOY
G.R. No. 19190, June 19, 2013
J. Brion
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 the company-designated physician had
already issued a certification as to his fitness or disability and he finds this disagreeable.
Under the same provision, it is the company-designated physician who is entrusted with the
task of assessing a seafarer’s disability and there is a procedure to contest his findings. Hence,
Supreme Court ruled failure to comply with the procedure prescribed by the POEA-SEC.is
cause for dismissal of seafarer’s claim.
Facts:
Magsaysay Maritime Corporation (MMC), on behalf of its foreign principal, co-

petitioner Westfal-Larsen and Co., A/S, hired respondent Wilson G. Capoy as Fitter on
board the vessel M/S Star Geiranger. While he was at work, Capoy allegedly fell down a
ladder and claimed that he immediately felt numbness in his fingertips that gradually
extended to his hands and elbows. Despite the incident, he continued performing his work.
While climbing a flight of stairs, he again fell and said that he could not tightly hold to the
railings of the stairs due to the numbness of his fingers and that he felt electricity-like
sensation in his body, legs and hands. It was found out that Capoy had an illness making
him unfit to work and was advised not to return to work. Capoy was medically repatriated;
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however, the cost of the surgery for his injury was shouldered by MMC. Capoy, then, filed
a complaint for disability benefits, maintenance allowance, damages and attorney’s fees
against the petitioners. He argued that after the lapse of 120 days without being declared
fit to work, he was entitled to permanent total disability benefits in accordance with the
collective bargaining agreement (CBA) his union, the Associated Marine Officers and
Seamen’s Union of the Philippines (AMOSUP), had with his employer. The petitioners
denied its liability and argued that Capoy was not entitled to permanent disability benefits
as his claim was premature since no disability assessment has yet been made by the
company-designated physician. MMC further argued that the injury which caused Capoy’s
disability was self-inflicted due to his failure to follow the recommended medical
treatment. Additionally, they disputed Capoy’s claim, that he suffered a fall twice on board
the vessel, pointing out that the vessel’s logbook had no record of the incidents. They
presented the affidavit of the vessel M/S Star Geiranger’s Master, Tomas Littaua, on the
absence of reports regarding the incidents.
Issue:
Whether or not Capoy is entitled to permanent total disability benefits
Ruling:
Considering that Capoy was still under treatment by the company doctors even after
the lapse of 120 days but within the 240-day extended period allowed by the rules, he was
under temporary total disability and entitled to temporary total disability benefits under
the same rules. Moreover, with respect to Capoy’s failure to comply with the procedure
under the POEASEC vis-a-vis Dr. Sabado’s certification, we find the following Court
pronouncement in C.F. Sharp Crew Management, Inc. v. Taok most applicable, thus:
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 the company-designated
physician had already issued a certification as to his fitness or disability and he finds this
disagreeable. Under the same provision, it is the company-designated physician who is
entrusted with the task of assessing a seafarer’s disablity and there is a procedure to contest
his findings. It is patent from the records that Taok submitted these medical certificates
during the pendency of his appeal before the NLRC. More importantly, Taok prevented the
company-designated physician from determining his fitness or unfitness for sea duty when
he did not return on October 18, 2006 for re-evaluation. Thus, Taok’s attempt to convince
this Court to put weight on the findings of his doctors-of-choice will not prosper given his
failure to comply with the procedure prescribed by the POEA-SEC.
Very obviously, Capoy’s case suffers from the same infirmities committed by Taok
in the cited case, when he presented Dr. Sabado’s certification to the LA without going
through the procedure under the POEA-SEC. Capoy, needless to say, prevented Dr.
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Salvador from determining his fitness or unfitness for sea duty when he did not return on
April 6, 2006 for re-evaluation.
For grossly misappreciating the facts, the clear import of the law and the rules, as
well as recent jurisprudence on maritime compensation claims, the NLRC gravely abused
its discretion in sustaining the award of permanent total disability benefits to Capoy. For
upholding the NLRC ruling, the CA itself committed a reversible error of judgment.
In light of these considerations, Capoy’s claim for permanent total disabilty benefits
must necessarily fail. However, since it is undisputed that Capoy still needed medical
treatment beyond the initial 120 days from his repatriation - it lasted for 197 days as found
by the CA - he is entitled, under the rules, to the income benefit for temporary total
disability during the extended period or for one hundred ninety-seven (197) days. This
benefit must be paid to him.
MAERSK FILIPINAS CREWING, INC./ MAERSK SERVICES LTD., AND/OR MR.

JEROME DELOS ANGELES vs. NELSON MESINA
G.R. No. 200837, June 05, 2013
J. Reyes
The Court has ruled that the list of illnesses/diseases in Section 32-A of the 2000
POEA-SEC 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. In this case, the Supreme Court finds that psoriasis was work
related.
Facts:
Respondent was employed by petitioners as a steward on board the vessel “Sealand

Innovator” for a period of nine (9) Months. After about one month into employment, the
seafarer started to feel unusual itchiness all over his body followed by the appearance of
small spots on his skin. He was medically repatriated on October 7 2005. Upon his arrival
in the Philippines, he was referred to the petitioners’ company-designated physician, Dr.
NatalioAlegre. Dr. Alegre declared respondent to be afflicted with psoriasis, an auto-
immune ailment that is not work-related. Discontented by the finding, respondent
submitted himself for diagnosis to Dr. Glenda Anastacio-Fugoso, a dermatologist, who
certified that respondent was disabled. He was diagnosed for psoriasis vulgaris (a recurring
non-contagious papulosquamous disease aggravated by stress, drug intake, alcohol, etc.).
His skin condition has occupied 80 percent of his body, which needed a longer time to
control. Respondent then filed a case for payment of full disability benefits, damages, and
attorney’s fees before the LA.
The Labor Arbiter ruled in favor of the respondent and awarded USD75,000.00 plus
attorney’s fees. It was ruled that seafarer’s illness was connected to his work and thus
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compensable. The NLRC differed with the conclusion of the Labor Arbiter and held that
there is actually no substantial evidence to prove that the nature of and the stress relating
to seafarer’s work aggravated his psoriasis. The NLRC observed that the only evidence
substantiating the claim that seafarer’s illness is work-related was the certification of his
dermatologist who examined him only once. The Court of Appeals reinstated the Labor
Arbiter’s decision. Hence, this petition.
Issue:
Whether or not the respondent entitled to permanent total disability benefits
Ruling:
The Supreme Court affirmed the decision of the Court of Appeals.
At the onset, it is well to note that in resolving disputes on disability benefits, the
fundamental consideration has been that the POEA-SEC was designed primarily for the
protection and benefit of Filipino seamen in the pursuit of their employment on board
ocean-going vessels. As such, its provisions must be construed and applied fairly,
reasonably and liberally in their favor because only then can its beneficent provisions be
fully carried into effect Under Section 20.1.4.1 of the parties’ AMOSUP/IMEC CBA for 2004,
the respondent shall be entitled to compensation if he suffers permanent disability as a
result of a work-related illness while serving on board. The provision further states that the
determination of whether an illness is work-related shall be made in accordance with
Philippine laws on employees’ compensation. The 2000 POEA-SEC defines “work-related
illness” as “any sickness resulting to disability or death as a result of an occupational disease
listed under Section 32-A of this contract with the conditions set therein satisfied.”
In interpreting the said definition, the Court has held that for disability to be
compensable under Section 20(B) of the 2000 POEA-SEC, it is not sufficient to establish
that the seafarer‘s illness or injury has rendered him permanently or partially disabled; it
must also be shown that there is a causal connection between the seafarer‘s illness or injury
and the work for which he had been contracted (Magsaysay Maritime Corporation v. NLRC,
G.R. No. 186180, March 22, 2010). The Court has likewise ruled that the list of
illnesses/diseases in Section 32-A does not preclude other illnesses/diseases not so listed
from being compensable. The POEA-SEC cannot be presumed to contain all the possible
injuries that render a seafarer unfit for further sea duties. This is in view of Section 20(B)(4)
of the POEA-SEC which states that “those illnesses not listed in Section 32 of this Contract
are disputably presumed as work-related.”
Concomitant with such presumption is the burden placed upon the claimant to
risk of contracting the disease.
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After a circumspect evaluation of the conflicting medical certifications of Drs. Alegre
and Fugoso, the Supreme Court found that serious doubts pervade in the former. While
both doctors gave a brief description of psoriasis, it was only Dr. Fugoso who categorically
stated a factor that triggered the activity of the respondent’s disease—stress, drug or
alcohol intake, etc. Dr. Alegre immediately concluded that it is not work-related on the
basis merely of the absence of psoriasis in the schedule of compensable diseases in Sections
32 and 32-A of the Philippine Overseas Employment Authority-Standard Employment
Contract (POEA-SEC). Based on these observations, it is the Supreme Court’s considered
view that Dr. Fugoso’s certification deserves greater weight. It remains undisputed that the
respondent used strong detergent, fabric conditioner, special soap and chemicals in
performing his duties as a steward. Stress and climate changes likewise permeate his
working environment as with that of any other seafarer. These factors, taken together with
Dr. Fugoso’s certification, confirm the existence of a reasonable connection between the
nature of respondent’s work and the onset of his psoriasis.
The Supreme Court also noted that the respondent was unable to work for more
than 120 days as in fact, the company doctor’s certification was issued only after 259 days
with the seafarer still needing further medical treatments thus rendering him unable to
pursue his customary work. This makes his condition a permanent and total disability.
ORIENTAL SHIPMANAGEMENT CO., INC., et. al. vs. RAINERIO N. NAZAL

G.R. No. 177103, June 3, 2013
J. BRION
A seafarer who files claim against his employer is not entitled to disability benefits if
he obtains subsequent employment with another company. Seafarer’s ailments resulting in
his claimed disability could only have been contracted or aggravated during his engagement
by his last employer.
A party alleging a critical fact must support his allegation with substantial evidence.
Any decision based on unsubstantiated allegation cannot stand as it will offend due process.
Facts:
Rainerio N. Nazal was employed as cook by Oriental Shipmanagement Co., Inc.

(Oriental), an agency, for its principal, Bennet Shipping SA Liberia (Bennet). After finishing
his contract, he was found to be suffering from high blood pressure and diabetes. He, then,
asked for compensation and medical assistance, but the agency denied his request and
advised him not to work again. Nazal demanded permanent total disability compensation
from Oriental, contending that his ailments developed during his employment with the
company and while he was performing his duties. As his demand went unheeded, he filed
the present complaint. Oriental, for itself and for its principal, argued that Nazal’s claim is
barred by laches as it was filed at least two years and ten (10) months late; even if it were
otherwise, it still cannot prosper because of Nazal’s failure to submit himself to a post-
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employment medical examination by a company designated physician within three
working days upon his disembarkation, as mandated by the Philippine Overseas
Employment Administration Standard Employment Contract (POEA-SEC). This resulted,
it added, in the forfeiture of his right to claim disability benefits.
The Labor Arbiter denied the complaint on the ground that the respondent failed
to comply with the 3-day mandatory reporting requirement under the POEA Contract.
The NLRC set aside the decision of the Labor Arbiter and relied on the assessment
of the seafarer’s physician and awarded partial disability benefits amounting to US$10,075.
Both parties moved for partial reconsideration as the seafarer wanted full disability benefits
and the company was of the position that seafarer is not entitled to any. Both motions
were denied. In the interim, it was discovered that the seafarer was engaged by another
company on-board another ocean-going ship. The company elevated the matter to the
Court of Appeals but their petition was dismissed due to technicalities. The company then
filed a petition with the Supreme Court.
Issue:
Whether or not the Oriental and Bennet are liable for the death of Nazal
Ruling:
SC finds no substantial evidence supporting the ruling that the agency and its
principal are liable to Nazal by way of temporary or partial total disability benefits. The
labor tribunal and the appellate court grossly misappreciated the facts and even completely
disregarded vital pieces of evidence in resolving the case.
First, Nazal disembarked from the vessel M/V Rover for a "finished contract," not
for medical reasons. Except for his bare allegations, nothing on record supports Nazal’s
claim that he contracted his supposed ailments on board the vessel. The absence of a
medical report or certification of Nazal’s ailments and disability only signifies that his post-
employment medical examination did not take place as claimed. SC, thus, cannot accept
the NLRC reasoning that the absence of a medical report does not mean that Nazal was not
examined by the company-designated physician as the medical reports are normally in the
custody of the manning agency and not with the seaman. In UST Faculty Union v.
University of Santo Tomas, the Court declared: "a party alleging a critical fact must support
his allegation with substantial evidence. Any decision based on unsubstantiated allegation
cannot stand as it will offend due process."
Second, Nazal inordinate delay in the institution of the complaint casts a grave
suspicion of his true intentions against the petitioners. It took him two years and 10 months
to file the complaint (on September 16, 2004) since he disembarked from the vessel M/V
Rover on November 24, 2001. Why it took him that long a time to file the complaint only
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Nazal can answer, but one thing is clear: he obtained another employment as a seaman for
three months (from March 1, 2004 to June 11, 2004), long after his employment with the
petitioners. He was deployed by manning agent Crossocean Marine Services, Inc.
(Crossocean) on board the vessel Kizomba A FPSO, for the principal EurestShrm Far East
Pte., Ltd. Nazal admitted as much when he submitted in evidence before the LA
photocopies of the visa section of his passport showing a departure on March 1, 2004 and
an arrival on June 11, 2004.
If Nazal was able to secure an employment as a seaman with another vessel after his
disembarkation in November 2001, how can there be a case against the petitioners,
considering especially the lapse of time when the case was instituted? How could Nazal be
accepted for another ocean-going job if he had not been in good health? How could he be
engaged as a seaman after his employment with the petitioners if he was then already
disabled? Surely, before he was deployed by Crossocean, he went through a pre-
employment medical examination and was found fit to work and healthy; otherwise, he
would not have been hired. Under the circumstances, his ailments resulting in his claimed
disability could only have been contracted or aggravated during his engagement by his last
employer or, at the very least, during the period after his contract of employment with the
petitioners expired. For ignoring this glaring fact, the NLRC committed a grave abuse of
discretion; for upholding the NLRC, the CA committed the same jurisdictional error.
PHILIPPINE JOURNALISTS, INC. vs. JOURNAL EMPLOYEES UNION, FOR ITS

UNION MEMBER, MICHAEL ALFANTE
G.R. No. 192601, June 03, 2013
J. Bersamin
The coverage of the term legal dependent as used in a stipulation in a collective

bargaining agreement (CBA) granting funeral or bereavement benefit to a regular employee
for the death of a legal dependent, if the CBA is silent about it, is to be construed as similar
to the meaning that contemporaneous social legislations have set. This is because the terms
of such social legislations are deemed incorporated in or adopted by the CBA.
The civil status of the employee as either married or single is not the controlling
consideration in order that a person may qualify as the employee’s legal dependent. What is
rather decidedly controlling is the fact that the spouse, child, or parent is actually dependent
for support upon the employee.
Facts:
Respondent Michael Alfante was hired by petitioner Philippine Journalists, Inc., as

computer technician for the management information system. While respondent Judith
Pulido was hired by petitioner as proofreader. Respondents Pulido and Alfante filed a
complaint for illegal dismissal and other monetary claims.
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Petitioner denied liabilities as far as respondents‘ monetary claims are concerned.
With respect to the alleged non-adjustment of longevity pay and burial aid, petitioner
pointed out that it complies with the provisions of the CBA and that both respondents have
not claimed for the burial aid. Petitioner maintained that under Section 4, Article XIII of
the CBA, funeral and bereavement aid should be granted upon the death of a legal
dependent of a regular employee; that consistent with the definition provided by the Social
Security System (SSS), the term legal dependent referred to the spouse and children of a
married regular employee, and to the parents and siblings, 18 years old and below, of a
single regular employee; that the CBA considered the term dependents to have the same
meaning as beneficiaries, as provided in Section 5, Article XIII of the CBA on the payment
of death benefits; that its earlier granting of claims for funeral and bereavement aid without
regard to the foregoing definition of the legal dependents of married or single regular
employees did not ripen into a company policy whose unilateral withdrawal would
constitute a violation of Article 100 of the Labor Code, the law disallowing the non-
diminution of benefits; that it had approved only four claims from 1999 to 2003 based on
its mistaken interpretation of the term legal dependents, but later corrected the same in
2000; that the grant of funeral and bereavement aid for the death of an employee‘s legal
dependent, regardless of the employee‘s civil status, did not occur over a long period of
time, was not consistent and deliberate, and was partly due to its mistake in appreciating
a doubtful question of law; and that its denial of subsequent claims did not amount to a
violation of the law against the non-diminution of benefits. In their comment, respondents
countered that the CBA was a bilateral contractual agreement that could not be unilaterally
changed by any party during its lifetime; and that the grant of burial benefits had already
become a company practice favorable to the employees, and could not anymore be
reduced, diminished, discontinued or eliminated by petitioner.
When the case reached the Court of Appeals (CA), it modified the decision of the
National Labor Relations Commission (NLRC) by granting funeral or bereavement aid to
respondent but imposing, among others, the condition that he should present conclusive
proof that the deceased was his parent.
Issue:
Whether or not denial of respondents’ claims for funeral and bereavement aid
granted under Section 4, Article XIII of their CBA constitutes diminution of benefits in
violation of Article 100 of the Labor Code
Ruling:
Social legislations contemporaneous with the execution of the collective bargaining

agreement (CBA) have given a meaning to the term legal dependent. First of all, Section
8(e) of the Social Security Law provides that a dependent shall be the following, namely:
(a) the legal spouse entitled by law to receive support from the member; (b) the legitimate,
legitimated, or legally adopted, and illegitimate child who is unmarried, not gainfully
employed and has not reached 21 of age, or, if over 21 years of age, is congenitally or while
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still a minor has been permanently incapacitated and incapable of self-support, physically
or mentally; and (c) the parent who is receiving regular support from the member.
Secondly, Section 4(f) of Republic Act 7875, as amended by RA 9241, enumerates

who are the legal dependents, to wit: (a) the legitimate spouse who is not a member; (b)
the unmarried and unemployed legitimate, legitimated, illegitimate, acknowledged
children as appearing in the birth certificate; legally adopted or step-children below 21 years
of age; (c) children who are 21 years old and older but suffering from congenital disability,
either physical or mental, or any disability acquired that renders them totally dependent
on the member of our support; and (d) the parents who are 60 years old or older whose
monthly income is below an amount to be determined by the Philippine Health Insurance
Corp. in accordance with the guiding principles set forth in Article 1 of RA 7875.
And, thirdly, Section 2(f) of Presidential Decree 1146, as amended by RA 8291,

describes a dependent as someone who depends for support upon the member or
pensioner; (b) the legitimate, legitimated, legally adopted child, including the illegitimate
child, who is unmarried, not gainfully employed, not over the age of majority, or is over the
age of majority but incapacitated and incapable of self-support due to a mental or physical
defect acquired prior to age of majority; and (c) the parents dependent upon the member
for support.
It is clear from these statutory definitions of dependent that the civil status of the
employee as either married or single is not the controlling consideration in order that a
person may qualify as the employee’s legal dependent. What is rather decidedly controlling
is the fact that the spouse, child, or parent is actually dependent for support upon the
employee. The continuity in the grant of the funeral and bereavement aid to regular
employees for the death of their legal dependents has undoubtedly ripened into a company
policy. With that, the denial of Alfante's qualified claim for such benefit pursuant to Section
4, Article XIII of the CBA violated the law prohibiting the diminution of benefits.
CAMILO A. ESGUERRA vs. UNITED PHILIPPINES LINES, INC., ET AL.

G.R. No. 199932. July 3, 2013
J. Reyes
Permanent and 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.
Disability need not render the seafarer absolutely helpless or feeble to be compensable; it is
enough that it incapacitates to perform his customary work.
Facts:
On October 26, 2007, United Philippines Lines, Inc. (UPLI), a Philippine-registered

manning agency, in behalf of its principal, Belships Management (Singapore) Pte Ltd.,
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(Belships), hired the petitioner to work as a fitter on board the vessel ‘M/V Jaco Triumph’
for a period of nine (9) months or until July 2008. On August 21, 2008, while the petitioner
was welding wedges inside Hatch 5 of the vessel, a manhole cover accidentally fell and hit
the petitioner on the head. The impact of the blow caused him pain on his neck and
shoulders despite him wearing a protective helmet. He was given immediate medical
attention and was kept under constant monitoring and observation. On September 11, 2008,
the petitioner was medically repatriated to the Philippines. He was referred to the
company-designated physicians for a series of medical examinations. Eventually, the
company-designated physicians declared petitioner’s disability as Grade 8 although the
specialist noted that fitness to work is not guaranteed.
Petitioner filed a complaint for payment of permanent disability benefits and

sickness allowance with claims for damages and attorney’s fees claiming that he is entitled
to full disability compensation. During the proceedings, the petitioner presented the
medical report of his own doctor who diagnosed him to be permanently unfit as a seafarer.
The Labor Arbiter ruled in favor of the petitioner and awarded full disability
benefits. Said ruling was affirmed by the NLRC. The Court of Appeals modified the
decision of the NLRC and awarded the sum of US$16,795.00 based on the grade “8”
disability assessment of the company-designated doctor.
Issue:
Whether or not the petitioner is entitled to permanent disability benefits and

sickness allowance
Ruling:
The petitioner’s injury should be classified as permanent and total disability.
The findings of the NLRC on the degree of the petitioner’s disability are most in
accord with the evidence on record. As ardently observed by the labor commission, the
orthopedic surgeon designated by the respondents, Dr. Chuasuan, and the petitioner’s
independent specialist, Dr. Sabado, were one in declaring that the petitioner is
permanently unfit for sea duty. Dr. Sabado categorically pronounced the same in his
certification dated February 15, 200932 while the import of Dr. Chuasuan’s report on
February 7, 200933 conveyed the similar conclusion when he stated: “[f]urther treatment
would probably be of some benefit but will not guarantee (the petitioner’s) fitness to work.”
The uncertain effect of further treatment intimates nothing more but that the injury
sustained by the petitioner bars him from performing his customary and strenuous work
as a seafarer/fitter. As such, he is considered permanently and totally disabled.
Permanent and 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
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perform, or any kind of work which a person of his mentality and attainment can do.” It is
inconsequential whether the petitioner was actually recorded by the respondents to be
driving a motorcycle. It does not preclude an award for disability because, in labor laws,
disability need not render the seafarer absolutely helpless or feeble to be compensable; it
is enough that it incapacitates to perform his customary work.
Settled is the rule that the burden of proof rests upon the party who asserts the
affirmative of an issue. In labor cases, the quantum of proof necessary is substantial
evidence, or such amount of relevant evidence which a reasonable mind might accept as
adequate to justify a conclusion. In disability claims, as in the case at bar, the employee
bears the onus to prove by substantial evidence his own positive assertions.
In fine, the petitioner failed to proffer credible and competent evidence of his claim
for superior disability benefits. What remains as competent basis for disability award is the
POEA-SEC.
Section 32, on the other hand, states that a disability allowance of US$60,000.00
(US$50,000.00 x 120%) is granted for an impediment considered as total and permanent,
such as that adjudged to have befallen the petitioner.
Anent sickness benefits, the Court finds that the respondents have already satisfied
the same based on Section 20(B)(3) of the POEA-SEC. Under the said provision, 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. The receipts on record establish payment of
the petitioner’s sickness allowance from September 14, 2008 to January 12, 2009 or for a
period of 120 days.
3. GOVERNMENT SERVICE INSURANCE SYSTEM (GSIS), Petitioner, v.

APOLINARIO C. PAUIG, Respondent.
G.R. No. 210328, January 30, 2017
Facts:
Respondent Apolinario C. Pauig(Pauig) was the Municipal Agriculturist of the
Municipality of San Pablo, Isabela. He started in the government service on
February 12, 1964 as Emergency Laborer on casual status. Later, he became a
temporary employee from July 5, 1972 to July 18, 1977. On July 19, 1977, he became a
permanent employee, and on August 1, 1977, he became a GSIS member, as
indicated in his Information for Membership.
Thereafter, on November 3, 2004, he retired from the service upon reaching the
mandatory retirement age of sixty-five (65) years old. But when he filed his
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retirement papers with the GSIS-Cauayan, the latter processed his claim based on
a Record of Creditable Service (RCS) and a Total Length of Service of only twenty-
seven (27) years. Disagreeing with the computation, Pauig wrote a letter-complaint
to the GSIS, arguing that his first fourteen (14) years in the government service had
been. erroneously omitted.
The GSIS ratiocinated that Pauig's first fourteen (14) years in the government were
excluded in the computation of his retirement benefits because during those years,
no premium payments were remitted to it. Under the Premium-Based Policy of the
GSIS which took effect on August 1, 2003, only periods of service where premium
payments were made and duly remitted to the System shall be included in the
computation of retirement benefits. Aggrieved, Pauig filed a case before the RTC of
Cabagan, Isabela.
Issue:
Whether or not the GSIS should include Pauig's first fourteen (14) years in
government service for the calculation of the latter's retirement benefits claim.
Ruling:
No.
Retirement benefits are given to government employees to reward them for giving
the best years of their lives to the service of their country. This is especially true
with those in government service occupying positions of leadership or positions
requiring management skills because the years they devote to government service
could be spent more profitably elsewhere, such as in lucrative appointments in the
private sector. Hence, in exchange for their selfless dedication to government
service, they should enjoy security of tenure and be ensured of a reasonable
amount of support after they leave the government.
Pauig insists that retirement laws must be liberally construed in favor of the
retirees because the intention is to provide for their sustenance, and hopefully
even comfort, when they no longer have the stamina to continue earning their
livelihood. After devoting the best years of his life to public service, Pauig asserts
that he deserves the appreciation of a grateful government as best concretely
expressed in a generous retirement gratuity commensurate with the value and
length of his services. That generosity, he argues, is the least he should expect now
that his work is done and his youth is gone. Even as he feels the weariness in his
bones and glimpses the approach of the lengthening shadows, he should be able to
savor the fruits of his toil.
40 | P a g e
However, the doctrine of liberal construction cannot be applied in this case, where
the law invoked is clear, unequivocal and leaves no room for interpretation or
construction. To uphold Pauig's position will contravene the very words of the law,
and will defeat the ends which it seeks to attain.
Indubitably, compulsory coverage under the GSIS had previously and consistently
included regular and permanent employees, and expressly excluded casual,
substitute or temporary employees from its retirement insurance plan. A
permanent appointment is one issued to a person who has met the requirements
of the position to which appointment is made, in accordance with the provisions
of the Civil Service Act and the Rules and Standards, while temporary appointment
is made in the absence of appropriate eligibles and it becomes necessary in the
public interest to fill a vacancy. Casual employment, on the other hand, is not
permanent but occasional, unpredictable, sporadic and brief in nature.11 Based on
the records, Pauig began his career in the government on February 12, 1964 as
Emergency Laborer on a casual status. Then, he became a temporary employee
from July 5, 1972 to July 18, 1977. However, the Court notes that it was not until
1997 that the compulsory membership in the GSIS was extended to employees
other than those on permanent status.
Pauig cited the case of GSIS v. CSC,13 where the Court ruled that the basis for the
provision of retirement benefits is service to the government. Indeed, while a
government insurance system rationalizes the management of funds necessary to
keep this system of retirement support afloat and is partly dependent on
contributions made by the thousands of members of the system, the fact that these
contributions are minimal when compared to the amount of retirement benefits
actually received shows that such contributions, while necessary, are not
absolutely determinative in drawing up criteria for those who would qualify as
recipients of the retirement benefit system.
Unfortunately, Pauig's reliance on the aforecited case is misplaced. True, in GSIS v.

CSC, the Court allowed the claimants to avail of their retirement benefits although
no deductions were made from their salaries during the disputed periods when
they were paid on a per diem basis. However, unlike in the case at bar, deductions
were actually made from claimant's fixed salary before and after the short
controversial period. She assumed in all good faith that she continued to be
covered by the GSIS insurance benefits considering that, in fact and in practice,
the deductions are virtually mandatorily made from all government employees on
an essentially involuntary basis. More importantly, neither of the claimants in this
case of GSIS v. CSC was a casual or temporary employee like Pauig, both of them
being elective officials.14 Here, the primordial reason why there were no
40 | P a g e
deductions during those fourteen (14) years was because Pauig was not yet a GSIS
member at that time. There was thus no legal obligation to pay the premium as no
basis for the remittance of the same existed. And since only periods of service
where premium payments were actually made and duly remitted to the GSIS shall
be included in the computation of retirement benefits, said disputed period of
fourteen (14) years must corollarily be removed from Pauig's creditable service.
The Court must deny Pauig's appeal to liberal construction since the applicable
law is clear and unambiguous.
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
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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 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
40 | P a g e
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 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.
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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 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
40 | P a g e
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
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
40 | P a g e
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.
HOLY CHILD CATHOLIC SCHOOL vs. HON. PATRICIA STO. TOMAS, ETC., ET
AL.
G.R. No. 179146. July 23, 2013
J. Peralta
A certification election is the sole concern of the workers, except when the employer
itself has to file the petition pursuant to Article 259 of the Labor Code, as amended, but even
after such filing its role in the certification process ceases and becomes merely a bystander.
The employer clearly lacks the personality to dispute the election and has no right to interfere
at all therein.
Inclusion of supervisory employees in a labor organization seeking to represent the
bargaining unit of rank-and-file employees does not divest it of its status as a legitimate labor
organization.
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Facts:
A petition for certification election was filed by private respondent Pinag-

IsangTinig at Lakas ng Anakpawis – Holy Child Catholic School Teachers and Employees
Labor Union (HCCS-TELU-PIGLAS).
Petitioner raised that members of private respondent do not belong to the same
class; it is not only a mixture of managerial, supervisory, and rank-and-file employees – as
three (3) are vice-principals, one (1) is a department head/supervisor, and eleven (11) are
coordinators – but also a combination of teaching and non-teaching personnel – as twenty-
seven (27) are non-teaching personnel. It insisted that, for not being in accord with Article
245 of the Labor Code, private respondent is an illegitimate labor organization lacking in
personality to file a petition for certification election, and an inappropriate bargaining unit
for want of community or mutuality of interest.
Med-Arbiter denied the petition for certification election on the ground that the
unit which private respondent sought to represent is inappropriate. Private respondent
appealed before the SOLE, who ruled against the dismissal of the petition and directed the
conduct of two separate certification elections for the teaching and the non-teaching
personnel. On appeal, the CA dismissed the petition.
Issue:
Whether or not a petition for certification election is dismissible on the ground that
the labor organization’s membership allegedly consists of supervisory and rank-and-file
employee
Ruling:
The “Bystander Rule” is already well entrenched in this jurisdiction. It has been
consistently held in a number of cases that a certification election is the sole concern of the
workers, except when the employer itself has to file the petition pursuant to Article 259 of
the Labor Code, as amended, but even after such filing its role in the certification process
ceases and becomes merely a bystander. The employer clearly lacks the personality to
dispute the election and has no right to interfere at all therein. This is so since any uncalled-
for concern on the part of the employer may give rise to the suspicion that it is batting for
a company union. Indeed, the demand of the law and policy for an employer to take a strict,
hands-off stance in certification elections is based on the rationale that the employees’
bargaining representative should be chosen free from any extraneous influence of the
management; that, to be effective, the bargaining representative must owe its loyalty to
the employees alone and to no other.
In the 2008 case of Republic v. Kawashima Textile Mfg., Philippines, Inc. ,wherein
the employer-company moved to dismiss the petition for certification election on the
40 | P a g e
ground inter alia that the union membership is a mixture of rank-and-file and supervisory
employees, this Court had conscientiously discussed the applicability of Toyota and
Dunlop in the context of R.A. No. 6715 and D.O. No. 9, viz.:
It was in R.A. No. 875, under Section 3, that such questioned mingling was first
prohibited, to wit:
Sec. 3. Employees' right to self-organization. - Employees shall have the right to self-
organization and to form, join or assist labor organizations of their own choosing for the
purpose of collective bargaining through representatives of their own choosing and to
engage in concerted activities for the purpose of collective bargaining and other mutual aid
or protection. Individuals employed as supervisors shall not be eligible for membership in
a labor organization of employees under their supervision but may form separate
organizations of their own.
When a similar issue confronted this Court close to three years later, the above
ruling was substantially quoted in SamahangManggagawasa Charter Chemical Solidarity of
Unions in the Philippines for Empowerment and Reforms (SMCC-Super) v. Charter
Chemical and Coating Corporation. In unequivocal terms, we reiterated that the alleged
inclusion of supervisory employees in a labor organization seeking to represent the
bargaining unit of rank-and-file employees does not divest it of its status as a legitimate
labor organization.
4. ASIAN INSTITUTE OF MANAGEMENT, Petitioner, v.ASIAN INSTITUTE OF

MANAGEMENT FACULTY ASSOCIATION, Respondent.
G.R. No. 207971, January 23, 2017
Facts:
Petitioner Asian Institute of Management (AIM) is a duly registered non stock,
non-profit educational institution. Respondent Asian Institute of Management
Faculty Association (AFA) is a labor organization composed of members of the
AIM faculty, duly registered Certificate of Registration No. NCR-UR-12-4076-2004.
On May 16, 2007, respondent Hied a petition for certification election6 seeking
to represent a bargaining unit in AIM consisting of forty (40) faculty members. The
case was docketed as DOLE Case No. NCR-OD-M-0705-007. Petitioner opposed
the petition, claiming that respondent's members are neither rank-and-file nor
supervisory, but rather, managerial employees.7
On July 11, 2007, petitioner filed a petition for cancellation of respondent's

certificate of registration8 - docketed as DOLE Case No. NCR-OD-0707-001-
40 | P a g e
LRD - on the grounds of misrepresentation in registration and that respondent is
composed of managerial employees who are prohibited from organizing as a
union.
On August 30, 2007, the Med-Arbiter in DOLE Case No. NCR-OD-M-0705-007

issued an Order9 denying the petition for certification election on the ground that
AIM's faculty members are managerial employees. This Order was appealed by
respondent before the Secretary of the Department of Labor and Employment
(DOLE),10 who reversed the same via a February 20, 2009 Decision11 and May 4,
2009 Resolution.
Meanwhile, in DOLE Case No. NCR-OD-0707-001-LRD, an Order14 dated February

16, 2009 was issued by DOLE-NCR Regional Director Raymundo G. Agravante
granting AIM's petition for cancellation of respondent's certificate of registration
and ordering its delisting from the roster of legitimate labor organizations. This
Order was appealed by respondent before the Bureau of Labor Relations15 (BLR),
which, in a December 29, 2009 Decision,16 reversed the same and ordered
respondent's retention in the roster of legitimate labor organizations. The BLR
held that the grounds relied upon in the petition for cancellation are not among
the grounds authorized under Article 239 of the Labor Code,17 and that
respondent's members are not managerial employees. Petitioner moved to
reconsider, but was rebuffed in a March 18, 2010 Resolution.
Issue:
What is the proper procedure in case of alleged inclusion of disqualified employees
in a union?
Ruling:
In Holy Child Catholic School v. Hon. Sto, Tomas,30 this Court declared that "[i]n
case of alleged inclusion of disqualified employees in a union, the proper
procedure for an employer like petitioner is to directly file a petition for
cancellation of the union's certificate of registration due to misrepresentation,
false statement or fraud under the circumstances enumerated in Article 239 of the
Labor Code, as amended."
On the basis of the ruling in the above-cited case, it can be said that petitioner was
correct in filing a petition tor cancellation of respondent's certificate of
registration. Petitioner's sole ground for seeking cancellation of respondent's
certificate of registration - that its members are managerial employees and for this
reason, its registration is thus a patent nullity for being an absolute vio1ation of
Article 245 of the Labor Code which declares that managerial employees are
40 | P a g e
ineligible to join any labor organization - is, in a sense, an accusation that
respondent is guilty of misrepresentation for registering under the claim that its
members are not managerial employees.
However, the issue of whether respondent's members are managerial employees is

still pending resolution by way of petition for review on certiorari in G.R. No.
197089, which is the culmination of all proceedings in DOLE Case No. NCR-OD-
M-0705-007 - where the issue relative to the nature of respondent's membership
was first raised by petitioner itself and is there fiercely contested.
The resolution of this issue cannot be pre-empted; until it is determined with

finality in G.R. No. 197089, the petition for cancellation of respondent's certificate
of registration on the grounds alleged by petitioner cannot be resolved. As a
matter of courtesy and in order to avoid conflicting decisions, We must await the
resolution of the petition in G.R. No. 197089.
UNION REGISTRATION
NUBE vs. PEMA and PNB
G.R. No. 174287. August 12, 2013
J. Peralta
A local union may disaffiliate at any time from its mother federation, absent any
showing that the same is prohibited under its constitution or rule. Such, however, does not
result in it losing its legal personality altogether.
In the case at bar, there is nothing shown in the records that the union was expressly
forbidden to disaffiliate from the federation nor were there any conditions imposed for a valid
breakaway. This being so, PEMA is not precluded to disaffiliate from NUBE after acquiring
the status of an independent labor organization duly registered before the DOLE.
Facts:
40 | P a g e
Respondent Philippine National Bank (PNB) used to be a government-owned and
controlled banking institution. Its rank-and-file employees, being government personnel,
were represented for collective negotiation by the Philnabank Employees Association
(PEMA), a public sector union.
In 1996, the Securities and Exchange Commission approved PNB’s new Articles of
Incorporation and By-laws and its changed status as a private corporation. PEMA affiliated
with petitioner National Union of Bank Employees (NUBE), which is a labor federation
composed of unions in the banking industry, adopting the name NUBE-PNB Employees
Chapter (NUBE-PEC).
Later, NUBE-PEC was certified as the sole and exclusive bargaining agent of the PNB rank-
and-file employees. A collective bargaining agreement (CBA) was subsequently signed
between NUBE-PEC and PNB covering the period of January 1, 1997 to December 31, 2001.
Pursuant to Article V on Check-off and Agency Fees of the CBA, PNB shall deduct the
monthly membership fee and other assessments imposed by the union from the salary of
each union member, and agency from the salary of the rank-and-file employees within the
bargaining unit who are not union members. Moreover, NUBE, being the Federation union,
agreed that PNB shall remit P15.00 of the P65.00 union dues per month collected by PNB
from every employee, and that PNB shall directly credit the amount to NUBE’s current
account with PNB.
Following the expiration of the CBA, the Philnabank Employees Association-FFW (PEMA-
FFW) filed a petition for certification election among the rank-and-file employees of PNB.
The petition sought the conduct of a certification election to be participated in by PEMA-
FFW and NUBE-PEC.
While the petition for certification election was still pending, two significant events
transpired – the independent union registration of NUBE-PEC and its disaffiliation with
NUBE.
40 | P a g e
PEMA sent a letter to the PNB management informing its disaffiliation from NUBE and
requesting to stop, effective immediately, the check-off of the P15.00 due for NUBE.
Issue:
Whether or not PEMA validly disaffiliated itself from NUBE, the resolution of which, in
turn, inevitably affects the latter’s right to collect the union dues held in trust by PNB
Ruling:
The right of the local union to exercise the right to disaffiliate from its mother union is well
settled in this jurisdiction. In MSMG-UWP v. Hon. Ramos, We held:
A local union has the right to disaffiliate from its mother union or declare
its autonomy. A local union, being a separate and voluntary association, is
free to serve the interests of all its members including the freedom to
disaffiliate or declare its autonomy from the federation which it belongs
when circumstances warrant, in accordance with the constitutional
guarantee of freedom of association.
The purpose of affiliation by a local union with a mother union [or] a

federation
"x x x is to increase by collective action the bargaining power in respect of

the terms and conditions of labor. Yet the locals remained the basic units of
association, free to serve their own and the common interest of all, subject
to the restraints imposed by the Constitution and By-Laws of the
Association, and free also to renounce the affiliation for mutual welfare
upon the terms laid down in the agreement which brought it into
existence."
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Thus, a local union which has affiliated itself with a federation is free to
sever such affiliation anytime and such disaffiliation cannot be considered
disloyalty. In the absence of specific provisions in the federation's
constitution prohibiting disaffiliation or the declaration of autonomy of a
local union, a local may dissociate with its parent union.
The recent case of Cirtek Employees Labor Union-Federation of Free Workers v. Cirtek
Electronics, Incruled:
x x x [A] local union may disaffiliate at any time from its mother federation,
absent any showing that the same is prohibited under its constitution or
rule. Such, however, does not result in it losing its legal personality
altogether.
The right of the local members to withdraw from the federation and to form a new local
union depends upon the provisions of the union's constitution, by-laws and charter and, in
the absence of enforceable provisions in the federation's constitution preventing
disaffiliation of a local union, a local may sever its relationship with its parent. In the case
at bar, there is nothing shown in the records nor is it claimed by NUBE that PEMA was
expressly forbidden to disaffiliate from the federation nor were there any conditions
imposed for a valid breakaway. This being so, PEMA is not precluded to disaffiliate from
NUBE after acquiring the status of an independent labor organization duly registered
before the DOLE.
Consequently, by PEMA's valid disaffiliation from NUBE, the vinculum that previously
bound the two entities was completely severed. As NUBE was divested of any and all power
to act in representation of PEMA, any act performed by the former that affects the interests
and affairs of the latter, including the supposed expulsion of Serrana et al., is rendered
without force and effect.
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Also, in effect, NUBE loses it right to collect all union dues held in its trust by PNB. The
moment that PEMA separated from and left NUBE and exists as an independent labor
organization with a certificate of registration, the former is no longer obliged to pay
dues and assessments to the latter; naturally, there would be no longer any reason
or occasion for PNB to continue making deductions.
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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,
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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 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
Peninsula Employees Union vs. Michael B. Esquivel, et al.

GR. NO. 218454
December 01, 2016
Facts:
On December 13, 2007, PEU's Board of Directors passed Local Board Resolution No. 12,
series of 2007 authorizing (a) the affiliation of PEU with NUWHRAIN, and the direct
membership of its individual members thereto; (b) the compliance with all the
requirements therefor; and (c) the Local President to sign the affiliation agreement with
NUWHRAIN upon acceptance of such affiliation. On the same day, the said act was
submitted to the general membership, and was duly ratified by 223 PEU members.
Beginning January 1, 2009, PEU-NUWHRAIN sought to increase the union dues/agency

fees from one percent (1%) to two percent (2%) of the rank and file employees' monthly
salaries, brought about by PEU's affiliation with NUWHRAIN, which supposedly requires
its affiliates to remit to it two percent (2%) of their monthly salaries.
Meanwhile, in a Decision dated October 10, 2008 (October 10, 2008 Decision), the OSEC
resolved the collective bargaining deadlock between PEU-NUWHRAIN and The Peninsula
Manila Hotel (Hotel), ordering the parties to execute a collective bargaining agreement
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(CBA) incorporating the dispositions therein (arbitral award). The parties have yet to
actually sign a CBA but have, for the most part, implemented the arbitral award.
In March 2009, PEU-NUWHRAIN requested the OSEC for Administrative Intervention for
Dispute Avoidance (AIDA) pursuant to DOLE Circular No. 1, series of 2006 in relation to
the issue, among others, of its entitlement to collect increased agency fees from the non-
PEU members, which was docketed as OSEC-AIDA-03-001-09.
The non-PEU members objected to the assessment of increased agency fees arguing
that: (a) the new CBA is unenforceable since no written CBA has been formally signed and
executed by PEU-NUWHRAIN and the Hotel; (b) the 2% agency fee is exorbitant and
unreasonable; and (c) PEU-NUWHRAIN failed to comply with the mandatory
requirements for such increase.
Issue:
Whether or not PEU-NUWHRAIN had the right to collect the increased agency fees.
Ruling:
No.
The recognized collective bargaining union which successfully negotiated the CBA with the
employer is given the right to collect a reasonable fee called "agency fee" from non-union
members who are employees of the appropriate bargaining unit, in an amount equivalent
to the dues and other fees paid by union members, in case they accept the benefits under
the CBA. While the collection of agency fees is recognized by Article 259 (formerly Article
248) of the Labor Code, as amended, the legal basis of the union's right to agency fees is
neither contractual nor statutory, but quasi-contractual, deriving from the established
principle that non-union employees may not unjustly enrich themselves by benefiting from
employment conditions negotiated by the bargaining union.
In the present case, PEU-NUWHRAIN's right to collect agency fees is not disputed.
However, the rate of agency fees it seeks to collect from the non-PEU members is contested,
considering its failure to comply with the requirements for a valid increase of union dues,
rendering the collection of increased agency fees unjustified.
Case law interpreting Article 250 (n) and (o) (formerly Article 241) of the Labor Code, as
amended, mandates the submission of three (3) documentary requisites in order to justify
a valid levy of increased union dues. These are: (a) an authorization by a written resolution
of the majority of all the members at the general membership meeting duly called for the
purpose; (b) the secretary's record of the minutes of the meeting, which shall include the
list of all members present, the votes cast, the purpose of the special assessment or fees and
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the recipient of such assessment or fees; and (c) individual written authorizations for
check-off duly signed by the employees concerned.
In the present case, however, PEU-NUWHRAIN failed to show compliance with the
foregoing requirements.
It is evident from the foregoing that while the matter of implementing the two percent
(2%) union dues was taken up during the PEU-NUWHRAIN's 8th General Membership
Meeting on October 28, 2008, there was no sufficient showing that the same had been duly
deliberated and approved. The minutes of the Assembly itself belie PEU-NUWHRAIN's
claim that the increase in union dues and the corresponding check-off were duly approved
since it merely stated that "the [two percent (2%)] Union dues will have to be
implemented," meaning, it would still require the submission of such matter to the
Assembly for deliberation and approval Such conclusion is bolstered by the silence of the
October 28, 2008 GMR on the matter of two percent (2%) union dues, in contrast to the
payment of 10% attorney's fees from the CBA backwages which was clearly spelled out as
having been "discussed and approved." Thus, as aptly pointed out by the CA: "[i]f indeed
majority of the members of [PEU-NUWHRAIN] approved the increase in union dues, the
same should have been mentioned in the [October 28, 2008 minutes], and reflected in the
GMR of the same date."
Mario N. Felicilda vs. Manchesteve H. Uy

G.R. No. 221241
September 14, 2016
Facts:
Petitioner alleged that on October 29, 2010, respondent Manchesteve H. Uy (respondent)
hired him as a truck driver for the latter's trucking service under the business name "Gold
Pillars Trucking" (GPT). In connection, therewith, petitioner was issued a company
identification card (ID), assigned in one of GPT's branches in Manila, and paid on a
percentage basis. On December 9, 2011, petitioner took a nap at the work station while
waiting for his truck to be loaded with cargoes, all of which were delivered to respondent's
clients on schedule. The next day, or on December 10, 2011, respondent's helper told
petitioner that his employment was already terminated due to his act of sleeping while on
the job. Claiming that he was dismissed without just cause and due process, and that his
act of taking a nap did not prejudice respondent's business, petitioner filed a complaint for
illegal dismissal with money claims against respondent, before the NLRC, docketed as
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NLRC NCR Case No. 12-18409-11.
In his defense, respondent denied the existence of an employer-employee relationship

between him and petitioner, considering that petitioner was: (a) paid merely on a per trip
"percentage" basis and was not required to regularly report for work; (b) free to offer his
services to other companies; and (c) not under respondent's control with respect to the
means and methods by which he performed his job as a truck driver. Respondent added
that petitioner's company ID did not indicate that the latter was his employee, but only
served the purpose of informing the GPT's clients that petitioner was one of respondent's
authorized drivers. Finally, respondent averred that it no longer engaged petitioner's
services due to the latter's "serious transgressions and misconduct."
Issue:
respondent and, thus, the latter could have illegally dismissed the former
Ruling:
Yes.
To ascertain the existence of an employer-employee relationship, jurisprudence has

invariably adhered to 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 power to control
the employee's conduct, or the so-called "control test." Verily, the power of the employer
to control the work of the employee is considered the most significant determinant of the
existence of an employer-employee relationship. This is the so-called "control test," and is
premised on whether the person for whom the services are performed reserves the right to
control both the end achieved and the manner and means used to achieve that end. It must,
however, be stressed that the "control test" merely calls for the existence of the right to
control, and not necessarily the exercise thereof. To be clear, the test does not require that
the employer actually supervises the performance of duties by the employee.
Contrary to respondent's submission, which was upheld by the CA, the Court agrees with
the labor tribunals that all the four (4) elements are present in this case:
First. It is undisputed that respondent hired petitioner to work as a truck driver for his
private enterprise, GPT.
Second. Petitioner received compensation from respondent for the services he rendered.
Contrary to the findings of the CA, while the wages paid was determined on a "per trip" or
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commission basis, it has been constantly ruled that such does not negate employment
relationship. Article 97 (f) of the Labor Code broadly defines the term "wage" as "the
remuneration or earnings, however designated, capable of being expressed in terms of
money, whether fixed or ascertained on a time, task, piece, or commission basis, or other
method of calculating the same, which is payable by an employer to an employee under a
written or unwritten contract of employment for work done or to be done, or for services
rendered or to be rendered x x x." That petitioner was paid on a "per trip" or commission
basis is insignificant as this is merely a method of computing compensation and not a basis
for determining the existence or absence of an employer-employee relationship.
Third. Respondent's power to dismiss was inherent in the selection and engagement of
petitioner as truck driver.
Fourth. The presence of the element of control, which is the most important element to
determine the existence or absence of employment relationship, can be safely deduced
from the fact that: (a) respondent owned the trucks that were assigned to petitioner; (b)
the cargoes loaded in the said trucks were exclusively for respondent's clients; and (c) the
schedule and route to be followed by petitioner were exclusively determined by
respondent. The latter's claim that petitioner was permitted to render service to other
companies was not substantiated and there was no showing that he indeed worked as truck
driver for other companies. Given all these considerations, while petitioner was free to carry
out his duties as truck driver, it cannot be pretended that respondent, nonetheless,
exercised control over the means and methods by which the former was to accomplish his
work. To reiterate, the power of control refers merely to the existence of the power. It is
not essential for the employer to actually supervise the performance of duties of the
employee, as it is sufficient that the former has a right to wield the power, as in this case.
For a dismissal to be valid, the rule is that the employer must comply with both the
that the dismissal must be pursuant to either a just or an authorized cause under Articles
297, 298, and 299 (formerly Articles 282, 283 or 284)38 of the Labor Code, as
amended.39chanrobleslaw
Procedural due process, on the other hand, mandates that the employer must observe the
twin requirements of notice and hearing before a dismissal can be effected.
In this case, suffice it to say that aside from respondent's averment that petitioner
committed "serious transgressions and misconduct" resulting in the former's loss of trust
and confidence, no other evidence was shown to substantiate the same. Such averment
should be properly deemed as a self serving assertion that deserves no weight in
law. Neither was petitioner accorded procedural due process as he was merely informed by
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respondent's helper that he was already terminated from his job. Clearly, respondent
illegally dismissed petitioner, and as such, the latter is entitled to backwages and separation
pay in lieu of reinstatement.
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."
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.
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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 disability benefits.
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
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repeat ESWL, but he failed to do so. Clearly, under the circumstances, the 120-day rule had
lost its relevance.
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.
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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.
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.
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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.
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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.
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.
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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.
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
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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.
MAYNILAD WATER SUPERVISORS ASSOCIATION, represented by ROBERTA

ESTINO vs. MAYNILAD WATER SERVICES, INC.
G.R. No. 198935, November 27, 2013
J. PEREZ
Petitioners argues the associations’ entitlement to cost of living allowances (COLA),

however, after the absorption of MWSS by Maynilad, the said COLA had already been
integrated with the employees basic salary. It is undisputed that Maynilad complied with
such commitment. It cannot, however, be compelled to assume the payment of an
allowance which was not agreed upon. Such would not only be unreasonable but also unfair
for Maynilad. MWSS and Maynilad could not have presumed that the COLA was part of
the agreement when it was no longer being received by the employees at the time of the
execution of the contract, which is the reckoning point of their new employment.
Facts:
Petitioner Maynilad Water Supervisors Association (MWSA) is an association composed

of former supervisory employees of Metropolitan Waterworks and Sewerage System
(MWSS). These employees claim that during their employment with MWSS, they were
receiving a monthly cost of living allowance (COLA) equivalent to 40% of their basic pay.
The payment of these allowances and other additional compensation, including the
COLA were, however, discontinued without qualification effective 1 November 1989
when the Department of Budget and Management (DBM) issued Corporate
Compensation Circular No. 10 (CCC No. 10). In 1997, MWSS was privatized and part of it,
MWSS West, was acquired by Maynilad Water Services, Inc. (Maynilad). Some of the
employees of MWSS, which included members of MWSA, were absorbed by Maynilad
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subject to the terms and conditions of a Concession Agreement and the payment of
COLA was not among those listed as benefits in Exhibit "F."
In 1998, the Supreme Court promulgated a Decision declaring DBM CCC No.10
ineffective for failure to comply with the publication requirement. Consequently, MWSS
partially released the COLA payments for its employees, including members of MWSA,
covering the years 1989 to 1997, and up to year 1999 for its retained employees. In 2002,
MWSA filed a complaint before the Labor Arbiter praying for the payment of their COLA
from the year 1997, the time its members were absorbed by Maynilad, up to the present.
MWSA argued that since DBM CCC No. 10 was rendered ineffective, the COLA should
be paid as part of the benefits enjoyed by their members at the time of their separation
from MWSS, and which should form part of their salaries and benefits with Maynilad.
Labor Arbiter (LA) granted MWSA’s claim and directed Maynilad to pay the COLA of the
supervisors retroactive to the date when they were hired in 1997, with legal interest from
the date of promulgation of the decision. NLRC reversed LA’s ruling. CA set aside NLRC’s
ruling and reinstated the decision of the LA, however, on the Motion for Reconsideration
of Maynilad, CA affirmed the ruling of NLRC.
Issue:
Whether the CA erred in not holding that the MWSA members are entitled to COLA
under the Concession Agreement.
Ruling:
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 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.
It is evident therefore, that at the time the MWSS employees were absorbed by Maynilad
in 1997, the COLA was already part and parcel of their monthly salary. The non-
publication of DBM CCC No. 10 in the Official Gazette or newspaper of general
circulation did not nullify the integration of COLA into the standardized salary rates
upon the effectivity of R.A. No. 6758. As held by this Court in Phil. International Trading
Corp. v. COA, the validity of R.A. No. 6758 should not be made to depend on the validity
of its implementing rules. To grant COLA to herein petitioners now would create an
absurd situation wherein they would be receiving an additional COLA in the amount
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equivalent to 40% of their basic salary even if the Court has already ruled that the COLA
is already integrated in the employee’s basic salary. Such conclusion would give the
absorbed employees far greater rights than their former co-employees or other
government employees from whom COLA was eventually disallowed.
The ruling of the Labor Arbiter which MWSA insists on is also erroneous in that it seeks
to have the COLA incorporated in the monthly compensation to be received by the
absorbed employees. It failed to consider that the employment contracts of the MWSA
members with MWSS were terminated prior to their employment with MAYNILAD.
Although they may have continued performing the same function, their employment is
already covered by an entirely new employment contract.
This Court has ruled that unless expressly assumed, labor contracts such as employment
contracts and collective bargaining agreements are not enforceable against a transferee
of an enterprise, labor contracts being in personam, thus binding only between the
parties. In the instant case, the only commitment of Maynilad under the Concession
Agreement it entered with MWSS was to provide the absorbed employees with a
compensation package "no less favorable than those granted to [them] by the MWSS at
the time of their separation from MWSS, particularly those set forth in Exhibit ‘F’ x x x." It
is undisputed that Maynilad complied with such commitment. It cannot, however, be
compelled to assume the payment of an allowance which was not agreed upon. Such
would not only be unreasonable but also unfair for Maynilad. MWSS and Maynilad could
not have presumed that the COLA was part of the agreement when it was no longer being
received by the employees at the time of the execution of the contract, which is the
reckoning point of their new employment.
In Norton Resources and Development Corporation v. All Asia Bank Corporation, this
Court ruled that the agreement or contract between the parties is the formal expression
of the parties’ rights, duties and obligations. It is the best evidence of the intention of the
parties. Thus, when the terms of an agreement have been reduced to writing, it is
considered as containing all the terms agreed upon and there can be no evidence of such
terms other than the contents of the written agreement between the parties and their
successors in interest. Time and again, we have stressed the rule that a contract is the
law between the parties, and courts have no choice but to enforce such contract so long
as it is not contrary to law, morals, good customs or public policy. Otherwise, courts
would be interfering with the freedom of contract of the parties. Simply put, courts
cannot stipulate for the parties or amend the latter’s agreement, for to do so would be to
alter the real intention of the contracting parties when the contrary function of courts is
to give force and effect to the intention of the parties.
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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 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
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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 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.
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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.
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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.
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
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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 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
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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 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
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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 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.”
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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.
MITSUBISHI MOTORS PHILIPPINES SALARIED EMPLOYEES UNION vs.

MITSUBISHI MOTORS PHILIPPINES CORPORATION
G.R. No. 175773, June 17, 2013
J. Del Castillo
Since the subject CBA provision is an insurance contract, the rights and obligations
of the parties must be determined in accordance with the general principles of insurance
law. Being in the nature of a non-life insurance contract and essentially a contract of
indemnity, the CBA provision obligates the company to indemnify the covered employees’
medical expenses incurred by their dependents but only up to the extent of the expenses
actually incurred. This is consistent with the principle of indemnity which proscribes the
insured from recovering greater than the loss. Indeed, to profit from a loss will lead to
unjust enrichment and therefore should not be countenanced.
Facts:
The Collective Bargaining Agreement (CBA) of the parties in this case provides
that the company shoulder the hospitalization expenses of the dependents of covered
employees subject to certain limitations and restrictions. Accordingly, covered
employees pay part of the hospitalization insurance premium through monthly salary
deduction while the company, upon hospitalization of the covered employees'
dependents, shall pay the hospitalization expenses incurred for the same. The conflict
arose when a portion of the hospitalization expenses of the covered employees'
dependents were paid/shouldered by the dependent's own health insurance. While the
company refused to pay the portion of the hospital expenses already shouldered by the
dependents' own health insurance, the union insists that the covered employees are
entitled to the whole and undiminished amount of said hospital expenses. The company
denied the claims contending that double insurance would result if the said employees
would receive from the company the full amount of hospitalization expenses despite
having already received payment of portions thereof from other health insurance
providers.
The union referred the dispute to the National Conciliation and Mediation Board
and requested for preventive mediation. The Voluntary Arbitrator rendered a Decision
finding the company liable to pay or reimburse the amount of hospitalization expenses
already paid by other health insurance companies. The Voluntary Arbitrator held that
the employees may demand simultaneous payment from both the CBA and their
dependents’ separate health insurance without resulting to double insurance, since
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separate premiums were paid for each contract. He also noted that the CBA does not
prohibit reimbursement in case there are other health insurers.
The CA reversed the decision of the Labor Arbiter. It ruled that despite the lack of
a provision which bars recovery in case of payment by other insurers, the wordings of the
subject provision of the CBA showed that the parties intended to make the company
liable only for expenses actually incurred by an employee’s qualified dependent. Hence,
this petition.
Issue:
Whether recovery from both the CBA and separate health cards is not prohibited
in the absence of any specific provision in the CBA
Ruling:
The conditions set forth in the CBA provision indicate an intention to limit
MMPC’s liability only to actual expenses incurred by the employees’ dependents, that is,
excluding the amounts paid by dependents’ other health insurance providers.
We agree with the CA. The condition that payment should be direct to the
hospital and doctor implies that MMPC is only liable to pay medical expenses actually
shouldered by the employees’ dependents. It follows that MMPC’s liability is limited, that
is, it does not include the amounts paid by other health insurance providers. This
condition is obviously intended to thwart not only fraudulent claims but also double
claims for the same loss of the dependents of covered employees.
MMPSEU insists that MMPC is also liable for the amounts covered under other
insurance policies; otherwise, MMPC will unjustly profit from the premiums the
employees contribute through monthly salary deductions. This contention is
unmeritorious.
To constitute unjust enrichment, it must be shown that a party was unjustly

enriched in the sense that the term unjustly could mean illegally or unlawfully. A claim
for unjust enrichment fails when the person who will benefit has a valid claim to such
benefit.
The CBA has provided for MMPC’s limited liability which extends only up to the
amount to be paid to the hospital and doctor by the employees’ dependents, excluding
those paid by other insurers. Consequently, the covered employees will not receive more
than what is due them; neither is MMPC under any obligation to give more than what is
due under the CBA.
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Moreover, since the subject CBA provision is an insurance contract, the rights and
obligations of the parties must be determined in accordance with the general principles
of insurance law. Being in the nature of a non-life insurance contract and essentially a
contract of indemnity, the CBA provision obligates MMPC to indemnify the covered
employees’ medical expenses incurred by their dependents but only up to the extent of
the expenses actually incurred. This is consistent with the principle of indemnity which
proscribes the insured from recovering greater than the loss. Indeed, to profit from a loss
will lead to unjust enrichment and therefore should not be countenanced. As aptly ruled
by the CA, to grant the claims of MMPSEU will permit possible abuse by employees.
ZUELLIG PHARMA CORPORATION vs. ALICE M. SIBAL, ET AL.

G.R. No. 173587. July 15, 2013
J. Del Castillo
In the present case, the CBA contains specific provisions which effectively bar the
availment of retirement benefits once the employees have chosen separation pay or vice
versa. As the law between the parties, the CBA must be strictly complied with. Moreover,
the complaining employees are not entitled to the monetary equivalent of their unused sick
leave credits because the CBA, the existing company policies, and the quitclaims do not
cover them.
Facts:
Petitioner Zuellig Pharma Corporation (Zuellig) is a domestic corporation

engaged in the manufacture & distribution of pharmaceutical products. It also distributes
pharmaceutical products manufactured by other companies like Syntex Pharmaceuticals
(Syntex). Respondents (36 in all), on the other hand, were the employees of Zuellig at
its Syntex Division.
In 1995, Roche Philippines, Inc. (Roche) purchased Syntex and took over from
Zuellig the distribution of Syntex products. Consequently, Zuellig closed its Syntex
Division and terminated the services of respondents due to redundancy. They were
properly notified of their termination and were paid their respective separation pay in
accordance with for which, respondents individually signed Release and Quitclaim in full
settlement of all claims arising from their employment with Zuellig.
Controversy arose when respondents filed before the Arbitration Branch of the
NLRC separate Complaints (which were later consolidated) for payment of retirement
gratuity and monetary equivalent of their unused sick leave on top of the separation pay
already given them. Respondents claimed that they are still entitled to retirement
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benefits and that their receipt of separation pay and execution of Release and Quitclaim
do not preclude pursuing such claim.
The LA rendered a Decision denying respondents’ claims. The NLRC rendered a

Decision affirming the Decision of the LA. The CA granted respondents’ Petition and
nullified the Decisions of both the Labor Arbiter and the NLRC. Hence, this petition.
Issue:
Whether or not respondents could avail of both Redundancy pay and Retirement
benefits
Ruling:
The CBA does not allow recovery of both separation pay and retirement gratuity.
In the present case, the CBA contains specific provisions which effectively bar the
availment of retirement benefits once the employees have chosen separation pay or vice
versa. Section 2 of Article XIV explicitly states that any payment of retirement gratuity
shall be chargeable against separation pay. Clearly, respondents cannot have both
retirement gratuity and separation pay, as selecting one will preclude recovery of the
other. To illustrate the mechanics of how Section 2 of Article XIV bars double recovery,
if the employees choose to retire, whatever amount they will receive as retirement
gratuity will be charged against the separation pay they would have received had their
separation from employment been for a cause which would entitle them to severance
pay. These causes are enumerated in Section 3, Article XIV of the CBA (i.e., retrenchment,
closure of business, merger, redundancy, or installation of labor-saving device).
However, if the cause of the termination of their employment was any of the causes
enumerated in said Section 3, they could no longer claim retirement gratuity as the fund
from which the same would be taken had already been used in paying their separation
pay. Put differently, employees who were separated from the company cannot have both
retirement gratuity and separation pay as there is only one fund from which said benefits
would be taken. Inarguably, Section 2 of Article XIV effectively disallows recovery of
both separation pay and retirement gratuity. Consequently, respondents are entitled
only to one. Since they have already chosen and accepted redundancy pay and have
executed the corresponding Release and Quitclaim, they are now barred from claiming
retirement gratuity.
Respondents are also not entitled to the monetary equivalent of their unused sick
leave credits.
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As the law between the parties, the CBA must be strictly complied with. 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.
The Release and Quitclaim executed by each of the respondents remains valid. It
is true that quitclaims executed by employees are often frowned upon as contrary to
public policy. But that is not to say that all waivers and quitclaims are invalid as against
public policy. Quitclaims will be upheld as valid if the following requisites are present:
“(1) the employee executes a deed of quitclaim voluntarily; (2) there is no fraud or deceit
on the part of any of the parties; (3) the consideration of the quitclaim is credible and
reasonable; and, (4) the contract is not contrary to law, public order, public policy, morals
or good customs or prejudicial to a third person with a right recognized by law.”
In this case, there is no showing that Zuellig coerced or forced respondents to sign
the Release and Quitclaim. In fact, there is no allegation that Zuellig employed fraud or
deceit in making respondents sign the Release and Quitclaim. On the other hand,
respondents declared that they had received the separation pay in full settlement of all
claims arising from their employment with Zuellig. For which reason, they have remised,
released and discharged Zuellig.
UNFAIR LABOR PRACTICE
SONEDCO Workers Free Labor Union, et al. vs. Universal Robina Corporation
Sugar Division - Southern Negros Development Corporation (URC-SONEDCO)
G.R. No. 220383
October 05, 2016
Facts:
On May 6, 2002, Universal Robina Corporation Sugar Division - Southern Negros
Development Corporation (URC-SONEDCO) and Philippine Agricultural Commercial
and Industrial Workers Union (PACIWU-TUCP), then the exclusive bargaining
representative of URC-SONEDCO's rank-and-file employees, entered into a Collective
Bargaining Agreement (2002 Collective Bargaining Agreement) effective January 1, 2002
to December 31, 2006. Under the 2002 Collective Bargaining Agreement, rank-and-file
employees were entitled to a wage increase of P14.00/day for 2002 and P12.00/day for the
succeeding years until 2006.
On May 17, 2002, days after the 2002 Collective Bargaining Agreement was signed, a
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certification election was conducted. SONEDCO Workers Free Labor Union won and
replaced PACIWU-TUCP as the exclusive bargaining representative.
PACIWU-TUCP questioned the results of the certification election before the

Department of Labor and Employment. On July 8, 2002, Med-Arbiter Romulo Sumalinog
certified SONEDCO Workers Free Labor Union as the sole and exclusive bargaining
representative of URC-SONEDCO. This was affirmed by the Labor Secretary in a
Resolution dated December 27, 2002, which became final on April 15, 2003. PACIWU-
TUCP elevated the same issue to the Court of Appeals and thereafter this Court, which
on July 11, 2007, resolved that the certification election was valid. SONEDCO Workers
Free Labor Union was declared the exclusive bargaining agent of URC-SONEDCO's rank-
and-file employees.
URC-SONEDCO consistently refused to negotiate a new collective bargaining agreement

with SONEDCO Workers Free Labor Union, despite several demands from SONEDCO
Workers Free Labor Union, allegedly due to the 2002 Collective Bargaining Agreement,
which it signed with PACIWU-TUCP.
Issues:
a. Whether or not respondent committed unfair labor practice.
b. Whether or not petitioners, who refused to sign the 2007 and 2008 waivers, are entitled
to the wage increase and other economic benefits as a continuing employee benefit
notwithstanding the 2009 Collective Bargaining Agreement.
Ruling:
a. Yes.
unfair labor practice not only involves acts that violate the right to self-organization but
also covers several acts enumerated in Article 259 of the Labor Code, thus:
ARTICLE 259. [248] Unfair Labor Practices of Employers. — It shall be unlawful for an
employer to commit any of the following unfair labor practices:
(a) To interfere with, restrain or coerce employees in the exercise of their right to self-
organization;
(b) To require as a condition of employment that a person or an employee shall not join
a labor organization or shall withdraw from one to which he belongs;
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(c) To contract out services or functions being performed by union members when such
will interfere with, restrain or coerce employees in the exercise of their right to self-
organization;
(d) To initiate, dominate, assist or otherwise interfere with the formation or

administration of any labor organization, including the giving of financial or other
support to it or its organizers or supporters;
(e) To discriminate in regard to wages, hours of work and other terms and
conditions of employment in order to encourage or discourage membership in any
labor organization. Nothing in this Code or in any other law shall stop the parties from
requiring membership in a recognized collective bargaining agent as a condition for
employment, except those employees who are already members of another union at the
time of the signing of the collective bargaining agreement. Employees of an appropriate
bargaining unit who are not members of the recognized collective bargaining agent may
be assessed a reasonable fee equivalent to the dues and other fees paid by members of
the recognized collective bargaining agent, if such non-union members accept the
benefits under the collective bargaining agreement: Provided, That the individual
authorization required under Article 242, paragraph (o) of this Code 204 shall not apply
to the non-members of the recognized collective bargaining agent;
(f) To dismiss, discharge or otherwise prejudice or discriminate against an employee for

having given or being about to give testimony under this Code;
(g) To violate the duty to bargain collectively as prescribed by this Code;
(h) To pay negotiation or attorney's fees to the union or its officers or agents as part of
the settlement of any issue in collective bargaining or any other dispute; or
(i) To violate a collective bargaining agreement.
The provisions of the preceding paragraph notwithstanding, only the officers and agents
of corporations, associations or partnerships who have actually participated in,
authorized or ratified unfair labor practices shall be held criminally liable. (Emphasis
supplied)
Under this provision, an employer is guilty of unfair labor practice when it fails in its duty
to bargain in good faith.
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In ruling that respondent did not commit unfair labor practice, the National Labor
Relations Commission and the Court of Appeals failed to consider the totality of
respondent's acts, which showed that it violated its duty to bargain collectively. This
constitutes unfair labor practice under Article 259(g) of the Labor Code.
Article 263 of the Labor Code defines the duty to bargain collectively:
ARTICLE 263. [252] Meaning of Duty to Bargain Collectively. — The duty to bargain
collectively means the performance of a mutual obligation to meet and convene promptly
and expeditiously in good faith for the purpose of negotiating an agreement 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 and
executing a contract incorporating such agreements if requested by either party but such
duty does not compel any party to agree to a proposal or to make any concession.
Respondent repeatedly refused to meet and bargain with SONEDCO Workers Free Labor
Union, the exclusive bargaining agent of its rank-and-file employees. In its Position Paper
before the National Labor Relations Commission, respondent cited the different
instances when petitioners sent it letters trying to set meetings to discuss a new collective
bargaining agreement. Respondent admitted that it refused to meet with petitioners in
light of the 2002 Collective Bargaining Agreement, which it signed with PACIWU-TUCP,
the previous bargaining representative. It claimed that the 2002 Collective Bargaining
Agreement remained in full force and effect without change until December 31, 2006,
despite PACIWU-TUCP losing the May 17, 2002 certification election to SONEDCO
Workers Free Labor Union.
Respondent's argument has no merit. Respondent's reliance on the 2002 Collective

Bargaining Agreement as basis for not negotiating with petitioners is unjustified. The
Collective Bargaining Agreement that respondent invoked had been entered into when
a Petition for Certification Election was already filed.
b. Yes.
After SONEDCO Workers Free Labor Union was again declared as the exclusive
bargaining representative in the August 20, 2008 certification election, the 2009
Collective Bargaining Agreement was created to cover 2009 to 2013. Since the 2009
Collective Bargaining Agreement did not include the years 2007 and 2008, the alleged
purpose of the waivers, which was to prevent double compensation, was already
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served. It would be unfair for the employees to still not receive the benefits for 2007 and
2008 simply because they refused to sign a waiver that was already moot.
However, there is no need for the continuation of the wage increase for 2007 and 2008
since the 2009 Collective Bargaining Agreement contains wage increase provisions for
2009 to 2013. As explained in Samahang Manggagawa sa Top Form Manufacturing v.
National Labor Relations Commission, if a proposal is not printed in the collective
bargaining agreement, it cannot be demanded:
The CBA is the law between the contracting parties — the collective bargaining
representative and the employer-company. Compliance with a CBA is mandated by the
expressed policy to give protection to labor, hi the same vein, CBA provisions should be
"construed liberally rather than narrowly and technically, and the courts must place a
practical and realistic construction upon it, giving due consideration to the context in
which it is negotiated and purpose which it is intended to serve." This is founded on the
dictum that a CBA is not an ordinary contract but one impressed with public interest. It
goes without saying, however, 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 a part thereof and the proponent has no claim whatsoever
to its implementation.72(Citations omitted)
If petitioners wanted the wage increase for 2007 and 2008 to be carried on, the proper
recourse would have been to demand that this be included in the 2009 Collective
Bargaining Agreement.
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
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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:
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
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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.
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.
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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
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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.
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
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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
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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 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. ––
"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."
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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 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
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(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
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
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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.
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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 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
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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:
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
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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 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.
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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.
BANKARD, INC. vs. NLRC-FIRST DIVISION, PAULO BUENCONSEJO,

BANKARD EMPLOYEES UNION-AWATU
G.R. No. 171664. March 6, 2013
J. Mendoza
The union contended that the employer committed unfair labor practice by
resorting to job contractualization/outsourcing or contracting out of jobs. The Supreme
Court held that contracting out of services is an exercise of business judgment or
management prerogative. Absent any proof that management acted in a malicious or
arbitrary manner, Supreme Court will not interfere with the exercise of judgment by an
employer. The alleging party has the burden of proving the Unfair Labor Practice; and in
order to show that the employer committed ULP under the Labor Code, substantial
evidence is required to support the claim.
Facts:
The case arose from the notice of strike filed by the Bankard Employees Union-
AWATU (Union) as a result of a deadlock in collective bargaining negotiations with
Bankard, Inc. The union also complained about the unfair labor practices the company
allegedly committed, namely: 1) job contractualization; 2) outsourcing/contracting-out
jobs; 3) manpower rationalization program; and 4) discrimination.
The Union alleged that Bankard, Inc. has resorted to job contractualization or
outsourcing or contracting out of jobs. It implemented a Manpower Rationalization
Program (MRP), which was an invitation to the employees to tender their voluntary
resignation with entitlement to separation pay equivalent to at least two months’ salary
for every year of service. Majority of its Phone Center and Service Fulfillment Division
employees availed themselves of the MRP. Hence, the Union contended that Bankard,
Inc. committed unfair labor practice (ULP).
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The NLRC ruled in favor of the union and said that the reduction of employees
and the outsourcing of their jobs had the ultimate effect of reducing the number of union
members and increasing the number of contractual employees who are not qualified to
become members of the union. Bankard, Inc. appealed the ruling to the Court of Appeals.
The Court of Appeals upheld the NLRC’s action and stated that the company’s freeze-
hiring policy and contracting out of jobs was an unfair labor practice act because it was
able to limit and prevent the growth of the Union. Hence, this petition.
Issue:
Whether or not Bankard, Inc. committed unfair labor practice (ULP)
Ruling:
The general principle is that the one who makes an allegation has the burden of
proving it. While there are exceptions to this general rule, in ULP cases, the alleging party
has the burden of proving the ULP; and in order to show that the employer committed
ULP under the Labor Code, substantial evidence is required to support the claim. Such
principle finds justification in the fact that ULP is punishable with both civil and/or
criminal sanctions.
Aside from the bare allegations of the union, nothing in the records strongly
proves that Bankard intended its program, the MRP, as a tool to drastically and
deliberately reduce union membership. Contrary to the findings and conclusions of both
the National Labor Relations Commission (NLRC) and the Court of Appeals (CA), there
was no proof that the program was meant to encourage the employees to disassociate
themselves from the union or to restrain them from joining any union or organization.
There was no showing that it was intentionally implemented to stunt the growth
of the union or that Bankard discriminated against, or in any way singled out the union
members who had availed themselves of the retirement package under the MRP.
True, the program might have affected the number of union membership because
of the employees’ voluntary resignation and availment of the package, but it does not
necessarily follow that Bankard indeed purposely sought such a result. It must be recalled
that the MRP was implemented as a valid cost-cutting measure, well within the ambit of
the so-called management prerogatives. Bankard contracted an independent agency to
meet business exigencies. In the absence of any showing that Bankard was motivated by
ill will, bad faith or malice, or that it was aimed at interfering with its employees’ right to
self-organize, it cannot be said to have committed an act of unfair labor practice.
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Contracting out of services is an exercise of business judgment or management
prerogative. Absent any proof that management acted in a malicious or arbitrary manner,
SC will not interfere with the exercise of judgment by an employer. Furthermore, bear
in mind that ULP is punishable with both civil and/or criminal sanctions. As such, the
party so alleging must necessarily prove it by substantial evidence. The Union, as earlier
noted, failed to do this. Bankard merely validly exercised its management prerogative.
Not shown to have acted maliciously or arbitrarily, no act of ULP can be imputed against
it.
MINETTE BAPTISTA, ET AL. vs. ROSARIO VILLANUEVA, ET AL.

G.R. No. 194709. July 31, 2013
J. Mendoza
ULP relates to the commission of acts that transgress the workers’ right to organize.
As specified in Articles 248 and 249 of the Labor Code, the prohibited acts must necessarily
relate to the workers' right to self-organization and to the observance of a CBA. Absent the
said vital elements, the acts complained, although seemingly unjust, would not constitute
ULP.
In this case, RPNEU’s Constitution and By-Laws expressly mandate that before a
party is allowed to seek the intervention of the court, it is a pre-condition that he should
have availed of all the internal remedies within the organization. Petitioners were found to
have violated the provisions of the union’s Constitution and By-Laws when they filed
petitions for impeachment against their union officers and for audit before the DOLE
without first exhausting all internal remedies available within their organization. This act
is a ground for expulsion from union membership. Thus, petitioners’ expulsion from the
union was not a deliberate attempt to curtail or restrict their right to organize.
Facts:
Petitioners were former union members of Radio Philippines Network Employees

Union (RPNEU), a legitimate labor organization and the sole and exclusive bargaining
agent of the rank and file employees of Radio Philippines Network (RPN), a government-
sequestered corporation involved in commercial radio and television broadcasting
affairs, while the respondents were the union’s elected officers and members.
On April 26, 2005, on suspicion of union mismanagement, petitioners, together

with some other union members, filed a complaint for impeachment of their union
president, ReynatoSiozon, before the executive board of RPN, which was eventually
abandoned. They later re-lodged the impeachment complaint, this time, against all the
union officers and members of RPNEU before the Department of Labor and Employment
(DOLE). In a letter, dated January 24, 2006, RPNEU’s officers informed their company of
the expulsion of petitioners and the 12 others from the union and requested the
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management to serve them notices of termination from employment in compliance with
their CBA’s union security clause.
Aggrieved, petitioners filed three (3) separate complaints for ULP against the
respondents, which were later consolidated, questioning the legality of their expulsion
from the union and their subsequent termination from employment. The Labor Arbiter
(LA) ruled in favor of the petitioners and adjudged the respondents guilty of ULP. The
NLRC vacated and set aside the LA decision and dismissed the complaint for ULP for
lack of merit. The CA sustained the NLRC decision. Hence, this petition.
Issue:
Whether or not the respondent is guilty of Unfair Labor Practice
Ruling:
The primary concept of ULP is embodied in Article 247 of the Labor Code, which
provides:
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, ULP relates to the commission of acts that transgress the workers’ right
to organize. As specified in Articles 248 and 249 of the Labor Code, the prohibited acts
must necessarily relate to the workers' right to self-organization and to the observance
of a CBA. Absent the said vital elements, the acts complained, although seemingly unjust,
would not constitute ULP. Based on RPNEU’s Constitution and By-Laws, the charges
against petitioners were not mere internal squabbles, but violations that demand proper
investigation because, if proven, would constitute grounds for their expulsion from the
union.
Besides, any supposed procedural flaw in the proceedings before the Committee
was deemed cured when petitioners were given the opportunity to be heard. Due
process, as a constitutional precept, is satisfied when a person was notified of the charge
against him and was given an opportunity to explain or defend himself. In administrative
proceedings, the filing of charges and giving reasonable opportunity for the person so
charged to answer the accusations against him constitute the minimum requirements of
due process.
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It is well-settled that workers’ and employers’ organizations shall have the right
to draw up their constitutions and rules to elect their representatives infull freedom, to
organize their administration and activities and to formulate their programs. In this case,
RPNEU’s Constitution and By-Laws expressly mandate that before a party is allowed to
seek the intervention of the court, it is a pre-condition that he should have availed of all
the internal remedies within the organization. Petitioners were found to have violated
the provisions of the union’s Constitution and By-Laws when they filed petitions for
impeachment against their union officers and for audit before the DOLE without first
exhausting all internal remedies available within their organization. This act is a ground
for expulsion from union membership. Thus, petitioners’ expulsion from the union was
not a deliberate attempt to curtail or restrict their right to organize, but was triggered by
the commission of an act, expressly sanctioned by Section 2.5 of Article IX of the union’s
Constitution and By-Laws.
For a charge of ULP against a labor organization to prosper, the onus probandi
rests upon the party alleging it to prove or substantiate such claims by the requisite
quantum of evidence. Unfortunately, petitioners failed to discharge the burden
required to prove the charge of ULP against the respondents. Aside from their self-
serving allegations, petitioners were not able to establish how they were restrained or
coerced by their union in a way that curtailed their right to self-organization.
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 (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
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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
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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 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."
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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 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.
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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. ––
"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.
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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
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.’
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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
Erson Ang Lee doing business as Super Lamination Services vs. Samahan ng mga
Manggagawa ng Super Lamination
G.R. No. 193816
November 21, 2016
Facts:
Petitioner Erson Ang Lee (petitioner), through Super Lamination, is a duly registered
entity principally engaged in the business of providing lamination services to the general
public. Respondent Samahan ng mga Manggagawa ng Super Lamination Services (Union
A) is a legitimate labor organization, which is also a local chapter affiliate of the National
Federation of Labor Unions - Kilusang Mayo Uno. It appears that Super Lamination is a
sole proprietorship under petitioner's name, while Express Lamination and Express Coat
are duly incorporated entities separately registered with the Securities and Exchange
Commission (SEC).
On 7 March 2008, Union A filed a Petition for Certification Election to represent all the
rank-and-file employees of Super Lamination.
Notably, on the same date, Express Lamination Workers' Union (Union B) also filed a
Petition for Certification Election to represent all the rank-and-file employees of Express
Lamination.
Also on the same date, the Samahan ng mga Manggagawa ng Express Coat Enterprises,
Inc. (Union C) filed a Petition for Certification Election to represent the rank-and-file
employees of Express Coat.
Super Lamination, Express Lamination, and Express Coat, all represented by one counsel,
separately claimed in their Comments and Motions to Dismiss that the petitions must be
dismissed on the same ground — lack of employer-employee relationship between these
establishments and the bargaining units that Unions A, B, and C seek to represent as well
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as these unions' respective members. Super Lamination, in its Motion, posited that a
majority of the persons who were enumerated in the list of members and officers of
Union A were not its employees, but were employed by either Express Lamination or
Express Coat. Interestingly, both Express Lamination and Express Coat, in turn,
maintained the same argument that a majority of those who had assented to the Petition
for Certification Election were not employees of either company, but of one of the two
other companies involved.
All three Petitions for Certification Election of the Unions were denied. On 21 May 2008,
an Order was issued by DOLE National Capital Region (NCR) Med-Arbiter Michael
Angelo Parado denying the respective petitions of Unions B and C on the ground that
there was no existing employer-employee relationship between the members of the
unions and the companies concerned. On 23 May 2008, DOLE NCR Med-Arbiter Alma
Magdaraog-Alba also denied the petition of respondent Union A on the same ground.
The three unions filed their respective appeals before the Office of the DOLE Secretary,
which consolidated the appeal because the involved companies alternately referred to
one another as the employer of the members of the bargaining units sought to be
represented. The unions argued that their petitions should have been allowed
considering that the companies involved were unorganized, and that the employers had
no concomitant right to oppose the petitions. They also claimed that while the
questioned employees might have been assigned to perform work at the other
companies, they were all under one management's direct control and supervision.
Issues:
a. Whether or not application of the doctrine of
piercing the corporate veil is
warranted to treat separate corporations with related businesses as a single bargaining
unit.
b. Whether or not the rank-and-file employees of Super Lamination, Express Lamination,
and Express Coat constitute an appropriate bargaining unit.
Ruling:
a. Yes.
This Court has time and again disregarded separate juridical personalities under the
doctrine of piercing the corporate veil. It has done so in cases where a separate legal
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entity is used to defeat public convenience, justify wrong, protect fraud, or defend crime,
among other grounds. In any of these situations, the law will regard it as an association
of persons or, in case of two corporations, merge them into one.
A settled formulation of the doctrine of piercing the corporate veil is that when two
business enterprises are owned, conducted, and controlled by the same parties, both law
and equity will, when necessary to protect the rights of third parties, disregard the legal
fiction that these two entities are distinct and treat them as identical or as one and the
same.
This formulation has been applied by this Court to cases in which the laborer has been
put in a disadvantageous position as a result of the separate juridical personalities of the
employers involved. Pursuant to veil-piercing, we have held two corporations jointly and
severally liable for an employee's back wages. We also considered a corporation and its
separately incorporated branches as one and the same for purposes of finding the
corporation guilty of illegal dismissal. These rulings were made pursuant to the
fundamental doctrine that the corporate fiction should not be used as a subterfuge to
commit injustice and circumvent labor laws.
Here, a certification election was ordered to be held for all the rank-and-file employees
of Super Lamination, Express Lamination, and Express Coat. The three companies were
supposedly distinct entities based on the fact that Super Lamination is a sole
proprietorship while Express Lamination and Express Coat were separately registered
with the SEC. The directive was therefore, in effect, a piercing of the separate juridical
personalities of the corporations involved. We find the piercing to be proper and in
accordance with the law.
Further, we discern from the synchronized movements of petitioner and the two other
companies an attempt to frustrate or defeat the workers' right to collectively bargain
through the shield of the corporations' separate juridical personalities.
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Due to the finger-pointing by the three companies at one another, the petitions were
dismissed. As a result, the three unions were not able to proceed with the conduct of the
certification election. This also caused confusion among the employees as to who their
real employer is, as Union A claims in its Comment.
We hold that if we allow petitioner and the two other companies to continue obstructing
the holding of the election in this manner, their employees and their respective unions
will never have a chance to choose their bargaining representative. We take note that all
three establishments were unorganized. That is, no union therein was ever duly
recognized or certified as a bargaining representative.
Therefore, it is only proper that, in order to safeguard the right of the workers and Unions
A, B, and C to engage in collective bargaining, the corporate veil of Express Lamination
and Express Coat must be pierced. The separate existence of Super Lamination, Express
Lamination, and Express Coat must be disregarded. In effect, we affirm the lower
tribunals in ruling that these companies must be treated as one and the same unit for
purposes of holding a certification election.
b. Yes.
The basic test for determining the appropriate bargaining unit is the application of a
standard whereby a unit is deemed appropriate if it affects a grouping of employees who
have substantial, mutual interests in wages, hours, working conditions, and other
subjects of collective bargaining. We have ruled that geographical location can be
completely disregarded if the communal or mutual interests of the employees are not
sacrificed.
In the present case, there was communal interest among the rank-and-file employees of
the three companies based on the finding that they were constantly rotated to all three
companies, and that they performed the same or similar duties whenever
rotated. Therefore, aside from geographical location, their employment status and
working conditions were so substantially similar as to justify a conclusion that they
shared a community of interest. This finding is consistent with the policy in favor of a
single-employer unit, unless the circumstances require otherwise. The more solid the
employees are, the stronger is their bargaining capacity.
Light Rail Transit Authority vs. Bienvenido R. Alvarez, Carlos S. Velasco,

Ascencion A. Gargalicano, Marlon E. Aguinaldo, Petronilo T. Legaspi, Bonifacio A.
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Estopia, Andre A. Dela Merced, Jose Novier D. Bayot, Rolando C. Amazona and
Marlino G. Herrera
G.R. No. 188047
November 28, 2016
Facts:
LRTA is a government-owned and controlled corporation created by virtue of Executive
Order No. 603, for the purpose of the construction, operation, maintenance, and/or lease
of light rail transit system in the Philippines. Private respondents Bienvenido R. Alvarez,
Carlos S. Velasco, Ascencion A. Gargalicano, Marlon E. Aguinaldo, Petronilo T. Legaspi,
Bonifacio A. Estopia, Andre A. Dela Merced, Jose Novier D. Bayot, Rolando C. Amazona
and Marlino G. Herrera (private respondents) are former employees of Meralco Transit
Organization, Inc. (METRO).
On June 8, 1984, METRO and LRTA entered into an agreement called "Agreement for the
Management and Operation of the Light Rail Transit System" (AMO-LRTS) for the
operation and management of the light rail transit system. LRTA shouldered and
provided for all the operating expenses of METRO. Also, METRO signed a Collective
Bargaining Agreement (CBA) with its employees wherein provisions on wage increases
and benefits were approved by LRTA's Board of Directors.
However, on April 7, 1989, the Commission on Audit (COA) nullified and voided the
AMO-LRTS. To resolve the issue, LRTA decided to acquire METRO by purchasing all of
its shares of stocks on June 8, 1989. METRO, thus, became a wholly-owned subsidiary of
LRTA. Since then, METRO has been renamed to Metro Transit Organization, Inc. Also,
by virtue of the acquisition, LRTA appointed the new set of officers, from chairman to
members of the board, and top management of METRO. LRTA and METRO declared and
continued the implementation of the AMO-LRTS and the non-interruption of
employment relations of the employees of METRO. They likewise continued the
establishment and funding of the Metro, Inc. Employees Retirement Plan which covers
the past services of all METRO regular employees from the date of their employment.
They confirmed that all CBAs remained in force and effect. LRTA then sanctioned the
CBA's of the union of rank and file employees and the union of supervisory employees.
On November 17, 1997, the METRO general manager (who was appointed by LRTA)
announced in a memorandum that its board of directors approved the
severance/resignation benefit of METRO employees at one and a half (1 1/2) months
salaries for every year of service.
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On July 25, 2000, the union of rank and file employees of METRO declared a strike over
a retirement fund dispute.17 By virtue of its ownership of METRO, LRTA assumed the
obligation to update the Metro, Inc. Employees Retirement Fund with the Bureau of
Treasury.
Issues:
a. Whether or not the LA and the NLRC have jurisdiction over the LRTA.
b. Whether or not the LRTA is jointly and severally liable with METRO for private
respondents' money claims
Ruling:
a. Yes.
LRTA's reliance on Venus is misplaced. Venus involves the illegal dismissal of the
complainants. The proceedings a quo is not for an illegal dismissal case, but for the
monetary claims of respondents against METRO and LRTA. Thus, unlike in Venus, this
case does not involve the issue of respondents' employment with METRO or LRTA. In
fact, in Mendoza, this Court held, "[a]s we see it, the jurisdictional issue should not have
been brought up in the first place because the respondents' claim does not involve their
employment with LRTA. There is no dispute on this aspect of the case. The respondents
were hired by METRO and, were, therefore its employees."
The only issue, therefore, as in Mendoza, is whether LRTA can be made liable by the labor
tribunals for private respondents' money claim despite the absence of an employer-
employee relationship, and though LRTA is a government-owned and controlled
corporation.
We rule in the affirmative. In Mendoza, this Court upheld the jurisdiction of the labor
tribunals over LRTA, citing Philippine National Bank v. Pabalan:
x x x By engaging in a particular business thru the instrumentality of a corporation, the

government divests itself pro hac vice of its sovereign character, so as to render the
corporation subject to the rules of law governing private corporations.
This Court further ruled that LRTA must submit itself to the provisions governing private
corporations, including the Labor Code, for having conducted business through a private
corporation, in this case, METRO.
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In this case, the NLRC accordingly declared, "[LRTA's] contractual commitments with
[METRO] and its employees arose out of its business relations with [METRO] which is
private in nature. Such private relation was not changed notwithstanding the subsequent
acquisition by [LRTA] of full ownership of [METRO] and take-over of its business
operations at LRT."
b. Yes.
First, LRTA is contractually obligated to pay the retirement or severance/resignation pay

of METRO employees. Citing evidence on record, the LA found that:
x x x On November 17, 1997, the Metro, Inc. general manager appointed by LRTA
announced in a memorandum that its Board of Directors approved the
severance/resignation benefit of Metro, Inc. employees at one and a half (1.5) months
salaries for every year of service. x x x By virtue of its ownership of Metro, Inc. LRTA
officially and formally assumed by authority of its board the obligation to update the
Metro, Inc. Employees Retirement Fund with the Bureau of Treasury, to ensure that the
fund fully covers all retirement benefits payable to Metro, Inc[.] employees x x x. [T]he
LRTA's appointed Board of Directors for Metro, Inc. approved the release and payment
of the first fifty (50%) per cent of the severance pay to the displaced Metro. Inc.
employees x x x and complainants were issued the certifications of eligibility for
severance pay/benefit and the memoranda to receive the same x x x.
On this same issue, we again quote this Court's ruling in Mendoza:
First. LRTA obligated itself to fund METRO's retirement fund to answer for the
retirement or severance/resignation of METRO employees as part of METRO's
"operating expenses." Under Article 4.05.1 of the O & M agreement between LRTA and
Metro, "The Authority shall reimburse METRO for x x x "OPERATING EXPENSES x x x."
In the letter to LRTA dated July 12, 2001, the Acting Chairman of the METRO Board of
Directors at the time, Wilfredo Trinidad, reminded LRTA that funding provisions for the
retirement fund have always been considered operating expenses of Metro. The coverage
of operating expenses to include provisions for the retirement fund has never been
denied by LRTA.
In the same letter, Trinidad stressed that as a consequence of the nonrenewal of the O &
M agreement by LRTA, METRO was compelled to close its business operations effective
September 30, 2000. This created, Trinidad added, a legal obligation to pay the qualified
employees separation benefits under existing company policy and collective bargaining
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agreements. The METRO Board of Directors approved the payment of 50% of the
employees' separation pay because that was only what the Employees' Retirement Fund
could accommodate.
The evidence supports Trinidad's position. We refer principally to Resolution No. 00-44
issued by the LRTA Board of Directors on July 28, 2000, in anticipation of and in
preparation for the expiration of the O & M agreement with METRO on July 31, 2000.
Specifically, the LRTA anticipated and prepared for the (1) non-renewal (at its own
behest) of the agreement, (2) the eventual cessation of METRO operations, and (3) the
involuntary loss of jobs of the METRO employees; thus, (1) the extension of a two-month
bridging fund for METRO from August 1, 2000, to coincide with the agreement's
expiration on July 31, 2000; (2) METRO's cessation of operations - it closed on September
30, 2000, the last day of the bridging fund - and most significantly to the employees
adversely affected; (3) the updating of the "Metro, Inc., Employee Retirement Fund with
the Bureau of Treasury to ensure that the fund fully covers all retirement benefits payable
to the employees of Metro, Inc."
The clear language of Resolution No. 00-44, to our mind, established the LRTA's
obligation for the 50% unpaid balance of the respondents' separation pay. Without
doubt, it bound itself to provide the necessary funding to METRO's Employee Retirement
Fund to fully compensate the employees who had been involuntary retired by the
cessation of operations of METRO. This is not at all surprising considering that METRO
was a wholly owned subsidiary of the LRTA.
Second, assuming arguendo that LRTA is not contractually liable to pay the separation
benefits, it is solidarily liable as an indirect employer of private respondents.
Articles 107 and 109 of the Labor Code provide:
Art. 107. Indirect employer. - The provisions of the immediately preceding article shall
likewise apply to any person, partnership, association or corporation which, not being an
employer, contracts with an independent contractor for the performance of any work,
task, job or project.
xxx
Art. 109. Solidary liability. - The provisions of existing laws to the contrary
notwithstanding, every employer or indirect employer shall be held responsible with his
contractor or subcontractor for any violation of any provision of this Code. For purposes
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of determining the extent of their civil liability under this Chapter, they shall be
considered as direct employers.
Based on the foregoing provisions, LRTA qualifies as an indirect employer by contracting

METRO to manage and operate the Metro Manila light rail transit. Being an indirect
employer, LRTA is solidarily liable with METRO in accordance with Article 109 of the
Labor Code. The fact that there is no actual and direct employer-employee relationship
between LRTA and private respondents does not absolve the former from liability for the
latter's monetary claims. The owner of the project is not the direct employer but merely
an indirect employer, by operation of law, of his contractor's employees.
Valentin Lozada vs. Magtanggol Mendoza
G.R. No. 196134

October 12, 2016
Facts:
On October 13, 1997, respondent Magtanggol Mendoza was employed as a technician by
VSL Service Center, a single proprietorship owned and managed by Valentin Lozada.
Sometime in August 2003, the VSL Service Center was incorporated and changed its
business name to LB&C Services Corporation. Subsequently, the Mendoza was asked by
Lozada to sign a new employment contract. Mendoza did not accede because the
company did not consider the number of years of service that he had rendered to VSL
Service Center. From then on, Mendoza's work schedule was reduced to one to three days
a week.
In December 2003, Mendoza was given his regular working schedule by the company.
However, on January 12, 2004, Mendoza was advised by the company's Executive Officer,
Angeline Aguilar, not to report for work and just wait for a cal1 from the company
regarding his work schedule.
Mendoza patiently waited for the company's call regarding his work schedule. However,
he did not receive any call from it. Considering that his family depends on him for
support, he asked his wife to call the respondent company and inquire on when he would
report back to work. Still, Mendoza was not given any work schedule by the company.
Issue:
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Was the petitioner liable for the monetary awards granted to the respondent despite the
absence of a pronouncement of his being solidarity liable with LB&C Services
Corporation?
Ruling:
No.
A corporation, as a juridical entity, may act only through its directors, officers and
employees. Obligations incurred as a result of the acts .of the directors and officers as the
corporate agents are not their personal liability but the direct responsibility of the
corporation they represent.13 As a general rule, corporate officers are not held solidarily
liable with the corporation for separation pay because the corporation is invested by law
with a personality separate and distinct from those of the persons composing it as well
as from that of any other legal entity to which it may be related. Mere ownership by a
single stockholder or by another corporation of all or nearly all of the capital stock of a
corporation is not of itself sufficient ground for disregarding the separate corporate
personality. To hold a director or officer personally liable for corporate obligations, two
requisites must concur, to wit: (1) the complaint must allege that the director or officer
assented to the patently unlawful acts of the corporation, or that the director or officer
was guilty of gross negligence or bad faith; and (2) there must be proof that the director
or officer acted in bad faith.
A perusal of the respondent's position paper and other submissions indicates that he
neither ascribed gross negligence or bad faith to the petitioner nor alleged that the
petitioner had assented to patently unlawful acts of the corporation. The respondent only
maintained that the petitioner had asked him to sign a new employment contract, but
that he had refused to do the petitioner's bidding. The respondent did not thereby clearly
and convincingly prove that the petitioner had acted in bad faith. Indeed, there was no
evidence whatsoever to corroborate the petitioner's participation in the respondent's
illegal dismissal. Accordingly, the twin requisites of allegation and proof of bad faith
necessary to hold the petitioner personally liable for the monetary awards in favor of the
respondent were lacking.
Phil-Nippon Kyoei, Corp. vs. Rosalia T. Gudelosao, et al.

G.R. No. 181375
July 13, 2016
Facts:
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Petitioner, a domestic shipping corporation, purchased a "Ro-Ro" passenger/cargo
vessel "MV Mahlia" in Japan in February 2003. For the vessel's one month
conduction voyage from Japan to the Philippines, petitioner, as local principal,
and Top Ever Marine Management Maritime Co., Ltd. (TMCL), as foreign
principal, hired Edwin C. Gudelosao, Virgilio A. Tancontian, and six other
crewmembers. They were hired through the local manning agency of TMCL, Top
Ever Marine Management Philippine Corporation (TEMMPC). TEMMPC, through
their president and general manager, Capt. Oscar Orbeta (Capt. Orbeta), and the
eight crewmembers signed separate contracts of employment. Petitioner secured
a Marine Insurance Policy (Maritime Policy No. 00001) from SSSICI over the vessel
for Pl 0,800,000.00 against loss, damage, and third party liability or expense,
arising from the occurrence of the perils of the sea for the voyage of the vessel
from Onomichi, Japan to Batangas, Philippines. This Marine Insurance Policy
included Personal Accident Policies for the eight crewmembers for P3,240,000.00
each in case of accidental death or injury.
On February 24, 2003, while still within Japanese waters, the vessel sank due to
extreme bad weather condition. Only Chief Engineer Nilo Macasling survived the
incident while the rest of the crewmembers, including Gudelosao and Tancontian,
perished.
Respondents, as heirs and beneficiaries of Gudelosao and Tancontian, filed

separate complaints for death benefits and other damages against petitioner,
TEMMPC, Capt. Orbeta, TMCL, and SSSICI, with the Arbitration Branch of the
National Labor Relations Commission (NLRC).
Issues:
a. Whether or not petitioner is solidarily liable with TEMMPC and TMCL for
the benefits under the PO EA-SEC – whether the limited liability rule found
in the Code of Commerce is inapplicable in a liability created by statute to
compensate employees and laborers, or the heirs and dependents, in cases
of injury received by or inflicted upon them while engaged in the
performance of their work or employment.
b. Whether or not the NLRC has jurisdiction over the claim on the Personal
Accident Policies.
Ruling:
a. Yes. The limited liability rule found in the Code of Commerce is
inapplicable here.
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Article 837 applies the limited liability rule in cases of collision. Meanwhile,
Articles 587 and 590 embody the universal principle of limited liability in
all cases wherein the shipowner or agent may be properly held liable for
the negligent or illicit acts of the captain. Nonetheless, the limited liability
rule is not absolute and is without exceptions. It does not apply in cases:
(1) where the injury or death to a passenger is due either to the fault of the
shipowner, or to the concurring negligence of the shipowner and the
captain; (2) where the vessel is insured; and (3) in workmen's
compensation claims.
In Abueg v. San Diego, we ruled that the limited liability rule found in the
Code of Commerce is inapplicable in a liability created by statute to
compensate employees and laborers, or the heirs and dependents, in cases
of injury received by or inflicted upon them while engaged in the
performance of their work or employment, to wit:
The real and hypothecary nature of the liability of the shipowner or

agent embodied in the provisions of the Maritime Law, Book III, Code
of Commerce, had its origin in the prevailing conditions of the
maritime trade and sea voyages during the medieval ages, attended
by innumerable hazards and perils. To offset against these adverse
conditions and to encourage shipbuilding and maritime commerce, it
was deemed necessary to confine the liability of the owner or agent
arising from the operation of a ship to the vessel, equipment, and
freight, or insurance, if any, so that if the shipowner or agent
abandoned the ship, equipment, and freight, his liability was
extinguished.
But the provisions of the Code of Commerce invoked by appellant

have no room in the application of the Workmen's Compensation Act
which seeks to improve, and aims at the amelioration of, the
condition of laborers and employees. It is not the liability for the
damage or loss of the cargo or injury to, or death of, a passenger by or
through the misconduct of the captain or master of the ship; nor the
liability for the loss of the ship as a result of collision; nor the
responsibility for wages of the crew, but a liability created by a statute
to compensate employees and laborers in cases of injury received by
or inflicted upon them, while engaged in the performance of their
work or employment, or the heirs and dependents of such laborers
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and employees in the event of death caused by their employment.
Such compensation has nothing to do with the provisions of the Code
of Commerce regarding maritime commerce. It is an item in the cost
of production which must be included in the budget of any well-
managed industry. (Underscoring supplied.)
Act No. 3428, otherwise known as The Workmen's Compensation

Act44 is the first law on workmen's compensation in the Philippines for
work-related injury, illness, or death. This was repealed on November 1,
1974 by the Labor Code, and was further amended on December 27, 1974
by Presidential Decree No. 626. The pertinent provisions are now found in
Title II, Book IV of the Labor Code on Employees Compensation and State
Insurance Fund. The death benefits granted under Title II, Book IV of the
Labor Code are similar to the death benefits granted under the POEA-SEC,
specifically, its Section 20(A)(l) and (4)(c).
Akin to the death benefits under the Labor Code, these benefits under the
POEA-SEC are given when the employee dies due to a work-related cause
during the term of his contract. The liability of the shipowner or agent
under the POEA-SEC has likewise nothing to do with the provisions of the
Code of Commerce regarding maritime commerce. The death benefits
granted under the POEA-SEC is not due to the death of a passenger by or
through the misconduct of the captain or master of the ship; nor is it the
liability for the loss of the ship as result of collision; nor the liability for
wages of the crew. It is a liability created by contract between the seafarers
and their employers, but secured through the State's intervention as a
matter of constitutional and statutory duty to protect Filipino overseas
workers and to secure for them the best terms and conditions possible, in
order to compensate the seafarers' heirs and dependents in the event of
death while engaged in the performance of their work or employment. The
POEA-SEC prescribes the set of standard provisions established and
implemented by the POEA containing the minimum requirements
prescribed by the government for the employment of Filipino seafarers.
While it is contractual in nature, the POEA-SEC is designed primarily for
the protection and benefit of Filipino seamen in the pursuit of their
employment on board ocean-going vessels. As such, it is deemed
incorporated in every Filipino seafarers' contract of employment. It is
established pursuant to POEA's power "to secure the best terms and
conditions of employment of Filipino contract workers and ensure
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compliance therewith" and "to protect the well-being of Filipino workers
overseas" pursuant to Article 17 of the Labor Code as amended by Executive
Order (EO) Nos. 79752 and 247.
But while the nature of death benefits under the Labor Code and the
POEA-SEC are similar, the death benefits under the POEA-SEC are
intended to be separate and distinct from, and in addition to, whatever
benefits the seafarer is entitled to under Philippine laws, including those
benefits which may be claimed from the State Insurance Fund. Thus, the
claim for death benefits under the POEA-SEC is the same species as the
workmen's compensation claims under the Labor Code - both of which
belong to a different realm from that of Maritime Law.
All the same, the Release and Quitclaim executed between TEMMPC,
TMCL and Capt. Oscar Orbeta, and respondents redounded to the benefit of
petitioner as a solidary debtor.
b. Yes. The NLRC has jurisdiction over the claim on the Personal Accident
Policies.
The Migrant Workers and Overseas Filipinos Act of 1995 gives the Labor
Arbiters of the NLRC the original and exclusive jurisdiction over claims
arising out of an employer-employee relationship or by virtue of any law or
contract involving Filipino workers for overseas deployment, including
claims for actual, moral, exemplary and other forms of damage. It further
creates a joint and several liability among the principal or employer, and
the recruitment/placement agency, for any and all claims involving
Filipino workers.
In Finman General Assurance Corp. v. Inocencio, 62 we upheld the

jurisdiction of the POEA to determine a surety's liability under its bond.
We ruled that the adjudicatory power to do so is not vested with the
Insurance Commission exclusively. The POEA (now the NLRC) is vested
with quasi-judicial powers over all cases, including money claims,
involving employer-employee relations arising out of or by virtue of any
law or contract involving Filipino workers for overseas employment.63
Here, the award of the insurance proceeds arose out of the personal
accident insurance procured by petitioner as the local principal over the
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deceased seafarers who were Filipino overseas workers. The premiums paid
by petitioner were, in actuality, part of the total compensation paid for the
services of the crewmembers. Put differently, the labor of the employees is
the true source of the benefits which are a form of additional compensation
to them. Undeniably, such claim on the personal accident cover is a claim
under an insurance contract involving Filipino workers for overseas
deployment within the jurisdiction of the NLRC.
Century Properties, Inc. vs. Edwin J. Babiano and Emma B. Concepcion

G.R. No. 220978
July 5, 2016
Facts:
On October 2, 2002, Babiano was hired by CPI as Director of Sales, and was
eventually appointed as Vice President for Sales effective September 1, 2007. As
CPI' s Vice President for Sales, Babiano was remunerated with, inter alia, the
following benefits: (a) monthly salary of P70,000.00; (b) allowance of P50,000.00;
and (c) 0.5% override commission for completed sales. His employment contract
also contained a "Confidentiality of Documents and Non-Compete Clause" which,
among others, barred him from disclosing confidential information, and from
working in any business enterprise that is in direct competition with CPI "while
[he is] employed and for a period of one year from date of resignation or
termination from [CPI]." Should Babiano breach any of the terms thereof, his
"forms of compensation, including commissions and incentives will be forfeited."
During the same period, Concepcion was initially hired as Sales Agent by CPI and
was eventually promoted as Project Director on September 1, 2007. As such, she
signed an employment agreement, denominated as "Contract of Agency for
Project Director" which provided, among others, that she would directly report to
Babiano, and receive a monthly subsidy of P60,000.00, 0.5% commission, and cash
incentives. On March 31, 2008, Concepcion executed a similar contract anew with
CPI in which she would receive a monthly subsidy of P50,000.00, 0.5%
commission, and cash incentives as per company policy. Notably, it was stipulated
in both contracts that no employer-employee relationship exists between
Concepcion and CPI.
After receiving reports that Babiano provided a competitor with information

regarding CPI's marketing strategies, spread false information regarding CPI and
its projects, recruited CPI's personnel to join the competitor, and for being absent
without official leave (AWOL) for five (5) days, CPI, through its Executive Vice
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President for Marketing and Development, Jose Marco R. Antonio (Antonio), sent
Babiano a Notice to Explain on February 23, 2009 directing him to explain why he
should not be charged with disloyalty, conflict of interest, and breach of trust and
confidence for his actuations.
On February 25, 2009, Babiano tendered his resignation and revealed that he had
been accepted as Vice President of First Global BYO Development Corporation
(First Global), a competitor of CPI. On March 3, 2009, Babiano was served a Notice
of Termination for: (a) incurring AWOL; (b) violating the "Confidentiality of
Documents and Non-Compete Clause" when he joined a competitor enterprise
while still working for CPI and provided such competitor enterprise information
regarding CPI' s marketing strategies; and (c) recruiting CPI personnel to join a
competitor.
On the other hand, Concepcion resigned as CPI's Project Director through a letter
dated February 23, 2009, effective immediately.
On August 8, 2011, respondents filed a complaint for non-payment of commissions

and damages against CPI and Antonio before the NLRC, docketed as NLRC Case
No. NCR-08-12029-11, claiming that their repeated demands for the payment and
release of their commissions remained unheeded
For its part, CPI maintained that Babiano is merely its agent tasked with selling
its projects. Nonetheless, he was afforded due process in the termination of his
employment which was based on just causes. It also claimed to have validly
withheld Babiano' s commissions, considering that they were deemed forfeited for
violating the "Confidentiality of Documents and Non-Compete Clause." On
Concepcion's money claims, CPI asserted that the NLRC had no jurisdiction to
hear the same because there was no employer-employee relations between them,
and thus, she should have litigated the same in an ordinary civil action.
Issues:
a. Whether or not Babiano's acts of providing information on CPI's marketing
strategies to the competitor and spreading false information about CPI and
its projects constitute blatant violations of the "Confidentiality of
Documents and Non-Compete Clause" of his employment contract making
the forfeiture of his unpaid commissions in accordance with the same
clause proper.
b. Whether or not the Labor Arbiter has jurisdiction over Concepcion's

money claim as she was not an employee but a mere agent of CPI, as clearly
stipulated in her engagement contract with the latter.
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Ruling:
a. Yes.
In the interpretation of contracts, the Court must first determine whether

a provision or stipulation therein is ambiguous. Absent any ambiguity, the
provision on its face will be read as it is written and treated as the binding
law of the parties to the contract.
In the case at bar, CPI primarily invoked the "Confidentiality of Documents

and Non-Compete Clause" found in Babiano's employment contract to
justify the forfeiture of his commissions. The same clause Verily is not only
clear and unambiguous in stating that Babiano is barred to "work for
whatsoever capacity x x x with any person whose business is in direct
competition with [CPI] while [he is] employed and for a period of one year
from date of [his] resignation or termination from the company," it also
expressly provided in no uncertain terms that should Babiano "[breach] any
term of [the employment contract], forms of compensation including
commissions and incentives will be forfeited." Here, the contracting parties
- namely Babiano on one side, and CPI as represented by its COO-Vertical,
John Victor R. Antonio, and Director for Planning and Controls, Jose Carlo
R. Antonio, on the other - indisputably wanted the said clause to be
effective even during the existence of the employer-employee relationship
between Babiano and CPI, thereby indicating their intention to be bound
by such clause by affixing their respective signatures to the employment
contract. More significantly, as CPI's Vice President for Sales, Babiano held
a highly sensitive and confidential managerial position as he "was tasked,
among others, to guarantee the achievement of agreed sales targets for a
project and to ensure that his team has a qualified and competent
manpower resources by conducting recruitment activities, training
sessions, sales rallies, motivational activities, and evaluation programs."
Hence, to allow Babiano to freely move to direct competitors during and
soon after his employment with CPI would make the latter's trade secrets
vulnerable to exposure, especially in a highly competitive marketing
environment. As such, it is only reasonable that CPI and Babiano agree on
such stipulation in the latter's employment contract in order to afford a fair
and reasonable protection to CPI. Indubitably, obligations arising from
contracts, including employment contracts, have the force of law between
the contracting parties and should be complied with in good faith.
Corollary thereto, parties are bound by the stipulations, clauses, terms, and
conditions they have agreed to, provided that these stipulations, clauses,
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terms, and conditions are not contrary to law, morals, public order or
public policy, as in this case.
Here, a judicious review of the records reveals that in his resignation letter
dated February 25, 2009, Babiano categorically admitted to CPI Chairman
Jose Antonio that on February 12, 2009, he sought employment from First
Global, and five (5) days later, was admitted thereto as vice president. From
the foregoing, it is evidently clear that when he sought and eventually
accepted the said position with First Global, he was still employed by CPI
as he has not formally resigned at that time. Irrefragably, this is a glaring
violation of the "Confidentiality of Documents and Non-Compete Clause"
in his employment contract with CPI, thus, justifying the forfeiture of his
unpaid commissions
b. Yes, the Labor Arbiter has jurisdiction. There was an employer-employee

relationship between CPI and Concepcion.
Based on case law, the presence of the following elements evince the
existence of an employer-employee relationship: (a) the power to hire, i.e.,
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's conduct, or the so called "control test." The control test is
commonly regarded as the most important indicator of the presence or
absence of an employer-employee relationship. Under this test, an
employer-employee relationship exists where the person for whom the
services are performed reserves the right to control not only the end
achieved, but also the manner and means to be used in reaching that end.
Guided by these parameters, the Court finds that Concepcion was an
employee of CPI considering that: (a) CPI continuously hired and
promoted Concepcion from October 2002 until her resignation on
February 23, 2009, thus, showing that CPI exercised the power of selection
and engagement over her person and that she performed functions that
were necessary and desirable to the business of CPI; (b) the monthly
"subsidy" and cash incentives that Concepcion was receiving from CPI are
actually remuneration in the concept of wages as it was regularly given to
her on a monthly basis without any qualification, save for the "complete
submission of documents on what is a sale policy"; (c) CPI had the power
to discipline or even dismiss Concepcion as her engagement contract with
CPI expressly conferred upon the latter "the right to discontinue [her]
service anytime during the period of engagement should [she] fail to meet
the performance standards," among others, and that CPI actually exercised
such power to dismiss when it accepted and approved Concepcion' s
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resignation letter; and most importantly, (d) as aptly pointed out by the
CA, CPI possessed the power of control over Concepcion because in the
performance of her duties as Project Director - particularly in the conduct
of recruitment activities, training sessions, and skills development of Sales
Directors - she did not exercise independent discretion thereon, but was
still subject to the direct supervision of CPI, acting through Babiano.
Besides, while the employment agreement of Concepcion was

denominated as a "Contract of Agency for Project Director," it should be
stressed that the existence of employer-employee relations could not be
negated by the mere expedient of repudiating it in a contract. In the case
of Insular Life Assurance Co., Ltd. v. NLRC, it was ruled that one's
employment status is defined and prescribed by law, and not by what the
parties say it should be.
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:
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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
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.
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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.
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,
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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
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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 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
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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.
Issue:
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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.
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SAUDI ARABIAN AIRLINES AND BRENDA 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 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
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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
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"[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
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
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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:
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.
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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.
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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.
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 voided.
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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
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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 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.
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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.
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.
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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
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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.
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
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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.
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
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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
WILGEN LOON, JERRY ARCILLA, et al.

vs. POWER MASTER, INC., TRI-C GENERAL SERVICES, and SPOUSES HOMER and
CARINA ALUMISIN
G.R. No. 189404, December 11, 2013
J. BRION
In the case, the respondents failed to submit their petitions during the trial with the
Labor Arbiter, the petitioner now questions whether the former may present evidence first
time on appeal. The Court ruled that strict adherence to the technical rules of procedure is
not required. However, this liberal policy should still be subject to rules of reason and
fairplay. The liberality of procedural rules is qualified by two requirements: (1) a party
should adequately explain any delay in the submission of evidence; and (2) a party should
sufficiently prove the allegations sought to be proven.
Facts:
Herein petitioners are employed by respondents Power Master, Inc. and Tri-C General
Services and assigned the former as janitors and leadsmen in various Philippine Long
Distance Telephone Company (PLDT) offices in Metro Manila area. Subsequently, the
petitioners filed a complaint for money claims against Power Master, Inc., Tri-C General
Services and their officers, the spouses Homer and Carina Alumisin
(collectively, the respondents). The petitioners alleged in their complaint that they were
not paid minimum wages, overtime, holiday, premium, service incentive leave, and
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thirteenth month pays. They further averred that the respondents made them sign blank
payroll sheets. On June 11, 2001, the petitioners amended their complaint and included
illegal dismissal as their cause of action. They claimed that the respondents relieved them
from service in retaliation for the filing of their original complaint. During the trial, with
the Labor Arbiter, respondents only appeared on two instances and did not submit any
petition.
Labor Arbiter (LA) ruled in favor of the petitioners. The LA awarded the
petitioners salary differential, service incentive leave, and thirteenth month
pays. However, denying the petitioners’ claims for backwages, overtime, holiday, and
premium pays. NLRC ruled partically in favor of the respondents which the CA affirmed.
The CA held that the petitioners were afforded substantive and procedural due process.
Accordingly, the petitioners deliberately did not explain their side. Instead, they
continuously resisted their transfer to other PLDT offices and violated company rules
and regulations.
Issues:
Whether the respondents may submit evidence first time on appeal
Ruling:
In labor cases, strict adherence to the technical rules of procedure is not required. Time
and again, we have allowed evidence to be submitted for the first time on appeal with
the NLRC in the interest of substantial justice. Thus, we have consistently supported the
rule that labor officials should use all reasonable means to ascertain the facts in each case
speedily and objectively, without regard to technicalities of law or procedure, in the
interest of due process.
However, this liberal policy should still be subject to rules of reason and fairplay. The
liberality of procedural rules is qualified by two requirements: (1) a party should
adequately explain any delay in the submission of evidence; and (2) a party should
sufficiently prove the allegations sought to be proven. The reason for these requirements
is that the liberal application of the rules before quasi-judicial agencies cannot be used
to perpetuate injustice and hamper the just resolution of the case. Neither is the rule on
liberal construction a license to disregard the rules of procedure.
Guided by these principles, the CA grossly erred in ruling that the NLRC did not commit
grave abuse of discretion in arbitrarily admitting and giving weight to the respondents’
pieces of evidence for the first time on appeal.
A. The respondents failed to adequately explain their delay in the submission of

evidence
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We cannot accept the respondents’ cavalier attitude in blatantly disregarding the NLRC
Rules of Procedure. The CA gravely erred when it overlooked that the NLRC blindly
admitted and arbitrarily gave probative value to the respondents’ evidence despite their
failure to adequately explain their delay in the submission of evidence. Notably, the
respondents’ delay was anchored on their assertion that they were oblivious of the
proceedings before the LA. However, the respondents did not dispute the LA’s finding
that Mr. Romulo Pacia, Jr. appeared on their behalf on April 19, 2001 and May 21, 2001.
The respondents also failed to contest the petitioners’ assertion that the respondents’
counsel appeared in a preliminary mandatory conference on July 5, 2001.
Indeed, the NLRC capriciously and whimsically admitted and gave weight to the
respondents’ evidence despite its finding that they voluntarily appeared in the
compulsory arbitration proceedings. The NLRC blatantly disregarded the fact that the
respondents voluntarily opted not to participate, to adduce evidence in their defense and
to file a position paper despite their knowledge of the pendency of the proceedings before
the LA. The respondents were also grossly negligent in not informing the LA of the
specific building unit where the respondents were conducting their business and their
counsel’s address despite their knowledge of their non-receipt of the processes.
B. The respondents failed to sufficiently prove the allegations sought to be proven
Furthermore, the respondents failed to sufficiently prove the allegations sought to be

proven. Why the respondents’ photocopied and computerized copies of documentary
evidence were not presented at the earliest opportunity is a serious question that lends
credence to the petitioners’ claim that the respondents fabricated the evidence for
purposes of appeal. While we generally admit in evidence and give probative value to
photocopied documents in administrative proceedings, allegations of forgery and
fabrication should prompt the adverse party to present the original documents for
inspection. It was incumbent upon the respondents to present the originals, especially in
this case where the petitioners had submitted their specimen signatures. Instead, the
respondents effectively deprived the petitioners of the opportunity to examine and
controvert the alleged spurious evidence by not adducing the originals. This Court is thus
left with no option but to rule that the respondents’ failure to present the originals raises
the presumption that evidence willfully suppressed would be adverse if produced.
It was also gross error for the CA to affirm the NLRC’s proposition that "[i]t is of common
knowledge that there are many people who use at least two or more different signatures."
The NLRC cannot take judicial notice that many people use at least two signatures,
especially in this case where the petitioners themselves disown the signatures in the
respondents’ assailed documentary evidence. The NLRC’s position is unwarranted and is
patently unsupported by the law and jurisprudence.
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Viewed in these lights, the scales of justice must tilt in favor of the employees. This
conclusion is consistent with the rule that the employer’s cause can only succeed on the
strength of its own evidence and not on the weakness of the employee’s evidence.
ROMEO R. ARAULLO
vs. OFFICE OF THE OMBUDSMAN, HON. MERCEDITAS N. GUTIERREZ, HON.
GERARDO C. NOGRALES, HON. ROMEO L. GO, HON. PERLITA B. VELASCO, and
ARDEN S. ANNI
G.R. No. 194169, December 4, 2013
J. DEL CASTILLO
A public officer who acts pursuant to the dictates of law and within the limits of
allowable discretion can hardly be considered guilty of misconduct.
Facts:
A decided case by the NLRC entitled "Romeo R. Araullo, Complainant, versus Club
Filipino, Inc., Respondent," having a judgment that is final and executory after it was
affirmed by this Court. thus, the labor case was remanded to the NLRC for computation
of petitioner’s actual entitlements. The Labor Arbiter handling the case, Fedriel
Panganiban (Arbiter Panganiban) directed the NLRC Computation and Examination
Unit to compute the liabilities of Club Filipino.
On December 13, 2007, Arbiter Panganiban issued an Order voluntarily inhibiting himself
from handling the labor case "to obviate any suspicion of partiality." Thereafter, the labor
case was raffled to herein respondent Labor Arbiter Arden S. Anni (Arbiter Anni) on
January 4, 2008. Thereafter, Arbiter Anni also issued an Order voluntarily inhibiting
himself from further proceedings in the labor case, on the ground that his "sense of
impartiality may be questioned by any of the parties because of (his) rapport with Atty.
Roberto ‘Obet’ De Leon, President of Club Filipino, and respondent’s counsel, Atty.
Ernesto P. Tabao x x x, who are both (his) fraternity brothers in San Beda College of Law."
Petitioner filed with the NLRC a Very Urgent Petition to Set Aside the Order of Labor
Arbiter Arden S. Anni. however, the Petition was denied for lack of merit in an October
29, 2008 Resolution issued by the First Division of the NLRC, composed of the herein
respondent Commissioners – Presiding Commissioner Gerardo C. Nograles and
Commissioners Romeo L. Go, and Perlita B. Velasco.
Petitioner filed a Complaint before the Ombudsman against the respondent

Commissioners and Arbiter Anni, for violation of Section 3(e) of Republic Act No. 3019
or the Anti-Graft and Corrupt Practices Act, and Article 206 of the Revised Penal Code.
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Issue
Whether there is substantial evidence to hold respondents liable for grave misconduct.
Ruling
The Petition is dismissed.
There is no doubt that Arbiter Anni’s July 29, 2008 Writ of Execution was procedurally
irregular, as it pre-empted the NLRC Rules which require that where further computation
of the award in the decision is necessary during the course of the execution proceedings,
no Writ of Execution shall be issued until after the computation has been approved by
the Labor Arbiter in an order issued after the parties have been duly notified and heard
on the matter. When the writ was issued, there was as yet no order approving the
computation made by the NLRC Computation and Examination Unit, and there was a
pending and unresolved Motion to Recompute filed by Club Filipino. A cursory
examination of the motion reveals that it raised valid issues that required determination
in order to arrive at a just resolution, so that none of the parties would be unjustly
enriched. For example, it appears that petitioner owed Club Filipino a substantial amount
of money which the latter sought to deduct from the judgment award by way of
compensation; if this is true, then the necessary adjustment in the award may be made
to allow Club Filipino to recover what petitioner owes it, to the extent allowable by law.
Since the Writ of Execution was issued in contravention of the law, it is irregular and
defective, and there was no need to further hear Club Filipino’s motion to quash the writ;
Arbiter Anni’s issuance of the August 12, 2008 Order quashing the writ ahead of the
scheduled August 20, 2008 hearing is therefore not improper. "A void judgment or order
has no legal and binding effect, force or efficacy for any purpose. In contemplation of
law, it is non-existent. x x x It is not even necessary to take any steps to vacate or avoid a
void judgment or final order; it may simply be ignored."
The Court cannot blame the respondents for not treating the Writ of Execution as an
implicit approval of the NLRC Computation and Examination Unit’s computation, or
even as an implied denial of Club Filipino’s Motion to Recompute, because the NLRC
Rules precisely require that the computation must be approved by the Labor Arbiter in
an order issued after the parties have been duly notified and heard. Besides, the pending
motion to recompute was not touched upon in the Writ of Execution. Finally, given
petitioner’s threats of exacting criminal and administrative liability if he did not have his
way, respondents chose to act with extreme caution and took an academic and literal
approach in construing and applying the NLRC Rules. Nor may it be said that in quashing
the Writ of Execution or in inhibiting himself from the labor case, Arbiter Anni unduly
favored Club Filipino. Quite the contrary, Arbiter Anni risked being dragged to court on
a gross ignorance charge by issuing the Writ of Execution in disregard of the NLRC Rules;
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if he did not quash the writ, he would likewise have been perceived as favoring petitioner.
Moreover, it could also be said that if Arbiter Anni favored his fraternity brothers in Club
Filipino, he would not have issued the Writ of Execution in the first place; and he would
have stayed on with the case, instead of inhibiting himself therefrom. On the part of the
respondent Commissioners, the Court detects no irregularity in their actions either.
While petitioner accuses them of gross misconduct for improperly affirming, through
their October 29, 2008 Resolution, Arbiter Anni’s order quashing the Writ of Execution,
the Court believes otherwise; they acted pursuant to the NLRC Rules, and averted further
mistake and damage by affirming the quashing of an otherwise improvident writ. The
Court fails to discern any indication of malice, bad faith, misconduct, or even negligence
in the respondents’ actions.
ROLANDO E. CAWALING, PEDRO L. LABAYO, et. al.

vs. NAPOLEON M. MENESE (Retired Commissioner, NLRC-Second Division),
RAUL T. AQUINO (Presiding Commissioner, NLRC-Second Division) and
TERESITA D. CASTILLON-LORA (Commissioner, NLRC-Second Division)
A.C. No. 9698, November 13, 2013
J. PERALTA
After being informed of the expired accreditation of Intra Strata, respondents should have
refrained from allowing Intra Strata to transact business or to post a bond in favor of
Bacman. 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. Respondents cannot extend Intra Strata's authority or
accreditation. Neither can it validate an invalid bond issued by a bonding company with
expired accreditation, or give a semblance of validity to it pending this Court's approval of
the application for renewal of accreditation.
Facts:
Complainants were employees of Bacman Geothermal, Inc. (Bacman), who were

dismissed from their employment. They filed a complaint for illegal dismissal against
Bacman Geothermal, Inc., Danilo G. Catigtig, Ernesto Espinosa and Oscar M. Lopez.
Labor Arbiter rendered a decision in favor of the complainants and declared them to be
illegally dismissed. Bacman appealed NLRC where respondents were sitting as
Commissioners. There being a monetary award in the decision, Bacman posted supersede
as bond issued by Intra Strata Assurance Corporation (Intra Strata) on February 23, 2012.
Meanwhile, Intra Strata filed a Manifestation dated February 23, 2012 before the Regional
Arbitration Branch No. V of the NLRC. It stated therein that their certification of
accreditation and authority from the Supreme Court had expired on January 31, 2012, but
their application for renewal is pending before the Supreme Court.
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However, complainants lamented that instead of dismissing the appeal pursuant to the
above-mentioned provision, respondents entertained the appeal of Bacman and even
reversed the decision of the Labor Arbiter in their Decision dated April 2, 2012.
Complainants moved for reconsideration where they pointed out the irregularity in the
bond and claimed that the NLRC did not acquire jurisdiction over the appeal.
Issue:
Whether NLRC acquired jurisdiction over the appeal despite the irregularity of the bond.
Ruling:
In a nutshell, the rules are explicit that the filing of a bond for the perfection of an appeal
is mandatory and jurisdictional. The requirement that employers post a cash or surety
bond to perfect their appeal is apparently intended to assure 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. It was intended to discourage employers from using an appeal to delay,
or even evade, their obligations to satisfy their employees' just and lawful claims.
However, the whole essence of requiring the filing of bond is defeated if the bond issued
turned out to be invalid due to the surety company's expired accreditation.
In the instant case, at the time of the filing of the supersedeas bond no. JCL (15)-HO-
001522/50934 on behalf of Bacman in the amount of Php5,790,543.06, Intra Strata was no
longer an accredited surety company as it admitted in their Manifestation dated February
23, 2012. A perusal of Intra Strata's certificate of accreditation and authority would show
that its accreditation was valid only until January 31, 2012. Thus, beyond January 31, 2012,
Intra Strata was no longer a reputable surety company possessing the authority to
transact business relative to issuing judicial bonds.
Respondents argued that Intra Strata exhibited good faith in informing them of their
expired accreditation. We are, however, unconvinced. The defense of good faith does
not, in any way, render the issued bond valid. The fact remains that due to the expired
accreditation of Intra Strata, it has no authority to issue the subject bond. 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.
Necessarily, after being informed of the expired accreditation of Intra Strata,

respondents should have refrained from allowing Intra Strata to transact business or to
post a bond in favor of Bacman. 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. Respondents cannot
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extend Intra Strata's authority or accreditation. Neither can it validate an invalid bond
issued by a bonding company with expired accreditation, or give a semblance of validity
to it pending this Court's approval of the application for renewal of accreditation.
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 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,
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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)
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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 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
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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.
SUPERIOR PACKAGING CORPORATION, Petitioner, v. ARNEL BALAGSA Y,

ZALDY ALFORGNE, JAIME ANGELES, REY APURA, GERALD CABALAN, JONALD
CALENTENG, RAMIL CROIJERO, JUNREY CABALGUINTO, OSCAR DAYTO,
RUFO DIONOLA, DIONILO ESMERALDA, BOOTS LADRILLO, ELIEZER
MAGHAMOY, LEO FLORES, RENATOPAGADORA,REYNALDO PLAZA, H.OGER
SJBNEAO, EDWIN TONALBA, .JOHN ACHARON, RODERICK RAMAS,
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SALVADOR ACURATO, JULUIS BASUL, CARLOS RAYTA, LITO BELANO, ROGER
CASIMIRO, RENE CURADA, NESTRO ESTE, ROMMEL IMPELIOO, ZOILO ISLA,
JHONIE OGARDO, EDWIN POSADAS, ALEXANDER REGPALA, CHRISTOPHER
SAMPIANO, RITCHIE SANCHES, ROLANDO SORIANO, ROWELL ANCHETA,
RICKY BORDAS, ANTONIO BEHEN, RONALD DOMINGO, JERRY MORENO,
ROLLY ROSALES, RENATO RESTANO and ISIDRO SARIGNE, Respondents
G.R. No. 178909 : October 10, 2012
FACTS:
Pursuant to a complaint filed by the respondents against the petitioner and its
President, Cesar Luz (Luz), for underpayment of wages, non-payment of premium pay
for worked rest, overtime pay and non-payment of salary, the Department of Labor
and Employment (DOLE) conducted an inspection of the petitioners premises and
found several violations, to wit: (1) non-presentation of payrolls and daily time records;
(2) non-submission of annual report of safety organization; (3) medical and
accident/illness reports; (4) non-registration of establishment under Rule 1020 of
Occupational and Health Standards; and (5) no trained first aide Due to the
petitioners failure to appear in the summary investigations conducted by the DOLE,
an Order was issued on June 18, 2003 finding in favor of the respondents and adopting
the computation of the claims submitted. Petitioner and Luz were ordered, among
others, to pay respondents their total claims in the amount of Eight Hundred Forty
Thousand Four Hundred Sixty-Three Pesos and 38/100 (P 840,463.38).
They filed a motion for reconsideration on the ground that respondents are not its
employees but of Lancer and that they pay Lancer in lump sum for the services
rendered. The DOLE, however, denied its motion.
ISSUE:
Whether or not the DOLE clearly acted within its authority when it determined the
existence of an employer-employee relationship between the petitioner and
respondents.
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Whether or not Lancer was not an independent contractor but was engaged in "labor-
only contracting"
RULING:
Yes.
The DOLE clearly acted within its authority when it determined the existence of an
employer-employee relationship between the petitioner and respondents as it falls
within the purview of its visitorial and enforcement power under Article 128(b) of the
Labor Code, which provides:
Notwithstanding the provisions of Articles 129 and 217 of this Code to the contrary,
and in cases where the relationship of employer-employee still exists, the Secretary of
Labor and Employment or his duly authorized representatives shall have the power to
issue compliance orders to give effect to the labor standards provisions of this Code
and other labor legislation based on the findings of labor employment and
enforcement officers or industrial safety engineers made in the course of inspection.
The Secretary or his duly authorized representative shall issue writs of execution to the
appropriate authority for the enforcement of their orders, except in cases where the
employer contests the findings of the labor employment and enforcement officer and
raises issues supported by documentary proofs which were not considered in the
course of inspection.
In Peoples Broadcasting (Bombo Radyo Phils., Inc.) v. Secretary of the Department of

Labor and Employment, the Court stated that it can be assumed that the DOLE in the
exercise of its visitorial and enforcement power somehow has to make a determination
of the existence of an employer-employee relationship. Such determination, however,
is merely preliminary, incidental and collateral to the DOLEs primary function of
enforcing labor standards provisions.
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Yes.
It was the consistent conclusion of the DOLE and the CA that Lancer was not an
independent contractor but was engaged in "labor-only contracting"; hence, the
petitioner was considered an indirect employer of respondents and liable to the latter
for their unpaid money claims.
At the time of the respondents’ employment in 1998, the applicable regulation was
DOLE Department Order No. 10, Series of 1997. Under said Department Order, labor-
only contracting was defined as follows:
Sec. 9. Labor-only contracting. (a) Any person who undertakes to supply workers to an
employer shall be deemed to be engaged in labor-only contracting where such person:
Does not have substantial capital or investment in the form of tools, equipment,
machineries, work premises and other materials; and
The workers recruited and placed by such persons are performing activities which are
directly related to the principal business or operations of the employer in which
workers are habitually employed.
Labor-only contracting is prohibited and the person acting as contractor shall be

considered merely as an agent or intermediary 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.
According to the CA, the totality of the facts and surrounding circumstances of this
case point to such conclusion.
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RADIO PHILIPPINES NETWORK, INC., and/or MIA CONCIO, President,
LEONOR LINAO, General Manager, LOURDES ANGELES, HRD Manager, and
IDA BARRAMEDA, AGM-Finance,Petitioners, v. RUTH F. YAP, MA. FE DAYON,
MINETTE BAPTISTA, BANNIE EDSEL SAN MIGUEL, and MARISA
LEMINA, Respondents
G.R. NO. 187713 - August 1, 2012
FACTS:
On November 26, 2004, RPN and RPNEU entered into a Collective Bargaining
Agreement (CBA) with a union security clause providing that a member who has been
expelled from the union shall also be terminated from the company. The CBA had a
term of five (5) years, commencing on July 1, 2004 and expiring on June 30, 2009.
A conflict arose between the respondents and other members of RPNEU. On

November 9, 2005, the RPNEU s Grievance and Investigation Committee
recommended to the union s board of directors the expulsion of the respondents from
the union. On January 24, 2006, the union wrote to RPN President Concio demanding
the termination of the respondents’ employment from the company.
On February 17, 2006, RPN notified the respondents that their employment would be
terminated effective March 20, 2006, whereupon the respondents filed with the Labor
Arbiter (LA) a complaint for illegal dismissal and non-payment of benefits.
On September 27, 2006, the LA rendered a decision ordering the reinstatement of the
respondents with payment of backwages and full benefits and without loss of seniority
rights after finding that the petitioners failed to establish the legal basis of the
termination of respondents’ employment. The LA also directed the company to pay
the respondents certain aggregate monetary benefits.
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On October 27, 2006, the petitioner, through counsel submitted a Manifestation and
Compliance dated October 25, 2006 to the LA stating that it has complied with
reinstatement of the complainants (payroll reinstatement).
Alleging that there was no compliance yet as aforestated and that no notice was
received, respondents filed with the LA a Manifestation and Urgent Motion to Cite for
Contempt dated November 3, 2006.
ISSUE:
Whether or not petitioner complied with the directive of the LA, when it merely
reinstated respondents in the payroll.
RULING:
Here, yes.
In the case of Pioneer Texturizing Corp. v. NLRC, it was held that an order reinstating a
dismissed employee is immediately self-executory without need of a writ of execution,
in accordance with the third paragraph of Article 223 of the Labor Code. The article
states that the employee entitled to reinstatement "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 the employer, merely reinstated in the payroll." Thus,
even if the employee is able and raring to return to work, the option of payroll
reinstatement belongs to the employer.
The new NLRC Rules of Procedure, which took effect on January 7, 2006, now requires
the employer to submit a report of compliance within ten (10) calendar days from
receipt of the LA s decision, disobedience to which clearly denotes a refusal to
reinstate. The employee need no longer file a motion for issuance of a writ of
execution, since the LA shall thereafter motu proprio issue the writ. With the new
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rules, there will be no difficulty in determining the employer s intransigence in
immediately complying with the order.
The general policy of labor law is to discourage interference with an employer’s

judgment in the conduct of his business. Even as the law is solicitous of the welfare of
the employees, it must also protect the right of an employer to exercise what are
clearly management prerogatives. As long as the company s exercise of judgment is in
good faith to advance its interest and not for the purpose of defeating or
circumventing the rights of employees under the laws or valid agreements, such
exercise will be upheld. Neither does labor law authorize the substitution of judgment
of the employer in the conduct of his business, unless it is shown to be contrary to law,
morals, or public policy. The only condition is that the exercise of management
prerogatives should not be done in bad faith or with abuse of discretion.
It has been held that in case of strained relations or non-availability of positions, the
employer is given the option to reinstate the employee merely in the payroll, precisely
in order to avoid the intolerable presence in the workplace of the unwanted employee.
The circumstances of the present case have more than amply shown that the physical
restoration of the respondents to their former positions would be impractical and
would hardly promote the best interest of both parties. Respondents have accused the
petitioners of being directly complicit in the plot to expel them from the union and to
terminate their employment, while petitioners have charged the respondents with
trying to sabotage the peace of the workplace in "furthering their dispute with the
union." The resentment and enmity between the parties have so strained their
relationship and even provoked antipathy and antagonism, as amply borne out by the
physical clashes that had ensued every time the respondents attempted to enter the
RPN compound, that respondents presence in the workplace will not only be
distracting but even disruptive, to say the least.
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DE LA SALLE UNIVERSITY, Petitioner, v. DE LA SALLE UNIVERSITY EMPLOYEES
ASSOCIATION (DLSUEA-NAFTEU), Respondent
G.R. NO. 169254 - August 23, 2012
FACTS:
This petition involves one of the three notices of strike filed by respondent De La Salle
University Employees Association (DLSUEANAFTEU) against petitioner De La Salle
University due to its refusal to bargain collectively with it in light of the intra-union
dispute between respondent’s two opposing factions.
Note that both G.R. No. 168477 and this petition are offshoots of petitioner s purported
temporary measures to preserve its neutrality with regard to the perceived void in the
union leadership. While these two cases arose out of different notices to strike filed on
April 3, 2003 and August 27, 2003, it is undeniable that the facts cited and the
arguments raised by petitioner are almost identical. Inevitably, G.R. No. 168477 and
this petition seek only one relief, that is, to absolve petitioner from respondent
s charge of committing an unfair labor practice, or specifically, a violation of
Article 248(g) in relation to Article 252 of the Labor Code.
ISSUE:
Whether or not the Supreme Court should apply the law of the case doctrine in light of
the finality of its July 20, 2005 and September 21, 2005 resolutions in G.R. No. 168477.
RULING:
Yes.
The Court is constrained to apply the law of the case doctrine in light of the finality of
our July 20, 2005 and September 21, 2005 resolutions in G.R. No. 168477. In other
words, our previous affirmance of the Court of Appeals finding that petitioner erred in
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suspending collective bargaining negotiations with the union and in placing the union
funds in escrow considering that the intra-union dispute between the Aliazas and
BaÃ±ez factions was not a justification therefor is binding herein. Moreover, we note
that entry of judgment in G.R. No. 168477 was made on November 3, 2005, and that
put to an end to the litigation of said issues once and for all.
The law of the case has been defined as the opinion delivered on a former appeal. It
means that whatever is once irrevocably established as the controlling legal rule or
decision between the same parties in the same case continues to be the law of the
case, whether correct on general principles or not, so long as the facts on which such
decision was predicated continue to be the facts of the case before the court.
In any event, upon our review of the records of this case, we find that the Court of
Appeals committed no reversible error in its assailed Decision dated March 4, 2005
and Resolution dated August 5, 2005. Petitioner s reliance on the July 12, 2002 Decision
of Labor Arbiter Pati, and the NLRC s affirmance thereof, is misplaced. The unfair
labor practice complaint dismissed by Labor Arbiter Pati questioned petitioner s
actions immediately after the March 19, 2001 Decision of BLR Regional Director
Maraan, finding that "the reason for the hold-over [of the previously elected union
officers] is already extinguished." The present controversy involves petitioner s actions
subsequent to (1) the clarification of said March 19, 2001 Maraan Decision by BLR
Director Cacdac who opined in a May 16, 2003 memorandum that the then incumbent
union officers (i.e., the BaÃ±ez faction) continued to hold office until their successors
have been elected and qualified, and (2) the July 28, 2003 Decision of the Secretary of
Labor in OS-AJ-0015-2003 ruling that the very same intra-union dispute (subject of
several notices of strike) is insufficient ground for the petitioner to suspend CBA
negotiations with respondent union. We take notice, too, that the aforesaid Decision
of Labor Arbiter Pati has since been set aside by the Court of Appeals and such reversal
was upheld by this Court’s Second Division in its Decision dated April 7, 2009 in G.R.
No. 177283, wherein petitioner was found liable for unfair labor practice.
Neither can petitioner seek refuge in its defense that as early as November 2003 it had
already released the escrowed union dues to respondent and normalized relations with
the latter. The fact remains that from its receipt of the July 28, 2003 Decision of the
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Secretary of Labor in OS-AJ-0015-2003 until its receipt of the November 17, 2003
Decision of the Secretary of Labor in OS-AJ-0033-2003, petitioner failed in its duty to
collectively bargain with respondent union without valid reason. At most, such
subsequent acts of compliance with the issuances in OS-AJ-0015-2003 and OS-AJ-0033-
2003 merely rendered moot and academic the Secretary of Labor’s directives for
petitioner to commence collective bargaining negotiations within the period provided.
To conclude, we hold that the findings of fact of the Secretary of Labor and the Court
of Appeals, as well as the conclusions derived therefrom, were amply supported by
evidence on record. Thus, in line with jurisprudence that such findings are binding on
this Court, we see no reason to disturb the same.
WALL EM MARITIME SERVICES, INC., Petitioner, v. ERNESTO C.

TANAWAN, Respondent
G.R. NO. 160444 - August 29, 2012
FACTS:
On May 12, 1997, the petitioner, then acting as local agent of Scandic Ship
Management, Ltd., engaged Ernesto C. Tanawan as dozer driver assigned to the vessel,
M/V Eastern Falcon, for a period of 12 months.
On November 22, 1997, while Tanawan was assisting two co-workers in lifting a steel
plate aboard the vessel, a corner of the steel plate touched the floor of the deck,
causing the sling to slide and the steel plate to hit his left foot. He was brought to a
hospital in Malaysia where his left foot was placed in a cast. His x-ray examination
showed he had suffered multiple left toes fracture (i.e., left 2nd proximal phalanx and
3rd to 5th metatarsal).
Following Tanawan’s repatriation on November 28, 1997, his designated physician, Dr.
Robert D. Lim, conducted the evaluation and treatment of his foot injury at
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Metropolitan Hospital, the designated hospital. Tanawan was initially evaluated on
December 1, 1997 and was referred to Metropolitan Hospital s orthopedic surgeon who
reviewed the x-rays and advised Tanawan to continue with his immobilization to allow
good fracture healing.
On December 22, 1997, Tanawan s cast was removed, and he was advised to start
motion exercises and partial weight bearing. He underwent physical therapy for two
months at the St. Camillus Hospital. On March 26, 1998, the orthopedic surgeon
suggested pinning and bone grafting of the 5th metatarsal bone after noticing that
there was no callous formation there.
On April 7, 1998, Tanawan underwent bone grafting and was discharged on the next
day. On May 21, 1998, conformably with the orthopedic surgeon s findings, Dr. Lim
reported that Tanawan was already asymptomatic and pronounced him fit to work. It
is noted that from November 30, 1997 until April 1998, Tanawan was paid sickness
allowances equivalent to his monthly salary.
On March 31, 1988, while Tanawan was still under treatment by Dr. Lim, he also
sought the services of Dr. Rimando Saguin to assess the extent of his disability due to
the same injury. Dr. Saguin categorized the foot injury as Grade 12 based on the
Philippine Overseas Employment Administration (POEA) Schedule of Disability.
On August 25, 1998, due to the worsening condition of his right eye, Tanawan also
went to the clinic of Dr. Hernando D. Bunuan for a disability evaluation, not of his foot
injury but of an eye injury that he had supposedly sustained while on board the vessel.
Tanawan’s position paper narrated how he had sustained the eye injury, stating that
on October 5, 1997, the Chief Engineer directed him to spray-paint the loader of the
vessel; that as he was opening a can of thinner, some of the thinner accidentally
splashed into his right eye; that he was rushed to the Office of the Chief Mate for
emergency treatment; and that the ship doctor examined him five days later, and told
him that there was nothing to worry about and that he could continue working.
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Dr. Bunuan referred him to Dr. Tim Jimenez, an ophthalmologist, who diagnosed him
to be suffering from a retinal detachment with vitreous hemorrhage on the right eye
for which surgical repair was needed. Dr. Bunuan categorized his disability as Grade 7.
On November 26, 1998, Tanawan filed in the Arbitration Branch of the NLRC a
complaint for disability benefits for the foot and eye injuries, sickness allowance,
damages and attorney s fees against the petitioner and its foreign principal.
In its answer, the petitioner denied Tanawan’s claim for disability benefits for his foot
injury, averring that he was already fit to work based on Dr. Lim’s certification; that he
did not sustain the alleged eye injury while on board the vessel because no such injury
was reported; that the claim for sickness allowance was already paid when he
underwent treatment.
ISSUES:
What governs the employment of seafarers, and its incidents, including claims for
death benefits?
Who is tasked to determine whether the seafarer suffers from any disability or is fit to
work?
RULLING:
The employment of seafarers, and its incidents, including claims for death benefits, is
governed by the contracts they sign every time they are hired or rehired. Such
contracts have the force of law between the parties as long as their stipulations are not
contrary to law, morals, public order or public policy. While the seafarers and their
employers are governed by their mutual agreements, the POEA rules and regulations
require that the POEA Standard Employment Contract, which contains the standard
terms and conditions of the seafarers’ employment in foreign ocean-going vessels, be
integrated in every seafarer’s contract. The pertinent provision of the 1996 POEA SEC,
which was in effect at the time of Tanawan’s employment, was Section 20(B) –
Compensation and Benefits.
The one tasked to determine whether the seafarer suffers from any disability or is fit to
work is the company-designated physician. As such, the seafarer must submit himself to
the company-designated physician for a post-employment medical examination within
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three days from his repatriation. But the assessment of the company-designated
physician is not final, binding or conclusive on the seafarer, the labor tribunals, or the
courts. The seafarer may request a second opinion and consult a physician of his choice
regarding his ailment or injury, and the medical report issued by the physician of his
choice shall also be evaluated on its inherent merit by the labor tribunal and the court.
Tanawan submitted himself to Dr. Lim, the company-designated physician, for a medical
examination within the 3-day reglementary period from his repatriation. The medical
examination conducted focused on Tanawan’s foot injury, the cause of his repatriation.
Dr. Lim treated Tanawan for the foot injury from December 1, 1997 until May 21, 1998,
when Dr. Lim declared him fit to work. Within that period that lasted 172 days, Tanawan
was unable to perform his job, an indication of a permanent disability. Under the law,
there is permanent disability if a worker is unable to perform his job for more than 120
days, regardless of whether or not he loses the use of any part of his body. Disability
should be understood more on the loss of earning capacity rather than on the medical
significance of the disability. Even in the absence of an official finding by the company-
designated physician to the effect that the seafarer suffers a disability and is unfit for sea
duty, the seafarer may still be declared to be suffering from a permanent disability if he is
unable to work for more than 120 days. On the other hand, Tanawan’s claim for disability
benefits due to the eye injury was already barred by his failure to report the injury and to
have his eye examined by a company-designated physician. The rationale for the rule 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.
Under the 1996 POEA SEC, it was enough to show that the injury or illness was sustained
during the term of the contract. The Court has declared that the unqualified phrase
“during the term” found in Section 20(B) thereof covered all injuries or illnesses
occurring during the lifetime of the contract. Whoever claims entitlement to the benefits
provided by law should establish his right to the benefits by substantial evidence.
Tanawan did not present any proof of having sustained the eye injury during the term of
his contract. All that he submitted was his bare allegation that his eye had been splashed
with some thinner while he was on board the vessel.
EASTERN MEDITERRANEAN MARITIME LTD. AND AGEMAR MANNING

AGENCY, INC., Petitioners, v. EST ANISLAO SURIO, FREDDIE PALGUIRAN,
GRACIANO MORALES, HENRY CASTILLO, ARISTOTLE ARREOLA, ALEXANDER
YGOT, ANRIQUE BA TTUNG, GREGORIO ALDOVINO, NARCISO FRIAS,
VICTOR FLORES, SAMUEL MARCIAL, CARLITO PALGUIRAN, DUQUE
VINLUAN, .JESUS MENDEGORIN, NEIL FLORES, ROMEO MANGALIAG, JOE
GARFIN and SALESTINO SUSA, Respondents.
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G.R. NO. 154213 - August 23, 2012
FACTS:
Respondents were former crewmembers of MT Seadance, a vessel owned by petitioner

Eastern Mediterranean Maritime Ltd. and manned and operated by petitioner Agemar
Manning Agency, Inc. While respondents were still on board the vessel, they
experienced delays in the payment of their wages and in the remittance of allotments,
and were not paid for extra work and extra overtime work. They complained about the
vessels inadequate equipment, and about the failure of the petitioners to heed their
repeated requests for the improvement of their working conditions. On December 19,
1993, when MT Seadance docked at the port of Brofjorden, Sweden to discharge oil,
representatives of the International Transport Federation (ITF) boarded the vessel and
found the wages of the respondents to be below the prevailing rates. The ensuing
negotiations between the ITF and the vessel owner on the increase in respondents’
wages resulted in the payment by the vessel owner of wage differentials and the
immediate repatriation of respondents to the Philippines.
Subsequently, on December 23, 1993, the petitioners filed against the newly-
repatriated respondents a complaint for disciplinary action based on breach of
discipline and for the reimbursement of the wage increases in the Workers Assistance
and Adjudication Office of the POEA.
During the pendency of the administrative complaint in the POEA, Republic Act No.
8042 (Migrant Workers and Overseas Filipinos Act of 1995) took effect on July 15, 1995.
Section 10 of Republic Act No. 8042 vested original and exclusive jurisdiction over all
money claims arising out of employer-employee relationships involving overseas
Filipino workers in the Labor Arbiters.
The jurisdiction over such claims was previously exercised by the POEA under the
POEA Rules and Regulations of 1991 (1991 POEA Rules).
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On May 23, 1996, the POEA dismissed the complaint for disciplinary action.
Petitioners received the order of dismissal on July 24, 1996.
Relying on Section 1, Rule V, Book VII of the 1991 POEA Rules, petitioners filed a
partial appeal on August 2, 1996 in the NLRC, still maintaining that respondents
should be administratively sanctioned for their conduct while they were on board MT
Seadance.
On March 21, 1997, the NLRC dismissed petitioners appeal for lack of jurisdiction
ISSUE:
Whether or not the NLRC has appellate jurisdiction to review the decision of the
POEA in disciplinary cases involving overseas contract workers.
RULING:
No.
Although Republic Act No. 8042, through its Section 10, transferred the original and
exclusive jurisdiction to hear and decide money claims involving overseas Filipino
workers from the POEA to the Labor Arbiters, the law did not remove from the POEA
the original and exclusive jurisdiction to hear and decide all disciplinary action cases
and other special cases administrative in character involving such workers. The
obvious intent of Republic Act No. 8042 was to have the POEA focus its efforts in
resolving all administrative matters affecting and involving such workers. The NLRC
had no appellate jurisdiction to review the decision of the POEA in disciplinary cases
involving overseas contract workers.
Although, as a rule, all laws are prospective in application unless the contrary is
expressly provided, or unless the law is procedural or curative in nature, there is no
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serious question about the retroactive applicability of Republic Act No. 8042 to the
appeal of the POEA’s decision on petitioners’ disciplinary action against respondents.
In a way, Republic Act No. 8042 was a procedural law due to its providing or omitting
guidelines on appeal. Republic Act No. 8042 applies to petitioners’ complaint by virtue
of the case being then still pending or undetermined at the time of the law’s passage,
there being no vested rights in rules of procedure. They could not validly insist that
the reckoning period to ascertain which law or rule should apply was the time when
the disciplinary complaint was originally filed in the POEA in 1993. Moreover, Republic
Act No. 8042 and its implementing rules and regulations were already in effect when
petitioners took their appeal. When Republic Act No. 8042 withheld the appellate
jurisdiction of the NLRC in respect of cases decided by the POEA, the appellate
jurisdiction was vested in the Secretary of Labor in accordance with his power of
supervision and control under Section 38(1), Chapter 7, Title II, Book III of the Revised
Administrative Code of 1987.
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:
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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.
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
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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 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
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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:
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
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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 with the Regional Arbitration Branch of the NLRC in San Fernando
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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.
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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 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
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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.”
individual notices to vacate SMI Village. Petitioners were as a consequence no longer
operations.
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:
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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.
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.
7K CORPORATION vs. EDDIE ALBARICO
G.R. No. 182295. June 26, 2013
CJ. Sereno
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The failure of the parties to limit the issues specifically to that which was
stated in the Submission Agreement allowed the arbitrator to assume jurisdiction over the
related issue. In the present case, there is no indication that the issue of illegal
dismissal should be treated, as a two-tiered issue whereupon entitlement to backwages
must be determined separately. Since arbitration is a final resort for the adjudication
of disputes, the voluntary arbitrator in the present case can assume that he has the
necessary power to make a final settlement.
Facts:
Respondent Eddie Albarico (Albarico) was a regular employee of petitioner 7K

Corporation, a company selling water purifiers. He started working for the company in
1990 as a salesman. Because of his good performance, his employment was regularized.
In April of 1993, the chief operating officer of petitioner 7K Corporation

terminated Albarico’s employment allegedly for his poor sales performance. Respondent
had to stop reporting for work, and he subsequently submitted his money claims against
petitioner for arbitration before the National Conciliation and Mediation Board (NCMB).
The issue for voluntary arbitration before the NCMB, according to the parties’
Submission Agreement dated 19 April 1993, was whether respondent Albarico was
entitled to the payment of separation pay and the sales commission reserved for him by
the corporation.
While the NCMB arbitration case was pending, respondent Albarico filed a
Complaint against petitioner corporation with the Arbitration Branch of the National
Labor Relations Commission (NLRC) for illegal dismissal with money claims for overtime
pay, holiday compensation, commission, and food and travelling allowances. The
Complaint was decided by the labor arbiter in favor of respondent Albarico, who was
awarded separation
pay in lieu of reinstatement, backwages and attorney’s fees.
On appeal by petitioner, the labor arbiter’s Decision was vacated by the NLRC for
forum shopping on the part of respondent Albarico, because the NCMB arbitration case
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was still pending. The NLRC Decision, which explicitly stated that the dismissal was
without prejudice to the pending NCMB arbitration case, became final after no appeal
was taken.
On 18 November 2005, the NCMB voluntary arbitrator rendered a Decision

finding petitioner corporation liable for illegal dismissal. The termination of respondent
Albarico, by reason of alleged poor performance, was found invalid. Additionally, in view
of the finding that Albarico had been illegally dismissed, the voluntary arbitrator also
ruled that the former was entitled to backwages
Petitioner corporation subsequently appealed to the CA. The CA affirmed the

Decision of the voluntary arbitrator.
Issue:
Whether or not the CA committed reversible error in finding that the voluntary
arbitrator properly assumed jurisdiction to decide the issue of the legality of the dismissal
of respondent as well as the latter’s entitlement to backwages, even if neither the legality
nor the entitlement was expressly claimed in the Submission Agreement of the parties.
Ruling:
The Petition is denied for being devoid of merit.
We rule that although petitioner correctly contends that separation pay may in
fact be awarded for reasons other than illegal dismissal, the circumstances of the instant
case lead to no other conclusion than that the claim of respondent Albarico for
separation pay was premised on his allegation of illegal dismissal. Thus, the voluntary
arbitrator properly assumed jurisdiction over the issue of the legality of his dismissal.
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Having established that the issue of the legality of dismissal of Albarico was in fact
necessarily-albeit not explicitly- included in the Submission Agreement signed by the
parties, this Court rules that the voluntary arbitrator rightly assumed jurisdiction to
decide the said issue. Consequently, we also rule that the voluntary arbitrator may award
backwages upon a finding of illegal dismissal, even though the issue of entitlement
thereto is not explicitly claimed in the Submission Agreement. Backwages in general, are
awarded on the ground of equity as a form of relief that restores the income lost by the
terminated employee by reason of his illegal dismissal.
The failure of the parties to limit the issues specifically to that which was stated
allowed the arbitrator to assume jurisdiction over the related issue. In the present case,
there is no indication that the issue of illegal dismissal should be treated, as a two-tiered
issue whereupon entitlement to backwages must be determined separately. Besides,
"since arbitration is a final resort for the adjudication of disputes," the voluntary
arbitrator in the present case can assume that he has the necessary power to make a
final settlement. Thus, we rule that the voluntary arbitrator correctly assumed
jurisdiction over the issue of entitlement of respondent Albarico to backwages on the
basis of the former's finding of illegal dismissal.
KAPISANANG PANGKAUNLARAN NG KABABAIHANG POTRERO, INC. AND

MILAGROS H. REYES vs. REMEDIOS BARRENO, LILIBETH AMETIN, DRANREV F.
NONAY, FREDERICK D. DIONISIO AND MARITES CASIO
G.R. No. 175900, June 10, 2013
J. Perlas-Bernabe
In cases where the complaint for violation of labor standard laws preceded the
termination of the employee and the filing of the illegal dismissal case, it would not be in
consonance with justice to charge the complainants with engaging in forum shopping when
the remedy available to them at the time their causes of action arose was to file separate
cases before different fora.
Facts:
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Respondents filed a Complaint against KPKPI before the DOLE-NCR for
underpayment of wages, non-payment of labor standard benefits, namely, legal/special
holiday pay, 13th month pay and service incentive leave pay, and non-coverage with the
Social Security System and Home Development Mutual Fund against KPKPI and its
Program Manager, petitioner Milagros H. Reyes (Reyes). During its pendency, however,
respondents were terminated. This prompted the filing of their Complaint with the
NLRC.
Petitioners averred that respondents committed forum shopping when they filed
the NLRC CASE during the pendency of the DOLE CASE. Respondents likewise denied
having committed forum shopping, explaining that the DOLE CASE referred only to
money claims and that it had already been withdrawn while the NLRC CASE involves the
complaint for illegal dismissal with money claims. The LA found no forum shopping the
Labor Arbiter (LA) found no forum shopping, holding that the subsequent dismissal of
the respondents affected the jurisdiction of the DOLE-NCR since illegal dismissal cases
are beyond the latter’s jurisdiction. Necessarily therefore, the case for money claims
pending before the DOLE-NCR had to be consolidated with the illegal dismissal case
before the NLR. On appeal, the NLRC reversed the LA, and ruled that respondents are
guilty of forum shopping in filing the same complaint against petitioners in two (2) fora,
namely the DOLE and the NLRC. The CA affirmed the NLRC, but declared that the ends
of justice would be better served if respondents would be given the opportunity to be
heard on their complaint for illegal dismissal. Accordingly, the CA ordered the remand
of the case to the NLRC for further proceedings.
Issue:
Whether or not the order of the CA for the reinstatement and remand of the NLRC
CASE to the NLRC despite its finding of forum shopping proper
Ruling:
Forum shopping exists “when one party repetitively avails of several judicial
remedies in different courts, simultaneously or successively, all substantially founded on
the same transactions and the same essential facts and circumstances, and all raising
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substantially the same issues either pending in, or already resolved adversely, by some
other court” (Coca-Cola Bottlers, Inc. v. Social Security Commission, G.R. No. 159323, July
31, 2008). What is truly important to consider in determining whether it exists or not is
the vexation caused the courts and parties-litigants by a party who asks different courts
and/or administrative agencies to rule on the same or related causes and/or grant the
same or substantially the same reliefs, in the process creating the possibility of conflicting
decisions being rendered by different fora upon the same issues (Municipality of Taguigv.
CA, G.R. No. 142619, September 13, 2005).
Applying the foregoing principles to the case at bar, respondents did not commit
forum shopping. Clearly, there is no identity of causes of action between the cases
pending with the DOLE and the NLRC. The DOLE CASE involved violations of labor
standard provisions where an employer-employee relationship exists. On the other hand,
the NLRC CASE questioned the propriety of respondents' dismissal. No less than the
Labor Code provides for these two (2) separate remedies for distinct causes of action.
More importantly, at the time the DOLE CASE was initiated, respondents' only, cause of
action was petitioners' violation of labor standard laws which falls within the jurisdiction
of the DOLE. It was only after the same was filed that respondents were dismissed from
employment, prompting the filing of the NLRC CASE, which is within the mantle of the
NLRC‘s jurisdiction. Under the foregoing circumstances, respondents had no choice but
to avail of different fora. Nevertheless, records reveal that respondents withdrew the
DOLE CASE after they had instituted the NLRC CASE. Pertinent on this point is the
Court's pronouncement in Consolidated Broadcasting System v. Oberio, G.R. No. 168424,
June 8, 2007, to wit:
Under Article 217 of the Labor Code, termination cases fall under the jurisdiction
of Labor Arbiters. Whereas, Article 128 of the same Code vests the Secretary of Labor or
his duly authorized representatives with the power to inspect the employer's records to
determine and compel compliance with labor standard laws. The exercise of the said
power by the Secretary or his duly authorized representatives is exclusive to cases where
[the] employer-employee relationship still exits. Thus, in cases where the complaint for
violation of labor standard laws preceded the termination of the employee and the filing
of the illegal dismissal case, it would not be in consonance with justice to charge the
complainants with engaging in forum shopping when the remedy available to them at
the time their causes of action arose was to file separate cases before different fora.
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ROY D. PASOS vs. PHILIPPINE NATIONAL CONSTRUCTION
CORPORATION
G.R. No. 192394, July 3, 2013
J. Villarama, Jr.
The Court held that while the bond requirement on appeals involving monetary
awards has been relaxed in certain cases, this can only be done where there was substantial
compliance of the Rules or where the appellants, at the very least, exhibited willingness to
pay by posting a partial bond.
Project employee is deemed regularized if services are extended without specifying

duration. In this case, when the services of the project employee were extended without any
specification of as to the duration, that made him a regular employee of PNCC.
Facts:
Petitioner started working for respondent on April 26, 1996. Based ·on the
respondent's "Personnel Action Form Appointment for Project Employment" dated April
30, 1996, petitioner was designated as “Clerk II (Accounting)” and was assigned to the
“NAIA – II Project.” The project duration is from April 26, 1996 to July 25, 1996. Petitioner
worked continuously for more than two years after the supposed three-month duration
of his project employment for the NAIA II Project. His services were just extended
indefinitely.
On February 18, 2003, respondent filed a complaint for illegal dismissal with a
prayer for reinstatement and back wages. He argued that he is deemed a regular
employee of respondent due to his prolonged employment as a project employee as well
as the failure on the part of respondent to report his termination every time a project is
completed. He further contended that his termination without the benefit of an
administrative investigation was tantamount to an illegal dismissal. Respondent
countered that petitioner was hired as a project employee in several projects with specific
dates of engagement and termination and had full knowledge and consent that his
appointment was only for the duration of each project. It further contended that it had
sufficiently complied with the reportorial requirements to the DOLE
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The Labor Arbiter rendered a Decision in favor of petitioner. On appeal of the
respondent, petitioner moved to dismiss respondent’s appeal contending that the
supersedeas bond in the amount of P422,630.41 filed by the latter was insufficient
considering that the Labor Arbiter’s monetary award is P460,292.41. He also argued that
the person who verified the appeal, Mr. Erece, Jr., Personnel Services Department Head
of respondent, has no authority to file the same for and in behalf of respondent.
Issue:
1. Whether or not an appeal should be dismissed outright if the appeal bond filed is
less than the adjudged amount
2. Whether or not petitioner a regular employee and not a mere project employee
and thus can only be dismissed for cause
Ruling:
The perfection of an appeal within the reglementary period and in the manner
prescribed by law is jurisdictional, and noncompliance with such legal requirement is
fatal and effectively renders the judgment final and executory. As provided in Article 223
of the Labor Code, as amended, in case of a judgment involving a monetary award, an
appeal by the employer may be perfected only upon the posting of a cash or surety bond
issued by a reputable bonding company duly accredited by the Commission in the
amount equivalent to the monetary award in the judgment appealed from.
However, not only in one case has this Court relaxed this requirement in order to
bring about the immediate and appropriate resolution of cases on the merits. In
Quiambao v. National Labor Relations Commission, this Court allowed the relaxation of
the requirement when there is substantial compliance with the rule. Likewise, in Ong v.
Court of Appeals, the Court held that the bond requirement on appeals may be relaxed
when there is substantial compliance with the Rules of Procedure of the NLRC or when
the appellant shows willingness to post a partial bond. The Court held that “[w]hile the
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bond requirement on appeals involving monetary awards has been relaxed in certain
cases, this can only be done where there was substantial compliance of the Rules or where
the appellants, at the very least, exhibited willingness to pay by posting a partial bond.”
In the instant case, the Labor Arbiter in his decision ordered PNCC to pay
petitioner back wages amounting to P422,630.41 and separation pay of P37,662 or a total
of P460,292.41. When PNCC filed an appeal bond amounting to P422,630.41 or at least
90% of the adjudged amount, there is no question that this is substantial compliance
with the requirement that allows relaxation of the rules.
Project employee is deemed regularized if services are extended without

specifying duration. While for first three months, petitioner can be considered a project
employee of PNCC, his employment thereafter, when his services were extended without
any specification of as to the duration, made him a regular employee of PNCC. And his
status as a regular employee was not affected by the fact that he was assigned to several
other projects and there were intervals in between said projects since he enjoys security
of tenure.
Report of termination required upon project completion. In this case, records

clearly show that PNCC did not report the termination of petitioner’s supposed project
employment for the NAIA II Project to the DOLE. Department Order No. 19, or the
“Guidelines Governing the Employment of Workers in the Construction Industry,”
requires employers to submit a report of an employee’s termination to the nearest public
employment office every time an employee’s employment is terminated due to a
completion of a project.
SAMAR-MED DISTRIBUTION vs. NATIONAL LABOR RELATIONS

COMMISSION
G.R. No. 162385, July 15, 2013
J. Bersamin
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The non-inclusion in the complaint of the issue of dismissal did not necessarily
mean that the validity of the dismissal could not be an issue. The rules of the NLRC require
the submission of verified position papers by the parties should they fail to agree upon an
amicable settlement, and bar the inclusion of any cause of action not mentioned in the
complaint or position paper from the time of their submission by the parties. In view of this,
respondent’s cause of action should be ascertained not from a reading of his complaint
alone but also from a consideration and evaluation of both his complaint and position
paper.
Facts:
Respondent JosafatGutang was hired by petitioner with the task of supervising the
company’s sales personnel and sales agents, and of representing in transactions with the
government in Region VIII. Respondent filed a complaint for money claims against
petitioner Samar-Med Distribution, a sole proprietorship registered in the name of
Danilo V. Roleda. He claimed that Samar-Med had difficulty paying his compensation
during his employment, resulting in his not being paid salaries since November 1995,
allowances since June 1994 and commissions from sales, and 13th month pay in 1996. He
also alleged that Samar-Med made illegal deductions in June 1994 and February 1995.
Consequently, he had been compelled to look for other sources of income beginning on
March 26, 1996 in order to survive.
Petitioner denied liability for respondent’s monetary claims, contending that

respondent was not his employee but an employee of the City Council of Manila; that
respondent had approached and asked him if he could assist in the operation of the
business in order to have extra income; that respondent was thus permitted to sell
petitioner’s products in his own hometown; that respondent stopped selling and no
longer returned to Manila after he was tasked to conduct an investigation of the shortage
in sales collections; that there was no dismissal of respondent, to speak of, but
abandonment on his part; and that the complaint was a harassment suit to retaliate for
the criminal case they had meanwhile filed against respondent for misappropriating
petitioner’s funds.
The LA ruled in favor of respondent for illegal dismissal. The NLRC initially denied
Roleda’s appeal for his failure to post the required appeal bond. The NLRC dismissed the
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complaint of respondent. Respondent Gutang then assailed the outcome in the NLRC
through a petition for certiorari that he filed in the CA. The CA reversed the finding of
NLRC. Petitioner asserts that it was a mistake for CA to reverse the finding of NLRC that
respondent Gutang was dismissed for a cause. It raises, as an issue, among others, that
respondent’s complaint did not include “illegal dismissal” as his cause of action, thus, no
cause of action for illegal dismissal.
Issue:
Whether or not respondent’s dismissal was a proper issue even if he had not raised
it in his complaint
Ruling:
The complaint of respondent was a mere checklist of possible causes of action that
he might have against petitioner. Such manner of preparing the complaint was obviously
designed to facilitate the filing of complaints by employees and laborers who are thereby
enabled to expediently set forth their grievances in a general manner.
But the non-inclusion in the complaint of the issue of dismissal did not necessarily
mean that the validity of the dismissal could not be an issue. The rules of the NLRC
require the submission of verified position papers by the parties should they fail to agree
upon an amicable settlement, and bar the inclusion of any cause of action not mentioned
in the complaint or position paper from the time of their submission by the parties. In
view of this, respondent’s cause of action should be ascertained not from a reading of his
complaint alone but also from a consideration and evaluation of both his complaint and
position paper.
With respondent’s position paper having alleged not only the bases for his money
claims, but also that he had been “compelled to look for other sources of income in order
to survive” and that his employment had not been formally terminated, thereby entitling
him to “full backwages aside from his other claims for unpaid monies,” the consideration
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and ruling on the propriety of respondent’s dismissal by the Labor Arbiter and the NLRC
were proper.
VOLUNTARY ARBITRATOR
MANILA PAVILION HOTEL, owned and operated by ACESITE (PHILS.) HOTEL

CORPORATION v HENRY DELADA
G.R. No. 189947, January 25, 2012
The Facts
Delada was the Union President of the Manila Pavilion Supervisors Association at MPH.
He was originally assigned as Head Waiter of Rotisserie, a fine-dining restaurant operated
by petitioner. Pursuant to a supervisory personnel reorganization program, MPH
reassigned him as Head Waiter of Seasons Coffee Shop, another restaurant operated by
petitioner at the same hotel. Respondent declined the inter-outlet transfer and instead
asked for a grievance meeting on the matter, pursuant to their Collective Bargaining
Agreement (CBA). He also requested his retention as Head Waiter of Rotisserie while the
grievance procedure was ongoing.
MPH replied and told respondent to report to his new assignment for the time being,
without prejudice to the resolution of the grievance involving the transfer. He adamantly
refused to assume his new post at the Seasons Coffee Shop and instead continued to
report to his previous assignment at Rotisserie. Thus, MPH sent him several memoranda
on various dates, requiring him to explain in writing why he should not be penalized for
the following offenses: serious misconduct; willful disobedience of the lawful orders of
the employer; gross insubordination; gross and habitual neglect of duties; and willful
breach of trust.
Despite the notices from MPH, Delada persistently rebuffed orders for him to report to
his new assignment. According to him, since the grievance machinery under their CBA
had already been initiated, his transfer must be held in abeyance. Thus, on 9 May 2007,
MPH initiated administrative proceedings against him. He attended the hearings
together with union representatives.
Meanwhile, the parties failed to reach a settlement during the grievance meeting
concerning the validity of MPHs transfer order. Respondent then elevated his grievance
to the Peers Resources Development Director. Still, no settlement between the parties
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was reached. Respondent appealed the matter to the Grievance Committee level. The
committee recommended that he proceed to the next level of the grievance procedure,
as it was unable to reach a decision on the matter. Consequently, on 20 April 2007, Delada
lodged a Complaint before the National Conciliation and Mediation Board.
While respondents Complaint concerning the validity of his transfer was pending before
the Panel of Voluntary Arbitrators (PVA), MPH continued with the disciplinary action
against him for his refusal to report to his new post at Seasons Coffee Shop. Citing security
and safety reasons, petitioner also placed respondent on a 30-day preventive suspension.
On 8 June 2007, MPH issued a Decision, which found him guilty of insubordination based
on his repeated and willful disobedience of the transfer order. The Decision imposed on
Delada the penalty of 90-day suspension. He opposed the Decision, arguing that MPH
had lost its authority to proceed with the disciplinary action against him, since the matter
had already been included in the voluntary arbitration.
Issues
a.) Whether MPH retained the authority to continue with the administrative case
against Delada for insubordination and willful disobedience of the transfer
order.
b.) Whether MPH is liable to pay back wages and other benefits for the period
corresponding to the penalty of 90-day suspension.
Ruling
Petitioner argues that it did not lose its authority to discipline Delada notwithstanding
the joint submission to the PVA of the issue of the validity of the transfer order.
According to petitioner, the specific issue of whether respondent could be held liable for
his refusal to assume the new assignment was not raised before the PVA, and that the
panel’s ruling was limited to the validity of the transfer order. Thus, petitioner maintains
that it cannot be deemed to have surrendered its authority to impose the penalty of
suspension.
In Sime Darby Pilipinas, Inc. v. Deputy Administrator Magsalin, we ruled that the
voluntary arbitrator had plenary jurisdiction and authority to interpret the agreement to
arbitrate and to determine the scope of his own authority subject only, in a proper case,
to the certiorari jurisdiction of this Court. In that case, the specific issue presented was
the issue of performance bonus. We then held that the arbitrator had the authority to
determine not only the issue of whether or not a performance bonus was to be granted,
but also the related question of the amount of bonus, were it to be granted. We then said
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that there was no indication at all that the parties to the arbitration agreement had
regarded the issue of performance bonus as a two-tiered issue, only one aspect of which
was being submitted to arbitration; thus, we held that the failure of the parties to
specifically limit the issues to that which was stated allowed the arbitrator to assume
jurisdiction over the related issue.
A more recent case is Ludo & Luym Corporation v. Saornido. In that case, we recognized
that voluntary arbitrators are generally expected to decide only those questions expressly
delineated by the submission agreement; that, nevertheless, they can assume that they
have the necessary power to make a final settlement on the related issues, since
arbitration is the final resort for the adjudication of disputes. Thus, we ruled that even if
the specific issue brought before the arbitrators merely mentioned the question of
whether an employee was discharged for just cause, they could reasonably assume that
their powers extended beyond the determination thereof to include the power to
reinstate the employee or to grant back wages. In the same vein, if the specific issue
brought before the arbitrators referred to the date of regularization of the employee, law
and jurisprudence gave them enough leeway as well as adequate prerogative to
determine the entitlement of the employees to higher benefits in accordance with the
finding of regularization. Indeed, to require the parties to file another action for payment
of those benefits would certainly undermine labor proceedings and contravene the
constitutional mandate providing full protection to labor and speedy labor justice.
Consequently, could the PVA herein view that the issue presented before it the question
of the validity of the transfer order necessarily included the question of respondent
Deladas insubordination and willful disobedience of the transfer order?
Pursuant to the doctrines in Sime Darby Pilipinas and Ludo & Luym Corporation, the PVA
was authorized to assume jurisdiction over the related issue of insubordination and
willful disobedience of the transfer order. Nevertheless, the doctrine in the
aforementioned cases is inapplicable to the present Petition. In those cases, the voluntary
arbitrators did in fact assume jurisdiction over the related issues and made rulings on the
matter. In the present case, however, the PVA did not make a ruling on the specific issue
of insubordination and willful disobedience of the transfer order. The PVA merely said
that its disagreement with the 90-day penalty of suspension stemmed from the fact that
the penalty went beyond the 30-day limit for preventive suspension:
But to us, what militates against the validity of Deladas preventive

suspension is the fact that it went beyond the 30-day period prescribed by
the Implementing Rules of the Labor Code (Section 4, Rules XIV, Book V).
The preventive suspension of Delada is supposed to expire on 09 June 2007,
but without notifying Delada, the MPH proceeded to impose a separate
penalty of 90-days suspension to him which took effect only on 18 June
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2007, or way beyond the 30-day rule mandated by the Rules. While the
intention of the MPH is to impose the 90-day suspension as a separate
penalty against Delada, the former is already proscribed from doing so
because as of 05 June 2007, the dispute at hand is now under the exclusive
jurisdiction of the panel of arbitrators. In fact, by its own admission, the
MPH categorically stated in its Position Paper that as of 25 May 2007, or
before the suspension order was issued, MPH and Delada had already
formulated and submitted the issues for arbitration. For all legal intents
and purposes, therefore, the MPH has now relinquished its authority to
suspend Delada because the issue at this juncture is now within the Panels
ambit of jurisdiction. MPHs authority to impose disciplinary action to
Delada must now give way to the jurisdiction of this panel of arbitrators to
rule on the issues at hand. By necessary implication, this Panel is thus
constrained to declare both the preventive suspension and the separate
suspension of 90-days meted to Delada to be not valid and justified.
First, it must be pointed out that the basis of the 30-day preventive suspension imposed
on Delada was different from that of the 90-day penalty of suspension. The 30-day
preventive suspension was imposed by MPH on the assertion that Delada might sabotage
hotel operations if preventive suspension would not be imposed on him. On the other
hand, the penalty of 90-day suspension was imposed on respondent as a form of
disciplinary action. It was the outcome of the administrative proceedings conducted
against him. Preventive suspension is a disciplinary measure resorted to by the employer
pending investigation of an alleged malfeasance or misfeasance committed by an
employee. The employer temporarily bars the employee from working if his continued
employment poses a serious and imminent threat to the life or property of the employer
or of his co-workers. On the other hand, the penalty of suspension refers to the
disciplinary action imposed on the employee after an official investigation or
administrative hearing is conducted. The employer exercises its right to discipline erring
employees pursuant to company rules and regulations. Thus, a finding of validity of the
penalty of 90-day suspension will not embrace the issue of the validity of the 30-day
preventive suspension. In any event, petitioner no longer assails the ruling of the CA on
the illegality of the 30-day preventive suspension.
It can be seen that, unlike in Sime Darby Pilipinas and Ludo & Luym Corporation, the
PVA herein did not make a definitive ruling on the merits of the validity of the 90-day
suspension. The panel only held that MPH lost its jurisdiction to impose disciplinary
action on respondent. Accordingly, we rule in this case that MPH did not lose its
authority to discipline respondent for his continued refusal to report to his new
assignment. In relation to this point, we recall our Decision in Allied Banking Corporation
v. Court of Appeals.
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In Allied Banking Corporation, employer Allied Bank reassigned respondent Galanida
from its Cebu City branch to its Bacolod and Tagbilaran branches. He refused to follow
the transfer order and instead filed a Complaint before the Labor Arbiter for constructive
dismissal. While the case was pending, Allied Bank insisted that he report to his new
assignment. When he continued to refuse, it directed him to explain in writing why no
disciplinary action should be meted out to him. Due to his continued refusal to report to
his new assignment, Allied Bank eventually terminated his services. When the issue of
whether he could validly refuse to obey the transfer orders was brought before this Court,
we ruled thus:
The refusal to obey a valid transfer order constitutes willful disobedience

of a lawful order of an employer. Employees may object to, negotiate
and seek redress against employers for rules or orders that they
regard as unjust or illegal. However, until and unless these rules or
orders are declared illegal or improper by competent authority, the
employees ignore or disobey them at their peril. For Galanidas
continued refusal to obey Allied Bank's transfer orders, we hold that the
bank dismissed Galanida for just cause in accordance with Article 282(a) of
the Labor Code. Galanida is thus not entitled to reinstatement or to
separation pay. (Emphasis supplied, citations omitted).
It is important to note what the PVA said on Deladas defiance of the transfer
order:
In fact, Delada cannot hide under the legal cloak of the grievance
machinery of the CBA or the voluntary arbitration proceedings to disobey
a valid order of transfer from the management of the hotel. While it is true
that Deladas transfer to Seasons is the subject of the grievance machinery
in accordance with the provisions of their CBA, Delada is expected to
comply first with the said lawful directive while awaiting the results of the
decision in the grievance proceedings. This issue falls squarely in the case
of Allied Banking Corporation vs. Court of Appeals x x x.
Pursuant to Allied Banking, unless the order of MPH is rendered invalid, there is a
presumption of the validity of that order. Since the PVA eventually ruled that the transfer
order was a valid exercise of management prerogative, we hereby reverse the Decision
and the Resolution of the CA affirming the Decision of the PVA in this respect. MPH had
the authority to continue with the administrative proceedings for insubordination and
willful disobedience against Delada and to impose on him the penalty of suspension. As
a consequence, petitioner is not liable to pay back wages and other benefits for the period
corresponding to the penalty of 90-day suspension.
ESTATE OF NELSON R. DULAY, represented by his wife MERRIDY JANE P.
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DULAY,
vABOITIZ JEBSEN MARITIME, INC. and GENERAL CHARTERERS, INC.,
G.R. No. 172642, June 13, 2012
The Facts
Nelson R. Dulay (Nelson, for brevity) was employed by General Charterers Inc. (GCI), a
subsidiary of co-petitioner Aboitiz Jebsen Maritime Inc. since 1986. He initially worked
as an ordinary seaman and later as bosun on a contractual basis. From September 3, 1999
up to July 19, 2000, Nelson was detailed in petitioner’s vessel, the MV Kickapoo Belle.
On August 13, 2000, or 25 days after the completion of his employment contract, Nelson
died due to acute renal failure secondary to septicemia. At the time of his death, Nelson
was a bona fide member of the Associated Marine Officers and Seamans Union of the
Philippines (AMOSUP), GCIs collective bargaining agent. Nelsons widow, Merridy Jane,
thereafter claimed for death benefits through the grievance procedure of the Collective
Bargaining Agreement (CBA) between AMOSUP and GCI. However, on January 29, 2001,
the grievance procedure was declared deadlocked as respondents refused to grant the
benefits sought by the widow.
On March 5, 2001, Merridy Jane filed a complaint with the NLRC Sub-Regional
Arbitration Board in General Santos City against GCI for death and medical benefits and
damages.
The respondents asserted that the NLRC had no jurisdiction over the action on account
of the absence of employer-employee relationship between GCI and Nelson at the time
of the latter’s death. Nelson also had no claims against petitioners for sick leave
allowance/medical benefit by reason of the completion of his contract with GCI. They
further alleged that private respondent is not entitled to death benefits because
petitioners are only liable for such in case of death of the seafarer during the term of his
contract pursuant to the POEA contract and the cause of his death is not work-related.
Petitioners admitted liability only with respect to article 20(A)2 [of the CBA].
The Labor Arbiter ruled in favor of the petitioner. It took cognizance of the case by virtue
of Article 217 (a), paragraph 6 of the Labor Code and the existence of a reasonable causal
connection between the employer-employee relationship and the claim asserted.
The Labor Arbiter also ruled that the proximate cause of Nelsons death was not work-
related.
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On appeal, [the NLRC] affirmed the Labor Arbiters decision as to the grant of death
benefits under the CBA but reversed the latters ruling as to the proximate cause of
Nelson’s death.
The respondents then filed a special civil action for certiorari with the CA contending,
among others, that the NLRC committed grave abuse of discretion in affirming the
jurisdiction of the NLRC over the case.
On July 11, 2005, the CA promulgated its assailed Decision, ruling that while the suit filed
by Merridy Jane is a money claim, the same basically involves the interpretation and
application of the provisions in the subject CBA. As such, jurisdiction belongs to the
voluntary arbitrator and not the labor arbiter.
Issue
Whether the Labor Arbiter has no jurisdiction over the case.
Ruling
Petitioner contends that Section 10 of Republic Act (R.A.) 8042, otherwise known as the
Migrant Workers and Overseas Filipinos Act of 1995, vests jurisdiction on the appropriate
branches of the NLRC to entertain disputes regarding the interpretation of a collective
bargaining agreement involving migrant or overseas Filipino workers. Petitioner argues
that the abovementioned Section amended Article 217 (c) of the Labor Code which, in
turn, confers jurisdiction upon voluntary arbitrators over interpretation or
implementation of collective bargaining agreements and interpretation or enforcement
of company personnel policies.
The pertinent provisions of Section 10 of R.A. 8042 provide as follows:
SEC. 10.Money Claims. - Notwithstanding any provision of law to the

contrary, the Labor Arbiters of the National Labor Relations Commission
(NLRC) shall have the original and exclusive jurisdiction to hear and
decide, within ninety (90) calendar days after filing of the complaint, the
claims arising out of an employer-employee relationship or by virtue of any
law or contract involving Filipino workers for overseas deployment
including claims for actual, moral, exemplary and other forms of damages.
Article 217(c) of the Labor Code, on the other hand, states that:
xxxx
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(c) Cases arising from the interpretation or implementation of
collective bargaining agreements and those arising from the interpretation
or enforcement of company personnel policies shall be disposed by the
Labor Arbiter by referring the same to the grievance machinery and
voluntary arbitration as may be provided in said agreements.
On their part, respondents insist that in the present case, Article 217, paragraph (c) as
well as Article 261 of the Labor Code remain to be the governing provisions of law with
respect to unresolved grievances arising from the interpretation and implementation of
collective bargaining agreements. Under these provisions of law, jurisdiction remains
with voluntary arbitrators.
Article 261 of the Labor Code reads, thus:
ARTICLE 261. Jurisdiction of Voluntary Arbitrators or panel of

Voluntary Arbitrators. The Voluntary Arbitrator or panel of Voluntary
Arbitrators shall have original and exclusive jurisdiction to hear and decide
all unresolved grievances arising from the interpretation or
implementation of the Collective Bargaining Agreement and those arising
from the interpretation or enforcement of company personnel policies
referred to in the immediately preceding article. Accordingly, violations of
a Collective Bargaining Agreement, except those which are gross in
character, shall no longer be treated as unfair labor practice and shall be
resolved as grievances under the Collective Bargaining Agreement. For
purposes of this article, gross violations of Collective Bargaining Agreement
shall mean flagrant and/or malicious refusal to comply with the economic
provisions of such agreement.
The Commission, its Regional Offices and the Regional Directors of

the Department of Labor and Employment shall not entertain disputes,
grievances or matters under the exclusive and original jurisdiction of the
Voluntary Arbitrator or panel of Voluntary Arbitrators and shall
immediately dispose and refer the same to the Grievance Machinery or
Voluntary Arbitration provided in the Collective Bargaining Agreement.
It is true that R.A. 8042 is a special law governing overseas Filipino workers. However, a
careful reading of this special law would readily show that there is no specific provision
thereunder which provides for jurisdiction over disputes or unresolved grievances
regarding the interpretation or implementation of a CBA. Section 10 of R.A. 8042, which
is cited by petitioner, simply speaks, in general, of claims arising out of an employer-
employee relationship or by virtue of any law or contract involving Filipino workers for
overseas deployment including claims for actual, moral, exemplary and other forms of
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damages. On the other hand, Articles 217(c) and 261 of the Labor Code are very specific
in stating that voluntary arbitrators have jurisdiction over cases arising from the
interpretation or implementation of collective bargaining agreements. Stated differently,
the instant case involves a situation where the special statute (R.A. 8042) refers to a
subject in general, which the general statute (Labor Code) treats in particular. In the
present case, the basic issue raised by Merridy Jane in her complaint filed with the NLRC
is: which provision of the subject CBA applies insofar as death benefits due to the heirs
of Nelson are concerned. The Court agrees with the CA in holding that this issue clearly
involves the interpretation or implementation of the said CBA. Thus, the specific or
special provisions of the Labor Code govern.
In any case, the Court agrees with petitioner's contention that the CBA is the law or
contract between the parties. Article 13.1 of the CBA entered into by and between
respondent GCI and AMOSUP, the union to which petitioner belongs, provides as
follows:
The Company and the Union agree that in case of dispute or conflict
in the interpretation or application of any of the provisions of this
Agreement, or enforcement of Company policies, the same shall be
settled through negotiation, conciliation or voluntary arbitration.
The Company and the Union further agree that they will use their best
endeavor to ensure that any dispute will be discussed, resolved and settled
amicably by the parties hereof within ninety (90) days from the date of
filing of the dispute or conflict and in case of failure to settle thereof any of
the parties retain their freedom to take appropriate action. (Emphasis
supplied)
From the foregoing, it is clear that the parties, in the first place, really intended to bring
to conciliation or voluntary arbitration any dispute or conflict in the interpretation or
application of the provisions of their CBA. It is settled that when the parties have validly
agreed on a procedure for resolving grievances and to submit a dispute to voluntary
arbitration then that procedure should be strictly observed.
It may not be amiss to point out that the abovequoted provisions of the CBA are in
consonance with Rule VII, Section 7 of the present Omnibus Rules and Regulations
Implementing the Migrant Workers and Overseas Filipinos Act of 1995, as amended by
Republic Act No. 10022, which states that [f]or OFWs with collective bargaining
agreements, the case shall be submitted for voluntary arbitration in accordance with
Articles 261 and 262 of the Labor Code. The Court notes that the said Omnibus Rules and
Regulations were promulgated by the Department of Labor and Employment (DOLE)
and the Department of Foreign Affairs (DFA) and that these departments were mandated
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to consult with the Senate Committee on Labor and Employment and the House of
Representatives Committee on Overseas Workers Affairs.
In the same manner, Section 29 of the prevailing Standard Terms and Conditions
Governing the Employment of Filipino Seafarers on Board Ocean Going Vessels,
promulgated by the Philippine Overseas Employment Administration (POEA), provides
as follows:
Section 29. Dispute Settlement Procedures. − In cases of claims

and disputes arising from this employment, the parties covered by a
collective bargaining agreement shall submit the claim or dispute to
the original and exclusive jurisdiction of the voluntary arbitrator or
panel of arbitrators. If the parties are not covered by a collective
bargaining agreement, the parties may at their option submit the claim or
dispute to either the original and exclusive jurisdiction of the National
Labor Relations Commission (NLRC), pursuant to Republic Act (RA) 8042,
otherwise known as the Migrant Workers and Overseas Filipinos Act of
1995 or to the original and exclusive jurisdiction of the voluntary arbitrator
or panel of arbitrators. If there is no provision as to the voluntary
arbitrators to be appointed by the parties, the same shall be appointed from
the accredited voluntary arbitrators of the National Conciliation and
Mediation Board of the Department of Labor and Employment.
The Philippine Overseas Employment Administration (POEA) shall

exercise original and exclusive jurisdiction to hear and decide disciplinary
action on cases, which are administrative in character, involving or arising
out of violations of recruitment laws, rules and regulations involving
employers, principals, contracting partners and Filipino seafarers.
(Emphasis supplied)
It is clear from the above that the interpretation of the DOLE, in consultation with their
counterparts in the respective committees of the Senate and the House of
Representatives, as well as the DFA and the POEA is that with respect to disputes
involving claims of Filipino seafarers wherein the parties are covered by a collective
bargaining agreement, the dispute or claim should be submitted to the jurisdiction of a
voluntary arbitrator or panel of arbitrators. It is only in the absence of a collective
bargaining agreement that parties may opt to submit the dispute to either the NLRC or
to voluntary arbitration. It is elementary that rules and regulations issued by
administrative bodies to interpret the law which they are entrusted to enforce, have the
force of law, and are entitled to great respect. Such rules and regulations partake of the
nature of a statute and are just as binding as if they have been written in the statute itself.
In the instant case, the Court finds no cogent reason to depart from this rule.
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The above interpretation of the DOLE, DFA and POEA is also in consonance with the
policy of the state to promote voluntary arbitration as a mode of settling labor disputes.
No less than the Philippine Constitution provides, under the third paragraph, Section 3,
Article XIII, thereof that [t]he State shall promote the principle of shared responsibility
between workers and employers and the preferential use of voluntary modes in settling
disputes, including conciliation, and shall enforce their mutual compliance therewith to
foster industrial peace.
Consistent with this constitutional provision, Article 211 of the Labor Code provides the
declared policy of the State [t]o promote and emphasize the primacy of free collective
bargaining and negotiations, including voluntary arbitration, mediation and conciliation,
as modes of settling labor or industrial disputes.
APPEAL
CESAR V. GARCIA, ET AL. v KJ COMMERCIAL and REYNALDO QUE

G.R. No. 196830, February 29, 2012
The Facts
Respondent KJ Commercial is a sole proprietorship. It owns trucks and engages in the

business of distributing cement products. On different dates, KJ Commercial employed
as truck drivers and truck helpers petitioners Cesar V. Garcia, Carlos Razon, Alberto De
Guzman, Tomas Razon, Omer E. Palo, Rizalde Valencia, Allan Basa, Jessie Garcia,
JuanitoParas, Alejandro Orag, Rommel Pangan, RuelSoliman, and CenenCanlapan
(petitioners).
On 2 January 2006, petitioners demanded for a P40 daily salary increase. To pressure KJ
Commercial to grant their demand, they stopped working and abandoned their trucks at
the Northern Cement Plant Station in Sison, Pangasinan. They also blocked other
workers from reporting to work.
On 3 February 2006, petitioners filed with the Labor Arbiter a complaint for illegal
dismissal, underpayment of salary and non-payment of service incentive leave and
thirteenth month pay.
In his 30 October 2008 Decision, the Labor Arbiter held that KJ Commercial illegally
dismissed petitioners.
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KJ Commercial appealed to the NLRC. It filed before the NLRC a motion to reduce bond
and posted a P50,000 cash bond.The NLRC denied the motion to reduce bond and
conversely ruled that respondents-appellants failed to perfect an appeal for failure to post
the required bond.
KJ Commercial filed a motion for reconsideration and posted a P2,562,930 surety bond.
In its 8 February 2010 Resolution, the NLRC granted the motion and set aside the Labor
Arbiters 30 October 2008 Decision.
Petitioners filed a motion for reconsideration. In its 25 June 2010 Resolution, the NLRC
denied the motion for lack of merit.
Petitioners filed with the Court of Appeals a petition for certiorari.In its 29 April 2011
Decision, the Court of Appeals dismissed the petition and affirmed the NLRCs 8 February
and 25 June 2010 Resolutions.
Issue
Whether KJ Commercial failed to perfect its appeal before the NLRC.
Ruling
When petitioners filed with the Court of Appeals a petition for certiorari, they did not
raise as issue that the Labor Arbiter’s 30 October 2008 Decision had become final and
executory. Accordingly, the Court of Appeals limited itself to the resolution of the issues
enumerated in the petition.
Petitioners cannot, for the first time, raise as issue in their petition filed with this Court
that the Labor Arbiter’s 30 October 2008 Decision had become final and executory.
Points of law, theories and arguments not raised before the Court of Appeals will not be
considered by this Court. Otherwise, KJ Commercial will be denied its right to due
process.
KJ Commercial’s filing of a motion to reduce bond and delayed posting of the P2,562,930
surety bond did not render the Labor Arbiter’s 30 October 2008 Decision final and
executory. The Rules of Procedure of the NLRC allows the filing of a motion to reduce
bond subject to two conditions: (1) there is meritorious ground, and (2) a bond in a
reasonable amount is posted. Section 6 of Article VI states:
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No motion to reduce bond shall be entertained except on meritorious grounds
and upon the posting of a bond in a reasonable amount in relation to the
monetary award.
The mere filing of the motion to reduce bond without compliance with the
requisites in the preceding paragraph shall not stop the running of the period to
perfect an appeal.
The filing of a motion to reduce bond and compliance with the two conditions stop the
running of the period to perfect an appeal. In McBurnie v. Ganzon, the Court held:
x xx [T]he bond may be reduced upon motion by the employer, this is subject to
the conditions that (1) the motion to reduce the bond shall be based on
meritorious grounds; and (2) a reasonable amount in relation to the monetary
award is posted by the appellant, otherwise the filing of the motion to reduce bond
shall not stop the running of the period to perfect an appeal.
The NLRC has full discretion to grant or deny the motion to reduce bond, and it may rule
on the motion beyond the 10-day period within which to perfect an appeal. Obviously, at
the time of the filing of the motion to reduce bond and posting of a bond in a reasonable
amount, there is no assurance whether the appellant’s motion is indeed based on
meritorious ground and whether the bond he or she posted is of a reasonable amount.
Thus, the appellant always runs the risk of failing to perfect an appeal.
Section 2, Article I of the Rules of Procedure of the NLRC states that, These Rules shall
be liberally construed to carry out the objectives of the Constitution, the Labor Code of
the Philippines and other relevant legislations, and to assist the parties in obtaining just,
expeditious and inexpensive resolution and settlement of labor disputes. In order to give
full effect to the provisions on motion to reduce bond, the appellant must be allowed to
wait for the ruling of the NLRC on the motion even beyond the 10-day period to perfect
an appeal. If the NLRC grants the motion and rules that there is indeed meritorious
ground and that the amount of the bond posted is reasonable, then the appeal is
perfected. If the NLRC denies the motion, the appellant may still file a motion for
reconsideration as provided under Section 15, Rule VII of the Rules. If the NLRC grants
the motion for reconsideration and rules that there is indeed meritorious ground and
that the amount of the bond posted is reasonable, then the appeal is perfected. If the
NLRC denies the motion, then the decision of the labor arbiter becomes final and
executory.
In the present case, KJ Commercial filed a motion to reduce bond and posted a P50,000
cash bond. When the NLRC denied its motion, KJ Commercial filed a motion for
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reconsideration and posted the full P2,562,930 surety bond. The NLRC then granted the
motion for reconsideration.
In any case, the rule that the filing of a motion to reduce bond shall not stop the running
of the period to perfect an appeal is not absolute. The Court may relax the rule.
Jurisprudence tells us that in labor cases, an appeal from a decision involving a monetary
award may be perfected only upon the posting of a cash or surety bond. The Court,
however, has relaxed this requirement under certain exceptional circumstances in order
to resolve controversies on their merits. These circumstances include: (1) fundamental
consideration of substantial justice; (2) prevention of miscarriage of justice or of unjust
enrichment; and (3) special circumstances of the case combined with its legal merits, and
the amount and the issue involved.
In Ong v. Court of Appeals, the Court held that the bond requirement on appeals may be
relaxed when there is substantial compliance with the Rules of Procedure of the NLRC
or when the appellant shows willingness to post a partial bond. The Court held that,
While the bond requirement on appeals involving monetary awards has been relaxed in
certain cases, this can only be done where there was substantial compliance of the Rules
or where the appellants, at the very least, exhibited willingness to pay by posting a partial
bond.
In the present case, KJ Commercial showed willingness to post a partial bond. In fact, it
posted a P50,000 cash bond. In Ong, the Court held that, Petitioner in the said case
substantially complied with the rules by posting a partial surety bond of fifty thousand
pesos issued by Prudential Guarantee and Assurance, Inc. while his motion to reduce
appeal bond was pending before the NLRC.
Aside from posting a partial bond, KJ Commercial immediately posted the full amount
of the bond when it filed its motion for reconsideration of the NLRCs 9 March 2009
Decision.
CONSTRUCTIVE DISMISSAL
JULIES BAKESHOP AND/OREDGAR REYES VHENRY ARNAIZ, EDGAR NAPAL and

JONATHAN TOLORES,
G.R. No. 173882, February 15, 2012
The Facts
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Reyes hired respondents as chief bakers in his three franchise branches of Julies Bakeshop in
Sibalom and San Jose, Antique. On January 26, 2000, respondents filed separate complaints
against petitioners for underpayment of wages, payment of premium pay for holiday and rest
day, service incentive leave pay, 13th month pay, cost of living allowance (COLA) and attorney’s
fees. These complaints were later on consolidated.
Subsequently, in a memorandum dated February 16, 2000, Reyes reassigned respondents as

utility/security personnel tasked to clean the outside vicinity of his bakeshops and to maintain
peace and order in the area. Upon service of the memo, respondents, however, refused to sign
the same and likewise refused to perform their new assignments by not reporting for work.
In a letter-memorandum dated March 13, 2000, Reyes directed respondents to report back for
work and to explain why they failed to assume their duties as utility/security personnel. A second
letter-memorandum of the same tenor dated March 28, 2000 was also sent to respondents.
Respondents did not heed both memoranda.
Issue
Was the transfer/reassignment of respondents to another position without diminution in pay

and other privileges tantamount to constructive dismissal?
Ruling
The transfer/reassignment of respondents

constitutes constructive dismissal.
Petitioners contend that the order transferring or reassigning respondents from their position
as chief bakers to utility/security personnel is within the ambit of management prerogative as
employer. They harp on the fact that no evidence was presented by respondents to show that
they were dismissed from employment.
We have held that management is free to regulate, according to its own discretion and
judgment, all aspects of employment, including hiring, work assignments, working methods,
time, place and manner of work, processes to be followed, supervision of workers, working
regulations, transfer of employees, work supervision, lay off of workers and discipline, dismissal
and recall of workers. The exercise of management prerogative, however, is not absolute as it
must be exercised in good faith and with due regard to the rights of labor.
In constructive dismissal cases, the employer has the burden of proving that the transfer of an
employee is for just or valid ground, such as genuine business necessity. The employer must
demonstrate that the transfer is not unreasonable, inconvenient, or prejudicial to the employee
and that the transfer does not involve a demotion in rank or a diminution in salary and other
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benefits. If the employer fails to overcome this burden of proof, the employees transfer is
tantamount to unlawful constructive dismissal.
In this case, petitioners insist that the transfer of respondents was a measure of self-preservation
and was prompted by a desire to protect the health of the buying public, claiming that
respondents should be transferred to a position where they could not sabotage the business
pending resolution of their cases. According to petitioners, the possibility that respondents
might introduce harmful substances to the bread while in the performance of their duties as
chief bakers is not imaginary but real as borne out by what Tolores did in one of the bakeshops
in Culasi, Antique where he was assigned as baker.
This postulation is not well-taken. On the contrary, petitioners failed to satisfy the burden of
proving that the transfer was based on just or valid ground. Petitioner’s bare assertions of
imminent threat from the respondents are mere accusations which are not substantiated by any
proof. This Court is proscribed from making conclusions based on mere presumptions or
suppositions. An employee’s fate cannot be justly hinged upon conjectures and surmises. The
act attributed against Tolores does not even convince us as he was merely a suspected culprit in
the alleged sabotage for which no investigation took place to establish his guilt or culpability.
Besides, Reyes still retained Tolores as an employee and chief baker when he could have
dismissed him for cause if the allegations were indeed found true. In view of these, this Court
finds no compelling reason to justify the transfer of respondents from chief bakers to
utility/security personnel. What appears to this Court is that respondents transfer was an act of
retaliation on the part of petitioners due to the formers filing of complaints against them, and
thus, was clearly made in bad faith. In fact, petitioner Reyes even admitted that he caused the
reassignments due to the pending complaints filed against him.
[D]emotion involves a situation in which 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. When
there is a demotion in rank and/or a diminution in pay; when a clear discrimination, insensibility
or disdain by an employer becomes unbearable to the employee; or when continued
employment is rendered impossible, unreasonable or unlikely, the transfer of an employee may
constitute constructive dismissal.
We agree with the CA in ruling that the transfer of respondents amounted to a demotion.
Although there was no diminution in pay, there was undoubtedly a demotion in titular rank.
One cannot deny the disparity between the duties and functions of a chief baker to that of a
utility/security personnel tasked to clean and manage the orderliness of the outside premises of
the bakeshop. Respondents were even prohibited from entering the bakeshop. The change in
the nature of their work undeniably resulted to a demeaning and humiliating work condition.
In Globe Telecom, Inc. v. Florendo-Flores, we held:
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The managerial prerogative to transfer personnel must be exercised
without grave abuse of discretion. It must always bear in mind the basic elements
of justice and fair play. Having the right must not be confused with the manner
that right is exercised. Thus, it cannot be used as a subterfuge by the employer to
rid himself of an undesirable worker.
Petitioners claim that respondents abandoned their job stands on shallow grounds.
Respondents cannot be faulted for refusing to report for work as they were compelled to quit
their job due to a demotion without any just cause. Moreover, we have consistently held that a
charge of abandonment is inconsistent with the filing of a complaint for constructive dismissal.
Respondents demand to maintain their positions as chief bakers by filing a case and asking for
the relief of reinstatement belies abandonment.
As the transfer proves unbearable to respondents as to foreclose any choice on their part except
to forego continued employment, same amounts to constructive dismissal for which
reinstatement without loss of seniority rights, full backwages, inclusive of allowances, and other
benefits or their monetary equivalent, computed from the time their compensation was
withheld up to the time of their actual reinstatement, should be granted. The CA, therefore, did
not err in awarding the reliefs prayed for by the respondents as they were, without a doubt,
CONTEMPT
FEDERICO S. ROBOSA, ET AL. v NATIONAL LABOR RELATIONS COMMISSION

(First Division), CHEMO-TECHNISCHE MANUFACTURING, INC. and its
responsible officials led by FRANKLIN R. DE LUZURIAGA, and PROCTER &
GAMBLE PHILIPPINES, INC.
G.R. No. 176085. February 8, 2012
The Facts
Federico S. Robosa, Rolando E. Pandy, Noel D. Roxas, Alexander Angeles, Veronica

Gutierrez, Fernando Embat and Nanette H. Pinto (petitioners) were rank-and-file
employees of respondent Chemo-Technische Manufacturing, Inc. (CTMI), the
manufacturer and distributor of Wella products. They were officers and members of the
CTMI Employees Union-DFA (union). Respondent Procter and Gamble Philippines, Inc.
(P & GPI) acquired all the interests, franchises and goodwill of CTMI during the pendency
of the dispute.
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Sometime in the first semester of 1991, the union filed a petition for certification election
at CTMI. On June 10, 1991, Med-Arbiter Rasidali Abdullah of the Office of the Department
of Labor and Employment in the National Capital Region (DOLE-NCR) granted the
petition. The DOLE-NCR conducted a consent election on July 5, 1991, but the union
failed to garner the votes required to be certified as the exclusive bargaining agent of the
company.
On July 15, 1991, CTMI, through its President and General Manager Franklin R. de
Luzuriaga, issued a memorandum announcing that effective that day: (1) all sales
territories were demobilized; (2) all vehicles assigned to sales representatives should be
returned to the company and would be sold; (3) sales representatives would continue to
service their customers through public transportation and would be given transportation
allowance; (4) deliveries of customers orders would be undertaken by the warehouses;
and (5) revolving funds for ex-truck selling held by sales representatives should be
surrendered to the cashier (for Metro Manila) or to the supervisor (for Visayas and
Mindanao), and truck stocks should immediately be surrendered to the warehouse.
On the same day, CTMI issued another memorandum informing the company’s sales
representatives and sales drivers of the new system in the Salon Business Groups selling
operations.
The union asked for the withdrawal and deferment of CTMIs directives, branding them
as union busting acts constituting unfair labor practice. CTMI ignored the request.
Instead, it issued on July 23, 1991 a notice of termination of employment to the sales
drivers, due to the abolition of the sales driver positions.
On August 1, 1991, the union and its affected members filed a complaint for illegal
dismissal and unfair labor practice, with a claim for damages, against CTMI, De
Luzuriaga and other CTMI officers. The union also moved for the issuance of a writ of
preliminary injunction and/or temporary restraining order (TRO).
The labor arbiter handling the case denied the unions motion for a stay order on the
ground that the issues raised by the petitioners can best be ventilated during the trial on
the merits of the case. This prompted the union to file on August 16, 1991 with the
National Labor Relations Commission (NLRC), a petition for the issuance of a
preliminary mandatory injunction and/or TRO.
On August 23, 1991, the NLRC issued a TRO. It directed CTMI, De Luzuriaga and other
company executives to (1) cease and desist from dismissing any member of the union and
from implementing the July 23, 1991 memorandum terminating the services of the sales
drivers, and to immediately reinstate them if the dismissals have been effected; (2) cease
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and desist from implementing the July 15, 1991 memorandum grounding the sales
personnel; and (3) restore the status quo ante prior to the formation of the union and the
conduct of the consent election.
Allegedly, the respondents did not comply with the NLRCs August 23, 1991 resolution.
They instead moved to dissolve the TRO and opposed the union’s petition for preliminary
injunction.
On September 12, 1991, the NLRC upgraded the TRO to a writ of preliminary injunction.
The respondents moved for reconsideration. The union opposed the motion and urgently
moved to cite the responsible CTMI officers in contempt of court.
On August 25, 1993, the NLRC denied the respondents motion for reconsideration and
directed Labor Arbiter Cristeta Tamayo to hear the motion for contempt. In reaction, the
respondents questioned the NLRC orders before this Court through a petition for
certiorari and prohibition with preliminary injunction. The Court dismissed the petition
for being premature. It also denied the respondents motion for reconsideration, as well
as a second motion for reconsideration, with finality. This notwithstanding, the
respondents allegedly refused to obey the NLRC directives. The respondents defiance,
according to the petitioners, resulted in the loss of their employment.
Meanwhile, the NLRC heard the contempt charge. On October 31, 2000, it issued a
resolution dismissing the charge. It ordered the labor arbiter to proceed hearing the main
case on the merits.
The petitioners moved for, but failed to secure, a reconsideration from the NLRC on the
dismissal of the contempt charge. They then sought relief from the CA by way of a petition
for certiorari under Rule 65.
Issues
(1) whether the NLRC has contempt powers;

(2) whether the dismissal of a contempt charge is appealable; and
(3) whether the NLRC committed grave abuse of discretion in dismissing the
contempt charge against the respondents.
Ruling
On the first issue, we stress that under Article 218 of the Labor Code, the NLRC (and the
labor arbiters) may hold any offending party in contempt, directly or indirectly, and
impose appropriate penalties in accordance with law. The penalty for direct contempt
consists of either imprisonment or fine, the degree or amount depends on whether the
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contempt is against the Commission or the labor arbiter. The Labor Code, however,
requires the labor arbiter or the Commission to deal with indirect contempt in the
manner prescribed under Rule 71 of the Rules of Court.
Rule 71 of the Rules of Court does not require the labor arbiter or the NLRC to initiate
indirect contempt proceedings before the trial court. This mode is to be observed only
when there is no law granting them contempt powers. As is clear under Article 218(d) of
the Labor Code, the labor arbiter or the Commission is empowered or has jurisdiction to
hold the offending party or parties in direct or indirect contempt. The petitioners,
therefore, have not improperly brought the indirect contempt charges against the
respondents before the NLRC.
The second issue pertains to the nature of contempt proceedings, especially with respect
to the remedy available to the party adjudged to have committed indirect contempt or
has been absolved of indirect contempt charges. In this regard, Section 11, Rule 71 of the
Rules of Court states that the judgment or final order of a court in a case of indirect
contempt may be appealed to the proper court as in a criminal case. This is not the point
at issue, however, in this petition. It is rather the question of whether the dismissal of a
contempt charge, as in the present case, is appealable. The CA held that the NLRC’s
dismissal of the contempt charges against the respondents amounts to an acquittal in a
criminal case and is not subject to appeal.
The CA ruling is grounded on prevailing jurisprudence.
In Yasay, Jr. v. Recto, the Court declared:
A distinction is made between a civil and [a] criminal contempt.

Civil contempt is the failure to do something ordered by a court to be done
for the benefit of a party. A criminal contempt is any conduct directed
against the authority or dignity of the court.
The Court further explained in Remman Enterprises, Inc. v. Court of Appeals and People
v. Godoy the character of contempt proceedings, thus
The real character of the proceedings in contempt cases is to be

determined by the relief sought or by the dominant purpose. The
proceedings are to be regarded as criminal when the purpose is primarily
punishment and civil when the purpose is primarily compensatory or
remedial.
Still further, the Court held in Santiago v. Anunciacion, Jr. that:
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But whether the first or the second, contempt is still a criminal proceeding
in which acquittal, for instance, is a bar to a second prosecution. The
distinction is for the purpose only of determining the character of
punishment to be administered.
In the earlier case of The Insurance Commissioner v. Globe Assurance Co., Inc., the Court
dismissed the appeal from the ruling of the lower court denying a petition to punish the
respondent therein from contempt for lack of evidence. The Court said in that case:
It is not the sole reason for dismissing this appeal. In the leading
case of In re Mison, Jr. v. Subido, it was stressed by Justice J.B.L. Reyes as
ponente, that the contempt proceeding far from being a civil action is of a
criminal nature and of summary character in which the court exercises but
limited jurisdiction. It was then explicitly held: Hence, as in criminal
proceedings, an appeal would not lie from the order of dismissal of, or an
exoneration from, a charge of contempt of court. [footnote omitted]
Is the NLRCs dismissal of the contempt charges against the respondents

beyond review by this Court? On this important question, we note that the petitioners,
in assailing the CA main decision, claim that the appellate court committed grave abuse
of discretion in not ruling on the dismissal by the NLRC of the contempt charges. They
also charge the NLRC of having gravely abused its discretion and having committed
reversible errors in:
(1) setting aside its earlier resolutions and orders, including the writ of preliminary
injunction it issued, with its dismissal of the petition to cite the respondents in contempt
of court;
(2) overturning this Courts resolutions upholding the TRO and the writ of
preliminary injunction;
(3) failing to impose administrative fines upon the respondents for violation of the
TRO and the writ of preliminary injunction; and
(4) failing to order the reinstatement of the dismissed petitioners and the payment
of their accrued wages and other benefits.
In view of the grave abuse of discretion allegation in this case, we deem it necessary
to look into the NLRCs dismissal of the contempt charges against the respondents. As
the charges were rooted into the respondents alleged non-compliance with the NLRC
directives contained in the TRO and the writ of preliminary injunction, we first inquire
into what really happened to these directives.
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Did the NLRC commit grave abuse of discretion in dismissing the contempt
charges against the respondents? An act of a court or tribunal may only be considered
as committed in grave abuse of discretion when it was performed in a capricious or
whimsical exercise of judgment which is equivalent to lack of jurisdiction. The abuse of
discretion must be so patent and gross as to amount to an evasion of a positive duty
enjoined by law, or to act at all in contemplation of law, as where the power is exercised
in an arbitrary and despotic manner by reason of passion or personal hostility.
The petitioners insist that the respondents violated the NLRC directives, especially the
status quo ante order, for their failure to reinstate the dismissed petitioners and to pay
them their benefits. In light of the facts of the case as drawn above, we cannot see how
the status quo ante or the employer-employee situation before the formation of the union
and the conduct of the consent election can be maintained. As the NLRC explained,
CTMI closed its manufacturing and marketing operations after the termination of its
licensing agreement with WELLA AG of Germany. In fact, the closure resulted in the
termination of CTMIs remaining employees on January 31, 1992, aside from the sales
drivers who were earlier dismissed but reinstated in the payroll, in compliance with the
NLRC injunction. The petitioner’s termination of employment, as well as all of their
money claims, was the subject of the illegal dismissal and unfair labor practice complaint
before the labor arbiter. The latter was ordered by the NLRC on October 31, 2000 to
proceed hearing the case. The NLRC thus subsumed all other issues into the main illegal
dismissal and unfair labor practice case pending with the labor arbiter. On this point, the
NLRC declared:
Note that when the injunction order was issued, WELLA AG of

Germany was still under licensing agreement with respondent company.
However, the situation has changed when WELLA AG of Germany
terminated its licensing agreement with the respondent, causing the latter
to close its business.
Respondents could no longer be ordered to restore the status quo

as far as the individual petitioners are concerned as these matters regarding
the termination of the employees are now pending litigation with the
Arbitration Branch of the Commission. To resolve the incident now
regarding the closure of the respondent company and the matters alleged
by petitioners such as the creations of three (3) new corporations xxx as
successor-corporations are matters best left to the Labor Arbiter hearing
the merits of the unfair labor practice and illegal dismissal cases.
We find no grave abuse of discretion in the assailed NLRC ruling. It rightly avoided
delving into issues which would clearly be in excess of its jurisdiction for they are issues
involving the merits of the case which are by law within the original and exclusive
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jurisdiction of the labor arbiter. To be sure, whether payroll reinstatement of some of the
petitioners is proper; whether the resignation of some of them was compelled by dire
economic necessity; whether the petitioners are entitled to their money claims; and
whether quitclaims are contrary to law or public policy are issues that should be heard
by the labor arbiter in the first instance. The NLRC can inquire into them only on appeal
after the merits of the case shall have been adjudicated by the labor arbiter.
The NLRC correctly dismissed the contempt charges against the respondents. The CA
likewise committed no grave abuse of discretion in not disturbing the NLRC resolution.
PRESCRIPTION
TEEKAY SHIPPING PHILS., INC.,and/or TEEKAY SHIPPING CANADA v

RAMIER C. CONCHA
G.R. No. 185463, February 22, 2012
The Facts
On 9 November 2000, Ramier C. Concha (hereinafter referred to as private respondent)

was hired as an Able Seaman by petitioners under an employment contract for a period
of eight (8) months with a monthly salary of $535.00. He was deployed to Canada on 22
November 2000.
On a windy morning of 23 November 2000, while he was removing rusty fragments

during his deck assignment, a foreign particle accidentally entered his left eye. When his
eye became reddish and his vision became blurred, the designated medical officer on
board administered first aid treatment. Since there was no sign of improvement,
respondent requested for medical check-up in a hospital.
On 3 December 2000, private respondent was initially admitted at Karanatha Hospital in

Australia and was diagnosed with Left Eye Acute Iritis. He was thereafter referred to the
Royal Perth Hospital, West Australia and was diagnosed to be suffering from Left Eye
Iritis (Granulomatous).
On 6 December 2000, after being deployed only for less than a month, private respondent
was repatriated to the Philippines. Upon his arrival, private respondent was referred to
the Metropolitan Hospital. He underwent medical treatment until February 2001. As he
had not been assessed whether he was fit to work as a seafarer, he filed a complaint for
illegal dismissal with money claims with the Arbitration Branch of the National Labor
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Relations Commission (NLRC) on 28 May 2001. The complaint, however, was dismissed
without prejudice by the Labor Arbiter on same date.
On 13 December 2004, private respondent filed another complaint for illegal dismissal
before the Arbitration Branch of the NLRC. In his complaint, he sought to recover
disability benefits, damages and attorneys fees. He likewise prayed for the payment of
wages pertaining to the unexpired portion of his contract.
Petitioners moved to dismiss the complaint for being time-barred. Relying on Article 291
of the Labor Code, they maintained that all money claims premised on, or arising from
ones employment should be brought within three (3) years from the time the cause of
action accrued.
Issue
Whether or not the CA erred in ruling that private respondents claims have not yet
prescribed.
Ruling
Petitioners contend that the CA unjustifiably turned a blind eye to pertinent existing
laws, contract and prevailing jurisprudence. They insist that seafarers are contractual
employees whose rights and obligations are governed primarily by the POEA Standard
Employment Contract for Filipino Seamen, the Rules and Regulations Governing
Overseas Employment, and more importantly, Republic Act No. 8042 or the Migrant
Workers and Overseas Filipinos Act of 1995.
Citing Section 30 of the POEA Standard Employment Contract, they maintained that all
claims arising therefrom prescribes in three (3) years.
Petitioners argue that since the aforesaid provision specifically set the prescription to
three (3) years, the period provided under Article 1146 of the Civil Code cannot be made
to apply. They insist that private respondents cause of action even if principally anchored
on his alleged illegal dismissal clearly prescribed in three (3) years under the aforesaid
provision.
Petitioners contend that even if private respondents claims are well-founded, the latters
cause of action accrued on or before 6 December 2000. Thus, his complaint should have
been instituted within three (3) years from 6 December 2000 or before 6 December 2003.
They further contend that even assuming that the running of the period of prescription
began only on 28 May 2001, the date when private respondents first complaint was
dismissed without prejudice, his claims would have prescribed on 28 May 2004. Since
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private respondent filed his complaint only on 13 December 2004, the same had clearly
prescribed.
The dispute is the period of prescription of action for illegal dismissal. It will be noticed
that in their Motion to Dismiss before the NLRC, petitioners allege that the prescriptive
period to be applied should be three (3) years from the time the cause of action accrued
in accordance with the Labor Code. However, in their petition before this Court, they
changed their stand and alleged that the applicable provision should be that which is
stated in the POEA Standard Employment Contract for Filipino Seamen because
seafarers are not regular employees and as such, are not covered by the Labor Code.
In Callanta v. Carnation Philippines, Inc., this Court ruled that actions based on injury to
rights prescribe in four (4) years under Article 1146 of the Civil Code rather than three (3)
years as provided for the Labor Code. An action for damages involving a plaintiff
separated from his employment for alleged unjustifiable causes is one for injury to the
rights of the plaintiff, and must be brought within four (4) years. Private respondent had
gone to the Labor Arbiter on a charge, fundamentally, of illegal dismissal, of which his
money claims form but an incidental part. Essentially, his complaint is one for injury to
rights arising from his forced disembarkation. Thus, Article 1146 is the applicable
provision. It provides:
Art. 1146. The following actions must be instituted within four years:
(1) Upon an injury to the rights of the plaintiff;

(2) Upon a quasi-delict;
It is a principle in American jurisprudence which, undoubtedly, is well-recognized in this

jurisdiction that ones employment, profession, trade or calling is a property right, and
the wrongful interference therewith is an actionable wrong. The right is considered to be
property within the protection of a constitutional guaranty of due process of law. Clearly
then, when one is arbitrarily and unjustly deprived of his job or means of livelihood, the
action instituted to contest the legality of ones dismissal from employment constitutes,
in essence, 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.
As in other causes of action, the prescriptive period for money claims is subject to
interruption, and in view of the absence of an equivalent Labor Code provision for
determining when said period may be interrupted, Article 1155 of the Civil Code is
applicable. It states that:
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Article 1155. The prescription of actions is interrupted when they are filed
before the Court, when there is written extra-judicial demand by the
creditors, and when there is any written acknowledgment of the debt by the
debtor.
Records reveal that after his disembarkation from the vessel MV Kyushu Spirit on 6
December 2000, private respondent filed on 28 May 2001 a complaint for illegal dismissal
before the Arbitration Branch of the NLRC. His complaint was dismissed by the Labor
Arbiter on the same date. In accordance with Section 16, Rule V of the NLRC Rules of
Procedure, private respondent can re-file a case in the Arbitration Branch of origin. Since
the filing of his first complaint on 28 May 2001 tolled the running of the period of
prescription, both the NLRC and the CA were correct in ruling that the filing of
respondent’s second complaint with money claims on 13 December 2004 was clearly filed
on time.
The determination of the amount of claims or benefits to which private respondent may
be entitled requires factual inquiry that devolves upon the Labor Arbiter. Considering
that the case was dismissed through a minute resolution, the case, as correctly ruled by
the NLRC and affirmed by the CA, should be referred back to the Arbitration Branch of
NLRC for the reception of evidence.
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.
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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.
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:
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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. 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.
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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) 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
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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.
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Facts:
Quantum Foods, Inc. (QFI) hired Esloyo as Major Accounts

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
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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 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.
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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. 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
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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, 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
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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.
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
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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.
Having complied with the appeal bond requirement, petitioner s appeal before the NLRC
must therefore be reinstated.
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Andrew James McBurnie
vs. Eulalio Ganzon, EGI-Managers, Inc. and E. Ganzon, Inc.
G.R. No. 178034/G.R. No. 178117/G.R. No. 186984-85. October 17, 2013
J. Reyes
Facts:
On October 4, 2002, McBurnie, an Australian national, instituted a complaint for illegal

dismissal and other monetary claims against the respondents, EGI. He performed work
for the company until sometime in November 1999, when he figured in an accident that
compelled him to go back to Australia while recuperating from his injuries. While in
Australia, he was informed by respondent Ganzon that his services were no longer
needed because their intended project would no longer push through.
The respondents opposed the complaint, contending that their agreement with
McBurnie was to jointly invest in and establish a company for the management of hotels.
They did not intend to create an employer-employee relationship, and the execution of
the employment contract that was being invoked by McBurnie was solely for the purpose
of allowing McBurnie to obtain an alien work permit in the Philippines. At the time
McBurnie left for Australia for his medical treatment, he had not yet obtained a work
permit.
The LA declared McBurnie as having been illegally dismissed from employment. On

appeal, the respondents failed to post the required additional bond, the NLRC dismissed
their appeal.
Feeling aggrieved, the respondents appealed the LA’s Decision to the NLRC. 7 On
November 5, 2004, they filed their Memorandum of Appeal and Motion to Reduce Bond,
and posted an appeal bond in the amount ofP100,000.00. The respondents contended in
their Motion to Reduce Bond, inter alia, that the monetary awards of the LA were null
and excessive, allegedly with the intention of rendering them incapable of posting the
necessary appeal bond. They claimed that an award of "more than P60 Million Pesos to
a single foreigner who had no work permit and who left the country for good one month
after the purported commencement of his employment" was a patent nullity.
Furthermore, they claimed that because of their business losses that may be attributed
to an economic crisis, they lacked the capacity to pay the bond of almost P60 Million, or
even the millions of pesos in premium required for such bond.
On March 31, 2005, the NLRC denied the motion to reduce bond, explaining that "in cases
involving monetary award, an employer seeking to appeal the [LA’s] decision to the
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Commission is unconditionally required by Art. 223, Labor Code to post bond in the
amount equivalent to the monetary award x x x." Thus, the NLRC required from the
respondents the posting of an additional bond in the amount of P54,083,910.00.
When their motion for reconsideration was denied, the respondents decided to elevate
the matter to the Court of Appeals (CA) via the Petition for Certiorari and Prohibition
(With Extremely Urgent Prayer for the Issuance of a Preliminary Injunction and/or
Temporary Restraining Order) which the CA granted.
Issue:
Whether the respondents posted sufficient appeal bond.
Ruling:
We emphasize that the crucial issue in this case concerns the sufficiency of the appeal
bond that was posted by the respondents. The present rule on the matter is Section 6,
Rule VI of the 2011 NLRC Rules of Procedure, which was substantially the same provision
in effect at the time of the respondents’ appeal to the NLRC, and which reads:
RULE VI
APPEALS
Sec. 6. BOND. – In case the decision of the Labor Arbiter 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.
xxxx
No motion to reduce bond shall be entertained except on meritorious grounds and upon
the posting of a bond in a reasonable amount in relation to the monetary award.
The filing of the motion to reduce bond without compliance with the requisites in the
preceding paragraph shall not stop the running of the period to perfect an appeal.
While the CA, in this case, allowed an appeal bond in the reduced amount
of P10,000,000.00 and then ordered the case’s remand to the NLRC, this Court’s Decision
dated September 18, 2009 provides otherwise, as it reads in part:
The posting of a bond is indispensable to the perfection of an appeal in cases involving
monetary awards from the decision of the Labor Arbiter. 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. x x x.
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-
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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.
xxxx
Thus, it behooves the Court to give utmost regard to the legislative and administrative
intent to strictly require the employer to post a cash or surety bond securing the full
amount of the monetary award within the 10[-]day reglementary period. Nothing in the
Labor Code or the NLRC Rules of Procedure authorizes the posting of a bond that is less
than the monetary award in the judgment, or would deem such insufficient posting as
sufficient to perfect the appeal.
While the bond may be reduced upon motion by the employer, this is subject to the
conditions that (1) the motion to reduce the bond shall be based on meritorious grounds;
and (2) a reasonable amount in relation to the monetary award is posted by the appellant,
otherwise the filing of the motion to reduce bond shall not stop the running of the period
to perfect an appeal. The qualification effectively requires that unless the NLRC grants
the reduction of the cash bond within the 10-day reglementary period, the employer is
still expected to post the cash or surety bond securing the full amount within the said 10-
day period. If the NLRC does eventually grant the motion for reduction after the
reglementary period has elapsed, the correct relief would be to reduce the cash or surety
bond already posted by the employer within the 10-day period.
To begin with, the Court rectifies its prior pronouncement – the unqualified statement
that even an appellant who seeks a reduction of an appeal bond before the NLRC is
expected to post a cash or surety bond securing the full amount of the judgment award
within the 10-day reglementary period to perfect the appeal.
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ERIC V. CHUANICO
vs. LEGACY CONSOLIDATED PLANS, INC.,
G.R. No. 181852, October 9, 2013
J. ABAD
Chuanico, hired for legal services by Legacy Consolidated, was dismissed for the
alleged mishandling of two cases. The SC ruled in favor of Chuanico reiterating that the
factual findings of quasi-judicial bodies, which are triers of facts on matters within their
expertise, should be considered, when supported by substantial evidence, binding and
conclusive on appellate courts. Here the LA and the NLRC were in better positions to assess
and evaluate the credibility of the parties' claims and the weight to which the irrespective
evidence is entitled.
Facts:
Legacy Plans Philippines, Inc. (Legacy Plans) hired petitioner Eric V. Chuanico (Atty.
Chuanico) as Assistant Vice- President for legal services. He was to serve as in-house
counsel for the company and its subsidiaries under the supervision of Atty. Christine A.
Cruz (Atty. Cruz), the Senior Vice-President for Legal Affairs. In the same year, Legacy
Plans merged with Consolidated Plans Philippines, Inc. to become Legacy Consolidated
Plans, Inc. (Legacy Consolidated), the respondent in this case.
On October 17, 2002, Atty. Cruz wrote Atty. Chuanico a memorandum, requiring him to
explain why no administrative action should be taken against him for mishandling two
cases. Despite the explanation of Atty. Chuanico, on December 5, 2002, Legacy
Consolidated dismissed Atty. Chuanico for serious misconduct, willful disobedience to
lawful orders, gross and habitual neglect of duties, and willful breach of trust. This
prompted him to file a complaint for illegal dismissal with claims for his unpaid
December 2002 salary and 13th-month pay plus moral and exemplary damages and
attorney’s fees.
The Labor Arbiter (LA) rendered a decision finding Legacy Consolidated guilty of illegal
dismissal and awarded Atty. Chuanico with full backwages from December 20, 2002 and
separation pay in lieu of reinstatement computed at one month pay for every year of
service inclusive of the period when the case was pending. On appeal, the National Labor
Relations Commission (NLRC) affirmed the LA’s Decision. The CA reversed the ruling of
NLRC, hence, the petition.
Issue:
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Whether the CA erred in holding that the NLRC committed grave abuse of discretion in
finding that Legacy Consolidated illegally dismissed Atty. Chuanico.
Ruling:
SC grants the petition.
The CA found reasonable basis for believing that Atty. Chuanico had breached his
employer’s trust. He was not a mere rank-and-file employee but an in-house counsel.
Thus, Legacy Consolidated enjoyed wide latitude in evaluating his work and attitude and
in terminating his employment on the ground of loss of trust and confidence. His
mishandling of the cases assigned to him shows that he had been unfit to continue
working for his employer.
But these are broad principles that do not themselves show when, where, and how Atty.
Chuanico betrayed the trust that Legacy Consolidated gave him as in-house counsel. To
be a valid cause for dismissal, the loss of trust must be based on a willful breach of such
trust and founded on clearly established facts. The company charged him with having
mishandled two things that were assigned to him, the drafting of an answer in one and
the preparation of a complaint affidavit in the other. It failed to present proof, however,
of such mishandling.
In the first case, the charge is that the draft-answer Atty. Chuanico prepared for Bank of
East Asia was so haphazardly done that the lawyers assigned to handle them had to
prepare another answer that was eventually filed in court. Yet, as the LA found, Legacy
Consolidated did not bother to present the draft-answer Atty. Chuanico prepared and
demonstrate why it regarded the same as haphazardly done. Besides, as Atty. Chuanico
said, he was given only one day within which to finish the draft-answer and Legacy
Consolidated did not contest this fact. Consequently, he could not be expected to do
more than an adequate pleading.
In the second case, Legacy Consolidated accused Atty. Chuanico of failing to prepare a
complaint-affidavit against a certain De Rama. Atty. Chuanico denied that the matter
had been assigned to him. Yet, as the LA and the NLRC noted, Legacy Consolidated did
not bother to present some note or logbook to refute this denial. It only presented the
sworn statement of the office secretary, supposedly competent, who relied merely on her
memory for ascertaining individual work assignments in a law practice that served a
number of affiliated companies.
The Court held in CAPANELA v. National Labor Relations Commission that the factual
findings of quasi-judicial bodies, which are triers of facts on matters within their
expertise, should be considered, when supported by substantial evidence, binding and
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conclusive on appellate courts. Here the LA and the NLRC were in better positions to
assess and evaluate the credibility of the parties' claims and the weight to which the
irrespective evidence is entitled.
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
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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.
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. Hence,
this petition.
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.
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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 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
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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.
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
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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:
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
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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.
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.
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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
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ground relied upon for thereduction of the bond was not substantiated. The CA set aside
the NLRC ruling, holding that liquidity problems 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
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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 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
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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.”
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.
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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:
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.
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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.
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
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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:
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

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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.
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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, 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
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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 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.
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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
Dee Jay's Inn and Cafe (DJIC) and/or Melinda Ferraris vs. Ma. Lorina P. Rañeses
G.R. No. 191825
October 05, 2016
Facts:
Petitioner DJIC started its operation on December 8, 2002. It was registered under
Republic Act No. 9178 or the Barangay Micro Business Enterprises Act. Petitioner
Ferraris, the owner and manager of petitioner DJIC, engaged the services of respondent
and a certain Moonyeen J. Bura-ay (Moonyeen) as cashier and cashier/receptionist,
respectively, for a monthly salary of P3,000.00 each.
Respondent averred that sometime in January 2005, she asked from petitioner Ferraris
the latter's share as employer in the SSS contributions and overtime pay for the 11 hours
of work respondent rendered per day at petitioner DJIC. Petitioner Ferraris got infuriated
and told respondent to seek another employment. This prompted respondent to file her
complaints before the SSS Office and NLRC CAU XII. After learning of respondent's
complaints, petitioner Ferraris terminated respondent's employment on February 5,
2005. Respondent submitted the Joint Affidavit of Mercy Joy Christine Bura-ay (Mercy)
and Mea Tormo (Mea) to corroborate her allegations.
Petitioners countered that respondent and Moonyeen were not terminated from
employment. According to petitioners, petitioner DJIC incurred a shortage of P400.00 in
its earnings for February 4, 2005. That same day, petitioner Ferraris called respondent
and Moonyeen for a meeting but the two employees denied incurring any shortage.
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Petitioner Ferraris lost her temper and scolded respondent and Moonyeen, and required
them to produce the missing P400.00. However, respondent and Moonyeen merely
walked out and did not report back to work anymore. To support their version of events,
petitioners submitted the affidavit of Ma. Eva Gorospe (Eva), another employee of
petitioners
Issues:
a. Whether or not respondent could belatedly claim in her position paper a charge of illegal
dismissal although the same was not pleaded in her verified complaint.
b. Whether or not respondent was illegally dismissed.
Ruling:
a. Yes.
The record shows that respondent filed her complaint sometime in January 2005 and
position paper on September 8, 2005. During said period, the 2002 NLRC Rules of
Procedure, as amended by NLRC Resolution No. 01-02, was still in effect. The 2005
Revised Rules of Procedure of the NLRC only took effect on January 7, 2006.
Section 4, Rule V of the 2002 NLRC Rules of Procedure, as amended, provides:
Section 4. Submission of Position Papers/Memoranda. - Without prejudice to the

provisions of the last paragraph, Section 2, of this Rule, the Labor Arbiter shall direct
both parties to submit simultaneously their position papers with supporting documents
and affidavits within an inextendible period of ten (10) days from notice of termination
of the mandatory conference.
These verified position papers to be submitted shall cover only those claims and
causes of action raised in the complaint excluding those that may have been amicably
settled, and shall be accompanied by all supporting documents including the affidavits
of their respective witnesses which shall take the place of the latter's direct
testimony. The parties shall thereafter not be allowed to allege facts, or present
evidence to prove facts, not referred to and any cause or causes of action not
included in the complaint or position papers, affidavits and other
documents. (Emphases supplied.)
Stated differently, the parties could allege and present evidence to prove any cause or
causes of action included, not only in the complaint, but in the position papers as well.
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The Court observes herein that respondent could not have included the charge of illegal
dismis al in her complaint because she filed said complaint (which were for various
money claims against petitioners) in January 2005, and petitioners purportedly
dismissed her from employment only on February 5, 2005. However, since respondent
subsequently alleged and argued the matter of her illegal dismissal in her position paper
filed on September 8, 2005, then the Labor Arbiter could still take cognizance of the
same.
b. No.
The Court of Appeals was correct in its observation that the Labor Arbiter's quote on the
shifting of the burden of proof in dismissal cases, supposedly from De Paul, could not
actually be found in said case. Yet, it does not necessarily mean that the Labor Arbiter's
ruling on the matter was fallacious or entirely baseless.
In Exodus International Construction Corporation v. Biscocho, the Court pronounced

that "[i]n illegal dismissal cases, it is incumbent upon the employees to first establish the
fact of their dismiss before the burden is shifted to the employer to prove that the
dismissal was legal."
The Court reiterated in Brown Madonna Press, Inc. v. Casas, that "[i]n 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."
It bears to point out that in the case at bar, the Labor Arbiter, the NLRC, and even the
Court of Appeals, all consistently found that respondent was not able to present
substantial evidence of her dismissal. They all rejected the joint affidavit of Mercy and
Mea, submitted by respondent, for being partial and biased. It appears that Mercy and
Mea executed said affidavits to return a favor as respondent testified for them in their
own cases against petitioners. The Court of Appeals only deviated from the findings of
the Labor Arbiter and the NLRC by also disregarding Eva's affidavit, submitted by
petitioners to corroborate their allegations, for being insufficient to prove abandonment.
The appellate court then applied the equipoise doctrine: with all things considered equal,
all doubts must be resolved in favor of labor, that is, respondent.
Given the jurisprudence cited in the preceding paragraphs, the application by the Court
of Appeals of the equipoise doctrine and the rule that all doubts should be resolved in
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favor of labor was misplaced. Without the joint affidavit of Mercy and Mea, there only
remained the bare allegation of respondent that she was dismissed by petitioners on
February 5, 2005, which hardly constitute substantial evidence of her dismissal. As both
the Labor Arbiter and the NLRC held, since respondent was unable to establish with
substantial evidence her dismissal from employment, the burden of proof did not shift
to petitioners to prove that her dismissal was for just or authorized cause.
In a case where the employee was neither found to have been dismissed nor to have
abandoned his/her work, the general course of action is for the Court to dismiss the
complaint, direct the employee to return to work, and order the employer to accept the
employee. However, the Court recognized in Nightowl that when a considerable length
of time had already passed rendering it impossible for the employee to return to work,
the award of separation pay is proper. Considering that more than ten (10) years had
passed since respondent stopped reporting for work on February 5, 2005, up to the date
of this judgment, it is no longer possible and reasonable for the Court to direct
respondent to return to work and order petitioners to accept her. Under the
circumstances, it is just and equitable for the Court instead to award respondent
separation pay in an amount equivalent to one (1) month salary for every year of service,
computed up to the time she stopped working, or until February 4, 2005.
CLUB FILIPINO, INC. and ATTY. ROBERTO F. DE LEON v. BENJAMIN

BAUTISTA, et al.
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
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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
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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 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
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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
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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
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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:
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
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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 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
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constitutes fraudulent misrepresentation and shall disqualify him from any compensation
and benefits."
XAVIER C. RAMOS
vs. BPI FAMILY SAVINGS BANK AND/OR ALFONSO L. SALCEDO, JR.
G.R. No. 203186, December 04, 2013
J. PERLAS–BERNABE
It is readily apparent that Ramos’s action of issuing the Purchase Order and Authority
to Deliver ahead of the approval of the credit committee was actually conformant to regular
company practice which BPI Family itself sanctioned. As such, Ramos cannot be said to have
been negligent in his duties. To this end, it is well to note that in loan transactions, banks are
mandated to ensure that their clients wholly comply with all the documentary requirements
in relation to the approval and release of loan applications. As BPI Family
“uncharacteristically relaxed supervision over its divisions,” yielding as it did to the demands
of industry competition, it is but reasonable that it solely bears the loss of its own
shortcomings.
Facts:
Xavier Ramos was employed by BPI Family and eventually became its Vice–President for
Dealer Network Marketing/Auto Loans Division. During his tenure, a client named
Trezita B. Acosta (Acosta) entered into and obtained several auto and real estate loans from
BPI Family which were duly approved and promptly paid. On December 15, 2004, Acosta
purportedly secured another auto loan from BPI Family for the purchase of a Toyota Prado
vehicle (subject loan) which had remained unpaid. As it turned out, Acosta did not
authorize nor personally apply for the subject loan, rendering the transaction fraudulent.
After investigation, BPI Family discovered that: (a) a person misrepresented herself as
Acosta and succeeded in obtaining the delivery of a Toyota Prado from the Toyota–Pasong
Tamo Branch, pursuant to the Purchase Order (PO) and Authority to Deliver (ATD) issued
by Ramos; (b) Ramos released these documents without the prior approval of BPI Family’s
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credit committee; and (c) Ramos was grossly remiss in his duties since his subordinates did
not follow the bank’s safety protocols, particularly those regarding the establishment of the
loan applicant’s identity, and that the promissory note was not even signed by the applicant
in the presence of any of the marketing officers.
As a consequence, BPI Family lost P2,294,080.00, which amount was divided between
Ramos and his three (3) other subordinates, with Ramos shouldering the proportionate
amount of P546,000.00. The foregoing amount was subsequently deducted from Ramos’s
benefits which accrued upon his retirement on May 1, 2006. In relation thereto, he executed
a Release, Waiver and Quitclaim dated June 21, 2006, agreeing to release the bank from any
claim or liability with respect to, inter alia, his separation pay or retirement benefits.
Claiming that the deductions made by BPI Family were illegal, Ramos filed a complaint for
underpayment of retirement benefits and non–payment of overtime and holiday pay and
premium pay against BPI Family and/or its President at that time, Alfonso L. Salcedo, Jr.,
before the Regional Arbitration Branch of the NLRC.
The Labor Arbiter (LA) dismissed Ramos’s complaint, ruling that the deduction made on
his retirement benefits was “legal and even reasonable” since Ramos was negligent in
running his department. NLRC reversed the LA’s Decision. CA affirmed the finding of
negligence on the part of Ramos, however it also attributed negligence on the part of BPI
Family, the CA found it improper to deduct the entire P546,000.00 from Ramos’s
retirement benefits and, instead, equitably reduced the same to the amount of P200,000.00.
Issue:
Whether the CA erred in attributing grave abuse of discretion on the part of the NLRC
when it found the deduction made from Ramos’s retirement benefits to be illegal and
unreasonable.
Ruling:
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The petition is meritorious.
The requirement that the NLRC’s findings should be supported by substantial evidence is
clearly expressed in Section 5, Rule 133 of the Rules of Court which provides that “[i]n 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.”
Applying the foregoing considerations, the Court finds the CA to have erred in attributing
grave abuse of discretion on the part of the NLRC in finding that the deduction made from
Ramos’s retirement benefits was improper. Two (2) reasons impel the foregoing conclusion:
First, as correctly observed by the NLRC, BPI Family was not able to substantially prove its
imputation of negligence against Ramos. Well–settled is the rule that the burden of proof
rests upon the party who asserts the affirmative of an issue.45 In this case, BPI Family failed
to establish that the duty to confirm and validate information in credit applications and
determine credit worthiness of prospective loan applicants rests with the Dealer Network
Marketing Department, which is the department under the supervision of Ramos. Quite
the contrary, records show that these responsibilities lie with the bank’s Credit Services
Department, namely its Credit Evaluation Section and Loans Review and Documentation
Section,46 of which Ramos was not part of.
Second, as similarly observed by the NLRC, Ramos merely followed standing company
practice when he issued the PO and ATD without prior approval from the bank’s Credit
Services Department. In fact, as the CA itself notes, BPI Family adopted the practice of
processing loans with extraordinary haste in order to overcome arduous competition with
other banks and lending institutions, despite compromising procedural safeguards, viz.:
In a separate audit report, it was noted that marketing officers regularly issue or
release purchase orders and authorities to deliver to car dealers (in case of dealer
generated auto loan wherein a loan originates from the automobile dealer who
submits the financing transactions, down payment and mortgage fee by the debtor–
car purchaser to the bank) before the approval of the documents. The report further
noted that the practice has been adopted due in part to the stiff competition with
other banks and lending institutions. Resultantly, in 2005 alone, approximately 111
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car loan applications were released ahead of the approval of the credit evaluation
section.
Such findings of the auditing division have not been rebutted or countered as
erroneous. In fact, in all 111 instances, the bank did not attempt to rectify the flaw by
calling the respondent’s attention to the manner by which he disregarded important
bank procedure or protocol in accommodating car loan applications. It would seem
unthinkable that respondent bank has had no knowledge thereof when its credit
evaluation committee could have easily relayed the variations to the management
for expedient solution. Any conscientious, well–meaning banking institution (such
as respondent bank, We imagine) would have raised the red flag the moment the
violation is first discovered. However, in the case before Us, respondent bank did
not sound alarm until the discovery of the first defraudation. Without doubt, its
uncharacteristically relaxed supervision over its divisions contributed to a large
extent to the unfortunate attainment of fraud. x x x
Based on the foregoing, it is readily apparent that Ramos’s action of issuing the PO and
ATD ahead of the approval of the credit committee was actually conformant to regular
company practice which BPI Family itself sanctioned. As such, Ramos cannot be said to
have been negligent in his duties. To this end, it is well to note that in loan transactions,
banks are mandated to ensure that their clients wholly comply with all the documentary
requirements in relation to the approval and release of loan applications. As BPI Family
“uncharacteristically relaxed supervision over its divisions,” yielding as it did to the
demands of industry competition, it is but reasonable that it solely bears the loss of its own
shortcomings.
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VICTORINO OPINALDO
vs. NARCISA RAVINA
G.R. No. 196573, October 16, 2013
J. VILLARAMA, JR.
Time and again, SC have ruled and it has become doctrine that the perfection of an
appeal within the statutory or reglementary period and in the manner prescribed by law is
mandatory and jurisdictional. Failure to do so renders the questioned decision final and
executory and deprives the appellate court of jurisdiction to alter the final judgment, much
less to entertain the appeal. In labor cases, the underlying purpose of this principle is to
prevent needless delay, a circumstance which would allow the employer to wear out the
efforts and meager resources of the worker to the point that the latter is constrained to settle
for less than what is due him.
Facts:
Victorino Opinaldo (Opinaldo) was hired by Narcisa Ravina (Ravina), the general manager
and sole proprietor of St. Louisse Secuity Agency and was detailed to PAIJR Furniture
Accessories (PAIJR) in Mandaue City. On August 2006, the owner of PAIJR submitted a
written complaint to Navina requesting to relive Opinaldo from his post as he is no longer
physically fit to perform his duties and responsibilities as a company guard because of his
health condition. Ravina, acceding to PAIJR’s request, relieved Opinaldo from his work,
and further required the latter to submit medical certificate to prove that he is physically
and mentally fit for work as security guard.
On September 2006, Navina reassigned Opinaldo to Gomez Construction at Mandaue City.

After working for a period of two weeks for Gomez Construction and upon receipt of his
salary for services rendered within the said two-week period, Opinaldo ceased to report for
work. The records show that Opinaldo’s post at Gomez Construction was the last
assignment given to him by respondent.
On November 2006, Opinaldo filed a complaint against Ravina with the Department of
Labor and Employment (DOLE) Regional Office in Cebu City for underpayment of salary
and nonpayment of other labor standard benefits. The parties agreed to settle and reached
a compromise agreement, Opinaldo signed a Quitclaim and Release before the DOLE
Regional Office in Cebu City for the amount of P5,000. Opinaldo returned to Navina’s office
on December, 2006. Petitioner claims that when he asked respondent to sign an SSS
Sickness Notification which he was going to use in order to avail of the discounted fees for
a medical check-up, respondent allegedly refused and informed him that he was no longer
an employee of the Agency. Respondent allegedly told him that when he signed the
quitclaim and release form at the DOLE Regional Office, she already considered him to
have quit his employment. Respondent, on the other hand, counterclaims that she did not
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illegally dismiss petitioner and that it was a valid exercise of management prerogative that
he was not given any assignment pending the submission of the required medical certificate
of his fitness to work.
Opinaldo filed a Complaint for Illegal Dismissal with a prayer for the payment of separation
pay in lieu of reinstatement against respondent and the Agency before the NLRC. Labor
Arbiter rendered a Decision holding respondent and the Agency liable for illegal dismissal
and ordering them to pay petitioner separation pay and back wages. NLRC affirmed the
decision of the LA. CA reversed the decision of NLRC, thus, this petition.
Issue:
Whether the CA erred when it gave due course to respondent’s petition for certiorari under
Rule 65 despite being filed out of time and not properly verified.
Ruling:
Petitioner questions the appellate court for ruling that the issue of the timeliness of the
filing of respondent’s motion for reconsideration of the NLRC decision has become moot
and academic when the NLRC dismissed the said motion based on the merits and affirmed
its decision. It is the opinion of petitioner that "this should not and cannot be understood
to mean that the motion for reconsideration was filed within the period allowed," and that
"the Commission may have accommodated the motion for reconsideration although
belatedly filed and had chosen to decide it based on its merits x x x but it does not change
the fact that the motion for reconsideration before the Commission was filed beyond the
reglementary period." Petitioner believes that respondent’s filing of the motion for
reconsideration on time is a precondition to the application of the rule that a petition for
certiorari must be filed within 60 days from the notice of the denial of the motion for
reconsideration. As petitioner puts it, "the counting of the sixty (60)-day period from the
notice of the denial of the motion for reconsideration is proper only when the motion was
filed on time."
The reckoning period for the filing of a certiorari petition is sixty (60) days counted from
notice of the denial of said motion. Prescinding from the foregoing, the Petition for
Certiorari was filed within the 60-day period.
Time and again, we have ruled and it has become doctrine that the perfection of an appeal
within the statutory or reglementary period and in the manner prescribed by law is
mandatory and jurisdictional. Failure to do so renders the questioned decision final and
executory and deprives the appellate court of jurisdiction to alter the final judgment, much
less to entertain the appeal. In labor cases, the underlying purpose of this principle is to
prevent needless delay, a circumstance which would allow the employer to wear out the
efforts and meager resources of the worker to the point that the latter is constrained to
settle for less than what is due him.
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In the case at bar, the applicable rule on the perfection of an appeal from the decision of
the NLRC is Section 15, Rule VII of the 2005 Revised Rules of Procedure of the National
Labor Relations Commission:
Section 15. Motions for Reconsideration. – Motion for reconsideration of any
decision, resolution or order of the Commission shall not be entertained except
when based on palpable or patent errors; provided that the motion is under oath
and filed within ten (10) calendar days from receipt of decision, resolution or order,
with proof of service that a copy of the same has been furnished, within the
reglementary period, the adverse party; and provided further, that only one such
motion from the same party shall be entertained.
Should a motion for reconsideration be entertained pursuant to this SECTION, the
resolution shall be executory after ten (10) calendar days from receipt thereof.
Petitioner also claims that the verification in respondent’s petition for certiorari before the
CA suffers from infirmity because it was based only on "personal belief and information."
As it is, petitioner argues that it does not comply with Section 4, Rule 7 of the 1997 Rules
on Civil Procedure, as amended, which requires a pleading to be verified by an affidavit
that the affiant has read the pleading and that the allegations therein are true and correct
of his personal knowledge or based on authentic records. The petition must therefore be
considered as an unsigned pleading producing no legal effect under Section 3, Rule 7 of the
Rules and should have resulted in the outright dismissal of the petition.
It is a matter of procedural consequence in the case at bar that whether we strictly or

liberally apply the technical rules on the requirement of verification in pleadings, the
disposition of the case will be the same. If we sustain petitioner’s stance that the petition
before the CA should have been outrightly dismissed, the NLRC decision finding the
dismissal of petitioner as illegal would have reached finality. On the other hand, if we adopt
respondent’s view that the defect in the verification of the petition is merely a formal defect
and is neither jurisdictional nor fatal, we will be sustaining the appellate court’s giving due
course to the petition. However, on substantive grounds, we reverse the appellate court’s
decision and reinstate the finding of illegal dismissal by the NLRC and the Labor Arbiter.
JEROME M. DAABAY vs. COCA COLA BOTTLERS PHILS., INC.

G.R. No. 199890. August 19, 2013
J. Reyes
A party who has not appealed from a decision may not obtain any affirmative relief
from the appellate court other than what he had obtained from the lower court, if any, whose
decision is brought up on appeal.
Facts:
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Petitioner Jerome M. Daabay filed a complaint for illegal dismissal, illegal suspension, unfair
labor practice and monetary claims against respondent Coca-Cola Bottlers Philippines, Inc.
The Executive Labor Arbiter (ELA) declared his dismissal illegal. The National Labor
Relations Commission (NLRC) reversed the finding of illegal dismissal and dismissed the
complaint, but granted Daabay retirement benefits pursuant to their Collective Bargaining
Agreement (CBA). Coca-Cola appealed the decision to the Court of Appeals (CA) while the
petitioner’s Motion for Reconsideration was unresolved by the NLRC. The CA ordered the
award of retirement benefits be deleted.
It bears stressing that although the assailed CA decision and resolution are confined to the
issue of Daabay’s entitlement to retirement benefits, Daabay attempts to revive through the
present petition the issue of whether or not his dismissal had factual and legal bases. Thus,
instead of confining itself to the issue of whether or not Daabay should be entitled to the
retirement benefits that were awarded by the NLRC, the petition includes a plea upon the
Court to affirm ELA’s Decision, with the modification to include: (a) his allowances and
other benefits or their monetary equivalent in the computation of his backwages; (b) his
actual reinstatement; and (c) damages, attorney’s fees and litigation expenses.
Issue:
Is the issue of whether or not petitioner’s dismissal had factual and legal basis, appropriately
raised
Ruling:
We emphasize that the appeal to the CA was brought not by Daabay but by Coca-Cola, and
was limited to the issue of whether or not the award of retirement benefits in favor of
Daabay was proper. Insofar as CA-G.R. SP No. 03369-MIN was concerned, the correctness
of the NLRC’s pronouncement on the legality of Daabay’s dismissal was no longer an issue,
even beyond the appellate court’s authority to modify.” In Andaya v. NLRC, 502 Phil. 151
(2005), the Court emphasized that a party who has not appealed from a decision may not
obtain any affirmative relief from the appellate court other than what he had obtained from
the lower court, if any, whose decision is brought up on appeal.
Further, the Court explained in Yano v. Sanchez, G.R. No. 186640, Feb. 11, 2010, 612 SCRA
347, that the entrenched procedural rule in this jurisdiction is that a party who did not
appeal cannot assign such errors as are designed to have the judgment modified. All that
he can do is to make a counter-assignment of errors or to argue on issues raised below only
for the purpose of sustaining the judgment in his favor. Due process prevents the grant of
additional awards to parties who did not appeal. Considering that Daabay had not yet
appealed the NLRC’s resolution to the CA, his plea for the modification of the NLRC’s
findings was then misplaced. For the Court to review all matters that are raised in the
petition would be tolerant of what Daabay was barred to do before the appellate court.
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Even as we limit our present review to the lone issue that was involved in the assailed CA
decision and resolution, the Court finds no cogent reason to reverse the ruling of the CA.
Daabay was declared by the NLRC to have been lawfully dismissed by Coca-Cola on the
grounds of serious misconduct, breach of trust and loss of confidence. Our pronouncement
in Philippine Airlines, Inc. v. NLRC on the issue of whether an employee who is dismissed
for just cause may still claim retirement benefits equally applies to this case. We held:
At the risk of stating the obvious, private respondent was not separated
from petitioner’s employ due to mandatory or optional retirement but,
rather, by termination of employment for a just cause. Thus, any
retirement pay provided by PAL’s “Special Retirement & Separation
Program” dated February 15, 1988 or, in the absence or legal inadequacy
thereof, by Article 287 of the Labor Code does not operate nor can be made
to operate for the benefit of private respondent. Even private respondent’s
assertion that, at the time of her lawful dismissal, she was already qualified
for retirement does not aid her case because the fact remains that private
respondent was already terminated for cause thereby rendering nugatory
any entitlement to mandatory or optional retirement pay that she might
have previously possessed.
Being intended as a mere measure of equity and social justice, the NLRC’s award was then
akin to a financial assistance or separation pay that is granted to a dismissed employee
notwithstanding the legality of his dismissal. Jurisprudence on such financial assistance
and separation pay then equally apply to this case. The Court has ruled, time and again,
that financial assistance, or whatever name it is called, as a measure of social justice is
allowed only in instances where the employee is validly dismissed for causes other than
serious misconduct or those reflecting on his moral character.
Clearly, considering that Daabay was dismissed on the grounds of serious misconduct,
breach of trust and loss of confidence, the award based on equity was unwarranted.
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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
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.
Page 271 of 1699

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.
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.
Page 272 of 1699

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 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."
Page 273 of 1699

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,
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 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.
Page 274 of 1699

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;
Page 275 of 1699

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 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
Page 276 of 1699

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 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
Page 277 of 1699

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.
OMNI HAULING SERVICES, INC., LOLITA FRANCO and ANICETO FRANCO vs.
BERNARDO BON, et al.
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. 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
Page 278 of 1699

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.
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.”
Page 279 of 1699

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 substantial evidence.
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
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 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
Page 280 of 1699

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.
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.”
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.
Philippine Transmarine Carriers, Inc. vs. Leandro Legaspi
G.R. No. 202791, June 10, 2013
J. Mendoza
Page 281 of 1699

Decisions, resolutions or orders of the NLRC shall become final and executory after ten (10)
calendar days from receipt thereof by the parties, and entry of judgment shall be made upon
the expiration of the said period. Judicial review of decisions of the NLRC may be sought via
a petition for certiorari before the CA under Rule 65 of the Rules of Court; and petitioners
are allowed sixty (60) days from notice of the assailed order or resolution within which to
file the petition. Hence, in cases where a petition for certiorari is filed after the expiration of
the 10-day period but within the 60-day period under Rule 65 of the Rules of Court, the CA
can grant the petition and modify, nullify and reverse a decision or resolution of the NLRC.
Facts:
Respondent was employed as Utility Pastry on board the vessel under the
employment of petitioner. Respondent‘s employment was covered by a CBA wherein it
was agreed that the company shall pay a maximum disability compensation of up to
US$60,000.00 only. While on board the vessel, respondent suffered ―Cardiac Arrest S/P
ICD Insertation. On November 14, 2008, respondent was repatriated to receive further
medical treatment and examination. On May 23, 2009, the company-designated physician
assessed his condition to be Disability Grade 2. Not satisfied, respondent filed a complaint
for full and permanent disability compensation against petitioner. The LA ruled in favor
of respondent. On appeal, the NLRC affirmed the LA. After the NLRC denied the
company’s Motion for Reconsideration, an entry of judgment was issued to certify that
the decision is already final and executory.
Execution proceedings were commenced by the respondent and in due course, the
company was constrained to pay the full judgment award although it still had the remedy
of elevating the case to the Court of Appeals by virtue of a Petition for Certiorari. The
petitioner paid the respondent. The terms and conditions of said payment were embodied
in the Receipt of Judgment Award with Undertaking, wherein respondent acknowledged
receipt of the said amount and undertook to return it to petitioner in the event the
latter‘s petition for certiorari would be granted, without prejudice to respondent‘s right
to appeal.
A petition was then filed by the company and the Court of Appeals ruled that
seafarer is entitled only to US$60,000 disability benefits. The company manifested before
Page 282 of 1699

the Court of Appeals that the decision should be modified and compel the seafarer to
return the excess amount of US$29,452 in favour of the company.
The CA denied the motion and ruled that the petition should have been dismissed
for being moot and academic not only because the assailed decision of the NLRC had
become final and executory on September 5, 2010, but also because the said judgment had
been satisfied on October 22, 2010, even before the filing of the petition for certiorari on
November 8, 2010.This ruling of the Court of Appeals was questioned by the company
before the Supreme Court.
Issue:
Whether or not the petition for certiorari should be dismissed for being moot and
academic on the ground that the assailed decision of the NLRC had become final and
executory and that the said judgment had been satisfied even before the filing of the said
petition
Ruling:
Section 14, Rule VII of the 2011 NLRC Rules of Procedure provides that decisions,
resolutions or orders of the NLRC shall become final and executory after ten (10) calendar
days from receipt thereof by the parties, and entry of judgment shall be made upon the
expiration of the said period. In St. Martin Funeral Home v. NLRC, however, it was ruled
that judicial review of decisions of the NLRC may be sought via a petition for certiorari
before the CA under Rule 65 of the Rules of Court; and under Section 4 thereof,
petitioners are allowed sixty (60) days from notice of the assailed order or resolution
within which to file the petition. Hence, in cases where a petition for certiorari is filed
after the expiration of the 10-day period under the 2011 NLRC Rules of Procedure but
within the 60-day period under Rule 65 of the Rules of Court, the CA can grant the
petition and modify, nullify and reverse a decision or resolution of the NLRC.
Page 283 of 1699

Accordingly, in this case, although the petition for certiorari was not filed within
the 10-day period, petitioner timely filed it before the CA within the 60-day reglementary
period under Rule 65. It has, thus, been held that the CA’s review of the decisions or
resolutions of the NLRC under Rule 65, particularly those which have already been
executed, does not affect their statutory finality.
XXX
In Leonis Navigation, after the NLRC resolution awarding disability benefits became
final and executory, the employer paid the monetary award to the employee. The CA
dismissed the employer’s petition for certiorari, ruling that the final and executory
decisions or resolutions of the NLRC rendered appeals to superior courts moot and
academic. This Court disagreed with the CA and held that final and executed decisions of
the NLRC did not prevent the CA from reviewing the same under Rule 65 of the Rules of
Court. It was further ruled that the employee was estopped from claiming that the case was
closed and terminated, considering that the employee’s Acknowledgment Receipt stated
that such was without prejudice to the final outcome of the petition for certiorari pending
before the CA. 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.
MOOT AND ACADEMIC CASES
Juan B. Hernandez vs. Crossworld Marine Services, Inc., Mykonos Shipping Co., Ltd.
and Eleazar Diaz
G.R. No. 209098
November 14, 2016
Facts:
Petitioner Juan B. Hernandez has been working continuously for respondents Mykonos
Shipping Co., Ltd. (Mykonos), Crossworld Marine Services, Inc. (Crossworld), and Eleazar
Diaz (Diaz) - Crossworld's President/Chief Executive Officer - since November 14, 2005,
under different employment contracts covering the latter's several oceangoing vessels.
On October 7, 2008, petitioner was once more engaged by respondents to work as Chief
Cook aboard the vessel M/V Nikomarin. This latest employment was for a period of nine
months, with a monthly salary ofUS$587.00, plus fixed overtime pay, food allowance, leave
Page 284 of 1699

pay, and long service bonus. When his contract expired, petitioner's service was extended
for an additional five months. Thereafter, he was repatriated on December 19, 2009.
With a view to serving respondents anew under a new contract, petitioner was made to
undergo a pre-employment medical examination on March 22, 2010, and he was found to
be suffering from hypertension and diabetes mellitus. He was declared fit for duty and
required to take maintenance medication. However, respondents deferred his employment
on account of his state of health.
In 2011, petitioner consulted two separate physicians who turned out the same diagnosis:
that he was suffering from hypertension, stage 2, and type 2 diabetes mellitus, and was
therefore unfit for sea duty in whatever capacity as seaman.
Petitioner demanded compensation by way of disability benefits and medical expenses

from respondents, but the latter refused to pay.
Issue:
Whether or not instant petition has already been rendered moot and academic by virtue of
the Conditional Satisfaction of Judgment signed by petitioner.
Ruling:
No.
Respondents profess that the Conditional Satisfaction of Judgment, Receipt of Payment,

and Affidavit which petitioner was made to sign were prepared in good faith and simply to
comply with the execution proceedings below and prevent garnishment of their accounts.
However, this Court believes otherwise. Hidden behind these documents appears to be a
convenient ploy to deprive petitioner of all his rights to claim indemnity from respondents
under all possible causes of action and in all available fora, and effectively for nothing in
return or exchange - because in the event that the NLRC ruling is reversed, then petitioner
must return what he received, thus leaving him with the proverbial empty bag. This is
fundamentally unfair, and goes against public policy.
As was held before, human life is not more expendable than corporate capital. The survival
of the petitioner and his family depends on the former's ability to find and perform work
for wages they need to secure food, shelter, clothing, and the education of his children. It
may be that in this jurisdiction, petitioner may ultimately be adjudged as not entitled to
the monetary claims he seeks, but in other fora - such as in Panama, Japan, or any other
country - he may be found to be entitled thereto, and to other indemnities as well. Yet by
Page 285 of 1699

affixing his signature upon the Conditional Satisfaction of Judgment, Receipt of Payment,
and Affidavit, petitioner effectively surrendered all his rights and waived all his claims and
causes of action in all jurisdictions, and in exchange for nothing. Indeed, in the Affidavit,
petitioner even went so far as to certify and warrant that he will not file any other complaint
or prosecute any suit or action here or in any other country after receiving the settlement
amount.
That respondents did not invoke the prohibition in the Affidavit - when the instant Petition
was instituted - does not take away the fact that petitioner has been unduly deprived of
such recourse through the documents he was made to sign.
In Career Philippines, believing that the execution of the LA Decision was imminent after
its petition for injunctive relief was denied, the employer filed before the LA a pleading
embodying a conditional satisfaction of judgment before the CA and, accordingly, paid the
employee the monetary award in the LA decision. In the said pleading, the employer stated
that the conditional satisfaction of the judgment award was without prejudice to its
pending appeal before the CA and that it was being made only to prevent the imminent
execution.
The CA later dismissed the employer's petition for being moot and academic, noting that
the decision of the LA had attained finality with the satisfaction of the judgment award.
This Court affirmed the ruling of the CA, interpreting the 'conditional settlement' to be
tantamount to an amicable settlement of the case resulting in the mootness of the petition
for certiorari, considering (i) that the employee could no longer pursue other claims, and
(ii) that the employer could not have been compelled to immediately pay because it had
filed an appeal bond to ensure payment to the employee.
Stated differently, the Court ruled against the employer because the conditional
satisfaction of judgment signed by the parties was highly prejudicial to the
employee. The agreement stated that the payment of the monetary award was
without prejudice to the right of the employer to file a Petition for certiorari and
appeal, while the employee agreed that she would no longer file any complaint or
prosecute any suit of [sic] action against the employer after receiving the
payment. (Emphasis supplied)
Within the context of the constitutional, legislative, and jurisprudential guarantees

afforded to labor, the position petitioner has been led into is unjust, unfair, and arbitrary.
For what they did, respondents are guilty of bad faith, and should suffer the consequences
of their actions.
Page 286 of 1699

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 287 of 1699

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
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:
Page 288 of 1699

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.
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”.
Page 289 of 1699

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, 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
Page 290 of 1699

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 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
Page 291 of 1699

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.
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.
Page 292 of 1699

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.
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.
Page 293 of 1699

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.
Page 294 of 1699

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. 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.
Page 295 of 1699

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.
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:
Page 296 of 1699

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 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 297 of 1699

Page 298 of 1699

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LABOR LAW DIGESTS 2012-2017

RECRUITMENT AND PLACEMENT AND PLACEMENT

REPUBLIC OF THE PHILIPPINES, REPRESENTED BY HONORABLE LOURDES

Renelson Carlos applied at Worldview Internation Services Corporation as a heavy

POEA Adjudication Office found Carlos’ assertions credible. POEA cancelled

Section 23 (b.1) states that the Philippine Overseas Employment Administration

Section 2. Disqualification. The following are not qualified to engage in the

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

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

Section 64 of the Omnibus Rules and Regulations Implementing the Migrant

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

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

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

Yes, Hilario is entitled to damages.

PEOPLE OF THE PHILIPPINES vs. MARIA JENNY REA Y GUEVARRA AND

Illegal recruitment is committed by persons who, without authority from the

The RTC rendered judgment convicting appellants of the crime of illegal

The crime of illegal recruitment in large scale is committed upon concurrence of

Simply put, illegal recruitment is committed by persons who, without authority

That Tendenilla made misrepresentations concerning her purported power to

To prove illegal recruitment, it must be shown that appellant gave complainants

The certification issued by the Philippine Overseas Employment Administration

We reiterate the findings of the Court of Appeals, to wit:

In the case at bar, it cannot be doubted that both accused-appellants

ASIAN INTERNATIONAL MANPOWER SERVICES, INC., vs.

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

During the hearing on May 9, 2007, AIMS representative, Rommel Lugatiman

Whether AIMS’s right to due process was violated.

It is true that in administrative proceedings, as in the case below, only substantial

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

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

No. While a notarized document is presumed to be regular such presumption is not

MONCHITO R. AMPELOQUIO vs. JAKA DISTRIBUTION, INC

Respondents RMI Marketing Corp., (now known as JAKA DISTRIBUTION, INC.)

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

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

No, Ampeloquio is not entitled to all benefits or privileges received by other

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

The option of reinstatement to a substantially equivalent position does not apply

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

OUR HAUS REALTY DEVELOPMENT CORPORATION vs. ALEXANDER PARIAN,

Whether there is a substantial distinction between deducting and charging a facility’s

No, the legal requirements for creditability apply to both.

As the CA correctly ruled, these requirements, as summarized in Mabeza, are the

A. The facility must be customarily furnished by the trade

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

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

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

G.R. No. 202961, February 04, 2015, J. Leonen

An employer is allowed to withhold terminal pay and benefits pending the

Requiring clearance before the release of last payments to the employee is a

“Accountability,” in its ordinary sense, means obligation or debt. The ordinary

PMI-FACULTY AND EMPLOYEES UNION v. PMI COLLEGES BOHOL

Respondent PMI Colleges Bohol (respondent) is an educational institution that offers

MONCHITO R. AMPELOQUIO vs. JAKA DISTRIBUTION, INC

Respondents RMI Marketing Corp., (now known as JAKA DISTRIBUTION, INC.)

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

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

No, Ampeloquio is not entitled to all benefits or privileges received by other

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

The option of reinstatement to a substantially equivalent position does not apply